SMC thinking big with Telstra’s financial muscle behind it

6 Oct 2015

Philippines beer and food giant San Miguel Corp (SMC), which is looking to launch a new wireless carrier in the country offering voice, text and mobile broadband services, says that having the financial clout of big-hitter Telstra behind it will allow it to make a dent in a market currently controlled by a virtual duopoly of PLDT and Globe Telecom. The Sydney Morning Herald quotes SMC’s president Ramon Ang as saying that its Australian partner is so big its investment in the Philippines will mean ‘nothing’. Whilst Telstra is remaining tight-lipped on the plan for it to take a stake of more than 40% in the joint venture and spend millions of dollars to get it off the ground, Mr Ang is more open in assuming that a deal will be finalised soon. Telstra’s CEO Andy Penn has described the Philippines as a ‘very attractive market’, but the paper notes that SMC’s comments will likely heighten concerns among some Telstra investors worried large amounts of cash will soon be invested throughout the Asian region in an effort to grow profits and revenue. Building a network from scratch could cost up to USD2.5 billion.

Last month CommsUpdate reported that Telstra has held negotiations with SMC regarding a mobile joint venture (JV) in the south-east Asian country. In a filing with the Australian Securities Exchange, Telstra stated: ‘We note recent speculation concerning Telstra considering an investment in a wireless JV in the Philippines with San Miguel, and that financing is being sought in relation to that JV. We are in discussions in relation to these matters. However, no agreements have been reached in relation to these matters and there is no certainty that this will occur.’ Meanwhile, according to the Sydney Morning Herald, SMC has already started hiring telecoms staff, while Telstra is in the process of sourcing employees with local knowledge.

As previously reported, Vega Telecom – a wholly owned SMC subsidiary – acquired a 100% stake in WiMAX operator Liberty Telecoms in August this year, by purchasing the outstanding shares from its partners Qtel West Bay (part of Ooredoo Group), Wi-Tribe Asia and White Dawn Solution. Although Liberty utilised its 40MHz block of 2500MHz spectrum for its WiMAX network, it has been suggested that Telstra is keen to use the company’s almost 100MHz block of 700MHz spectrum to deploy 4G LTE technology; the Australian company switched on its ‘4GX’-branded 700MHz 4G network in its home market in November 2014.

Australia, Philippines, Telstra (incl. Belong)