China Telecom, Dennis Uy venture emerges as 'provisional' third telco

ABS-CBN News

Posted at Nov 07 2018 05:38 PM | Updated as of Nov 07 2018 09:44 PM

The logo of China Telecom is pictured at its booth during an expo in Guangzhou, Guangdong province, China July 27, 2017. Reuters/file

MANILA -- Filipino authorities on Wednesday selected a joint venture of China Telecom and Davao tycoon Dennis Uy as the country's provisional new major telecommunications player that would go against PLDT Inc. and Globe Telecom.

The consortium, Mislatel, beat Tier1 backed by former Ilocos Sur Governor Luis "Chavit" Singson and Philippine Telegraph and Telephone Corp. (PT&T). 

Mislatel includes China Telecom, Udenna Corp., and Chelsea Logistics. 

Only 3 of the 7 who bought bid papers participated. Singson's group and PT&T, however, were disqualified for failing to meet all the bidding requirements.

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In an interview with DZMM, the Department of Information and Communications Technology (DICT) Officer-in-Charge Eliseo Rio said Uy's group committed to provide internet speeds of 27Mbps on the first year, which would rise to 55Mbps on the second year. 

"Kung yan ay magawa nila ay katumbas na tayo ng Singapore sa speed na yan (If they can do that, we would be equal to Singapore in speed)," Rio said. 

Rio added that if Mislatel failed to deliver on this commitment, the government can forfeit the group's P14-billion performance bond.

In a statement before the bids were opened, Mislatel said its "immediate priority will be to prepare and to consolidate all the required resources in order to provide the best telecommunications services that Filipinos have been aspiring for."

One of China's biggest carriers, China Telecom boasts of 281.6 million subscribers at the end of the first half of 2018, of which 217.3 million are on 3G. Its total base is nearly 3 times the Philippines' population. It posted net income of 13.6 billion yuan (roughly $2 billion) in the January to June period.

A successful telecommunications foray will further expand the footprint of Uy. In the last 2 years, he has parlayed his fuel business, Phoenix Petroleum, into stakes in shipping firm 2GO, the Philippine operator of Japanese convenience store chain FamilyMart, hospitality school Enderun, and ISM Communications Corp.

Rio, meanwhile, said losing bidders cannot claim that the selection process was rigged to favor Uy and China Telecom because the bidding was transparent. 

"Kung ano kailangan gawin ng Udenna, yun din ang kailangan gawin ng iba. Nasan dun yung favoritism? (What Udenna had to do was also what the others had to do. Where's the favoritism there?)," Rio said. 

STILL PROVISIONAL

But the DICT chief also clarified that the Uy consortium's claim to be the new major telco player remains provisional, as losing bidders can still appeal their case. 

Rio said he was confident that the government can rule on these appeals within the month and give a final decision on the winner of the selection process. 

As the selection process was winding down, other groups abandoned their bids on Wednesday morning. 

NOW Corp, which questioned the process before the courts, refused to submit a bid Wednesday. The consortium that includes Converge ICT said it was backing out because the process was "unviable."

Streamtech, owned by the family of former Senate President Manuel Villar, said over the weekend that it was no longer participating in the bidding, despite recently securing a telecommunications franchise from Congress.

PLDT, GLOBE REACT

The two established telco players, meanwhile, both said they welcome more competition in the industry. 

PLDT said the entry of a third player will be good for the industry and for consumers.

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"So, pagalingan na ito (This will be a contest to see who is better)," said PLDT Smart public affairs head Ramon Isberto. 

PLDT is ready to compete with the promised 27Mbps to 55Mbps speed of the third telco by rolling out 5G technology, Isberto said. 

"We are glad for the smooth selection process undertaken by DICT and NTC," said Globe general counsel Froilan Castelo in a statement. 

Globe also said it has also started the process of divesting its tower assets, as suggested by the government, to help ease the entry of a third player through the common tower policy. 

President Rodrigo Duterte has repeatedly called on Philippine telcos to improve their services. At one point, internet connections in the country were the second slowest in the world, next only to Afghanistan.

San Miguel Corp tried to mount a third telco, but talks with its prospective Australian partner, Telstra, fizzled out, leading to the sale of its telecommunications unit, Vega, to PLDT and Smart in May 2016.