Criticizes ‘lousy service’ from incumbent operators
Australia’s Telstra expects to invest about $1 billion for its planned Philippine venture, negotiations for which remain ongoing, executives said on Thursday.
CEO Andrew Penn, asked to provide more details about a proposed telco venture with the Philippines’ San Miguel Corp., replied: “Our estimate would be an investment from Telstra would be less than US$1 billion.”
“[W]e would be restricted to a 40 percent shareholding for regulatory reasons, and so that would be the basis on which we would invest, plus we would also seek to—the venture would seek to—have external financing and we would probably pitch that somewhere equivalent to our current sort of gearing ratios which are around sort of 50 percentish, maybe a little bit less than that,” Penn said according to a transcript from a Telstra investors day.
Cynthia Whelan, group executive for international and new business, declined to say how close Telstra was to sealing a deal, only saying: “negotiations are ongoing, and I think that’s all that we can disclose at this point in time.”
Penn criticized current mobile services in the Philippines—dominated by Smart Communications and Globe Telecoms—and said that having just two incumbents made for an “interesting” prospect.
“The EBITDA (earnings before interest, taxes, depreciation and amortization) margins in the Philippines have been relatively strong and were we to complete a deal, the partner is a very strong partner both from the perspective of its business interest in the market and also its spectrum holdings as well,” he said.
“And, frankly, let’s face it, go to the Philippines, experience for yourself the sort of lousy service you get from the incumbent operators and you will see that the opportunity there for a new operator to provide a much better quality service over an LTE network over better spectrum, I think there’s a significant opportunity,” he added.
San Miguel in August confirmed that it was in talks with Telstra for a possible partnership.