PT&T, NOW frontrunners for 3rd telco slot — think tank

MANILA, Philippines — The consortium led by Philippine Telegraph and Telephone Corp. (PT&T) and NOW Corp. are the frontrunners in the battle for the third telecommunications player in the country, according to BMI Research.

The research arm of the Fitch Group said the criteria set by the Department of Information and Communications Technology (DICT) skews the process toward the company with the most valuable telecom assets in the Philippines.

The Zamora-led PT&T has partnered with LG Uplus, National Transmission Corp. and the National Grid Corp. of the Philippines (NGCP) and is the biggest benefactor of the bid criteria.

“We believe that a consortium of PT&T, LG Uplus, National Transmission Corp. and NGCP will lead the race. The state-owned utilities provider owns a fiber-optic backbone which runs alongside its transmission grid, which we believe can easily be augmented to provide last-mile fiber connectivity,” BMI Research said.

However, it pointed out the memorandum specifies that bidders should have no liabilities to the National Telecommunications Commission (NTC), and it is unclear whether PT&T’s reported P12 billion debt includes dues to the NTC.

Likewise, the research arm said the Velarde-led NOW Telecom has just secured an extension to its Congressional franchise by 25 years to 2043.

“NOW Telecom will be a potential competitor to PT&T. The company has stated that the guidelines outlined by the DICT are fair, and will continue discussions with its foreign partner and several other local telecoms players, whose identities are still unknown,” it said.

Based on the joint memorandum circular issued by the DICT, NTC, Department of Finance and the National Security Council, bidders need a Congressional franchise valid until at least December 2023.

DICT estimates the third player that would compete with PLDT Inc., and Ayala-owned Globe Telecom needs to spend between P150 billion and P300 billion in the first five years of its operations.

“Guidelines on the selection of the third operator could dampen foreign interest as stringent foreign ownership rules have not been relaxed. While a public consultation will be held, we believe the final guidelines will not differ much from the initial memorandum published by the DICT,” BMI Research said.

While the guidelines provide clarity on the selection process, it added the stringent requirements imposed could dissuade many interested parties from entering a market effectively controlled by two major players.

“We believe that the 40 percent cap on foreign ownership, which is a Philippine Constitution requirement, to be the biggest hurdle,” it said.

China Telecom, which was nominated by the Chinese government after an invitation from President Duterte to Prime Minister Li Keqiang, has made no apparent progress in negotiating a deal – a possible indication at its dissatisfaction of being unable to retain a larger stake in the business.