PLDT, Globe given one year to speed up Internet

The National Telecommunications Commission on Wednesday warned it will terminate the joint use by Philippine Long Distance Telephone Co. and Globe Telecom Inc. of the frequency owned by San Miguel Corp. if broadband access and Internet speed fail to improve in a year. 

The regulator said it approved the co-use by Globe and Smart Communications of frequencies assigned to Bell Telecommunications Philippines Inc. on conditions the broadband and Internet access speed would improve in a year, with the companies required to submit a progress report on a quarterly basis. 

Globe was allowed to use the 703-720.5/758-775.5 megahertz; 880-885/925-930 Mhz; 1710-1717.5/1805-1812.5MHz; 2380-2395 MHz and 2555-2595MHz.

Smart was assigned to use the 720.5-738/775.5-793 MHz; 885-890/930-935 MHz; 1717.5-1725/1812.5-1820 Mhz; 2365-2380 MHz and 2629-2669 Mhz.  These frequencies were previously assigned to BellTel. 

The 700-MHz band, located above the TV broadcast channels, penetrates buildings and walls and covers larger areas. Mobile wireless service providers in other countries have been using the spectrum to offer mobile broadband services. 

The NTC also ordered PLDT and Globe to submit within 60 days a rollout plan to cover at least 90 percent of the cities and municipalities in three years to address the growing demand for broadband infrastructure and Internet access. 

The regulator asked the two incumbent telco players to pay spectrum user’s fee and other required fees and charges; secure separate permits and licenses for radio stations and allow the NTC access to the base stations or cell sits for monitoring purposes. 

“The commission reserves the power to terminate the joint use in case of violation of any of the above conditions or when it deems necessary to serve public interest,” NTC said. 

PLDT and Globe  jointly acquired 100-percent equity interest in San Miguel’s Vega Telecom Inc. for P52.08 billion and the assumption of P17.02 billion of liabilities.  Vega owns an 87-percent stake in Liberty Telecom Holdings Inc., the unit formed by San Miguel. 

Debt watcher Moody’s  Investors Service said PLDT’s acquisition of San Miguel’s telecommunication business was “credit negative.”  PLDT’s current credit rating is Baa2.

“These transactions provide PLDT with new spectrum frequencies — notably in the 700 MHz, 900MHz and 1800Mhz bands, which will help improve its network quality and rollout in regional and rural areas; however, the company’s financial metrics will likely deteriorate, as part of the purchase price and additional capex will be debt financed,” Annalisa Di Chiara, a Moody’s vice president and senior credit officer said.

“The cash inflows from the sale of 25-percent of its equity interest in Beacon Electric Asset Holdings Inc. to Metro Pacific Investments Corp. will help mitigate the increase debt levels and support cash flows, which we view positively,” Di Chiara said.

MPIC agreed to pay PLDT P26.2 billion in total for the Beacon stake, while P17 billion will be received at closing and the remaining P9.2 billion will be paid in over the next four years.