China Telecom to have 40% of third Philippines mobile operator

Alan Burkitt-Gray
Published on:

TransCo and PT&T in competition for majority stake in Chinese-backed rival to Globe and PLDT

The Chinese government has selected China Telecom as the company to invest a third mobile operator in the Philippines.

China Telecom will have a 40% stake in the new company, the maximum permitted by Philippines law for foreign investment. The new operator will compete with Globe Telecom and PLDT.

The government of the Philippines will now need to pick which company will have the other 60% stake. Now a number of Philippines companies are lining up to make their claim.

The selection of China Telecom is the result of a direct deal between Rodrigo Duterte, president of the Philippines, and Li Keqiang, prime minister of China, during Li’s visit to Manila in November.

Duterte, wanting to break the Globe/PLDT duopoly, asked Li for Chinese help in setting up a third operator. Now, says both Hong Kong’s South China Morning Post and the Reuters news agency, China Telecom has been selected for the task and its two rivals, China Mobile and China Unicom, have been rejected.

The Chinese government has controlling shares in all three companies, though China Telecom’s shares are listed in Hong Kong.

At least two Philippines companies have come forward this week to press their case for the 60% stake.

PT&T said it is talking to China Telecom about investing in the new mobile business. Last month it said it was “talking to eight Chinese companies, mostly in telecoms, to form strategic partnerships as it aims to become a major player in the domestic telecoms market”.

PT&T’s chairman Salvador Zamora said in November that it was looking for strategic partners to expand its broadband services and launch mobile phone operations in the next few years. Now Zamora has told Reuters that he wants to sign a deal with China Telecom by the end of this week.

But TransCo, the Philippines electricity grid company, has also put its name forward as a partner of China Telecom. Company president, Melvin Matibag, said in a speech in Manila: “We can be the 60%. They have the technical expertise in operating and TransCo has the facilities to offer. This will shorten the process.”