Digitel to launch cellphone operations on Feb. 1

The mobile telephone subsidiary of Gokongwei-owned Digital Telecommunications Philippines, Inc. (Digitel) is set to commercially launch its cellular phone operations on Feb. 1 in Manila and Cebu, making it the sixth player in the highly competitive cellular phone market.

The move follows a long delay allegedly due to the inability of Digitel to enter into interconnection agreements with industry giants Globe Telecom and Smart Communications.

"Feb. 1 is the Chinese New Year and considered a lucky day," an official said in choosing the commercial launch date. Digitel has around 5,000 cellular subscribers to date, according to company officials, around 2,000 of which are Digitel employees and the rest, of parent company JG Summit and other subsidiaries.

Company officials said Digitel decided to proceed with the commercial launch even without the interconnection agreements with Globe and Smart in place. "But we are in continuing negotiations with the two major players hopefully to have agreements in place very soon," a Digitel official told The STAR.

Digitel will initially be focusing its cellular operations in Luzon, but plans to expand to other parts of the country soon.

At present, the cellular mobile telephone service (CMTS) industry is almost equally divided between Globe and subsidiary Isla Communications (Islacom) on one hand, and Smart and sister company Pilipino Telephone Inc. (Piltel) on the other. All four are into the GSM technology which allows for text messaging.

Unlike Globe, Islacom, Smart, and Piltel, another player Extelcom has remained offering analog services. Lopez-owned Bayan Telecommunications (Bayantel), which also has a provisional authority to engage in the CMTS business, has no immediate plans to utilize its license.

Digitel's mobile operations will basically utilize the GSM technology but is capable of engaging in the next generation of mobile technology known as general packet radio service (GPRS) currently being offered on a limited scale by Globe and Smart.

Earlier, Digitel president Lance Gokongwei said the company plans to have at least one million cellular subscribers within three years of its operations.

"We got the license only in August (2000). Ever since then we have been working very hard for nationwide coverage," he added.

Digitel was originally targeting the end of 2002 to start commercial operations of its wireless business.

Digitel has set up a separate subsidiary, Digital Mobile Philippines, for its wireless business. The new subsidiary was earlier given a 25-year franchise to operate by President Arroyo.

Despite the absence of a strategic foreign partner which is considered an advantage in the cellular mobile business (Globe with Singapore Telecom and Deutsche Telekom and Smart with NTT Communications of Japan), Digitel officials said the company utilized mainly internally-generated funds for the project although there are constant discussions with possible investors for the cellular business.

Gokongwei said Digitel has "sufficient funding" in place to support the nationwide rollout project even without a partner.

"We have the funding in place... for the GSM project. It’s funded mostly from suppliers credit, export credit agencies (ECAs), as well as internally generated funds," he said. Digitel’s expansion project is estimated to cost P8.17 billion.

"We’re constantly in dialogue. There’s nothing we can disclose as of now... What we could look for is someone who could provide technical expertise," he said.

Industry sources said Digitel has narrowed down its choice of a possible partner to two, one of which is Norwegian firm Telenor AS.

Telenor had a memorandum of understanding (MoU) with another telecom firm, Lopez unit Bayan Telecommunications, Inc. (BayanTel), for the latter’s planned cellular business, but the MoU lapsed last year.

Listed at the Philippine Stock Exchange, Digitel is 79 percent Filipino-owned and 21 percent foreign-owned.

The Gokongweis’ flagship firm, JG Summit Holdings, Inc. is the biggest shareholder with a 47.45 percent stake. Swedish firm Telia AB is the biggest foreign shareholder with 9.44 percent. The National Telecommunciations Commission (NTC) has already approved Digitel’s application for authority to charge cellular rates. The rates are from zero to as much as P3 per text message between two Digitel GSM subscribers. Sources revealed though that Digitel is eyeing a 50-centavo per message rate. Digitel also intends to charge text messages sent to other CMTS network anywhere between 50 centavos to P3. Digital Mobile Phils. Inc., the name that Digitel intends to use for its CMTS service, will offer both pre-paid and post-paid services. It proposed that basic monthly fees shall range anywhere from P100 to P1,500.