Telstra may spend $1B for Philippines telco venture, slams incumbents over ‘lousy service’

Australian telco Telstra eyes to spend up to US$1 billion for a possible wireless joint venture with San Miguel Corporation in the Philippines, The Australian reports.

That’s just Telstra’s share. Partner San Miguel, a conglomerate with diversified interests in the Philippines, will also put money in the business, along with some banks that will provide financing.

“We are not expecting it to be more than US$1 billion. That would be essentially Telstra’s equity investment. We could own 40 percent of the venture, which would also have external financing as well,” the company’s chief Andy Penn was quoted as saying by The Australian.

Telstra and San Miguel haven’t reached a deal yet, but talks are ongoing.

“The Philippines market from a mobile perspective is interesting because there are only two incumbent operators. The EBITDA margins in the Philippines are relatively strong and were we to complete a deal, the partner is a very strong one,” Andy continued.

Tech in Asia also reached out to Telstra and asked about the negotiations and this was their reply to us evening of October 29: “We can confirm that we are in discussions with San Miguel on a potential JV in the wireless market in the Philippines but no deal has been reached, and there is no certainty one will be reached.”

If it pushes through, the pair is expected to shake up the duopoly of telcos PLDT and Globe Telecom in the archipelago.

“Frankly, let’s face it, go to the Philippines and experience the lousy service you get from the incumbent operators and you will see that [there’s] opportunity for a new operator to provide a much better quality service … I think there’s a significant opportunity,” Andy was again quoted as saying.

San Miguel is rolling out its mobile telecommunications network in the Philippines through unit Bell Telecommunications.

The conglomerate had wanted to enter the mobile business for years, but this was delayed because of other acquisition opportunities, its president Ramon Ang previously said.

See: Shake-up ahead for Philippine mobile industry from the country’s biggest beer maker

Over the past years, San Miguel has aggressively moved away from its traditional food and beer businesses and into heavy industries such as infrastructure, power, oil refining, and telecommunications.

For Telstra’s part, it won’t be its first time to break into Asia. It acquired Singapore- and Hong Kong-based internet services company Pacnet for US$697 million early this year. That deal was part of a A$5 billion (US$3.56 billion) budget it allotted for Asian ventures.