By Neil Jerome Morales and Karen Lema
MANILA (Reuters) - Philippine Telegraph & Telephone Corp (PS:PTT) will partner with Chinese companies to challenge the nation's two dominant telecoms groups, its chairman said on Tuesday, a move which could be a game changer in the local market.
Salvador Zamora said PT&T is talking to eight companies about forming strategic partnerships and it is set to sign a deal with one before the end of the year as part of plans to turn a niche player into a domestic force.
Zamora bought into the little-known, debt-ridden firm for just 264.9 million pesos ($5.2 million) in August to get a share of a $5.3 billion telecoms sector which for years have been dominated by PLDT (PS:TEL) and Globe (PS:GLO).
"We will not just be content to be the third telco. We want to be second, and then perhaps even first, if we are able to satisfy our customers," Zamora told Reuters in an interview.
Zamora's confirmation of PT&T's engagement with Chinese firms comes after President Rodrigo Duterte offered China the "privilege" of being his country's third telecoms operator, following through on a threat he made last year to Globe and PLDT to shape up, or face competition.
Zamora, whose business interests include mining, real estate and energy, described Duterte's move as a "Godsend", adding that Chinese companies could not operate alone in the Philippines and would need to partner with a local firm.
The constitution's 40 percent cap on foreign ownership of domestic telecoms companies has kept interest from multinational firms at bay in the market of over 100 million people.
PT&T is listed on the Philippine Stock Exchange and provides broadband services to a thousand customers in Manila and adjacent provinces. Trade in its shares was voluntarily suspended back in 2004, but Zamora said the firm was working towards resuming dealings.
ROOM FOR IMPROVEMENT
PT&T is looking for strategic partners to expand its broadband and launch cellphone operations in the next few years, which would end a Philippine duopoly that critics say has stifled competition and resulted in poor quality services and patchy voice and data.
Last year, PLDT and Globe joined forces to buy a prized mobile spectrum for $1.5 billion from a potential rival, San Miguel Corp, strengthening their grip on the local telecoms market.
Both companies have said they welcome competition and are making upgrades to improve data and voice services, ranked among the Asia-Pacific's slowest and most intermittent.
"PT&T's rejuvenation...will certainly benefit from a partner that can bring in both capital, as well as technology and operational know-how," said Winthrop Yu, chairman of Internet Society Philippines, an industry body.
"As we like to say 'the more the merrier' and 'better sooner than later."
Zamora said PT&T expects to sign a deal by Dec. 15 with ZhongXing TianTong Technology Co Ltd to offer broadband services, and wants foreign partners to provide expertise, infrastructure and capital for internet expansion and new cellular services.
It is also talking with China Telecom (HK:0728) and Datang Telecom (SS:600198), PT&T officials said. Those companies did not immediately respond to request for comment.
"The Zamoras are adept at getting into partnerships with foreign companies in their other business ventures. This should give them an advantage, given their track record," said Mary Grace Santos, lead convenor of the Better Broadband Alliance.
PT&T has existing licenses for broadband and cellular businesses, which makes it easy for the company to roll out these services.
Duterte's administration is seeking to set up a national broadband network and is eager to boost internet penetration and bandwidth in a country known for having some of the slowest speeds in the Asia-Pacific.
"The market is so vast here. It seems the competitors, the duopoly, they are not at all customer-oriented," Zamora said.
"Even the president complains about them. Everybody complains about them but still they continue their poor service."
($1 = 50.6360 Philippine pesos)