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Asia

China-backed incomer Dito starts service in Philippines

China-backed Dito Telecommunity has finally started services, making it the long-awaited third network provider in the Philippines.

President Rodrigo Duterte has fervently wanted to give the country's two-player telecoms industry a shake-up.

The combination of Smart and Globe has been called one of the world's most durable duopolies. Duterte, known as a populist, threatened the country's telecoms sector with privatizations in his last state of the union address.

Then there were three: Filipino operators Smart and Globe now have a new, China-backed, sister to contend with.  (Source: Fiona Graham / WorldRemit on Flickr CC2.0)
Then there were three: Filipino operators Smart and Globe now have a new, China-backed, sister to contend with.
(Source: Fiona Graham / WorldRemit on Flickr CC2.0)

And just to subtly underscore the point, Dito launched its mobile services first in Cebu and Davao – the president's home region.

Duterte, soon after coming into power in 2016, announced the country's "separation" from the US, and closer ties with China.

As a benefit of setting aside disputes over territory in the South China Sea, he promised billions in infrastructure investments, which haven't quite materialized.

But the Philippines public continue to trust the US and Australia more than China, according to surveys which show China becoming less popular.

So the news came, maybe not coincidentally, as pressure was building within Duterte's government to look again at the costs and benefits of Manila's tilt to Beijing.

Ready player three

Telecoms in the Philippines has been a game of two for 30 years, after President Fidel Ramos liberalized the country's telecoms industry.

Smart targets monied millennials; Globe, those on tighter budgets.

Smart, which is owned by PLDT (formerly the Philippine Long Distance Telephone Company) was fast off the blocks in 1991.

Cash from Hong Kong investors First Pacific helped it build its network speedily and, more important, subsidize handsets.

It became a very early player in mobile money in 2001, when it launched SMART Money together with Banco de Oro, the Philippines' largest bank by assets.

Globe launched its digital cellular services in 1994, in its new incarnation as Globe Telecom.

This was a joint venture between SingTel and Ayala Corporation (the country's biggest business, which bought Globe Wireless). SingTel now owns 47% of the joint venture.

But its roots go right the way back to 1935, when the US Congress gave Globe Wireless a franchise to operate wireless services in the then-American colony.

Dito did not exactly understate its ambitions for the Philippines: "as a partner in nation building, we send the message to the people of the Philippines wherever they may be that Dito is more than just a telco," says Dito's Chairman and CEO Dennis Uy.

The telco's rollout in the capital area may happen "in a few weeks", said Dito's chief administrative officer, Adel Tamano.

Dito aims to be better than the existing telcos, not just linger as the country's number three, says Tamano.


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It doesn't bear the cost of legacy technologies, so will be cheaper, he adds.

Dito is a consortium, owned by China's state-owned China Telecommunications Corporation (the parent of China Telecom), along with Dennis Uy's Udenna Corporation.

The incumbents welcome the new competitor to the fight, sort of.

"What I can really tell you is as far as we have information in the areas Dito is launching, they cannot get even close on the coverage we have already," says Joachim Horn, Smart's next-generation technology solutions advisor.

Dito has built 1,900 cell sites so far. Each of the incumbents has over 16,000 cell sites, notes Horn.

But Dito, and Duterte, both sense dissatisfaction with how the duopoly has served the Philippines so far.

This week, after the most recent period of remote learning, only 39% of Filipino families with family members participating in distance learning said they have a "strong" Internet connection – not so far ahead of the 31% who said their connection was "weak".

Hindering it just for the moment, though, is mobile number portability.

Dito is fixing a few things on that front, but maybe it will be in place by July, says Tamano.

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Pádraig Belton, contributing editor special to Light Reading

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