Presidential spokesman says third telco slot open to all comers if ...

4 Jan 2018

Malaya Business Insight writes that the Philippine government is prepared to open the planned third telecoms operator slot to all comers – local and foreign – should the proposed tie-up with China Telecom fail to become a reality. With President Rodrigo Duterte having set out his stall to fast-track a plan for the third telco to launch in 1Q18, presidential spokesman Harry Roque has hinted at there being underlying problems to the deal. ‘If for any reason, China Telecom or China itself decides not to push through with the third telecoms [operator bid], of course, we have the option to offer it to other companies,’ he said, and while there are no indications China Telecom or Beijing is actively backing away from the project, Roque confirmed that the government would consider other options should Duterte’s preferred option unravel.

In November 2017 President Duterte extended an offer to China to become the country’s third telecoms operator in a bid to end the de facto duopoly of PLDT Inc. and Globe Telecom. At the time Mr Roque was quoted as saying: ‘The good news is consumers can look forward now to better telecommunications, not just in terms of cellular technology but also in terms of internet speed, as well as access … the announcement is that telecoms duopoly is about to end.’ The following month China Telecom was ‘selected’ to fill the slot, and soon after the sometimes controversial president said he wanted the country’s new third telco to begin operations as soon as Q1 2018, and to that end ordered the swift approval of its licence application to fast-track its smooth passage to market – reportedly issuing orders to the relevant agencies and regulatory bodies to ‘ensure the third telecom provider will be up and running by about the first quarter of 2018’.

However, Roque now says that – based on his past dealings with Chinese investors – one area that may scupper the plan is that some Chinese nationals are not comfortable with not having a 100% ownership of a firm. Under the Philippines’ Constitution, foreign ownership of utility companies, including telcos, is limited to 40%. Filipino companies Philippine Telegraph & Telephone Corp (PT&T) and state-owned power utility National Transmission Corporation (TransCo) are thought to be in contention for the 60% share of the proposed joint venture, but Roque’s comments suggest the country’s onerous ownership cap could come back to haunt Duterte.

TeleGeography notes that in 2007 ZTE Corp of China was awarded a USD330 million contract by the Philippines government to set up a broadband network linking state agencies, but the deal was subsequently annulled over allegations of corruption.

Philippines, China Telecom Corporation, PT&T