Filipino firm San Miguel Corp (SMC) is selling its telecoms assets to the country’s two incumbent operators, PLDT and Globe Telecom.
In a deal worth PHP52.8 billion ($1.13 billion), each operator will take over a 50% stake in SMC’s assets, which are valued at around PHP70 billion with liabilities of PHP17.02 billion. The agreement includes SMC’s highly coveted 700MHz spectrum.
Between them, PLDT and Globe have a market share of 99%. This surprise agreement, which was reached after SMC failed to attract an overseas partner for a joint venture to create a third operator in the market, will see both incumbents strengthen their footprint. However, both have had to relinquish some of their spectrum to the regulator to free up space for a potential third operator.
PLDT and Globe have long requested that the regulator put some of the 700MHz spectrum held by SMC to auction. SMC, which is the Philippines’ largest by revenue, accrued the spectrum over the past two years as it made efforts to consolidate its telecom holdings. These include BellTel, Cobaltpoint, Eastern Telecommunications, High Frequency Telecommunications and Wi-Tribe.
Between W-Tribe (80MHz) and High Frequency Telecommunications (10MHz), SMC owns 90% of the 100MHz of available 700MHz spectrum. PLDT and Globe will divide 70MHz of this holding between themselves, with the remaining 20MHz going back to the regulator.
SMC had previously held talks with Australian market leader Telstra about establishing a Filipino joint venture focused on wireless communications. However, in March Telstra pulled out of the negotiations after almost a year, stating that the two firms could not agree on an equity investment.
Following the collapse of talks with Telstra, SMC turned to the two incumbents. Norwegian firm Telenor has also approached SMC regarding a potential joint venture.
