March 29, 2011

PLDT buying Digitel - and then there were two

What's in it for the consumer:
1. Digitel's Sun Cellular is a pioneer in unlimited text and call promo. Other telcos were forced to offer more or less the same promo because of Sun. I'm not sure if the new Sun under PLDT/Smart will offer the same.

2. With the acquisition, the new Sun Cellular can then piggyback on PLDT/Smart infrastructure that results to wider coverage and fewer dropped calls.

What's in it for the stockholders:
1. DGTL posted a net profit of 429 million that's a 65% increase from last year with 15 million subscribers. That's a boost for PLDT/Smart whose subscriber based is more or less flat.
2. In terms of competition, Globe telecom of the Ayala group is the only real competition of PLDT/Smart/Sun. But in terms of subscriber based it only has 25 million against 60 million(Sun subscriber included). This should increase the stock price of the two competing telcos in the short term.

Given the mideast crisis and the Japan tragedy that affected our local market. I would recommend a buy on PLDT and Globe for long term.

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