San Miguel Corp., the Philippines’ biggest company by sales, has pulled its planned entry to the mobile phone network business, dashing hopes it would shake up the uncompetitive telecom sector.
The purchase of San Miguel’s telecom assets for roughly US$1.5 billion by the Philippines’ two existing mobile phone operators, Globe Telecom and PLDT, is likely to increase scrutiny on a sector that president-elect Rodrigo Duterte last week described as a “cartel”, the Wall Street Journal reports.
Duterte said the telcom industry must improve its performance or face tighter regulation and foreign competition.
Best known for its Philippine beer, San Miguel — a conglomerate with interests spanning food and beverages, power generation and petrochemicals — unveiled plans in 2014 to build and operate a third national mobile network via a subsidiary, Vega Telecom.
Last year, it opened talks with Australian operator Telstra Corp. about running the network as a joint venture.
But in March, the two parties ended the discussions without reaching an agreement.
The Philippine constitution bars foreign companies from holding more than a 40 percent stake in a communications business, a constraint which telecoms analysts said may have deterred the Australian company.
Initially, San Miguel President Ramon Ang said it would roll out the new network even without a foreign partner but on Monday PLDT owner First Pacific Co. — a Hong Kong holding company controlled by Indonesian tycoon Anthoni Salim — and Globe Telecom owned by Philippine conglomerate Ayala Corp. — both issued statements confirming they were each buying a 50 percent stake in Vega Telecom, ending the prospect of a third player entering the market.
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