Vega Telecom was well on its way to becoming The Philippines’ third biggest telecom operator until last weekend when its parent company, the huge food and drink company San Miguel, accepted the $1.5 billion bid by the country’s two largest telecom operators, Globe and PLDT. The buyers intend to split Vega’s assets 50-50, reported globaltelecomsbusiness.com yesterday. The move comes two and a half months after Telstra ended talks with San Miguel over a possible joint telecoms venture.
While Globe and PLDT will also take over most of the company’s 700MHz spectrum, the government will reportedly take back some of Vega’s spectrum, opening up the possibility that there will be a third rival in the future. The buyers expect to improve their overall coverage from existing cell sites with the added spectrum, the news site reported.
“We entered into this transaction as a solution to harmonize the spectrum assets in the country and immediately unlock the benefits of the underutilized frequencies,” Globe CEO Ernest Cu said. “Ultimately, our goal is to provide our customers with a better experience on our mobile data and home broadband services progressively over the next 12 months.”
Cu said: “Coupled with our execution excellence as the preferred brand for Filipinos’ digital lifestyle choices, the additional frequencies will provide the much needed capacity to improve mobile browsing speeds that our customers would enjoy.”
PLDT is likely to invest $1 billion in capital expenses to expand its data service, said Fitch Ratings, while the ratings service figures Globe will make an $850 million capex investment in its data service. The expenditures would be “the highest amounts in the last five years for both companies,” Fitch noted, adding, “The Philippine mobile market is highly saturated, but most users are on 2G networks – which provide telcos with plenty opportunities if they offer faster 4G LTE services.”
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