Telstra CEO explains why entering the Philippines is a good idea
Netizens have been abuzz the past few weeks following reports that Telstra, an Australian telecommunications giant, is about to enter a deal with San Miguel Corporation (SMC) to create a new Internet service provider in the country. Having a new player in the market is of course welcome news for Filipinos who have long been complaining about the slow Internet service in the country, which is among the slowest in the world.
The saga began in late August when Telstra released a statement to the Australian Securities Exchange confirming its ongoing talks with SMC regarding a possible joint venture. However, the company took pains to emphasize back then that there’s no deal yet. “No agreements have been reached in relation to these matters and there is no certainty that this will occur,” the telecommunications firm said.
Two months later, it seems that Alex Penn, Telstra’s chief executive officer (CEO), is now more than ever willing to take the plunge. According to a report by Sydney Morning Herald‘s David Ramli, Penn argues that investing in the country is a good move for the company.
“We recognized (the Philippines) would be a significant project and we got a lot of work there supporting San Miguel in terms of network roll out and design.” he said.
“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 is there for new operators to provide a much better quality service over an LTE network using better spectrum,” Penn added.
He further explained to investors that Telstra will probably have to shell out $1 billion to build the proposed new mobile network, with SMC shouldering $1.5 billion. This is because the 1987 constitution bars foreign investors from owning more than 40% of corporations established in the country.
The hype about Telstra’s possible arrival to the Philippines has already reached absurd heights thanks to a bogus Facebook page and circulating photos of its purported Philippine headquarters. At present, Telstra already has at least three business process outsourcing offices in the country – in Cebu (in Lahug), Makati (PhilAmLife Tower), and Quezon City (Fairview Terraces Mall).
It must be kept in mind that the plan of Telstra and SMC to create a new mobile provider entails massive investments in building the necessary facilities nationwide. Hence, it will take years before the oligopoly dominated by PLDT Communications and Globe Telecoms can be seriously challenged.
Nevertheless, it is hoped that this proposal will indeed push through. As The Filipino Scribe noted last year, one big reason why local telcos are dragging their feet as regards the need to improve their Internet service is because of their unchallenged dominance in the market.