Ang: Deep pockets key to 3rd telco success
Business tycoon Ramon S. Ang, whose San Miguel Corp. (SMC) was the last major company that attempted to break the country’s two-player telco sector, predicted that a new challenger with deep enough pockets could survive and even thrive against powerful incumbents.
“It will succeed if you have the money,” Ang, president of SMC, said last week.
The statement of support signaled a remarkable change of heart from two years ago, when SMC ended its own bid to become the country’s third telco player.
In May 2016, SMC sealed an almost P70 billion deal with joint buyers PLDT Inc. and Globe Telecom for its telco assets and the transfer of its coveted radio frequencies needed to provide high-speed internet services. The transaction came just two months after SMC’s talks with Australia’s Telstra fell through.
After the sale was announced, Ang revealed that SMC faced legal threats from the incumbents. He added that it was best for private sector to stay away and that only the government could become the third telco player.
Two years later, Ang said their telco ambitions did not enjoy the kind of government support the Duterte administration had showered on its current third telco initiative.
“We would have succeeded,” Ang said, adding that the Aquino administration was hesitant to clear hurdles such as the lack of cell tower sharing, number portability and high interconnection rates.
Telco infrastructure sharing, lower interconnection rates and the use of government assets such as the spare fiber in state-owned power transmission lines have mostly been addressed by the Department of Information and Communications Technology (DICT) under acting secretary Eliseo Rio Jr. Lawmakers separately approved a bill that would allow subscribers to retain their mobile numbers when switching providers. The steps were seen to lower barriers for new competitors.
Ang also made clear that SMC, a sprawling conglomerate with assets in food, drinks, energy, and infrastructure, had no plans to partner with or invest in the companies vying for the third telco slot.
“It’s my word of honor. When I sold it to them [PLDT and Globe], I said I will not come back and fight them” Ang said.
PLDT and Globe control a market of over 100 million people in a two-player regime that has endured ever since PLDT acquired the operator of Sun Cellular in 2011.
The DICT, in response to President Duterte’s directive to introduce new competition, is targeting to select a new mobile player by November 2018.
It will evaluate proposals based on their committed internet speed, population coverage and investment. The expenses alone are a major component, with the third player expected to shell out some P140 billion to P240 billion over a five-year commitment period. The high cost means local players will likely need a foreign partner to participate.
A 10 percent performance bond was also set to ensure compliance.
The performance security, participation security and appeal fee, which adhered to government procurement standards, were questioned last week in a lawsuit filed by NOW Telecom, among the companies eyeing the third telco slot. NOW also raised the issue on what it said were its preexisting rights to certain radio frequencies. The suit was slammed by the DICT and other bidders as an attempt to derail the government selection process.
Ang said it is important for potential bidders to show they have the financial resources to compete.
“In the third player bidding, whoever wants to join should show that they have 10 percent equity of the project cost,” he said.
Eight companies have so far bought bid documents, including foreign players such Norway’s Telenor, China Telecom and Austria’s Mobiltel Holding GMBH.
Local companies that bought bid documents included Philippine Telegraph and Telephone Corp., Udenna Corp., a venture between Ilocos politician Luis Chavit Singson’s LCS Group of Companies and TierOne Consortium, and NOW Telecom. Filipino broadband provider Converge ICT Solutions, in partnership with Korea’s KT Corp., were also said to be keen on bidding, Rio said last week. /cbb
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