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Globe, PLDT doubt 3rd telco’s ability

Richmond Mercurio (The Philippine Star) - November 19, 2018 - 12:00am

MANILA, Philippines — Globe Telecom has joined its fellow telco industry incumbent PLDT in downplaying the ability of the provisional third telco player to deliver its commitments on faster internet speed and network coverage during its initial years of operations.

“There’s no telco that can do that in one year, in my opinion. We use the same equipment, we go to the same permitting process, so let’s see,” Globe president and chief executive officer Ernest Cu said.

The country’s provisional new major player in the telecommunications industry, a consortium composed of Dennis Uy’s Udenna and Chelsea Logistics, China Telecommunications, and Mindanao Islamic Telephone Co., has promised in its bid a minimum average internet speed of 27 megabits per second (Mbps) on its first year, and up to at least 55 Mbps on its second year.

It has also committed a network coverage of 37.03 percent of the population in the first year and 51.01 percent in the second year.

With these commitments, the third telco player is expected to take significant portion of the incumbents’ market share.

“I don’t think there is any telco in the world that in their first year of operations, other than Reliance Jio, take a significant market share in their first year. But the caveat there is Reliance Jio before their launch was building four to five years, then they launched. They had a few hundred thousand cell sites by the time they launched. That’s a different model,” Cu said.

“I think  what they have to do other than this numeric thing that they did is figure out how they’re going to do it. No one has asked the question, right? I can make a promise, but how do you do it?” the Globe executive said.

PLDT has earlier expressed its doubts that the provisional new major player could deliver their commitments in its first two years.

“First question you have to ask is how long will it take them to build that network? From what I hear, people seem to be thinking that they will be operational a year from now. I don’t think so. For them to achieve the minimum speed or the average speed that they have committed, and the 33 to 34 percent coverage that they also committed, it will take them several years before they can put that network in place and become operational. By our estimation, it would be optimistic if they can have that network in place in two years, maybe around three years because just like us, they will have to look for sites for their towers, for antennas, etc.,” PLDT chief corporate services officer Ray Espinosa has said.

Similar to PLDT’s expectations, Cu said Globe also does not see the third telco player impacting significantly its business in terms of revenue and capital expenditures in the first year.

“The pressure of capex for Globe is not about third telco. It’s more of the demand. We keep increasing our capex because the demand is increasing. That is what we are responding to at this stage,” Cu said.

“All I know is they (China Telecom) are a large operator, they operate well in their country, and they know what they’re doing but its a different operating environment in China vis-a-vis the Philippines. There’s nuances in every country with regard to telco. The regulatory environment is different. We have a very complex regulatory environment from the national government down to the LGU, down to the barangay level. I hope they took that into consideration when they promise they would roll out that much in one year,” Cu said.

Information and Communications Technology Acting Secretary Eliseo Rio in a social media post over the weekend said Mislatel made a commitment to greatly improve the country’s telecommunication industry that can bring it at par with Singapore and is also putting a hefty performance bond of P24 billion if they fail in its commitments in a five-year period.

“Globe and PLDT/Smart never made any commitment in the more than 20 years of their operation. They never posted any performance security. For the first time in our history, we required a new telco player to come up with time-bound commitments and putting their money where their mouths are,” he said.

ERNEST CU GLOBE TELECOM
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