Globe seeks gov't intervention on PLDT-Digitel deal

Reuters

Posted at Apr 28 2011 06:45 PM | Updated as of Apr 29 2011 02:48 AM

MANILA, Philippines - Globe Telecom Inc., the country's second-ranked mobile operator, wants the government to intervene in a planned merger of two rivals, saying the deal would create a giant controlling two-thirds of the market.

Globe also wants spectrum frequencies reassigned so it can better compete with leader Philippine Long Distance Telephone Co. (PLDT), which plans a P74-billion takeover of third-ranked Digital Telecommunications Philippines Inc. (Digitel).

PLDT, the former state telecom monopoly, said all its allocated frequency was in use and it would not give any up.

PLDT, partly owned by Hong Kong's First Pacific Co. Ltd. and Japan's NTT Communications and NTT DoCoMo, formally submitted the deal last week to the National Telecommunications Commission (NTC) for approval.

In an April 26 letter to the NTC, Globe counsel Rodolfo Salalima said the regulator "must not shirk from its legal obligation to intervene in the PLDT/Digitel deal and regulate, if not forestall, the deal's grave implications and impact on free competition."

Globe, owned by local conglomerate Ayala Corp. and Singapore Telecommunications Ltd., said the deal would create a monopoly and called for stronger anti-trust rules.

PLDT and Digitel aim to close deal, which is subject to regulatory approval, by June 30.

Salalima said available frequency should be evenly distributed to Globe and other players to ensure competition.

"How does one then compete meaningfully and effectively when the frequency spectra, the tool for cellular operations, are virtually all in the hands of PLDT," he asked.

But PLDT officials said Globe was acting "to cure its inefficiency" and not to seek consumer protection.

"We have 77% more frequencies than Globe but we have 126% more subscribers," Ray Espinosa, head of regulatory affairs and policy at PLDT, told a media conference.

The sparring has not hurt investor sentiment. Digitel had sparked a price war that eroded margins, and its takeover was seen as positive for margins of the top two telecoms.

Shares in PLDT, the country's most valuable listed firm, was down just 0.2%, while Digitel was unchanged. Globe rose 0.6%, bucking the broader market's 1% loss.

Since March 28, the day before the deal was announced, shares in Globe have risen 27% and PLDT is up 21%, while the market has risen more than 9%.