PLDT in better position to benefit from SMC assets, says HSBC

PLDT Inc. is in a better position to take advantage of benefits from the acquisition of telco assets of San Miguel Corp. (SMC) over rival Globe Telecom Inc., the Hongkong and Shanghai Banking Corp. Ltd. (HSBC) said in a report.

“We believe there is substantial upside for the operators following the SMC spectrum deal, but believe that PLDT is better placed to capture this, with a lower proportion of active data users, larger spectrum bank, larger BTS (base transceiver station) installed base, and more extensive wireline network,” HSBC said.

PLDT and Globe purchased in May the telco assets of SMC for P70 billion.

The deal involved PLDT and Globe getting 50 percent each of the equity interest of SMC’s telco business held by Vega Telecom Inc.

It also allowed telcos to gain access to frequencies including the 700 Megahertz (MHz) band which provides greater indoor penetrability and coverage.

The 700 MHz band which was not utilized by SMC, is currently being rolled out by both PLDT and Globe for LTE or Long Term Evolution, the fastest wireless data service commercially available in the country.

Despite issues raised by critics the deal would prevent the entry of a new player in the market, HSBC is of the view the transaction would less likely be blocked.

The Philippine Competition Commission’s initial assessment of the transaction showed the deal would likely restrict competition in the telecommunications industry and the telcos have filed a lawsuit against the government body to stop it from completing its probe.

In August, the Court of Appeals issued a preliminary injunction to prevent the PCC from continuing its review of the transaction.

HSBC said that even as PLDT and Globe have both been investing heavily in new infrastructure in recent years, it expects PLDT to maintain a lead over Globe in terms of installed base stations by the end of the year.

“In addition, we believe that PLDT has a more extensive fixed-line network, which should stand it in good stead as data traffic grows,” HSBC said.

Even if PLDT was slow in making the move from text messaging and voicefocused plans, the company now has significant surplus capacity.