Philippines's Duterte offers third telecom slot to China

Manila: Philippine President Rodrigo Duterte has offered China Telecom a slot to be the country’s third telecom provider to break up the dominance of two local firms, his spokesman said today. The offer was part of Duterte’s efforts to improve ties between China and the Philippines, taking into account political as well as economic considerations, spokesman Harry Roque told reporters.

“It was brought up in bilateral negotiations between the Philippines and China. And the eventual player that was chosen by China, China Telecom, without doubt is one of the biggest in the world,” he said. “It was a political decision of the president to offer it to a Chinese company. Intended, I guess, also to strengthen our bilateral ties with China.” 

Duterte has repeatedly said he wanted to introduce a third player into the Philippine telecom industry to spur competition and improve service. The Philippines has a reputation for some of the slowest internet speeds in Asia, with customers restricted to a choice only between local firms PLOT and Globe Telecom.

On a visit to Manila in October, Chinese Internet tycoon and Alibaba founder Jack Ma described the Philippines’ internet speed as “no good”. Although Roque said the Chinese government had nominated China Telecom for the license, the company said it had yet to decide if it would take up the offer.

“China Telecom is currently having a preliminary study on the investment opportunity in Philippines and no concrete plan has been determined yet,” the company said in a statement to AFP. Philippine law restricts a majority-foreign firm from the telecom industry, which means China Telecom would have to pick a local partner.

Duterte has pursued closer economic, military and political ties with China for the Philippines, a traditional ally of the United States, since becoming president in the middle of last year. He reversed his predecessor’s policy of challenging China’s expansionism in the South China Sea into waters also claimed by the Philippines, arguing setting aside the territorial dispute would reap huge economic benefits.

However critics have questioned if Duterte is offering too much to China, leaving his country vulnerable to political and economic pressure. There are also concerns about corruption, with a similar Philippine-Chinese telecom venture ending badly a decade ago. A national broadband contract worth hundreds of millions of dollars with Chinese telecom giant ZTE was cancelled in 2007 after a bribery scandal that severely embarrassed then- Philippine president Gloria Arroyo.