Ayala has no plans yet of merging Globe, Islacom

Ayala Corp. has no immediate plans of totally merging cellular phone firms Globe Telecom and Isla Communications Co. (Islacom) despite the high cost of maintaining two different business entities.

Rodolfo Salalima, Globe senior vice president for legal and corporate affairs, said yesterday that so far, the memorandum of agreement (MOA) signed by the shareholders only calls for Islacom to become a subsidiary of Globe before yearend.

Barring the cost, Salalima said that it would be better to retain the identities of Globe and Islacom since each could have its own foreign partner.

At present, Globe already has a strategic partner in Singapore Telecom International (STI) which holds almost 40 percent of the company while Islacom has Deutsche Telekom AG of Germany which provides it not only with financial resources but also technology expertise and international connections, he explained.

Moreover, Salalima said that through Islacom, Globe's coverage both in fixed lines and wireless, will be further expanded.

While Globe provides mobile phone service in key cities nationwide, its wireline access is limited since its service areas only include parts of Metro Manila, Southern Tagalog region, and Mindanao.

Islacom, on the other hand, is very strong in Visayas where it has more than 150,000 fixed phone lines subscribers.

Both Globe and Islacom, incidentally, have put up over 700,000 telephone lines each in their respective service area and have a combined cellular phone subscriber base of about 1.3 million.

"So even if there is no merger, for the time being we are getting a lot of advantages from the arrangement," Salalima said.

At most, he said, the only kind of integration that the two companies will have is a functional or operational merger where they can share facilities and equipment and even marketing and advertising activities.

The transaction, which was already approved by the board of directors of both firms, is expected to close between October and December this year and even as it is still subject to certain conditions, including various regulatory, shareholder and certain third party approvals.