April 07, 2015

SMC unit seals supplier deals for mobile phone foray

News portal interaksyon.com today reported that Bell Tellecommunications, the telecom unit of San Miguel Corp (SMC) has signed contracts with equipment and software contractors and suppliers in line with its plans to venture into mobile phone operations. The company reportedly has 197 base transceiver stations in Metro Manila, nost of which have radio station licences.

It is reportedly looking to roll out its mobile phone businesss early next year and will go into commercial operations as soon as it attains sufficient coverage.

Our take: It remains to be seen how fast Belltel can rollout a network with meaningful coverage and acquire a subscriber base that can approximate those of the two established players in order to become profitable. Even if succeeds in establishing a nationwide network, the company will still have to contend with the prevailing aggressive industry competition.

If Belltel will offer rates that are more aggressive than what Smart Communications and Globe Telecom are now offering, it can possibly gain some subscribers but this may come at the expense of profitability. We note that Sun Cellular was barely profitable with a similar model until it was eventually acquired by Smart. At any rate, an aggressive pricing strategy can cause some potential disruptions in the industry. – WealthSec