Filipino think tank: ‘extremely difficult’ for a newcomer to enter market

30 Jun 2017

The Philippine Institute for Development Studies (PIDS) has released a new report on competition in the country’s telecoms landscape, concluding that whilst a third operator is needed to challenge de facto duopoly of PLDT Inc. and Globe Telecom, a host of barriers make it extremely unlikely that such an event will happen in the near term. The Philippine Daily Inquirer writes that the PIDS’ conclusions strike a similar tone to those reached by the antitrust body, the Philippine Competition Commission (PCC), which undertook to review the telcos’ joint acquisition of San Miguel Corp (SMC’s) telecoms assets in 2016. The multi-billion-dollar deal, which mainly involved giving PLDT and Globe access to SMC’s valuable mobile frequencies, finally closed on 30 May 2017, resulting in the pair now holding about 80% of all available telco frequencies in the country. The PIDS paper published its conclusions highlighting similar charges to those alleged by the PCC. This included the ‘haste’ at which PLDT and Globe closed the buyout deal with SMC, after the latter had abandoned its attempt to launch a third telco player.

‘This has brought a cloud about the motives and doubts about the net benefits that the acquisitions could bring given that these transactions clearly reduce competition to just two players,’ the think tank said. ‘There is added concern that the transactions have not been fully transparent about the terms in the co-sharing agreement and the conditions set by the National Telecommunications Commission [NTC],’ it added, before echoing the PCC’s view that the Filipino market is desperately in need of more competition. The PIDS’ gloomy prognosis, however, is that the ability of PLDT/Globe to exploit a ‘technical loophole’ to push through the transaction and avoid regulatory scrutiny does not bode well for anyone seeking to enter the market in future. ‘But arising from structural barriers, e.g., the cost of obtaining various permits and licences, both local and national, the cost of obtaining rights of way, the available spectrum or bandwidth, the foreign equity limitation, might make this extremely difficult in the near future,’ it concludes. In conclusion, it has called on the regulator NTC and the government to consider ‘liberalisation, competition and regulatory reforms’ to provide suitable long term solutions for end users – including a call that PLDT and Globe be forced to rapidly improve services. ‘This could entail agreeing on conditions that would yield benefits for consumers, like platform sharing and interconnectivity, and increased services and greater utilisation of their assets [including those newly acquired],’ the PIDS study added.