Telstra Corp., the biggest telecommunication company in Australia, said San Miguel Corp. is a “very strong” partner in the Philippines to fix the “lousy” telecommunication and broadband services in the country.
“We’re doing a lot of work there and supporting San Miguel to date in terms of the design and the network rollout if that were to go ahead,” Telstra chief executive Andy Penn said during the company’s Investor Day, which uploaded in the Australian Securities Exchange Friday.
Penn said the Philippine mobile market was “interesting” because there are only two incumbent players and “the EBITDA [earnings before interest, taxes depreciation and amortization] margins in the Philippines, have been relatively strong.”
The two biggest telecommunication companies in the Philippines are Philippine Long Distance Telephone Co. and Globe Telecom Inc. with a combined revenue of P264 billion in 2014.
PLDT and Globe earlier said they were unfazed with the possible entry of Telstra in the Philippines.
“The partner is a very strong partner both from the perspective of its business interest in the market and also its spectrum holdings as well,” Penn said, referring to San Miguel.
San Miguel has four telecommunications companies under its portfolio, namely Express Telecommunications Inc., Eastern Telecommunications Philippines Inc., Bell Telecommunications Philippines Inc. and Liberty Telecoms Holdings Inc.
“… and frankly, let’s face it, go to the Philippines, experience for yourself the sort of lousy service you get from the incumbent operators and you will see that the opportunity there for a new operator to provide a much better quality service over an LTE network over the better spectrum…,” Penn said.
The planned joint venture between San Miguel and Telstra would see the local conglomerate holding a majority stake, in compliance with the 1987 Constitution, which limits the foreign ownership of utilities to a maximum of 40 percent.
“We would be restricted to a 40 percent shareholdings for regulatory reasons,” Penn said.
“Our sort of view of the market and rollout and everything else and this is sort of at the early stage, our estimate would be an investment from Telstra would be less than $1 billion,” he said, referring to the Philippines.
Telstra currently operates customer service centers in the Philippines that serves its clients globally.
San Miguel earlier said it planned to launch mobile broadband services as early as January next year.
Earlier, Fitch Ratings said the entry of Telstra in the Philippines through a partnership with San Miguel would intensify competition over the longer term.
“Large cash burn for the new entrant is likely in the initial period as it faces significant capital investment to build its network in the absence of infrastructure sharing,” Fitch said.
