DIGITAL TELECOMMUNICATIONS PHILIPPINES INC.

DIGITAL TELECOMMUNICATIONS PHILIPPINES INC.

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Company Overview
Digital Telecommunications Philippines Inc., also known as DIGITEL, is a provider of communications services in the Philippines. It specializes in fixed line, data, and wireless solutions. The company was established in 1987 as a part of JG Summit Holdings Inc., one of the largest and most diversified conglomerates in the country. The company was incorporated in the Philippines and registered on the Securities and Exchange Commission (SEC). The commercial operations in wireless business was started in March 2003 under the brand Sun Cellular. Digital Telecommunications Philippines has a registered business office located in Quezon City.
Since its establishment, the company has grown to be recognized as one of the largest providers of wirelines in the Philippines. It operates through approximately 600 regional and local exchanges. DIGITEL’s telephones serve 276 towns and cities throughout Luzon. It has the prepaid phone cards under the Digikard brand. The company also caters high-speed data transmission and Internet services through DigitelOne, its data subsidiary. The Net direct service offers easy access to the Internet and has made DIGITEL one of the largest Internet Service Providers in the Philippines.
The company’s products and services portfolio includes Internet Data and Broadband, DIGITEL Choice Plans, IDD Services, Digikard Phone cards, Payphones, Gas Internet Prepaid, NDD Services, Pakikisama Rate, 108.109 Operator-Assisted, Domestic 1-800 Toll Free, and Domestic 1-900 Premium Services.
The company’s primary objective is to provide reliable communication access through seamless connectivity, as well as through its commitment to countryside development and nation building.
Business Summary
The Company is currently the second largest provider of fixed-line telecommunications services in Luxon outside of Metro Manila and intends to be the largest provider of such services in its area of operation by 1998.
Description and history
Established in August 31, 1987, Digital Telecommunications Phils., Inc. or DIGITEL is majority owned by JG Summit Holdings Inc. or JGSHI, one of the largest and most diversified conglomerates in the Philippines. DIGITEL continues to be the second largest provider of wirelines in the country in terms of working lines. Through 675 regional and local exchanges, DIGITEL telephones are now available in 279 towns and cities throughout Luzon. As of December 31, 2005, DIGITEL had a total of 644,984 installed lines and 438,125 working lines.

DIGITEL s voice products and services include the provisioning of local call, national and international toll services, enhanced through DIGITEL s suite of value added services, payphones and prepaid phone cards via Digikard & DGMax brands. Existing foreign and domestic carrier interconnection agreements enable sufficient transmission capacities for efficient and cost-effective routing. Interconnection with Philippine-based and some international Carriers involves use of IP (Internet Protocol). Quality customer service assistance is provided through the improved LEC Helper and the Kamustahan Program Web Application. These systems support standardization of the Customer Care interfaces.

In addition to wireline voice services, DIGITEL s data division DigitelOne offers corporate customers and consumers access to high-speed data transmission and Internet services. NetDirect, a dial-up Internet service, provides easy access to the Internet through a single dial-up number in any DIGITEL phone. The reliable service provided has steadily increased NetDirect s usage by 46%in 2005 compared to 2004 performance. This makes DIGITEL one of the largest Internet Service Providers in the Philippines. In response to future requirements for convergent technologies enabling simultaneous voice and data service transmissions, DIGITEL has done a major upgrade of its core network in 2005. The new IP Core Network with Multi-Protocol Labeling Switch (MPLS) capability is now operational. Aside from offering traditional services like Frame Relay and Domestic & International Leased Lines, MPLS technology enables DIGITEL to offer new IP-based services like IP Virtual Private Network (VPN), IP Centrex and other managed services. Furthermore, said technology assures subscribers of a fast, reliable, and efficient service.

DIGITEL Crossing, a joint venture between DIGITEL, East Asia Netcom Philippines, Inc. (a wholly owned company of Asia Netcom) and Asia Netcom Philippines, Inc. (formerly Philippine Crossing Land Corporation) was granted its franchise last November 2003 to construct, install, establish, operate and maintain telecommunications systems throughout the Philippines by Congress under Republic Act No. 9235. It brings competitive and high speed capacities to the local telecoms environment, thus enabling the growth of new businesses such as call centers, software design, and other IT services that leverage the Philippines competitive advantage in the world economy. Together with DigitelOne s Luzon-wide broadband backbone, this joint venture will help spur wide-spread Internet and high-speed data usage and familiarity around the country.

To sustain its position as the number one landline telecommunications provider in Luzon (outside of metro Manila) and serve requirements in all its service areas, the Company is upgrading its South Luzon Transmission Backbone (including IP requirements) and other facilities. This is to accommodate the transmission capacity and connectivity requirements of the DSLAM deployment project, GSM s redundancy requirements (ring), and the traffic migration from selected Bosch radio equipment. In addition, the Company intends to extend coverage of the last mile to serve more data and ADSL customers in NCR and other areas where LEC has limited cable facilities. DIGITEL is into pioneering an IP-based of Code Division Multiple Access (CDMA WLL) next generation technology.

This new service is being marketed under the MANGO brand name envisioned to cater to the professional Man or Woman-on-the-go . In September 2001, DIGITEL wholly owned wireless subsidiary Digitel Mobile Philippines, Inc. (DMPI) was established to provide wire and wireless public and private telecommunication services. DMPI was granted a congressional franchise to construct, install, establish, operate, and maintain telecommunications systems throughout the Philippines through RA 9180 on December 11, 2002. The National Telecommunications Commission (NTC) approved on August 28, 2003 the application for authority to assign and transfer the operations and maintenance of the nationwide Cellular Mobile Telephone Service (CMTS) fromDIGITEL to DMPI.

DIGITEL began development of its cellular network in 2001 and contracted Alcatel as its vendor-of-choice for the roll-out of Phases 1 and 2. The digital cellular network is compliant with Global System for Mobile (GSM) standards, operating in the 1800 MHz frequency band with access to 17.5 MHz of bandwidth. In addition, the network can handle millions of text messages per day, and is fully enabled for General Packet Radio Service (GPRS) applications.

DIGITEL s wireless service SUN Cellular was formally launched on March 3, 2003 at the Manila Midtown Hotel with no less than President Gloria Macapagal Arroyo as guest of honor followed by its commercial launch on March 29, 2003 with a pre-subscription activity called Pioneer Program from February to March 2003 in which more than 100,000 subscribers signed-up.

In October 2004, SUN Cellular introduced its 24/7 Call and Text Unlimited (CTU) Plan . Subscribers availing of a CTU plan enjoy the privilege of making as many calls and sending as many text messages as they desire as long as these calls and texts are made or sent to other Sun subscribers, in exchange for a predetermined fixed fee. The strategy was launched to encourage customers to use SUN Cellular as a second phone while the Company taps new subscribers among the young and mass market.
This is also to encourage its use as a fixed-line alternative. This strategy was undertaken as part of Sun s continuing desire to offer consumers a value proposition superior to those offered by the competitors.

The plan was met with huge success and within a month after the launch of the 24/7 CTU Plan, SUN Cellular s subscriber count surpassed the 1.0 million mark and has grown to 1.8 million at the end of 2005, commanding a market share of 5.0% from 4.0% and 2.9% in 2004 and 2003, respectively, ranking third among the three main players in the Philippines. Cognizant of consumers texting behavior and spending pattern, SUN Cellular introduced 24/7 Text Unlimited (TU) in March 2005. Given the consumers response to the Unlimited services, the Company offered another innovation with the introduction of Daylite Call and Text Unlimited, a new variant that allowed consumers unlimited texting services with 18 hours of unlimited call time.

SUN Cellular believes consumers should be given the power to choose what are truly important to them. With that in mind, the Company forges ahead partnering with leading global technology consultants and infrastructure providers to better serve the growing mobile market by providing consumers with meaningful choices to address individual needs.

To serve its subscribers on a daily basis in 25 locations nationwide, SUN Cellular s Business Centers, known as the Sun Shops, provides convenience for walk-in customers and customer care requirements. All consumers are immediately welcomed by Customer Care Officers upon their first step into a Sun Shop. SUN Cellular products and after-sales services are also available in more than 60 DIGITEL Customer Centers located in key cities and towns all throughout Luzon.

Established as a part of JG Summit Holdings Inc., one of the largest and most diversified conglomerates in the country

Business Line
A provider of communications services in the Philippines
Subsidiary

Advisor
SYCIP GORRES VELAYO & CO
IPO date
11/27/1996
US SIC Code
4813
Company Address
URC COMPOUND
110 E. RODRIGUEZ JR. AVENUE
City province or state postal code
1110, QUEZON CITY
Phone: +63 2397 8888
Fax: +63 2635 6142
Country address: PHILIPPINES
Website url: www.digitelone.com