MANILA, Philippines – The country’s most diversified conglomerate, San Miguel Corp., and Australia’s biggest telco company, Telstra Corp., have ended negotiations over a planned joint telecommunication venture in the Philippines, both parties announced.
“Both SMC and Telstra worked hard to come up with an acceptable resolution to some issues. However, we agreed we can no longer continue with the talks. I believe this is best for all parties,” Ramon Ang, SMC president and COO, said in a statement.
Telstra, which announced the talks in August last year, was planning to invest up to $1 billion in the proposed joint venture.
“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 chief executive officer Andrew Penn said in a statement.
Even as negotiations have come to a close, Ang said SMC still intends to roll out its telecommunications network along with high-speed Internet.
“SMC’s entry in the telecom market will definitely be a game changer. When we launch, consumers will benefit from better, cheaper service,” Ang said.
While SMC is still open to other joint venture opportunities, Ang said the company is in no rush to enter into a new telco deal.
“What’s important is that we give Filipinos a third and better choice that they have been deprived of for the longest time,” he said.
Meanwhile, Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom Inc. are expected to get a boost from the delayed entry of a third player in the industry, Fitch Ratings said.
In the medium- to long-term, Fitch said the threat of greater competition remains as SMC said it would proceed with its own network roll out as scheduled, and consider other joint venture opportunities in the future.
SMC holds the bulk of the 700 Megahertz (Mhz) spectrum coveted by existing players due to wider coverage and ability to penetrate buildings.
Fitch said the conglomerate’s entry in the market is expected to have greater impact on industry profitability over the long term.