"Expect China Telecom and Dennis Uy to offer the most reasonably priced telco service with the highest quality."
Finally, the Philippines will have a third telephone company. It will be tycoon Dennis Uy’s Mislatel Consortium in partnership with China Telecom.
China Telecom is big. China Telecom is China’s biggest landline telephone company and the third largest in mobile. It has revenues of $40 billion, EBITDA of $11.3 billion, and assets of $93 billion. It has 294-million mobile subscribers of which 230.45 million (78.38 percent) use 4G.
Last year, the Chinese government offered China Telecom to the Duterte administration to be the Philippines’ third telco to fight the powerful duopoly of PLDT Smart of the Salim group of Indonesia and Globe Telecom, of the Ayala family and SingTel.
In effect, the Philippine mobile and broadband market will be a proxy fight among China, Indonesia and Singapore, each backed by a powerful and resource-rich Philippine group or family—Dennis Uy of Davao for China, Manuel V. Pangilinan and the PLDT Pension Fund for Indonesia, and the Zobel-Ayala family for Singapore.
Offhand, Smart and Globe have the first-mover advantage. They have between them 100 percent of the market which of late has stagnated in growth. Still, the market is hugely profitable, milked by PLDT-Smart and Globe to the tune of at least $1.5 billion in profits a year, thanks to among the highest telephone rates in the world and among the slowest internet speeds, and of late, among the worst in service quality.
Being the third biggest in China’s mobile telephony, China Telecom is a smart and aggressive player. It is willing to cut or remove fees, if necessary, and to lower rates, in favor of greater market share. Also, it has international plans. China Telecom wants to enter Myanmar too.
China Telecom should perhaps look at the Globe formula. Long a second fiddle to PLDT Smart, Globe, under Ernest Cu (since 2009), went mass market, slashing prices to buy market share (service quality also went down). Hence, Globe now has 65-million mobile subscribers while Smart has just 58 million. With greater scale, Globe is now more profitable than Smart.
Expect China Telecom and Dennis Uy to offer the most reasonably priced telco service with the highest quality. Dennis Uy’s Mislatel promises to spend $3 billion in five years, internet speed of 27 to 55 mbps (ten times current speeds), and coverage of 84 percent of the country.
The key to China Telecom’s success in the Philippines is Dennis Uy, 42, a BS Business Management graduate of La Salle (1993).
Dennis has become the fastest growing and most successful businessman under the Duterte administration. To-date, he probably has a net worth of at least $350 million, making him the Philippines’ 20thrichest businessman. His holding company is Udenna Corp., established in 2002, with now 55 companies, financed by debts of P85 billion, more than triple in one year.
After Duterte became president in July 2016, Dennis Uy’s Phoenix Petroleum became the third largest player in the petroleum marketing industry, with a market share of 7 percent, after Petron’s 34 percent, and Shell’s 21 percent.
Barely 13 years old, Phoenix has 558 gas stations with 30 more in the pipeline. It is now the second biggest supplier of aviation fuel, with Cebu Pacific as its biggest client (which buys 6 percent of Phoenix’s total sales). In nine months to September 2018, Phoenix had total sales of P64.96 billion, double from a year ago; and profits of P1.317 billion, down slightly from P1.436 billion.
Uy’s Chelsea Logistics has become one of the largest in logistics, with the youngest boat fleet in the country (50 are brand new vessels). The IPO of Chelsea last year certified Dennis as a multi-billionaire. Chelsea Shipping Corp., the country’s largest tanker fleet, was acquired only in November 2017.
At the 10thanniversary of Phoenix as a listed company last year, no less than President Duterte showed up at the stock exchange.
Dennis has acquired 177 hectares of land in Clark as a logistics hub which is expected to cost $1 billion. Land sales are brisk.
He also has a resort hotel and casino complex in Mactan, Cebu. In July 2017, he bought Endurun Colleges which has 1,200 students on a sprawling 1.8-hectare campus in Taguig. He already has a maritime training school to support his shipping and logistics businesses.
In October 2017, Dennis bought FamilyMart which then had 67 stores. It is now under the Phoenix Petroleum wing which means FamilyMart could have 500 outlets almost overnight.
As if those acquisitions were not enough, Dennis also bought Conti’s, a glamorized bakery.
Soon, Phoenix will offer clients not just gas, not just LPG, not just groceries, not just cakes and coffee, but free mobile phones. Anyone?
By the way, it is not advisable to use your cellular phone when gassing up.