THE UK’s Vodafone Group PLC has discussed with the government the possibility of participating in the selection process for the telecommunications industry’s so-called “third player,” Budget Secretary Benjamin E. Diokno said following a visit to London.
“While I was in the UK, I was able to meet various members of British business, education and government sectors in hopes of securing investment and partnerships for the Philippines. Some highlights of the meetings include the possibility of Vodafone entering as our third telecommunications player,” Mr. Diokno said at a briefing in Mandaluyong on Wednesday.
“We went to their headquarters and we had discussion on our interest to introduce a third party to the duopolistic market, and that we’re welcoming proposals,” he added.
Mr. Diokno said that Vodafone hasn’t made its interest official, saying that he has “no idea” whether the company will submit bid documents when the window opens on Nov. 7.
“But they appear interested,” he said, because they were “asking serious questions.”
He said Vodafone’s main concern was reputational. “They don’t want to get involved in shady deals… so they want to make sure that everything is on the level,” Mr. Diokno said.
“They’re doing their due diligence, and they’ll probably find out if it’s worth their while to participate, that’s the usual stance of businessmen,” he added.
Mr. Diokno said to attract major investors, the government is banking on the amendment of the Public Service Act, which seeks to remove telecommunications from the list of industries classified as public utilities, thereby exempting the sector from the 40% foreign ownership cap.
“If they want to come in, they want to come in a big way,” he added.
Mr. Diokno also told Vodafone that the President signed Ease of Doing Business legislation that calls for shorter processing times for government transactions. The government is also due to issue its first Foreign Investment Negative List (FINL) which is expected to broadly liberalize foreign ownership limits in various industries.
“They raised serious questions about the ease of doing business. The FINL that was also discussed. That has been submitted for some quite some time, but we’ll keep the pressure because that’s really needed, the negative list, that’s important,” Mr. Diokno said.
Based on the guidelines provided by the Department of Information and Communications Technology and the National Telecommunications Commission, the third player will be selected according to the highest committed level of service in terms of population coverage (weighted at 40% in the selection points system), minimum average broadband speed (25%), and capital and operational expenditure (35%).
The government expects the third player to be selected before Christmas.
Foreign companies that have expressed interest include China Telecom, South Korea’s KT Corp. and LG Uplus Corp., Vietnam’s Viettel Telecom, Norway’s Telenor Group, and unidentified US and Japanese firms.
Philippine companies that are positioning as prospective joint venture partners include Philippine Telegraph and Telephone Corp.; NOW Corp.; Converge ICT Solutions, Inc.; Transpacific Broadband Group International, Inc.; EasyCall Communications Philippines, Inc. and TierOne Communications International, Inc.
Economic managers and other officials were in London last week to brief prospective investors.
He said the road show was “very successful,” as over 300 executives attended the event, far more than the 180 expected. — Elijah Joseph C. Tubayan