Analyst: PLDT-Digitel merger threatens competitive landscape

With the resolution on PLDT’s acquisition of smaller rival Digitel expected to come out anytime soon, a technology analyst has commented that an approved merger will be a threat to existing competitors as a bigger PLDT fortifies its portfolio of wired, wireless, and satellite services. Analyst firm XMG Global, founded and headed by Filipino-Canadian Lauro Vives, said it still expects competition to remain intense in case the government gives a nod to the deal. “Maintaining its market challenger position, Globe will deliver an adequate level of service across a wide footprint, but face the constant threat of being perceived as a commodity provider," said XMG research manager Katerina Karla Lizardo. Assuming the merger is approved, Lizardo it is highly unlikely PLDT would make drastic changes in the near term with Sun already being a strong brand as an alternative or second mobile service to Smart and Globe. “Although PLDT is adamant that it will not end Sun’s unlimited pricing plans, it is too early to tell on how this will impact the discount cellular product offerings," she said. The analyst said, however, that the merger will change the country’s telecommunication landscape in the long term. PLDT, Globe, and other emerging players will be forced to review and rethink their strategies and can result to changes in services bundling and pricing, according to Lizardo. XMG Global said its benchmark show that mobile operators, on average, require a market share of 30 percent plus to be profitable. “The merger pushes Sun and Smart’s market share to 69 percent, an increase in network size and coverage, and the ability to synergize, leverage costs and drive economies of scale," it noted. “With Globe holding 31 percent market share and with the entry of Liberty, we expect the market to expand to a new, but uneasy equilibrium that would benefit consumers," XMG said. Overall, XMG Global said it does not expect further significant decline in pricing or a drastic changes in the telecommunication landscape until the issue of interconnectivity charges are redressed or preferably removed altogether. The analyst firm observed that “the regulatory process has been slow, thereby putting a damper on the competitive environment" It said: “The light-handed approach by NTC is proving ineffective at letting market forces determine the development of the telecommunication landscape. “Until the Philippine telecommunication landscape can transform to full liberalization, the stage for radical changes, healthy competition, differentiated service offerings and price drops will be hard to achieve." In conclusion, said the analyst firm said: “Without the political desire or the political pressure to further liberalize the telecommunication market, XMG Global sees limited visibility in the horizon on when the telecommunication market in the Philippines can achieve its full potential." — Newsbytes.ph