San Miguel Corp. and Australia’s Telstra Corp. ended talks on a $1-billion joint investment in a new mobile network in the Philippines after failing to agree on terms.
San Miguel and Telstra on Monday announced the planned joint telecommunications venture had been abandoned due to “commercial arrangements” issue.
Telstra was attracted to the Philippine market, which has the slowest Internet speed in the region, because of its growth potential.
“Both SMC 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,” San Miguel president and chief operating officer Ramon Ang said.
Telstra chief executive Andrew Penn confirmed the organizations agreed over the weekend to bring negotiations to an end.
“Despite an enormous amount of effort and goodwill on all sides, we are simply unable to come to commercial arrangements that would have enabled us all to proceed,” Penn said.
“While this opportunity is strategically attractive, and we have great respect for San Miguel Corp. and its President Mr. Ang, it was obviously crucial that the commercial arrangements achieved the right risk-reward balance for all involved,” he added.
Local telecommunications companies said they were keeping their business strategy in preparation for the possible entry of third and major player, despite the failed joint venture of San Mniguel and Telstra.
The planned joint venture between San Miguel and Telstra would see the local conglomerate holding a majority stake, in compliance with the 1987 Constitution, which limits the foreign ownership of utilities to a maximum of 40 percent.
Australian consulting firm Creator Tech Pty Ltd. earlier warned Telstra shareholders of many risks that could impact on the cost of the company’s plan to invest in the Philippines through a wireless joint venture with San Miguel.
Among the risks faced by Telstra in the Philippines were the reallocation of the powerful frequency held by San Miguel and the incoming national elections.
Despite the collapsed joint venture, San Miguel said it would still switch on its telecommunications network along with a high-speed Internet service as scheduled.
Telstra offered to continue technical work design and construction consultancy support to San Miguel.
“SMC’s entry in the telecom market will definitely be a game changer. When we launch, consumers will benefit from better, cheaper service,” Ang said.
Ang said San Miguel was still interested in considering other joint venture opportunities for its telecom business.
“We are not rushing. What’s important is that we give Filipinos a third and better choice that they have been deprived of for the longest time.”
Philippine Long distance Telephone Co. spokesman Ramon Isberto said “with or without a new player, we are vigorously pursuing our digital divot strategy which involves a broad range of initiatives.
“Finally, we are strengthening our portfolio of compelling digital services for both consumers and enterprise customers,” Isberto said.