Government to select third telco company soon

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Metro Manila (CNN Philippines, November 6) — The telecommunications (telco) duopoly of PLDT/Smart Communications and Globe Telecom may soon be shattered upon entry of a third player.

At least, that's what the government is aiming for by opening the playing field to a new major player through a bidding process, which will be held on Wednesday at the National Telecommunications Commission (NTC) office.

So far, eight local and foreign companies have purchased their bidding documents, having fit the selection criteria of the Department of Information and Communications Technology (DICT).

While this is less than the number of companies that have initially expressed interest, some foreign firms have already partnered up with local companies in order to enter the playing field.

South Korea's KT Corporation, for example, has already partnered up with Converge ICT, which entered the bidding. 

The selection process has its fair share of critics. Now Telecom had filed cases against the NTC that were both junked at the regional trial court level, for adding monetary fees and requirements, which were not discussed during public hearings.

This was echoed by the Philippine Telegraph and Telephone Corp. (PT&T), which added that the selection process discriminated against local players. PT&T questioned the NTC's classification of a foreign bidder's "regional operations" in its home country as one of "national scale." The same, however, does not apply for local bidders.

Foreign firms

For foreign firms who wish to enter the Philippine telecommunications space, partnering up with a local firm is a must. This does not bar them from bidding for the third telco spot, but they will need a local partner once they begin operation.

Three foreign companies are set to participate in tomorrow's bidding: China Telecom, Telenor and Mobiltel Holding GmbH.

China Telecom's entry to the race is no surprise. President Rodrigo Duterte has made his preference for the state-owned company as early as 2017. With more than 200 million subscribers, the company is also operating in Europe and the Americas through its subsidiaries.

Telenor is also no stranger in providing internet service to developing countries. The Norwegian telecommunications company, through its subsidiaries, also provides its services to other Southeast Asian nations such as Thailand, Malaysia and Myanmar.

Not much is known about Mobiltel Holding GmbH, except that it is owned by A1 Telekom Austria Group, the mother company, which operates mainly in Austria and Eastern European countries.

Local players

In the local front, former giant PT&T is trying to get back into the game. The company was able to go toe-to-toe with PLDT in the '90s, before the Asian financial crisis hit. It continues to operate at a smaller scale in Metro Manila, Northern Luzon and Southern Luzon. It is also the internet service provider of the Armed Forces of the Philippines.

Now Telecom will also push through with the selection process. The Manila-based internet provider operates mainly in the National Capital Region, and would have to expand its operations if it won the bidding.

Converge ICT, another Manila-based company, has already found its foreign partners in South Korea's KT Corporation and the United States' TE SubCom. Convergence ICT also partnered with local company Fibernet Konstrukt in order to expand its internet services.

Not to be left behind, two Mindanao-based companies have also entered the fray.

TierOne is based in Sultan Kudarat, Maguindanao, and provides internet services to the Autonomous Region of Muslim Mindanao. It has partnered with the Luis Chavit Singson Group of Companies, led by former Ilocos Sur Governor Luis Singson. In an interview with CNN Philippines, Singson hinted at an additional Korean partner.

Davao-based Udenna Corporation also purchased bidding documents. While it is not currently known as a telecommunications company, it does have several other well-known businesses, such as Phoenix Petroleum, Udenna Development Corporation and Chelsea Logistics, leaving little room for doubt about whether or not it has the capital to enter this new business venture.

Consumers are hopeful that having fresh competition would either spur the current telecom duopoly to step up its services. At the very least, consumers will have another option.

With at least 103 million potential subscribers, at least 45 percent of whom remain unconnected to the internet, becoming the third major telecom player could be a lucrative business venture for corporations that are willing to work for it.