PLDT eyes one-third ownership of Radius Telecoms

PLDT continues to strengthen its broadband business, disclosing plans to acquire a 34.9% stake in Radius Telecoms, owned by the Manila Electric Company (Meralco), in a deal worth 2.12 billion Philippine pesos (US$37.71 million).

The announcement came barely two weeks after the telco giant received regulatory approval to take over Sky Cable.

In a stock exchange filing on Tuesday, PLDT said that its board of directors had approved the subscription of 2.49 million shares of common stock in Radius priced at PHP849.28 ($15.13) each.

"The proposed investment is a strategic move to fortify PLDT's market position and increase its market share through a harmonious integration of solution capabilities and market coverage by capitalizing on Radius' 100% fiber facilities," the company said in the filing statement.

Radius holds a legislative franchise to operate and maintain telco assets for commercial services. Its fiber facilities span 150 enterprise buildings, over 200 residential villages and more than 200 villages.

PLDT, on the other hand, has covered 17.31 million homes and laid out 1.1 million kilometers of fiber cable, based on latest data.

By leveraging the existing infrastructure and co-building in key areas, PLDT said both companies expect to make cost savings, while unlocking "synergies" in solution capabilities and network coverage to better serve and improve quality of service to PLDT and Radius customers across the country.

Related:PLDT gets regulatory nod to buy Sky Cable

The transaction is subject to closing conditions such as completion of due diligence review, procurement of necessary internal corporate and regulatory approvals, and execution of definitive agreements.

Strategic move

Industry observers believe that the impact of PLDT's latest investment on its customers would be "minimal" given the smaller presence of Radius. But the deal remains strategically significant.

"Radius will benefit from PLDT's extensive expertise in the broadband business. Depending on market dynamics, it's also possible that PLDT may fully acquire Radius down the road," Juan Paolo Colet, managing director of China Bank Capital, told BusinessWorld.

Toby Allan Arce, head of sales trading at Globalinks Securities and Stocks, also told the news outlet that the equity stake would allow "PLDT to have a substantial influence on Radius Telecoms and aligns with a strategic move to fortify its market position."

Growing market lead

PLDT leads the Philippine's broadband market with nearly 50% share, especially after the Sky Cable acquisition. The country's antitrust agency recently gave its approval of the PHP6.75 billion ($119.8 million) deal, which would bring approximately 350,000 broadband subscribers under PLDT's fold.

Based on latest available figures, PLDT's data and broadband revenues grew 4% to PHP116.9 billion (US$2.08 billion) in the first nine months of 2023 from the same period in 2022.

Residential fiber-only service revenues grew 10% to an all-time high of PHP39.3 billion (US$700.34 million) in the first nine months of 2023. Fiber-only revenues accounted for 87% of total residential revenues of PHP45.3 billion, which were 2% higher than in the same period in 2023.

PLDT's total fiber subscribers as of end-September 2023 reached 3.14 million, with 210,000 fiber net additions in the nine-month period.