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By Likha C. Cuevas-Miel Reporter
THE wireless unit of Philippine
Long Distance Telephone Co. (PLDT) has
acquired two firms that own a rival in the 3G (third-generation)
mobile business.
In a disclosure to the Philippine
Stock Exchange, PLDT said Smart Communications Inc. bought the
respective stakes of PH Communications Holdings Corp. and Francom
Holdings Inc. in Connectivity Unlimited Resource Enterprise Inc.
(CURE) for P419.54 million. PH Communications and Francom each hold
a 96.57-percent and 3.43-percent stake in CURE.
According to PLDT, an investment
group led by former trade minister Roberto Ongpin control both PH
Communications and Francom.
With the acquisition, Smart plans
to inject another P210 million in CURE by subscribing to new shares
in the company. The fresh capital will be used for working capital
purposes.
Smart and CURE are two of four
telecom companies that earlier won licenses to offer 3G service,
which is touted as the next growth driver in mobile telephony. The
two other telcos are Globe Telecom Inc. and Digital
Telecommunications Philippines Inc. The National Telecommunications
Commission (NTC) allocated the 10 megahertz to 2100 megahertz band
to CURE, which is set to launch its commercial service next month.
“CURE is envisioned to
provide Smart with a platform to offer and provide differentiated 3G
services for niche markets,” PLDT said.
Ramon Isberto, Smart public
affairs chief, told The Manila Times the company will not touch the
management structure of CURE for the meantime. Moreover, Smart will
allow its rival to “continue with its plans to set up its
projects” that were in the pipeline before the acquisition was
announced.
In an e-mail to The Times, Eric
Recto, CURE president said the company was gearing up to be a niche
player in the mobile phone industry.
“The buyout by Smart comes at a
time when the business model of CURE is ripe for taking to the next
level. The upcoming launch of Cure’s 3G service will validate our
outlook that the market for 3G is now much more robust and
established,” he said.
“We found the offer of Smart to
be timely, attractive and very much in line with what we think
CURE’s ultimate position in the mobile-phone industry should
be,” said Recto, a scion of the Ongpin family.
Duopoly in 3G sphere
Astro del Castillo, First Grade
Holdings Inc. managing director told The Times that the acquisition
gives Smart a leg up in terms of dominating the 3G space. “It
means [Smart] has less competition given that they have [a] bigger
room for their signals,” he said.
Ricardo Puig of ATR KimEng
Securities Inc. said that Smart’s de facto addition of a 3G
license will “not be destructive to the industry” given that the
country’s 3G market is small and has yet to take off. “The
market is not that big to accommodate many players and they would
have to create niches for themselves,” he said.
Questions on a probable
duopoly in the 3G sphere may arise but “we have been like that [in
the mobile phone industry] for many years,” he added.
Early this year, Smart sought
additional 3G frequencies from the NTC to support its growth. The
PLDT unit is seeking the 825 to 835 megahertz and 870 to 880
megahertz bandwidth. Its current 3G-frequency assignment falls
within the 1920 to 1935 megahertz and 2110 to 2125 megahertz ranges.
Smart said the additional
frequency band is necessary to enable the company to offer a new and
expanded range of leading-edge and high-speed data services
involving more complex applications that require wider and bigger
bandwidth and faster data speeds. These include interactive rich
media generation of user content, medical and hospital remote
medical diagnosis and tele-radiology, business functionalities,
distance education or e-learning, e-government, telemetry for
machine-to-machine applications, as well as ubiquitous and pervasive
wireless broadband or high speed Internet access.
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