Filipino govt again considering move to increase foreign ownership in telcos

21 Jul 2017

A senior government minister has once again issued a call for the Philippines to amend laws controlling foreign ownership of telecoms operators to attract investment and improve services. With the current bar set at a maximum 40% on all Philippine utilities (including telcos), Economic Planning Secretary Ernesto Pernia has called for the limit to be raised to as high as 70%. The minister is mindful that the market is currently dominated by just two players – PLDT Inc. and Globe Telecom – which critics note has resulted in poor service choice, high charges and a slow deployment of next generation – in particular broadband – technologies. ‘If we want to attract foreign direct investment, they have to have a larger stake in the investment,’ he told reporters, adding: ‘40% seems rather low. By raising that to 70%, it seems more attractive’. Critics, however, point out that the plan would require an amendment to the constitution (which set the 40% cap), something which is likely to remain problematic in a country that has long been dogged by political meddling and where legislators are known to have a vested interest in many key industries.

The country’s sometimes controversial president Rodrigo Duterte has previously warned he would intervene to improve the Philippines’ telecoms and power industries. In October 2016 he issued a call to PLDT and Globe Telecom to improve their services or face the real prospect of him bringing in competitors from China. In his speech during the National Banana Congress in Davao City, Duterte mentioned prominent businessman Manny Pangilinan (chairman and CEO of PLDT and Smart) and Ayala Corp (major stakeholders in Globe). ‘If you do not do it right, you wait, I’m going to China. I’ll open up everything for competition. I’ll just open up everything,’ the president warned.

Duterte’s statement came in the wake of persistent criticism of the Philippines’ slow and expensive internet services – a fact that has repeatedly been attributed to the de facto duopoly. Press rumours at the time suggested that if he followed through on his threat the likes of China Mobile or China Telecom could be invited to take an active interest in the local market through a new state-run vehicle.