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Rare Win for China Telecom in Philippines

Robert Clark
News Analysis
Robert Clark

In a rare offshore success, state-owned China Telecom has won a mobile network license in the Philippines.

Mislatel, a consortium 40%-owned by the Chinese firm, will be granted a license on July 8, Nikkei's Chinese language news service reported Monday.

A partnership between China Telecom and local conglomerate Udenna, it has committed to investing $5.4 billion in a nationwide network.

Udenna, based in Davao in the southern Philippines and led by businessman Dennis Uy, owns 60% of the consortium.

The deal was foreshadowed by President Rodrigo Duterte in November 2017 when the Beijing-friendly leader promised to invite a Chinese telco to challenge the long-standing Smart-Globe duopoly.

Mislatel will be awarded a healthy swathe of spectrum in the 700MHz, 2100MHz, 2000MHz, 2.5GHz, 3.3GHz and 3.5GHz bands.

It says it will spend PHP150 billion ($2.9 billion) on network and operations in its first year, achieving an average download speed of 27 Mbit/s and covering 37% of the population.

It must also pay a PHP25.8 billion ($500 million) performance bond by July 8.

Uy, reportedly a close friend of Duterte, has rapidly grown his logistics, petroleum and real estate group through a series of acquisitions. The privately held group early this year completed a reverse takeover of listed company ISM Communications through a share swap.

For all the latest news from the wireless networking and services sector, check out our dedicated mobile content channel here on Light Reading.

The new venture, China Telecom's first offshore public network license, comes amid a full-blooded assault by the Trump administration on China's hi-tech sector.

While Huawei and other vendors have borne the brunt, it also targets telcos.

Last month the FCC rejected on security grounds an application from China Mobile to build interconnection facilities in the US.

However, China's operators represent a small target because of their tiny footprint abroad. Primarily because of China's unwillingness to open up its own market, they are rarely welcome as network operators elsewhere.

China Mobile has made a number of offshore forays, not all of them successful.

In 2007 it acquired a Pakistani operator (now known as CMPak), from Millicom for $470 million. In 2014 it took an 18% stake in the biggest Thai operator, True Corp, owned by the CP Group.

But in an embarrassing misstep it made a $533 million tilt for a stake in Taiwanese telco, FarEasTone, in 2009, unaware this was illegal under Taiwan law. After four years it quietly dropped the bid.


— Robert Clark, contributing editor, special to Light Reading

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6/25/2019 | 5:13:37 AM
I think we need to keep China at check because they can be dangerous to the US


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