On Friday it issued a statement, from company secretary Damien Collins: “We note recent speculation concerning Telstra considering an investment in a wireless joint venture in the Philippines with San Miguel Corporation and that financing is being sought in relation to that joint venture.
“We are in discussions in relation to these matters. However, no agreements have been reached in relation to these matters and there is no certainty that this will occur.”
It doesn’t say much, but it also says a lot. Telstra was forced to make the statement after various Australian news sources had been speculating about the discussions, with Filipino company San Miguel Corporation. San Miguel is best known in Australia for its beer, but it is the Philippines’ largest company, an industrial conglomerate with interests in food, packaging, oil, power generation and infrastructure projects. Its annual revenues are over $20 billion.
But it does not operate in the Philippines’ substantial telecoms market. The discussions are believed to centre around a potential joint venture between San Miguel and Telstra to enter the country’s mobile phone market.
The market is dominated by Smart (owned by privatised former government monopoly PLDT), with 72 million subscribers, and Globe, with 46 million. Globe is 47% owned by Singtel, which owns 100% of Optus in Australia. The population of the Philippines is 102 million – the highest of any country in ASEAN. San Miguel, with its high brand recognition and channel infrastructure, would be well placed to enter the market.
The details of the talks have not been disclosed, but it is logical to assume that San Miguel would be looking to Telstra to provide the technical expertise for an entry into the market. The time is right. Despite the large population, 4G is not well advanced in the Philippines, and the high population density would keep infrastructure costs down.
Telstra has had a mixed record in investing in mobile companies in Asia, divesting itself of its three quarters stake in CSL in Hong Kong last year. But under former CEO David Thodey and his replacement Andy Penn, the company has repeatedly flagged further investment in Asia as vital to the company’s future.