FREE Market Commentary: DICT Finally Releases 3rd Telco Selection Rules

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Market Issue or Event

DICT Finally Releases Rules For Selection Of 3rd Telco

Interested company or group must have the following:

(a) a congressional franchise that is “not a related party” to dominant players,

(b) a paid-in capital of at least PHP 10 Billion, and

(c) experience in provisioning, delivery and operations of a telco service for the last 5 years.

Under the Terms of Reference (TOR), up for grabs are a set of frequencies in the 700 Megahertz, 2100 MHz, 2.5 Gigahertz, 3.3 GHz and 3.5 GHz bands. Further, the third telco must be able to fulfill the yearly minimum requirements of:

(a) at least 30% national population coverage,

(b) at least 5 (Mbps) minimum average broadband speed and

(c) P40 Bn for capital and operational expenditures.

 

Our Partner Broker’s View and Commentary

We believe that the biggest hurdle for the 3rd telco player is the large capex requirement of around PHP 200 Billion over the five-year period.

We heard through the grapevine that potential foreign partners, including Chinese firms, are beginning to vacillate whether or not entering the local telco industry is worth it. The large capital requirement and tight competition will lead to longer payback period.

Thus, this should be a challenge for the local partner to raise capital. On the other hand, the start of selection of process for the third telco player will again cloud sentiments for the existing duopoly.

 

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AP Securities (formerly Angping & Associates Securities)
AP Securities (formerly Angping & Associates Securities)

AP Securities (formerly Angping & Associates Securities) is one of PinoyInvestor’s partners in delivering superior and reliable stock research reports that help Filipino investors make smart stock investing decisions! Learn more about them here.