Entry of 3rd telco player ‘dim’ — ICT expert

MANILA, Philippines — Chances of a successful entry of a third telecommunications player may be dim for now, according to an industry expert.

ICT Davao president Samuel Matunog said the country’s search for a third telco player is “a very challenging project,” citing several barriers which make its entry difficult.

ICT Davao is the umbrella organization of all information and communication technology groups in the Davao region.

Among the barriers cited by Matunog include a high capital requirement and operating in an industry that is not easy to penetrate.

“The third telco is afraid because, as the Department of Information and Communications Technology (DICT) said, you need at least P60 billion just to start. At the end of the day, maybe the total cost will range from P250 billion to P300 billion in investments to reach the level of Globe and PLDT,” Matunog said.

“The question always is whether they will be able to satisfy the investors and recover their money,” he added.

Matunog said while many are interested, they are not willing to shell out so much money because they might not be able to recover it in the end.

The ICT official said global research analysts such as Morgan Stanley, Macquarie Capital Securities and HSBC have also evaluated prospects of foreign telcos in addressing the challenges of extremely tough entry barriers such as high capital expenditure.

While the amount and  spread of frequencies available is enough to build  a  new  telco, Matunog said studies found that the 40 percent foreign ownership limit, coupled with other capital requirements of the government, may be too daunting for a new player to comply with.

“These barriers continue to make it difficult for a new telecom player to enter the industry in spite of new draft terms set by the DICT,” he said.

According to Matunog, the DICT had earlier assured the public that a third major   telecommunications player would be operational by March this year as ordered by President Duterte, but the timetable has been pushed back to June or even later.

Duterte has long been calling for a third telco player in the Philippines so that consumers can enjoy better mobile and internet service.