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Philippine telecoms on offensive as foreign competition looms – Nikkei Asian Review

Philippine telecoms on offensive as foreign competition looms – Nikkei Asian Review

MANILA — The Philippines’ two major telecommunications companies are doubling down on their investments to upgrade network infrastructure, seeking to fend off looming competition that could include China Telecom.

PLDT CEO Manuel Pangilinan told reporters on Thursday that the nation’s largest telecom remains “vigilant” as the government invites foreign players to break its two-way competition with Globe Telecom.

PLDT, he said, will be keeping its record capital expenditures of 58 billion pesos ($1.09 billion) for 2018 to modernize base stations and expand its high-speed fiber-optic cable network. The CEO added that this week, the company also signed agreements with China’s Huawei Technologies and Sweden’s Ericsson to test fifth-generation mobile service in the first half of 2019.

Globe Telecom, for its part, said Wednesday it is boosting its capital spending by $100 million to a total of $950 million this year, aiming to provide “first-world internet connectivity in the Philippines.”

The aggressive network buildup by both PLDT, which is backed by Japan’s NTT group, and Globe, a joint venture of Singapore Telecommunications and Ayala Corp., comes as their market position is being threatened by a potential new rival.

The government has launched a campaign to dismantle the duopoly, which is often criticized for poor internet service. President Rodrigo Duterte has invited investors from countries including India and China, which has endorsed China Telecom to study an investment.

However, Manila has made little progress in attracting a third player. The auction for a major telecom license has been pushed back to the fourth quarter after missing a June target, due to disagreements between the Finance and Information and Communications Technology departments over how the preferred bidder should be selected.

But even without a third major player, one local company is already aiming to compete in internet service.

Converge ICT Solutions said on Wednesday it will embark on a $2 billion nationwide fiber-optic rollout over the next five years. It has enlisted South Korea’s KT and other foreign companies to build a network that can reach 13 million of the country’s 22 million households.

While PLDT and Globe have welcomed new players, they insist that the current market setup is already competitive.

On Thursday, PLDT said net income fell 29% to 11.7 billion pesos in the six months ended June, largely due to the absence of gains from asset sales last year. Without one-off items, net income from telecom operation rose 6%, while service revenue grew 2% to 72.45 billion pesos

Globe Telecom, meanwhile, saw net profit jump 24.7% to 10.1 billion pesos from 8.1 billion, as service revenue climbed 7% to 67.3 billion pesos.

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