PLDT and Globe: Rivals in the Telecommunication Industry

Case Analysis Outline

I. Introduction

II. Financial Review

a. Analysis

b. Ratios

III. Summary and Conclusion

I.Introduction

The race in the telecommunication is still not over since Philippine Long Distance Company (PLDT) and Globe Telecom, the two largest telecommunication firms in the country both claimed to be number 1 in terms of postpaid segment. PLDT claimed to be dominant by number of subscribers while Globe by revenue per subscriber. The situation continues to prevail as these two giants are continuously negotiating to merge or to buy out other smaller telecom companies in the countries.

In terms of revenue and market share in the prepaid market, PLDT is also dominating the sector. While Globe remains to have bigger profit in the postpaid market, PLDT consistently narrowed the revenue gap with Globe by surpassing the subscriber count of its competitor thru its acquisition of Digital Telecommunications Philippines Nonetheless, Globe’s stronghold is still the lucrative postpaid market in which the company is assured of service country and monthly bill. For both firms, postpaid market remains to be crucial for future growth since Philippine Economy is perceived to gain developments in the long run that further improve the buying capacity of the customers and so with postpaid market.

Along with the goal toward improving telecommunication services, the rivals are also investing huge amount of resources to upgrade and modernize their equipments and facilities in preparation to LTE technology. PLDT spent US$ 1.5 billion network modernization while Globe upgraded all of its 7,060 cell sites (12,714 base stations) costing US$790 million. Consequently, the two firms are again in a race