Tag Archives: Telecommunications

PLDT’s Sun Acquisition: Good or Bad? (Part 2 of 2)

With mobile telephony now already considered a mature industry (cellular penetration exceeding 80 percent), broadband Internet services are expected to be the sector’s new growth driver. According to Business Monitor International (2010), Smart and Globe continued to report strong growth in their broadband business segment. Total broadband subscribers for the two operators crossed the two and one million mark respectively, and wireless broadband take-up is the main subscriber growth driver for Smart and Globe.

It is amidst this setting of falling revenues in cellular services (an industry segment nearing maturity) but with high prospects for broadband Internet services (another segment which is still in its infancy and expected to compensate for the decline in cellular revenues) that PLDT has recently acquired Digitel. The deal would result in a duopoly with PLDT’s Smart, Talk N’Text (Piltel), Red Mobile (Cure) and Sun (Digitel) on the one hand, and Globe Telecom and TM on the other. PLDT now controls 70 percent of the total cellular subscribers while Globe controls the remaining 30 percent. Digitel has 400,000 broadband subscribers to be added to PLDT’s two million subscribers.

PLDT-Sun Acquisition (Part 1 of 2)

For more than 50 years, the Philippine Long Distance Company (PLDT) dominated the country’s telecommunications sector. During this entire period, our telecommunications sector was in a dismal state as indicated by the long waiting time to own a telephone, which at worst took more than ten years. Due to underinvestment in the sector, a huge telephone backlog existed, telephone service was generally unavailable and where it was, the service was unreliable.

All these changed with the opening up of the telecommunications sector in the late 1980s up to the early1990s. The entry of new players led to rapid growth in the industry as foreign investment increased and new services emerged. However, despite the entry of new players, PLDT continued to dominate the industry since it owned the backbone network and it accounted for the largest share in the total number of fixed lines. Being the owner of the domestic backbone system, PLDT was able to influence not only the speed but also the terms and conditions for interconnection as well as terms and conditions for revenue-sharing arrangements.