Establishing a third mobile provider remains at the forefront of government plans for ICT


The Philippine telecoms sector is in the process of making a critical step forward as it awaits the entrance of a new operator. As of May 2018, the telecoms market was dominated by two mobile providers, Globe Telecom and PLDT, formerly the Philippine Long Distance Telephone. While it previously seemed the duopoly’s hold on the market was set to end with the entrance of San Miguel Corporation, the local conglomerate abandoned the bid to form a joint venture with Australia’s Telstra in March 2016, and accepted a joint bid from Globe Telecom and PLDT for its telecoms assets, resulting in the duo holding at least 80% of all available telecoms frequencies in the country as of February 2018. The race for the coveted third telecoms licence has sparked investor interest; however, a number of potential hurdles remain.

Attractive Market

According to a report released in April 2018 by International Data Corporation, the import of smartphones dropped by 7% to 15m devices in 2017, marking its first ever decline since entering the market. Despite the decline in shipment numbers, the broader smartphone market in the Philippines is expected to bounce back in 2018 as competition between major brands continues to grow. This forecast recovery, coupled with the high profits posted by the duopoly since their inception (see Telecoms overview), make telecoms an attractive market for businesses.

New Operator

In early 2018 the Department of Information and Communication Technology (DICT), the regulating body of the national ICT market, announced the frontrunners for a new telecoms licence, which is set to drive down the average cost of services and improve connections that currently linger behind regional averages. “The third telecoms company will create real competition and major economic spinoffs,” Carlo Subido, head of public sector at computer company Dell EMC, told OBG. “There will be a positive effect on consumers, who have long been restricted by only two options.” The third player will also have the rights to eight frequency bands, ranging from 700 MHz to 10.5 GHz, which will enable it to quickly reach its coverage targets.

A number of international and local firms have expressed interest in the Philippine telecoms market, after President Rodrigo Duterte promised to dismantle the duopoly, comprising Smart Communications, a subsidiary of PLDT, and Globe Telecom, during his presidential campaign. Efforts to attract a third player have since accelerated, with the president instructing the DICT to select the new operator by March 2018, a deadline that was not met.

While the timeframe has proven to be problematic for interested firms, the message from the government has been clear throughout. In December 2017 Harry Roque, presidential spokesman, urged the judiciary not to delay the entry of a new operator, reflecting the administration’s intent to shake up the existing telecoms structure. According to local media in May 2018, however, the announcement of a third player was further delayed until September.


In January 2018 the DICT and the National Telecommunications Commission (NTC) released strict guidelines on the requirements needed to be met by companies that are interested in bidding. The draft memorandum circular (MC) stipulates that any firm vying for the position of the country’s third major telecoms operator should have a net worth of at least PH10bn ($198m), while any consortium needs to provide evidence that it can raise the same amount. Additional requirements include holding a congressional franchise, having proven technical capability, and being unrelated In terms of coverage, the new operator is expected to cover at least 80% of provincial capital cities and towns, as well as 80% of chartered cities within five years. In addition, the winning bidder has to pay annual spectrum user fees to the NTC. It will also be required to submit its rollout plan within 15 days and start commercial operations no later than one year from the date of issuance.


With the duopoly posting impressive profits since they began operations, the prospect of entering the telecoms market is an enticing one for businesses. According to local media, PLDT handed out more than PH380bn ($7.5bn) in cash dividends to its shareholders between 2000 and 2016, while Globe Telecom paid out around PH135bn ($2.7bn) during the same period. As of the first quarter of 2018 the race to become the Philippines’ third operator seemed to be playing out in favour of China Telecom, the second-largest telecoms company in China, though a number of local firms have also stepped forward in the bid for spectrum allocation.

In February 2018 the DICT appeared to be one step closer to finalising the allocation of available spectrum, when it announced it was considering three consortia, each led by a local company, including NOW Corporation, the newly-revitalised Philippine Telegraph & Telephone Corporation (PT&T) and Converge ICT Solutions. While limited details were made public as to the remaining companies under each consortium, developments throughout 2017 gave some indication as to who they might be. In October state-run National Transmission Corporation told local media it had plans to use its power assets as the backbone for a third telecoms firm. Around the same time, Streamtech Systems Technologies, owned by local family, the Villars, applied for a congressional franchise to enter the industry.

The Road Ahead

While the government is making strides towards improving competition, the challenges are considerable. The “IT Report: Philippines 2018 Investment Guide” by KPMG raised concerns that, under the current conditions, a bill will need to be filed in Congress and passed into law before any new firm commences operations, which could take a significant amount of time. The KPMG report also suggested that the process for obtaining permits to construct cell towers will need to be reviewed and streamlined to avoid delays. In addition to these challenges, land rights issues have a tendency to delay construction permits.

Furthermore, the absence of an open access and peering policy is a major setback. If such a policy were to be established, internet service providers (ISPs) would have access to each other’s facilities. This would push ISPs to connect to an internet exchange operated by a neutral organisation, which would lead to lower costs and improved services.

To ease the entrance of a new operator into the market, a number of policy and regulatory reforms have been rolled out under the broader National Broadband Plan (see IT analysis). Likewise, with a considerable amount of the heavy lifting completed by the existing operators, at least in terms of cell towers, the new player will have less infrastructure bottlenecks to address during its initial roll-out phase – provided infrastructure sharing agreements are reached. Despite a legacy of poor investment in critical infrastructure, the task of covering 80% of chartered cities in five years is manageable.

While there are a number of hurdles the DICT needs to overcome, the government is intent on finding a third player. According to the draft MC drawn up by the DICT and the NTC, “the entry of a new major player in the telecommunications market is a matter of paramount national interest”.

With the creation of a fair marketplace in mind, provisions are being put in place to prevent the newcomer from selling their stake or any spectrum to the existing duopoly. This feature alone will encourage true competition, a key ingredient that has been absent from the telecoms market over recent years.

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The Report: The Philippines 2018

ICT chapter from The Report: The Philippines 2018

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The Report

This article is from the ICT chapter of The Report: Philippines 2018. Explore other chapters from this report.

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