Telstra to take up 40% of SMC telco unit
Amid concerns on foreign ownership restrictions in the country, Australia’s telecoms giant Telstra would be investing less than US$1 billion in the Philippines through a budding partnership with local conglomerate San Miguel Corp. (SMC).
In the Philippines, foreign investors, as they enter the local market, could only take up 40 percent interest to any existing or new company, while the 60 percent should be owned by a Filipino entity.
Andrew Penn, Telstra chief executive officer, said that should Telstra decide to pursue its Philippine venture, it would only initially invest less than US$1 billion, in contrast with previous reports, because of some regulatory concerns.
“[Should we pursue our Philippine investment] we would be restricted to a 40 percent shareholding for regulatory reasons, and so that would be the basis on which we would invest,” Penn said in a transcript emailed to reporters.
“On the basis of that, and our sort of view of the market, and rollout, and everything else and this is sort of at the early stage, our estimate would be an investment from Telstra would be less than US$1 billion,” he added.
Penn noted that the plan of the company to enter the Philippines will be very strategic since the country has a “sort of lousy” telecommunication service, which are currently being provided by two local telcos, Globe Telecom, Inc. and Philippine Long Distance Telephone Co. (PLDT).
“The Philippines itself from a mobiles market perspective is interesting, because it has only – there are only two incumbent operators,” Penn said.
“Now, of course, any new venture is a level of risk, that’s why we considered and measured with it… but basically, as a foreigner, as a foreign investor in the Philippines, you are limited to a 40 percent shareholding, so this would be very much a partnership and our capital would be equivalent effectively to that shareholding and then also supplemented by external financing as well, but it’s a good market,” Penn reiterated.
For his part, James Molan, Telstra’s Communications Manager for International business, said the company’s discussion with SMC is still on-going and “no deal has been reached yet”.
He even said that “there is no certainty one [deal] will be reached”.
“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 [SMC] is a very strong partner both from the perspective of its business interest in the market and also its spectrum holdings as well,” Penn further said.