ArrowArtboardCreated with Sketch.Title ChevronCrossEye IconIcon FacebookIcon LinkedinShapeCreated with Sketch.Icon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Business Trends

Philippines looks to lure new telecom provider by November

Companies from China, Vietnam, South Korea and Norway have 'shown interest'

Philippine telecoms PLDT and Globe Telecom, both of which have been criticized for poor service, are expected to be challenged by a new player.

MANILA -- The Philippine government plans to open the country to a new telecommunications provider through an auction slated for Nov. 5, the National Telecommunications Commission said.

Bidders will be judged based on their level of service over five years. The three criteria are population coverage, weighted at 40%, and capital expenditure and broadband speeds, weighted at 35% and 25%, respectively, according to a memorandum released by the commission on Friday.

The memorandum, which spells out terms of the auction, said bidders should provide coverage of at least 10% of the population in the first year and 50% in five years. They must also be able to invest a minimum of 40 billion pesos ($740 million) and 140 billion pesos during the same periods.

Bids that fail to meet the minimum requirements will be rejected. If the winning bidder fails to deliver, it will lose its license and a performance bond equivalent to 10% of its committed capex, according to Edgardo Cabarios, a deputy commissioner at the National Telecommunications Commission.

At stake is entry into the country's $5.2 billion telecom industry currently dominated by PLDT, which counts Japan's NTT Group and Indonesia's Salim Group as key shareholders, and Globe Telecom, a joint venture between Singapore Telecommunications and local conglomerate Ayala.

The two players, which are often chided for poor service, have said they welcome competition, with both having ramped up investments to fend off a new rival.

According to the commission, qualified bidders must also have an existing telecom franchise, meaning foreign investors need a local partner. Foreigners can control no more than 40% of the company in line with ownership restrictions in public utilities.

The winning bidder will be given additional frequencies necessary to compete with existing players.

Foreign companies that were said to have "shown interest" were China Telecom, South Korea's SK, Norway's Telenor, Vietnam Telecom and AT&T, said Eliseo Rio, acting secretary of the Department of Information and Communications Technology.

Telecom and ICT officials have scrambled to fast-track the auction after an impatient President Rodrigo Duterte threatened to step in.

"Maybe late, early November, if there's no new player yet, I'll take over," Duterte said on Sept. 11. "I will place it under the Office of the President and I will invite all businessmen ... I will decide in front of them who is the new player."

You have {{numberReadArticles}} FREE ARTICLE{{numberReadArticles-plural}} left this month

Subscribe to get unlimited access to all articles.

Get unlimited access
NAR site on phone, device, tablet

{{sentenceStarter}} {{numberReadArticles}} free article{{numberReadArticles-plural}} this month

Stay ahead with our exclusives on Asia; the most dynamic market in the world.

Benefit from in-depth journalism from trusted experts within Asia itself.

Try 3 months for $9

Offer ends September 30th

Your trial period has expired

You need a subscription to...

See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

See all offers
NAR on print phone, device, and tablet media