Entry of Aussie company “exciting” for local telcos

CEBU, Philippines - An official from the Philippine Long Distance Telephone Co. (PLDT) said the potential entry of an Australian firm into the Philippines' telecommunications market is an "exciting game" for the industry.

"It's a pretty exciting game for all of us," said PLDT Vice President and HOME Marketing Head Gary Dujali in an interview late Thursday in Cebu City.

Conglomerate San Miguel Corp. (SMC) and Australian telecoms giant Telstra Corp. Ltd. recently confirmed their joint venture in entering the country's telecoms market.

Dujali said people have been longing for improved services especially in terms of Internet speed. He said that PLDT, for its part, has been investing to improve its services and introduce new devices in the market.

He noted the telecoms sector is an "open market."

In an earlier statement, global credit rater Fitch Ratings said it expects the potential entry of SMC and Telstra "to have limited impact on the domestic competition in the next two years."

"Large cash burn is likely for the new entrant in the initial period, as it will face significant capital outlay to build its network in the absence of mandatory infrastructure sharing. However, we believe the impact on industry profitability may be greater over the longer term," Fitch said in the statement posted on its website.

Presently, the Philippines' telecoms industry is dominated by the duopoly of PLDT and Ayala-led Globe Telecom Inc.

Fitch recently affirmed Globe's long-term foreign and local-currency issuer default ratings (IDRs) at "BBB-." It said Globe's ratings continue to benefit from its number two position in the country's telecoms market.

On the other hand, Fitch also downgraded the long-term local-currency IDR of PLDT to "BBB+" from "A-" citing the expected further decrease in its funds flow from operations due to its capital expenditure expansion.

Moreover, earlier reports said the SMC-Telstra venture will offer voice, text and internet services, focusing on mobile-broadband services.

While it expects PLDT to still dominate the Philippines telecoms market, Fitch noted that the impending entry of a third player in the industry will intensify competition over the longer term.— Carlo S. Lorenciana (FREEMAN)