Gov't looking to China first as third telco player

MANILA, Philippines — The invitation to become the Philippines' third player in the telecommunication industry would be open to firms from other countries if the government and China Telecom failed to reach an agreement, Malacañang said on Wednesday.

Presidential spokesman Harry Roque said the government would have to look for another player if China Telecom did not agree with the ownership restrictions imposed by the Constitution.

Foreign firms need to form partnerships with local companies because the Constitution limits foreign ownership of a public utility to 40 percent.

"DICT (Department of Information and Communications) has already said that they would want a Filipino consortium to own the 60 percent majority stake in this third telecoms," Roque said in a press briefing.

"If for any reason this is not acceptable to China Telecoms, then we have no choice. We gave China the option but if this is not acceptable to it, unfortunately we will have to look for other players because we will have to honor what the Constitution provides," he added.

Roque noted that the offer to China was made in a bilateral meeting between President Rodrigo Duterte and Chinese Premier Li Keqiang during which the Philippine leader invited Beijing to invest in the telco industry to improve the internet service in the country, which had been criticized for being expensive and slow.

"Because it was offered and accepted, we will honor our word," Roque said.

"But as I said, if for any reason, China Telecoms or any company nominated by the Chinese government finds the 60-40 requirement in the Constitution to be unacceptable, then of course, that will give us now the option to offer it to other companies."

Contradicting claims

Roque's statement contradicted that of Presidential Communications Secretary Martin Andanar who said that the invitation to become the country's third telecommunications player was open to all interested parties and not just to China Telecom.

In a radio interview last Dec. 31, Andanar said the government would choose the best offer to make sure that consumers could benefit from competition.

"This is not limited to China. This is open to all telcos or investors around the world. Whoever can provide the best offer, the most viable offer, the most juicy offer will be the third player of the telecommunication industry of the Philippines," Andanar said in Filipino.

The Department of Information and Communications Technology previously said companies from Japan, South Korea, United States, and Australia had expressed interest to form partnerships with local firms to become the country's third telco player.

Roque clarified that there was no assurance yet that a deal with China Telecom would push through. He noted that in the past Chinese state-run companies were uncomfortable with not having 100 percent or majority stake in an investment.

Roque however said there were no indications that the Chinese firm was not keen on pursuing the project.

"Unless it’s actually up and going, I guess there is always a possibility that others may be involved if for any reason China Telecoms or China decides not to push through with their commitment to start a third telecoms company," the presidential spokesman said.

"We do not know if it will actually push through. As you know, the devil is always in the details," he added.

Duterte has ordered state agencies to ensure that the third telco player would be operational within the first quarter.