Business Consulting BlogForeign InvestmentIncorporationNewsTelcos welcomed, more than ever!

October 16, 2018

Biennially, the government releases the Foreign Investment Negative List (FINL), which shows the sectors where foreign investors have only limited participation when incorporating in the Philippines. This year , with the 11th FINL, President Rodrigo Duterte has ordered the National Economic and Development Authority (NEDA) Board to “exert utmost efforts” to relax restrictions on sectors with limited foreign participation to break the country’s longstanding telecommunication industry duopoly.

As soon as the President signs the latest FINL, telcos will be reclassified and will no longer be considered a public utility. This would allow a higher percentage of ownership to foreign investors.

“The critical thing is to get them attracted to come here. And if it requires the raising of equity ownership of foreign telcos to 70% or more than majority, then maybe we are going to do it. Because the president is determined to have a third player,” said Socioeconomic Planning Secretary Ernesto M. Pernia at a briefing.

The President has been vocal against the state of the internet in the Philippines, saying the only way to improve internet speed is to introduce competition.

Internet service in the Philippines is currently ranked 74th out of 77 countries in terms of 4G speed by mobile network research firm OpenSignal.

In 2015, Manila was abuzz over Telstra and San Miguel Corporation’s negotiations for a joint venture to challenge the duopoly of Smart and Globe. Despite an enormous amount of effort, the parties were unable to come to satisfactory commercial arrangements and talks fizzled before the end of 2016.

The Excitement made clear that the market is ripe and consumers are ready for an upgrade. Since, President Rodrigo Duterte has invited Indian and Chinese telecoms to partake of the $5.2 billion Philippine telecom market.

All indicators point toward China Telecom being the most likely candidate and this revision is a significant step toward satisfactory commercial arrangements for China’s second largest service provider.

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