Philippine Daily Inquirer | March 31, 2011 | Doris Dumlao, Paolo Montecillo, Gil C. Cabacungan Jr.
The return of telecom duopoly in the country can shore up profits for leading players Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom and may spell cutbacks in the industry’s offering of unlimited voice and text messaging services to consumers, lawmakers said Wednesday.
PLDT recently signed a share-swap deal that will allow it to take majority control of Gokongwei-led Digital Telecommunications, whose cheap services through the Sun Cellular brand have gnawed sharply at the profitability of traditional leaders PLDT and Globe Telecom.
The stellar rise in the stock prices of PLDT and Globe Telecom after the deal was announced indicated a growing perception that with Digitel now out of the way, the two companies can now collect higher prices for their services.
In one of the internal memos issued by Globe management to employees when the PLDT-Digitel deal was announced on Tuesday, the Ayala-led telecom unit said one potentially good outcome was that “PLDT is seen to carry the cost of bringing rationality back to the market by paying for this acquisition and that Globe is seen to benefit from it as profitability remains in a more stable and consolidated market.”
Another internal Globe memo obtained by the Philippine Daily Inquirer said: “We might find ourselves competing in a more rational marketplace with better margins as the new opposition could decide to scale back on the unlimited propositions that undermine industry.”
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