Telstra is in the final stages of negotiating a multibillion-dollar joint venture with San Miguel to build a new mobile phone network in the Philippines, but the Philippines’ biggest phone and internet provider, PLDT, is preparing to take Telstra and its would-be partner San Miguel to court in an effort to strip the companies of their most valuable spectrum assets.
San Miguel holds 90% of 700MHz spectrum across the country, and both PLDT and Globe want to have a share with the said spectrum. Spectrum is the electronic airspace that all broadcast technologies rely on and the 700MHz frequency band is the best at penetrating buildings and travelling long distances.
According to Raymond Tong of Goldman Sachs, both Globe and PLDT have asked the regulator to reassign part of SM’s 7000MHz holding in a more equitable way.
PLDT head of Regulatory Affairs Ray Espinosa told Fairfax Media in an exclusive interview the company would begin lobbying Philippines President Benigno Aquino III directly this month. He added that its external legal team was preparing to launch legal action against the regulators, San Miguel and any of its partners unless the spectrum was shared.
“The 700MHz as it is assigned today has been issued with the assumption that it will be used for broadcast purposes only [and] the companies that hold it cannot legally use it for mobile communications purposes,” he said. “We are prepared to take vigorous action judicially if that’s necessary for us to get our fair share of the frequency … and that could mean bringing the case before our judicial courts. That would be against the regulators and the holders of the frequency.
“We will also bring it to the attention of the office of the President to emphasize how important this is … before the end of the year if not the early part of January.”
Goldman Sachs analyst Raymond Tong this month told clients in a note that San Miguel being stripped of its spectrum was a key risk to the project.
“Both Globe and PLDT have asked the regulator to reassign part of SM’s 7000MHz holding in a more equitable way,” he said. “This would significantly reduce San Miguel’s competitive advantage.”
The news about the move by PLDT and Globe has enraged netizens and subscribers who are waiting for better Internet Service Providers.
When Telstra announced last year that it would enter the Philippine market, many unhappy subscribers became excited, but the current situation can turn that excitement into disappointment if the Aquino government favors PLDT and Globe over San Miguel and Telstra.