A STOCK-market analyst said the possible third telecommunication firm in the country must have deep pockets while facing stringent conditions set by the government.
In a market study, Papa Securities Inc. said the aspiring third telco player must start with a net worth of at least P10 billion, or at least the capacity to raise the amount, and place a performance bond equivalent to 0.5 percent of the committed investment for five years.
The winning party must also deposit at least 30 percent of the committed investment for the first year to a financial institution chosen by the finance department within 30 days of the award. “We find it difficult for the new entrants to form a robust business case moving forward considering the short timeline given by the government,” the study said.
It added given the massive capital infusion required from the new parties, the new player would also have to raise a large amount of cash every year to meet the government’s P300-billion five-year capital spending requirement.
Aside from having deep pockets, the new entrant will also have to deal with intense competition from the established telecom players PLDT Inc. and Globe Telecom Inc., both which have been preparing for the entry of the third player.
The two rivals have been beefing up their networks, thanks to financial and technical help from their respective foreign shareholders NTT Docomo of Japan for PLDT Inc. and Singapore Telecommunications Ltd. for Globe Telecom Inc.
While the government initially preferred a Chinese partner for the third telco player, China Telecom has reportedly lost interest after learning that it cannot have a controlling stake in the company.
The remaining contenders include mining mogul Salvador Zamora who has bought into PT&T and Mel Velarde of Now Corp., which is already engaged in the broadband business.
Zamora is bringing in South Korea’s LG Corp., while Now Corp. is said to be eyeing an Indian telco.
Papa Securities said the stock market is also speculating the possible entry of Davao businessman Dennis A. Uy, whose Chelsea Logistics Holdings Corp. is seeking to expand its primary purpose in its registration papers, adding “other utility businesses including, but not limited to, telecommunication, power and other related utilities.”
1 comment
I am surprised you didn’t mention Tier 1, a Davao company, who was written up in Manila Bulletin a few days ago who brings in Millawave, Nokia and Parallel Wireless who will also be manufacturing phones, laptops and tablets.