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Telstra to shake up Philippine market with USD1bn investment, reports say

30 Oct 2015

The Malaya Business Insight writes that Australian telco Telstra is expected to invest at least USD1 billion in the Philippines market via its mobile joint venture (JV) with beer and food conglomerate San Miguel Corp (SMC). As previously reported by TeleGeography’s CommsUpdate, in a September 2015 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.’ Now, Telstra chief financial officer Warwich Bray has confirmed in a separate filing that the company has allocated USD1.5 billion for ‘new business and mergers and acquisition (M&A) this year’, with the amount including ‘investments in our capital programme and start up investments, such as the investment in the Philippines where we are to pursue that opportunity’. Further, on 29 October a report by Australian Business Review cited Telstra CEO Andy Penn as committing to the aforementioned investment plan, should it forge ahead with the proposed JV.

SMC reportedly declined to comment on the investment, but TeleGeography notes that earlier this month SMC said that having the financial clout of big-hitter Telstra behind it would allow it to make a dent in a market currently controlled by a virtual duopoly of PLDT and Globe Telecom. SMC’s president Ramon Ang was quoted as saying that its Australian partner is so big its investment in the Philippines would mean ‘nothing’.

In July this year, SMC confirmed that its 100%-owned subsidiary Vega Telecom had purchased 426.8 million common shares and 1.53 billion preferred shares in Liberty Telecoms Holdings Inc (LTHI) from its partner in the wireless broadband joint venture, Qtel West Bay Holding (part of Qatar’s Ooredoo Group). Further, Vega bought out 175.11 million preferred shares in Liberty Telecoms from Wi-Tribe Asia, and 1.21 billion preferred shares from White Dawn Solution Holdings as SMC consolidates its growing telecoms portfolio in the Philippines. The conglomerate paid a total of PHP5.75 billion (USD126.6 million) in cash for the three companies’ holdings, accounting for a combined 51.01% stake in Liberty Telecoms – which offers 4G wireless broadband services under the brand name Wi-Tribe. SMC’s board approved the deal on 14 July, and definite agreements were signed on 20 July. ‘Vega decided to acquire their shares due to the exit of the companies from their investment in LTHI,’ SMC said in the filing. Liberty is expected to break even following its exit from corporate rehabilitation last May and, with 500 base stations, currently serves 50,000 Wi-Tribe subscribers. It booked a net loss of PHP210.16 million in the three months ended 31 March 2015, a 32% improvement on the corresponding year-ago period, although gross revenue fell nearly 4% to PHP77.25 million. Aside from Liberty, SMC also controls Express Telecommunications (Extelcom), Eastern Telecommunications (ETPI) and its subsidiaries Telecommunications Technologies Philippines (TTPI) and Bell Telecom.

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