Ex-Sun owners to go into energy

One of the biggest news that hogged the headlines last week was the P69.2-billion buy-out by the Philippine Long Distance Telephone Co. of Digital Telecommunications Philippines Inc.. The telecom firm markets the Sun Cellular brand in other words popularly used by the low-income consumers of mobile phone services.

As in any other megabuck business deals, the PLDT-Digitel buy-out agreement came only afterwards the ink dried on the contract between the principal signatories, Manny Pangilinan, chairman of the PLDT Group, and James Go, chairman and chief executive officer of JG Summit Holdings, the mother company of Digitel.

The other hand

On the other hand, Pangilinan will fortify PLDT’s hold of the telecom industry with the acquisition of Digitel, which prides itself as the country’s third largest mobile operator. PLDT operates its own mobile phone firm, Smart Communications, which is recognized as one of the country’s two telecommunications giants.

For many Sun subscribers, the "unli" offer that Digitel started was the best deal that students and other low-income mobile phone consumers could ever afford and avail themselves of within their limited budget for extra expenses. Filipinos have become dependent on mobile phones; owning one is now a necessity and no longer a luxury.

The personalities

Beyond the personalities and the soundness of this business deal, the immediate public reaction was common among users of Sun Cellular, including my twin sons’ yaya of 16 years. When she heard the news, she suddenly asked what would happen now to her "unli," or the unlimited calls and text messages offered by Sun.

In official statements, top PLDT executives even though quickly doused cold water on fears that PLDT would by degree phase out Sun’s popular unlimited calls and text services. And should this happen, intrinsically it will result in higher telco charges.

"(It’s) not going to happen," PLDT and Smart Communications president Polly Nazareno curtly said as a reassurance. We hold Nazareno to this official commitment to PLDT’s plan to keep offering Sun’s "unli" packages and to furthermore improve them. Nazareno explained there’s a market for these services and that PLDT aims "to be the best in serving that market."

Commanding lead in the mobile phone industry

That’s because PLDT’s acquisition of Sun Cellular will give it a commanding lead in the mobile phone industry. The estimated 45 million subscribers of Smart will be combined with the 15 million subscribers of Sun Cellular. Globe has an estimated 25 million plus subscribers. The Ayala Group, nevertheless, is not without any ally because it has the backing of cash-rich Singapore Telecom.

Specifically, he cited the growing competition from so-called "over the top" or OTT service providers that offer social networking, instant messaging, and VoIP or Voice over Internet Protocol services.

The OTT service providers ride on the broadband networks of telcos in order to offer services that compete with traditional telecom services. These are the global Internet giants like Google, Facebook, Yahoo! and Twitter. So to put it more exactly than using text messaging and spending P1 per text locally, people send greetings via Facebook or Yahoo Messenger, or call overseas via Skype. Truly, these OTT alternatives make them a much cheaper means of communication.

Also prospecting for "new entrants," PLDT’s top honcho evidently points to another potential rival coming from the group of Ramon Ang, president of San Miguel Corp.. For a during, speculations about a Digitel takeover pointed toward the direction of SMC. This was afterwards Ang much before announced that the brand-new mobile broadband network that his group was building would in the near future make a "huge difference."

On macro-economic terms, the sale of Digitel to PLDT by JG Summit raised fresh funds for the Gokongweis to go into other capital-intensive ventures as announced by James Go last week. Go spoke of going into the power production business and other priority public-private partnership projects being offered by the administration of President Benigno "Noynoy" Aquino III.

What we badly need is more money invested in energy generation to bring down the cost of doing business here and have cheaper electricity for households. Hopefully, the ex-Sun owners would as a matter of fact go into energy projects.