Article by Cliff Harvey C. Venzon1

This past year, the Philippine telecommunications industry has shown an excellent performance. In addition to that, competition is continually growing, especially among the largest telecommunication companies, PLDT-Smart and Globe telecom.

So far, the existing rivalry between the two major telecoms has further amplified as both are aiming to expand their borders. The Ayala’s Globe telecom started to improve on their services by installing Long Term Evolution (LTE) through partnerships with various companies such as the US’ Aicent2. On the other hand, Manny Pangilinan’s PLDT-Smart is continuously expanding its coverage for its 67 million subscribers (68% of the total mobile subscribers in the Philippines)3. With the growing market by Sun and Smart, both subsidiaries of the PLDT-Smart, Globe telecom is pressured to intensify its method of improving their services inside or even outside of the country.

Last May 29, Globe telecom’s board of directors approved in selling bonds worth PhP7 billion. Bonds will be sold into two separate periods: 7-year and 10-year bonds. Majority of the funds accumulated from the bonds sold will be allotted for Globe’s capital expenditures (CAPEX) which includes the network and IT initiatives and investments to other facilities
4.


Other than this, the Globe telecom is also aiming for the complete rehabilitation of the Lopez group’s Bayan telecommunication, a minor competitor5. Presently, Globe owns 96.5% of the total indebtedness of Bayan. After selling the bonds, they plan to own the 100% of it then converting it as Bayan’s equity. Furthermore, this can be seen as a positive response to the growing partnership between the Lopez’s and the Ayala’s as former’s ABS-CBN also signed a telecommunication deal with Globe telecom recently6.

All in all, expansion is manifested not only through increasing one’s assets but also by forging relationships with others. The thriving partnership between these two successful companies would certainly become a threat to PLDT-Smart’s constant growth. As ABS-CBN enters the telecommunication industry, the division of the market will increase.


1 Venzon, Cliff Harvey C. “Globe gets SEC approval” BusinessWorld Online, July 4, 2013, accessed July 7, 2013, http://www.bworldonline.com/content.php?section=Corporate&title=Globe-gets-SEC-approval-to-issuebonds&id=72905
2 Abadilla, Emmie V. “Globe strengthens LTE roaming links.” Manila Bulletin Publishing Corporation, July 2, 2013, accessed July 10, 2013, http://mb.com.ph/Business/Corporate/20214/Globe_strengthens_LTE_roaming_links
3 Montecillo, Paolo G. “PLDT says user base rose to 69M in end-2012.” Philippine Daily Inquirer, April 5, 2013, accessed July 11, 2013, http://business.inquirer.net/115529/pldt-says-user-base-rose-to-69m-in-end-2012
4 Agcaoili, Lawrence, “Globe to raise add’l $120M for capex.” The Philippine Star, April 17, 2013, accessed July 10, 2013, http://www.philstar.com/business/2013/04/17/931423/globe-raise-addl-120m-capex
5 Amojelar, Darwin G. “Globe sets P7-billion debt sale to finance Bayan takeover” InterAksyon.com, June 19, 2013, accessed June 30, 2013, http://www.interaksyon.com/business/64418/globe-sets-p7-billion-debt-sale-to-financebayan-takeover
6 Agcaoili, Lawrence, “NTC okays Globe-ABS-CBN network agreement” The Philippine Star, June 8, 2013 http://www.philstar.com/business/2013/06/08/951358/ntc-okays-globe-abs-cbn-network-sharing-agreement



Authors:
Bulahan, Lyndon
Galeon, Francis Jake
Pestaño, Zenon
Policarpio, Bianca



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