Telstra backs out of Philippine telco venture as talks with San Miguel collapse

(Last updated at 9:35 am, March 14)

Australian telco Telstra has withdrawn from talks with conglomerate San Miguel Corporation to set up a third dominant mobile operator in the Philippines.

Telstra announced in a statement to the Australian Securities Exchange that the talks collapsed over the weekend.

The company was looking to spend up to US$1 billion for the wireless joint venture if it pushed through.

“Despite an enormous amount of effort and goodwill on all sides, we were simply unable to come to commercial arrangements that would have enabled us all to proceed,” Telstra CEO Andrew Penn said.

“While this opportunity is strategically attractive, and we have great respect for San Miguel Corporation and its President Mr. Ang, it was obviously crucial that the commercial arrangements achieved the right risk-reward balance for all involved.”

Not to worry however, the Telstra chief said they would keep on pursuing opportunities in Asia in line with their “capital management framework.”

Telstra earlier acquired internet services company Pacnet, headquartered in Singapore and Hong Kong, for US$697 million. That deal was part of a US$3.8 billion budget it allotted for Asian ventures.

Telstra and San Miguel were seen to finally shake up the duopoly of telecommunications giants PLDT and Globe Telecom in the Philippines, which suffers one of the world’s slowest internet speeds.

San Miguel has been moving away from its traditional food and beer businesses, and investing in capital-intensive industries such as telecommunications. It began rolling out its mobile infrastructure last year and was looking for a partner.

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