After Destiny deal, Sky Cable says will dominate, expand industry

MANILA, Philippines – While Sky Cable Corp. has sealed its dominance of the local cable industry with the recent deal involving a former rival, the Lopez-led firm also aims to keep subscription costs low by increasing their consumer base.

In an interview on Monday, May 14, Sky Cable chief operating officer Rodrigo Montinola said they are aiming to increase cable subscription as the expanded company adapts a digital technology that will reduce rampant piracy or illegal cable connections.

“Let’s put it this way, instead of increasing the combined market shares of Sky, Destiny (Destiny Cable, Inc.), MyDestiny (Solid Broadband Corp.) and Uni-Cable TV in the pay TV and cable broadband businesses, we can expand the market with digitization,” Montinola said.  

The transformation of the industry — from an analog infrastructure, which is vulnerable to piracy, into digital one — will be coupled with better programming, he said.  

“If we offer varied and affordable cable TV subscriptions, the market will grow. We would like to think that way rather than all of us eating the same market size,” said

“Instead of fighting for a bigger share of a very small market, it is better to expand the market size.

On May 11, Sky Cable signed separate deals with these companies that are under Solid Group, Inc., which were owned by the Lim family.

UniCable is a direct-to-home (DTH) cable TV subscription service covering the areas in Cebu. Solid Broadband, meanwhile, is a broadband service company that operates the MyDestiny brand. Destiny is a provider of cable TV service, similar to what Sky Cable offers.

“The combined market share is probably 45%. The rest is shared by our rivals including Cignal, Dream Satellite TV and Cable Link,” said Montinola. There around 1.3 million cable subscribers nationwide.

He said they have no more plans of acquiring more cable TV firms. “This is it. Even before this transaction we are already a strong number one in the pay TV segment,” said the official.

Digital era

Montinola said the deal with the Solid Group and the Lim family “opens an opportunity to digitize the cable TV service of those who have signed up with Destiny Cable.”
 
The digital transformation involves installing a so-called digibox in every household with legal cable TV connection. This will prevent illegal connection which adversely affects the signal fed into a paying subscriber’s home.
 
In previous years, the cable industry players went on a media blitz to campaign against rampant illegal connections, which they said is on a “one-on-one ratio between a paying cable subscriber and an illegal connect. They calculated the industry’s losses from piracy to be around P6.3 billion every year.  

“With the deal, this gives us the opportunity to continue with our digitization efforts to curb illegal connections.  Eventually, we will apply digitization to Destiny Cable subscribers,” said Montinola.
 
Sky Cable is aiming to convert about 80% of its half a million subscribers to digital by year end. About P1.5 billion has been earmarked for capital expenditure for Sky Cable subscribers.

In a press briefing of the first quarter financial performance of Sky Cable’s parent firm on Monday, May 14, ABS-CBN Corp Chief Financial Officer Ronaldo Valdueza said the Lopez-led firm is still awaiting approval from the National Telecommunications Commission for approval of a Destiny deal.

However, Valdueza said that, within the next 6 months SkyCable, would already raise P2 billion in debt and P1.5 billion in equity through corporate notes to fund the purchase of the new assets. “The plan really is to secure debt for this major acquisition,” said Valdueza.

The purchased assets are intended to be used in the expansion of Sky Cable’s television and broadband business. Valdueza explained that this cable deal will figure prominently into ABS-CBN’s future growth.

“Sky Cable continues to contribute positively with revenues increasing by 12% to  P1.2 billion. This is mostly driven by the increased take up of its broadband service subscriptions which increased by 20% year-on-year,” said ABS-CBN in a statement.
 
The deal

The agreements involve the sale and transfer of Destiny Cable’s assets used in its business of constructing, maintaining and operating community antennae television systems for public and commercial purposes to Sky Cable, at a purchase price of  P2,403,421,354.
 
Another asset purchase agreement was executed between Solid Broadband and Sky Cable. Under the P1 billion deal, Sold Broadband will sell, transfer and convey to Sky Cable all of its assets used in its business of operating commercial  telecommunications facilities, coastal stations for ships-at-sea, aeronautical stations for aircraft in  flight, television and broadcasting stations, and other telecommunications services.
 
Finally, Uni-Cable agreed to sell, transfer and convey to Sky Cable all of Uni’s assets used in its business of operating a cable antenna television system in Mandaue and Lapu Lapu City, Cebu province, including, but not limited to, a satellite TV system, cable TV Headend station, repeaters, booster, and other related equipment,  at a purchase price  of P93,578,646. – Rappler.com