MANILA, Philippines (2nd UPDATE) - After months of waiting, Philippine Long Distance Telephone Co.'s (PLDT) acquisition of a majority stake in Digital Telecommunications Philippines (Digitel) has finally been completed.
PLDT and Gokongwei-led JG Summit on Wednesday announced the successful completion of PLDT's purchase of a 51.55% stake in Digitel from JG Summit in a "landmark" share-swap transaction valued at about P69.2 billion.
This comes after the National Telecommunications Commission (NTC) approved the deal earlier on Wednesday.
"PLDT is extremely pleased to welcome Digitel to the PLDT Group. PLDT will continue to provide its consumers with the best value in terms of price, quality and range of products and services and we have committed to continue offering “unlimited” type of services in fulfillment of this promise. In addition, Sun subscribers can benefit from PLDT’s extensive infrastructure and varied service offerings," PLDT chairman Manuel V. Pangilinan said, in a statement.
"This transaction ensures that Digitel remains in good hands. Together, the PLDT-Digitel Group will be well-positioned to compete not only with formidable existing competitors but with well-funded new entrants as well," said JG Summit chairman, James L. Go.
In a disclosure to the Philippine Stock Exchange, PLDT said it received the NTC approval of the deal but it is subject to three conditions.
First, Digitel should continue to provide nationwide "unlimited" type services to the public. Sun Cellular pioneered the "unlimited" call and text promotions in the country.
After completing the Digitel acquisition, NTC also required PLDT to divest its stake in subsidiary Connectivity Unlimited Resources Enterprise Inc. (CURE). CURE owns 10MHz of 3G frequency in the 2100 band.
The NTC set a divestment plan for PLDT's stake in CURE. CURE will sell its Red Mobile business to Smart Communications. SMART will sell all its rights and interests in CURE, whose remaining assets will consist of its congressional franchise.
PLDT has been given 9 months for an orderly migration of CURE's customers, and a transfer of its assets to SMART. The divestment sale will be conducted within 6 months after the transition period.
Lastly, NTC required PLDT and Digitel to "continue to provide high quality service to the subscribers/ users."
'Not a monopoly'
Officials of the NTC defended its decision to approve the PLDT-Digitel deal.
NTC Commissioner Gamaliel Cordoba insisted the PLDT-Digitel merger will not result in a monopoly or bring about unfair competition.
"We would also like to assure the general public that the PLDT-Digitel transaction will not a result in a monpoly and bring about unhealthy business comptition that will be detrimental to the itnerest of millions of telecom users and subscribers," Cordoba said, in a press conference.
In case PLDT fails to comply with the conditions, NTC deputy commissioner Carlo Jose Martinez said its merger with Digitel may be nullified.
"If you look at the last condition, we placed there that in case any of the applicants fail to comply with the conditions, then the decision itself will be declared null and void, meaning the merger, in case, the parties fail to comply with it, it will be nullified," Martinez said.
Rival Globe Telecom and consumer groups had opposed the deal, saying it will create another monopoly in the telecommunications industry. There are estimates PLDT's mobile phone market is expected to rise to a whopping 70% at the completion of the deal.