Australia’s largest operator Telstra confirmed it has been in talks for several months with the Philippines’ San Miguel Corp (SMC), one of the largest conglomerates in the region, about investing in a local mobile operator.
Telstra said in a filing to the stock exchange that financing is being sought for a wireless joint venture in the Philippines with SMC. “We are in discussions… However, no agreements have been reached and there is no certainty that this will occur.”
Both firms reportedly have been preparing for a partnership, which could be worked out within months, with SMC hiring telecoms staff and Telstra picking up employees with local knowledge, the Sydney Morning Herald said.
SMC, a beverage and packaging company, is the country’s largest corporation by revenue. It recently has taken steps to consolidate its growing telecoms holdings in the Philippines. An SMC subsidiary last month acquired a 100 per cent stake in its wireless broadband venture Liberty Telecoms by purchasing the outstanding shares from its partners Qtel West Bay (part of Ooredoo Group), Wi-Tribe Asia and White Dawn Solution.
Liberty Telecoms, a troubled WiMAX provider, in May made an early exit from corporate rehabilitation after a Makati court closed the proceedings. The company operates WiMAX service under the Wi-Tribe brand and had an estimated 59,000 broadband connections in Q2, according to GSMA Intelligence.
The Australian operator is obviously attracted by Liberty’s almost 100MHz of spectrum in the 700MHz band. Telstra was one of the first operators in the world to launch 4G service on that highly efficient band last year.
A two-player market
The Philippines’ mobile market is controlled by two operators – Smart (a PLDT subsidiary) and Globe Telecom – which together have a 99 per cent share. Smart is the market leader with a 58 per cent share, while Globe, 46 per cent owned by SingTel (which owns Telstra’s rival Optus in Australia) has a 41 per cent share.
Telstra, after unloading a number of assets over the last year, has a cash pile of more than AUD5 billion ($4.4 billion). It sold its controlling stake (76 per cent) in Hong Kong operator CSL for $2.4 billion in May 2014 as well as its struggling Australian directories business Sensis.
Telstra has been on the acquisition trail over the past few years to boost its position outside of Australia, where growth in its consumer and enterprise units have slowed.
In April it completed the $697 million acquisition of Pacnet, which the Australian operator said will double its customer base in Asia. The deal was first announced in December and includes the largest privately owned intra-Asia cable network and 29 data centres.