AUSTRALIAN telecommunications company Telstra Corp. Limited and Philippine conglomerate San Miguel Corp. (SMC) have ended negotiations for a joint venture, Telstra announced yesterday.
In a statement issued to the Australian Securities Exchange yesterday morning, Telstra said the two firms were unable to reach an agreement on the commercial arrangements for a joint venture.
“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,” said Telstra’s chief executive officer Andrew Penn.
The Australian telecom giant’s share price has tumbled since talks were first confirmed in August 2015. Penn expressed interest to spend $1 billion for the joint venture.
Telstra said it has offered to continue technical network design and construction consultancy support to SMC, should those services be required.
Penn said both organizations agreed to end the negotiations over the weekend. The company said it will continue to pursue growth opportunities in Asia.
“Our investment decisions will be guided by our capital management framework. Investments remain an important part of our future to ensure sustainable growth in earnings and shareholder returns over time,” he added.
Following the collapse of the talks, a local IT BPM authority expressed hopes for another player.
“A third major player in the telecom industry would have made competition much healthier. Let’s hope that another major player will come in soon,” said Wilfredo “Jun” Sa-a Jr., managing director of the Cebu Educational Development Foundation for Information Technology (Cedfit).
Telstra would have been the third player to challenge the country’s telecom giants, PLDT and Globe Telecom.
Both companies have been calling on the National Telecommunications Commission to reallocate part of the 700Mhz frequency controlled by SMC.
United States Ambassador David H. Thorne, senior advisor to the US Secretary of State recently stressed the importance of digital connectivity if it wants to spur the growth of entrepreneurship in the country.
Quality of Internet
Cebu’s business leaders also emphasized the importance of having new players in the telecom industry.
Christian Paro-an, Cebu Business Month 2016 chair and owner of RC Goldline, earlier assured that poor and expensive Internet connectivity in the country will be tackled in the series of fora this June.
In a CBM press conference last month, Cebu Chamber of Commerce immediate past president Ma. Teresa Chan, acknowledged that poor connectivity hampers the ability of digital tools to uplift the conditions of small and medium enterprises (SMEs).
Instead of having only two popular telcos, Paro-an believes there are already other players that have long been present, but their reach is not as not as wide as the leading companies.
Paro-an said these networks require expansions so their services could reach a wider consumer base.
“The business sector will contine to push for this one...for better Internet service in the country because this is a matter of need” said Allan G. Suarez Jr., CBM 2016 vice chair, who is also the incumbent chair of the Philippine Exporters Confederation Inc. (Philexport) Cebu. Suarez said that the country’s Internet connectivity is one of the world’s most expensive yet also one of the slowest.
Paro-an said the CBM committee has invited telecom companies in the series of CBM events. While he doesn’t know who these companies will be sending, he noted that telco representatives will surely have to explain the present Internet infrastructure, because it is expected that the Cebuano audience will raise this long-time concern.
In 2015, PLDT registered a net income drop of 35 percent to P22.1 billion, while Globe Telecom registered an increase by 23 percent to P16.5 billion.