Duterte backs more players in telecom, energy industries

Posted on November 25, 2016
http://www.bworldonline.com/content.php?section=Economy&title=duterte-backs-more-players-in-telecom-energy-industries&id=136896

PRESIDENT Rodrigo R. Duterte is considering opening up the Philippines to new players particularly in the telecommunications and power industries, saying that such measures will encourage competition and improve the lives of the poor.


He explained that such measures would reduce “corruption in the government,” adding that limited competition in these industries puts the country “at the mercy of the corrupt people in this planet.”

“The only way for deliverance of this country is to remove it from the clutches of the few people who hold the power and money,” he said.

In October, Mr. Duterte threatened the country’s telecoms duopoly -- PLDT, Inc. and Globe Telecom, Inc. -- with competition from China if their services do not improve. He made the statement in connection with a plan to create a complaint line to report corrupt government workers.

In May, these two firms together agreed to buy conglomerate San Miguel Corp. out of the sector for $1.5 billion, pledging to invest heavily to boost Internet service. The acquisition was the country’s biggest corporate transaction in nearly three years.

Meanwhile, the Philippine power and electricity sector is a mix of competition and monopolies. Power generation is generally competitive with many generation companies (gencos) in the field.

Power transmission is a national monopoly via the National Grid Corp. of the Philippines (NGCP). And electricity distribution is reserved for geographical monopolies, mainly the 120 electric cooperatives (ECs) nationwide, the biggest of which, Manila Electric Co. (Meralco), accounts for about 75% of total electricity sales in Luzon and about 55% nationwide.

In the same statement on Wednesday, the chief executive clarified that he is not “destroying” the incumbents by inviting other players because they “have the advantage.”

“You are here already. Be content with that... But let us open everything to end the suffering of the Filipinos.”

He added that he does not want to have any conflict with the owners of the two telecom groups once he opens the Philippine market for competitors.

“I do not want to have a quarrel with the Ayalas and Pangilinan,” he said.

Manuel V. Pangilinan is the CEO of PLDT while the Ayalas are major shareholders in Globe.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. -- Ian Nicolas P. Cigaral