Duterte deeds done Duterte cheap? President threatens expropriation or closure of Globe, PLDT

28 Jul 2020

The President of the Philippines Rodrigo Duterte yesterday (27 July) used the vehicle of his penultimate State of the Nation Address to warn the country’s de facto duopoly – PLDT (including Smart Communications) and Globe Telecom – to improve dramatically or face the possibility of closure or government expropriation for what he reportedly called their ‘lousy’ services.

Duterte, whose frustration with the status quo had led to calls for their closure while on the campaign trail back in 2016 and later, the emergence of New Major Player (NMP) DITO Telecommunity in 2018, gave domestic telecoms providers until December to shape up or potentially face the consequences. ‘Improve services lest we be forced to take drastic steps,’ he was quoted as saying, hinting that unless telcos boost their capitalisation, the government ‘might just as well close all of you’. Expressing his dissatisfaction, Duterte said: ‘How many years have Smart and Globe been operating? The answer that I usually get is ‘the party cannot be reached.’ So where did that damn thing go?’

Shares in PLDT and Globe fell by 3.6% and 3.4% respectively in the wake of Duterte’s speech. While the former declined to comment – it previously outlined plans to invest more than PHP78 billion (USD1.54 billion) in its mobile and fixed broadband networks in 2020 – Globe said it had heeded Duterte’s call to improve on its record, including setting aside USD1.2 billion for CAPEX this year, the majority of which ‘goes to network and capacity builds’. By contrast, shares in DITO Telecommunity – controlled by the businessman Dennis Uy, one of Duterte’s biggest election campaign donors – jumped by as much as 10.0%. Its chief administrative officer Adel Tamano reacted to Duterte’s challenge by saying: ‘As far as DITO Telecommunity is concerned, we all share the concern of the President for the need to provide world class connectivity to the Filipino people, especially in the face of the pandemic … Let me assure the Filipino people that we recognise the clamour for the third major telco to already go on-air. DITO is doing all it can to work through the challenges, move forward, and launch soonest’. However, he stopped short of providing any sort of revised timeline.