Telstra sees opportunity in PHL's 'lousy' telco services

Australia's telecommunications giant Telstra Corp. Ltd. is seizing the opportunity to capture the Philippine market that has long suffered from one of the world's slowest internet connection speeds. 

 

"Go the Philippines and 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 [is significant]," Telstra CEO Andrew Penn said during an Investor Day on Thursday.

 

Listed on the Australian Securities Exchange, the telco is negotiating a partnership with San Miguel Corp., the largest diversified conglomerate in the Philippines.

 

"We are 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. Therefore, we are also very cognizant of how we allocate and how we invest our resources," Penn said.

 

Telstra may have to spend about $1 billion to acquire 40 percent of the proposed joint venture. Forty percent is the maximum allowable ownership of Philippine utility companies by foreigners. 

 

"We would be restricted to a 40 percent shareholding... so that would be the basis on which we would invest, plus the venture would seek to have external financing and we would probably  pitch that somewhere equivalent to our current gearing ratios which are around 50 percent," Penn said.

 

The imminent entry of Telstra is expected to shake the duopoly of Philippine Long Distance Telephone Company and Globe Telecom Inc., Fitch Ratings Inc. earlier noted in its credit rating reports for the local firms. 

 

"Any new competition coming to an industry will not really disrupt the status quo, but competition is to be expected.. We will continue with the strategy that has lead us to unprecedented growth," Yoly Crisanto, head of corporate communications at Globe, told GMA News Online on Friday.

 

San Miguel President and COO Ramon S. Ang has touted the proposed joint venture as a solution to the laggard wireless services in the Philippines.

 

"In so far as the Philippine internet situation is concerned, the issues are now being addressed. For Globe, we are already coming out with higher Internet speed at really affordable prices," Crisanto said. 

 

The Philippines has the second-slowest download speed averaging 3.64 megabits per second (Mbps) among 22 countries in Asia, based on tests conducted by Internet performance data provider Ookla. 

 

The country's leading telco companies recently announced their respective 1 gigabit-per-second broadband plans. – VS/JST, GMA News