The 4th telco player

“It doesn’t matter,” said the man in the dark suit, “if they end up as the third or the fourth telco player.”

“What is important,” he said with eyes beaming with enthusiasm, “is to be able to enter the Philippines.”

His words were stark and telling, and his excitement was almost tangible. It’s as if the billion-dollar deal is already in the bag.  

My source, a tycoon, was talking about Northcom Telecommunications, the only privately-owned telecommunications company in China. 

Northcom, he revealed, is in advanced talks with three Philippine companies as potential partners, hoping to beat its state-owned rivals China Mobile and China Telecom. 

It is the fourth largest telco player in Mainland China and it may just be the dark horse in this tight race. 

I asked him what Northcom would do if it doesn’t make it to the third spot, considering how tight the race is turning out to be.

Northcom can be fourth or even fifth, he said.

But first and foremost, it is rooting to be the third, never mind that its bigger rivals are vying for the same spot. 

Whichever it is, a new telco player entering the Philippine market must have the financial muscle to pour in around P300 billion to P400 billion over five years, the government said. 

“For Northcom, money is not a problem,” my source assured. 

And because it is a private company, it has an edge. 

“Northcom has very flexible policies and very fast decision making process. And its capacity to invest is huge,” he said. 

At the end of the day, my source said, it would be to the country’s advantage to get a Chinese telco. 

“Currently, China is entirely covered by networks. The fee is low and the service is very fast, so in this situation, if Chinese telcos enter the country, the growth and change in the Philippines will be the same as in China,” said the businessman.

He said the Chinese telco market used to have just only two players. Now, it has four and all the areas are covered. 

I asked why Northcom and other Chinese telcos are so keen on investing in the Philippines. 

“We have very good Sino-Philippine relationship.  There are 100 million people in the Philippines and half are below 25 years old...the Philippine market is brilliant,” he said. 

If the Duterte administration allows for a Chinese partner, it would be making a wise choice because Chinese telcos have already mastered the market, my source also said. 

Speculative play

All the talk about a new telco player breaking the duopoly is fueling speculation in the stock market.

Now Corp. for instance saw its shares climb 3.21 percent on Friday, while Easy Call’s shares went up 14.51 percent. 

But whoever ends up as the next telco player in the country will face challenges. For sure, it won’t be a walk in the park. 

One of the existing two players said that while the entry of a third player may lower existing cost of telco services in the country, that company may not really make money, at least in the early years. 

Villar shares

 Speaking of speculative play, shares of the companies of tycoon Manny Villar have also been soaring the past several days because of all the talk about a third telco.

 Shares of Golden Haven Inc. soared by 354 percent this week, just a month after the company announced it was diversifying into mass housing through the acquisition of housing developer Bria Homes Inc. 

Golden Haven said last month it would do a share swap transaction valued at roughly P3 billion with Bria Home’s principal stockholder Cambridge Group Inc. 

This paves the way for Golden Haven’s foray into mass housing and provides additional revenue stream to its already profitable memorial park business. There is speculation the company will be the backdoor listing for Bria. 

Cambridge is owned by Fine Properties, also of the Villars. 

Vista Land & Lifespaces Inc., another Villar-owned company, saw its shares climb 10.54 percent on Friday, while Starmalls’ shares gained 4.30 percent. 

Chris Mangun, head of research at Eagle Equities, said the gains could be attributed to speculation on who the third telco player will be, as Villar’s oldest son had expressed his interest in entering the telco industry earlier last year. 

Good year for the stock market 

Overall, it’s looking a lot like it’s going to be a good year for the stock market, with the index finally closing above the 9,000 mark. It made history last Friday when it closed at 9,041.20. 

Will we finally see some dream IPOs finally come true? 

Noel Medina, research and finance analyst at HDI Securities, sent me a letter and shared with me his dream IPO list. 

On his list are NutriAsia, National Bookstore, Golden ABC, (which is behind Penshoppe), Oishi maker Liwayway, Suyen Corp., (the company behind Bench) and United Laboratories. 

Will these companies finally brave the market? It’s still anybody’s guess, but Noel is right – these companies’ IPOs are indeed worth dreaming of.  

Iris Gonzales’ email address is [email protected].