Concentration Risk is the new Vendor Lock-In
A consortium consisting of China Telecom and Philippine firms have won the bidding for the Philippines’ third telecoms license. The Philippine National Telecommunications Commission (NTC) awarded the Mislatel Consortium a license after rejecting two other bids.
A win for the Mislatel Consortium
The consortium includes Dennis Uy's Udenna Corporation and its subsidiary Chelsea Logistics Holdings. State-owned China Telecom and the Mindanao Islamic Telephone Corporation, Inc. (Mislatel) are also partners. Mislatel commented on the decision in a statement this Wednesday. It said that "the consortium is confident that Udenna Corporation's extensive supply chain and knowledge of local industries will complement the world-class technology and telecommunications expertise of China Telecommunications Corporation." "Meanwhile, Chelsea Logistic Corp.'s expertise in logistics and distribution will enable the speedy development of the network," it added. Moreover, China Telecom is one of the largest telecom providers in Asia and boasts over 200 million subscribers.
The potential for tremendous growth
However, the Chinese telecom giant would have been unable to go it alone. Philippine legislation requires foreign firms to join a consortium due to a 40% ownership cap in a local telecoms outfit. Some experts say this has limited the competitiveness of the sector, however. The overall sector is worth approximately $5 billion a year in revenue, but analysts insist that it has the potential for tremendous growth. "This is a crucial step for China Telecom to go internationally, and it is a concrete move for us to implement China's 'Belt and Road' Initiative," China Telecom stated on Wednesday. "Based on the world-leading technology, we assure that we can do more to benefit the Filipinos as well as to prosper the Philippine communications market with our partners," it added. According to reports, the Philippine administration is looking for a third major telecoms player to compete with PLDT and Globe. If it is successful, the country's poor telecom services could benefit from a tremendous boost.
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