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Third telco player needs to invest P30b

The highly competitive mobile telecom market is unlikely to have a third player in the short term, given the huge investment required to roll out network infrastructure, a senior official of the National Telecommunications Commission said.

NTC deputy commissioner Edgardo Cabarios said the aspiring third player in the telecom market needed to invest at least P30 billion for the initial rollout of mobile telecom infrastructure. 

Cabarios also said the new player should match the investments of PLDT Inc. and Globe Telecom Inc. to catch up with the service of the existing players. 

Both PLDT and Globe were investing more than P40 billion a year to increase their network capacity in a bid to provide better services. 

“More players is better, but can the market support it? So, you think twice before entering the market,” he said. 

ABS-CBN Convergence Inc. and Now Telecom both have the authority to roll out cellular mobile telephone service.

A third potential player—San Miguel Corp. backed out from challenging the duopoly of PLDT and Globe after its $1-billion joint venture with Telstra Corp. of Australia did not push through. 

Instead of challenging the duopoly, San Miguel sold its telecom assets to PLDT and Globe for P70 billion. 

Globe president and chief executive Ernest Cu agreed with Cabarios, saying “this industry is very difficult to penetrate because the barriers to entry are very expensive to overcome and because deployment of networks are very challenging due to local government issues.”

“I have said it time and again, Globe is ready and willing to compete with any player old or new. However, any new player/s who want to come in should build incremental infrastructure in order to improve telco services in the country. The new player should not sit idly by waiting for existing operators to just open up and use whatever infrastructure is available because doing so will not help solve existing industry challenges,” Cu said.

Cu cited the case of SMC, which early this year was on the verge of launching a telco business. However, following the sellout of San Miguel’s telco assets in late May, it was found that its existing telco infrastructure was barely adequate. 

“How can this supposed player compete when they cannot deploy a network? When we found San Miguel, who was threatening to launch a network, they only had 230 cell sites. That is after two years of trying to build a network. You’ve heard about them trying to build their network but in reality, you go there, there’s nothing in there,” Cu said.

Cu said that following the joint buyout, these sites had to be dismantled. “There is no incremental value because the sites they built on already have existing telco sites,” Cu said.

Topics: National Telecommunications Commission , PLDT Inc. , Globe Telecom Inc. , ABS-CBN Convergence Inc. , Now Telecom , San Miguel Corp.
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