Security issue jams China Telecom entry

The entry of China Telecom as a possible third telecommunication player in the country is being jammed by security issues that hound its Philippine operations.

This was the conclusion of an industry outlook report by local stockbrokerage Papa Securities Corp., which highlighted the fact that while China Telecom has the financial clout to throw in between $700 million and $1 billion for its entry into the telecom business, security concerns could eventually hit hard.

“Entry of the Chinese telecom giant in the Philippines gathered significant attention over the last few months after the Philippine government invited China to challenge the industry incumbents that resulted in an uptick in the share prices of Globe and PLDT by 17 percent on average since Nov. 1, 2017,” the research report said.

Reviewing China Telecom’s financials, Papa Securities said it has the financial muscle to undertake the huge investment required as the amount accounts for less than two percent of its 2018 projected revenue.

“The company definitely packs a punch and could easily overcome the high barriers to entry posed by the high capex requirement of the industry,” the stock brokerage said.

But Papa Securities pointed out that the security risks China Telecom brings is its main obstacle for its expansion in the Philippines.

“Despite the government downplaying the security risk exposure arising from the entry of China Telecom in the Philippines, we believe the threat is real especially for US firms outsourcing in the Philippines should they switch service providers,” the study said.

It revealed that “there has been 76 state-sponsored cyber attacks linked with China since 2005, 75 of which are primarily espionage in nature while 44 of these state-sponsored attacks targeted towards the US during the period.”