Time is running out for China Telecom to land Filipino telco contract

The constitution of The Philippines states that any prospective new company entering the country's telecoms sector must be at least 60% Filipino owned.

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The Filipino government has reaffirmed its preference to partner with China Telecom in its bid to form a new telco but has warned that it may be forced to look elsewhere unless progress is made soon.  

President Duterte had invited the Chinese government to nominate a Chinese firm to form a new national telco and stimulate competition in the Philippines' stagnant telecoms sector. China duly accepted and nominated China Telecom. However, China Telecom has remained tight lipped on the subject, leading to speculation that the Chinese firm may be hesitating over entering the Filipino market.    

On Sunday, a government spokesperson stoked the fires of speculation, when he hinted that the Philippines would be prepared to look elsewhere for a prospective partner, should Chinese firms be unwilling to participate. 

“Whoever can give the best, the most viable offer, or the juiciest offer to us, that will be the third player in the telecommunications industry in the Philippines,” said communications secretary, Martin Adanar. 

The Filipino telecoms sector is currently a duopoly, with Smart Communications and Globe Telecom running the country's mobile infrastructure. However, president Duterte has been frustrated by the telcos difficulty in providing fast, reliable internet connections to his people. The formation of a third player is intended to inject competition and urgency into a number of forthcoming projects.  

Since the initial negotiations took place, Adanar has also said that the offer to form a new telecoms player in Manilla was "not limited to China" and was "open to investors around the world". 

These remarks were clarified on Wednesday when presidential spokesperson Harry Roque reaffirmed The Philippines' preference for a Chinese partner, when asked if his government were now actively looking for alternative partners. 

“Let me be clear on this – no. The offer to China was made in a bilateral talk between the President [Rodrigo Duterte] and the Chinese Premier [Li Keqiang],” he said. 

“It appears to have been accepted because the Chinese government nominated China Telecom," he added.

The sticking point in the move to form a third telco could be that the Filipino constitution stipulates that any prospective new player would need to be 60% Filipino owned. This may not sit well with potential partners in China. However, Roque warned that the issue was a red line for the Filipino government and one that they would not be prepared to compromise on. 

“If for any reason this is not acceptable to China Telecom, then we have no choice. We gave China the option but if this is not acceptable to it, unfortunately we will have to look for other players because we will have to honour what the constitution provides,” he said.

As recenlty as last month, President Duterte has said that he wanted the Philippines' third telecoms player to be up and running by the first quarter of 2018.