Talks for Telstra’s Philippine mobile entry collapse

Posted Mar 14, 2016 by Lucky Malicay
Australia’s biggest phone and Internet provider Telstra has dropped the plan to partner with Filipino conglomerate San Miguel Corporation for a $1 billion investment in Philippine mobile industry.
A Telstra mobile phone station in Western Australia.
A Telstra mobile phone station in Western Australia.
Negotiations collapsed after the two companies failed to come up with an agreement over the venture’s equity investment, according Telstra chief executive Andrew Penn in a report by The Australian.
“While this opportunity is strategically attractive, and we have great respect for San Miguel Corporation and its President Mr. (Ramon) Ang, it was obviously crucial that the commercial arrangements achieved the right risk-reward balance for all involved,” Penn said.
“Both SMC (San Miguel) and Telstra worked hard to come up with an acceptable resolution to some issues. However, we agreed we can no longer continue with the talks. I believe this is best for all parties,” said Ang, also the vice chairman and chief operating officer of San Miguel.
In August 2015, Telstra and San Miguel started negotiations for a joint wireless phone project that would make them the third player in the mobile communication industry in the Philippines, where Internet speed is one of the slowest in the world.
Despite the setback, Ang said San Miguel is not rushing to find another partner for its mobile phone business.
“We are not rushing,” he told the Philippine Daily Inquirer. “What’s important is that we give Filipinos a third and better choice that they have been deprived of for the longest time.”
Telstra remains keen to invest in the region and willing to spend more than $1 billion in new ventures in the Philippines.
"The Philippines is particularly attractive because ... it's only a two-player market whereas many of the other markets around the region have multiple players," Penn was quoted by The Sydney Morning Herald as saying. "I don't see the same dynamic in any other market at the moment.”
"So given that I think our bias is probably towards [business-to-business] opportunities but we continue to monitor," he added.
Expanding beyond its beer making business, San Miguel has ventured into power generation, infrastructure, real estate, banking and food to become the Philippines’ biggest corporation.
But it has yet to make an impact in the country’s lucrative mobile business dominated by Smart Communications and Globe Telecom.