2nd convergence deal: ABS-CBN, Globe seal partnership

MANILA, Philippines – Lopez-led ABS-CBN Corp. and Ayala-led Globe Telecom Inc. sealed the second big-ticket deal that marks the convergence of media and telecommunications businesses in the country.

On Tuesday, May 28, the country’s leading media group and the second biggest telecommunications provider announced their “groundbreaking partnership,” one that has been in the works for over 5 years.

“This groundbreaking partnership, which converges two separate industries, enables ABS-CBN – the country’s largest media and entertainment conglomerate – to deliver ABS-CBN content and offer traditional telecoms services on mobile devices,” Rolando P. Valdueza, ABS-CBN’s group chief finance officer, said in a  disclosure to the stock exchange.

“Through the network-sharing agreement, Globe will provide capacity and coverage on its existing cellular mobile telephony network to ABS-CBN Convergence on a nationwide basis. The parties may also share assets such as servers, towers, and switches,” he continued.

In a separate disclosure, Globe said its unit Innove Communications Inc and ABS-CBN Convergence Inc (also called ‘ABS-C’ and formerly Multimedia Telephony Inc.) were the entities that entered into a deal.

“Under the network sharing agreement, Globe and Innove will provide network capacity and coverage to ABS-C on a nationwide basis and connect ABS-C’s prepaid and postpaid billing and customer service management system to the network resources to be provided by Globe and Innove,” Globe said.

Convergence strategies

This deal follows the previous effort toward the same convergence strategy by the group led by Manuel V. Pangilinan.  

Pangilinan heads the country’s biggest telecommunications provider and Globe’s rival, Philippine Long Distance Telephone Co. (PLDT), which controls about 70% of the over 100 million local mobile subscribers.

PLDT’s media arm, MediaQuest Holdings, acquired third liner ABC Development Corp, the operator of TV5 in 2009, and pursued GMA Network Inc., the country’s second biggest media group and ABS-CBN’s main rival.

The 2012 talks — the 3rd since 2001 — between the Pangilinan group and GMA’s triumvirate owners ended nowhere.

Synergies

Since then, the Ayala and Lopez groups continued to pursue their own negotiations, which has started sometime in 2007.

In October 2012, the two business groups sealed a deal that will allow Globe to share the radio frequencies of the Lopezes’ cash-strapped BayanTel to ease Globe’s network congestion problems.

Eventually, Globe took over the debts of BayanTel, resulting in the Ayala firm’s control of the Lopezes’ telco unit, which has failed to compete in the capital-intensive industry.    

As the media and telecommunication groups in the country position to explore synergies, GMA-7 is still left out in the cold, along with other players such as debt-laden RPN-9 and newcomer Solar group. 

A utility business — including telecommunications, media, cable — need government’s and lawmakers’ nods since frequencies are finite and their service affect millions. – Rappler.com