Consumers might lose from PLDT-DigiTel deal

Melissa Chua
31 Mar 2011

PLDT’s purchase of a controlling stake in number three rival DigiTel in the Philippines could spell a duopoly for the market that puts customers at a disadvantage.

Stock prices for both PLDT and number two player Globe had risen in wake of the announcement, fuelled by perception that both companies would enjoy higher profit margins with a major rival out of the way.

The deal will allow PLDT to hold majority control in DigiTel-owned Sun Cellular, whose low-priced services have eaten at profits for the country’s top two players – PLDT and Globe Telecom. PLDT will hold a 70% market share after the purchase, with Globe holding the remaining 30%.

Sun Cellular had introduced unlimited call and text services for fixed monthly fees, which forced PLDT and Globe Telecom to do the same. The upcoming sale has sparked fears that these perks may disappear, despite PLDT’s assurance that Sun would remain operationally separate.

“The fear of the public is whether PLDT—that used to oppose unlimited services—might change the brand Sun and everything it stands for,” Antonio Cruz, president of consumer group TxtPower toldthePhilippine Daily Inquirer.

Cruz added that consumers might however, benefit from the combination of PLDT and Sun’s networks.

The deal also puts PLDT in control of three of the four 3G licenses that have been issued in the Philippines, with Globe holding the last.

The market could, however, see competition in the form of newcomer San Miguel, which has yet to go live with its cellular services.

“San Miguel is now in full-swing to build a brand new mobile broadband network that will be robust and reliable. Our network will address voice and data capacity, which we all know is very much congested resulting in rampant dropped calls and slow data speeds,” said San Miguel president Ramon S. Ang.

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