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PHILIPPINES, MARCH 31, 2011 – PLDT has acquired a majority stake of rival Digitel, a move that for the meantime will bring the telecommunications market back to a duopoly, it was announced on March 29.
The PLDT group, already the market share leader even before the acquisition, currently operates three brands: Smart, Talk N’ Text and Red Mobile. The acquisition of Digitel, which operates the Sun Cellular brand, will reportedly bring in an additional 15 million subscribers, resulting in a whopping 60 million users for the telecom giant while Globe, now its only rival, lags further behind with just over 25 million subscribers.
The announcement follows rumors that the San Miguel group, which operates market newcomer Liberty Telecom, was interested in Digitel.
Digitel launched the Sun Cellular brand in 2003 and has since held the distinction of being the fastest growing mobile network provider in the country, undoubtedly a result of its offering the lowest bucket plans in the country, despite considerable losses. Sun Cellular’s strategy of undercutting their rivals through cheap call and text packages rattled the mobile phone industry and eventually PLDT and Globe were forced to offer their own versions of cheap deals.
The ensuing price war resulted in an erosion of margins for the telecom firms and now that there are less players in the industry, it will be interesting to see if the move will be the end of Sun Cellular’s bucket-priced offerings, giving renewed pricing power to PLDT and Globe.
As reported in the Philippine Star, Manny Pangilinan “stressed that they intend to keep the mobile operations of Digitel separate and intact, instead of making Sun Cellular a Smart brand”. There is however, no other mention of how the move will affect the brands or their respective ad agencies.
The acquisition skyrockets PLDT further ahead of its competition, giving Gokongwei one seat on the PLDT board and Smart a bigger chunk of the lucrative postpaid pie, which is not the dominant network’s strongest point. The jury is still out is whether this deal, which returns the mobile phone industry to a duopoly, will benefit consumers, but it appears a win-win situation for both companies.
