SMC, Telstra drop telecom joint venture plans

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AFTER prolonged negotiations that raised public anticipation of the emergence of a third major telecom operator in the Philippines, San Miguel Corp. (SMC) and Australia’s Telstra said they have ended talks after failing to agree on an equity investment in a proposed $1-billion joint venture.

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In separate statements, SMC and Telstra said that they were unable to reach an agreement that would be favorable and beneficial for both parties.

“Both SMC and Telstra worked hard to come up with an acceptable resolution to some issues. However, we agreed we could no longer continue with the talks. I believe this is best for all parties,” Ramon Ang, SMC president and chief operating officer, said.

Speaking for Telstra, Chief Executive Officer Andrew Penn said on Monday the two companies agreed to bring negotiations to an end over the weekend.

“Despite an enormous amount of effort and goodwill on all sides, we were simply unable to come to commercial arrangements that would have enabled us all to proceed,” Penn said.

“While this opportunity is strategically attractive, and we have great respect for San Miguel Corp. and its President Mr. Ang, it was obviously crucial that the commercial arrangements achieved the right risk-reward balance for all involved,” he added.

Despite the development, SMC said it would still switch on its telecommunications network along with its high-speed internet service as scheduled, SMC said in its statement.

Earlier, in SMC’s investor briefing in February, Ang said, “We are putting up a mobile broadband business. In the next few months we are lighting it up.”

SMC’s broadband service will initially cover Luzon and eventually major cities in the Visayas and Mindanao regions.

Ang said SMC is still interested in considering other joint venture opportunities for its telco business. But he said SMC is not in a haste to cement partnerships.

“We are not rushing. What’s important is that we give Filipinos a third and better choice that they have been deprived of for the longest time,” he said.

A year ago, Telstra and SMC began negotiating a possible joint venture. Telstra envisaged investing up to $1 billion should the joint venture proceed.

SMC owns 90 percent of the 700-megahertz (mHz) radio frequency, which the two largest players in the domestic telecommunications industry—Philippine Long Distance Co. (PLDT) and Globe Telecom (Globe)—are asking to be redistributed.

PLDT and Globe said the proper utilization of the 700mHz band would enable the deployment of LTE-based connections and fixed broadband internet. The two telcos also said with the 700 mHz redistributed the cost of services would go down.

No change in plans

In an e-mail response to The Manila Times Monday edition, Ramon Isberto, head of PLDT Group’s public affairs said that even without the entry of Telstra, the telco giant is still holding on to its plans for 2016, which have already taken into account the entry of a new player.

Besides, Isberto said that even with Telstra out of the game, SMC has said it still plans on being a third player in the currently duopolistic telco industry.

“As we stated in the past, with or without a new player, we are vigorously pursuing our digital pivot strategy which involves a broad range of initiatives,” Isberto said.

PLDT said that its digital pivot strategy includes major enhancements of the capacity and resiliency of our fixed and mobile networks.

Meanwhile, Globe said the termination of the deal does not affect the company’s already set business strategy.

Globe said it stands firm with its call for the government to reallocate the 700mHz spectrum that is owned by SMC.

“The more serious concern is why SMC is being allowed to hold on to the entire 700mHz band.  We call on the NTC to immediately distribute the 700mHz for fast deployment of high-capacity LTE based wireless and fixed broadband that would benefit the entire country,” Globe’s statement read.

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