Investment News Analysis Telecoms

Eyes on boosting telecom ties

Philippines-Mexico Trade Relations; investment in Philippines telecoms sector

Mexico is ready to boost investments to the Philippines with a hefty US$2 billion injection. What is even better news is that the bulk of that is targeted at the archipelago’s desperately undercapitalised telecoms sector. President Rodrigo Duterte has made righting this sector a major priority of his administration.

This, then, could open the way for Mexican telco giant, América Móvil, entering the market and driving a wedge into the PLDT/GT duopoly – the protected dominance of Philippine Long Distance Telephone and Globe Telecom. Under their joint stewardship the sector has produced one of the most expensive and most unreliable services of anywhere on Earth.

América Móvil, is among the world’s largest corporations and the fourth largest mobile-network global operator in terms of equity subscribers. In 2014, it served 289.4 million wireless customers and provided 22.8 million broadband accesses.

Headquartered in Mexico City – the capital of colonial New Spain from where its Philippine viceroyalty was administered – América Móvil is a telco provider to most of Central America and the Caribbean, South America, the US and eight European countries. If it does set up in the Philippines, it would mark its first venture into Asia.

If confirmed – right now this is little more than speculation – América Móvil’s entry would be extremely good news for the Philippines’ long-suffering consumers and hopefully would lead to a further opening up of the telco market to other foreign providers. And there are a number of high-profile multinational telecom corporations who would welcome the opportunity of getting involved in the Philippines.

Among these are BT Global Services (BTGS), a division of UK operator and multinational telecom-services company, the BT Group, and Norwegian multinational telecommunications company, the Telenor Group – one of the world’s largest mobile providers. Both have a presence in Southeast Asia – BTGS, which supplies IT and communications services to more than 10,000 corporations and governments worldwide, operates a global IP exchange from a 32,100 square foot Tier 3 data-centre suite in Singapore; Telenor is on the ground in three member countries of the Association of Southeast Asian Nations (Asean) – Malaysia, Myanmar, and Thailand.

Southeast Asia is a part of the world where Mexico would dearly love to raise its profile and, given the historic ties between the two countries, the Philippines would be the most obvious launch pad for such an effort. In fact, Julio Camarena Villaseñor, Mexico’s ambassador to Manila has said that his country sees the Philippines as an economic gateway to the Asean region and that investment in the Philippines is being prioritised.

But boosting bi-lateral trade is also very much on their mind. Despite a long shared history, commerce between the two countries is lacklustre. Last year, Mexico was ranked as the Philippines’ 28th largest trading partner – it was the 40th largest importer of Filipino goods and the Philippines’ 19th largest export market. This is a performance which both sides want to redress and have held talks for establishing a joint economic committee which would explore ways of facilitating greater trade and investment.

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