Globe CEO on Telstra: I'm not scared of ghosts

Globe Telecom, Incorporated has a message to Australia’s largest telecommunications company Telstra Corporation Limited: Sign the contract and we will play.

This is Globe President and CEO Ernest Cu's remarks on the possible entry of Telstra in 2016, in partnership with diversified conglomerate San Miguel Corporation.

"Once they sign, we'll talk; but right now there is no deal yet. I don’t get scared of ghosts," Cu said.

"Anyone who comes in is a threat. But I'm not going to react to a threat that's not real. Sign the contract and we’ll play," Cu told reporters on the sidelines of a product launch in Makati City on Wednesday night, November 5.

Telstra last month told the Australian Securities Exchange that it has set aside $1.5 billion in capital for mergers and acquisitions for the rest of 2015. The bulk of the capital, Telstra said, may reach the Philippines through a joint venture with San Miguel.

San Miguel President and COO Ramon S. Ang said the telco partnership will offer voice, text, and Internet services with focus on mobile-broadband services.

Ang even announced at the Forbes Global CEO Conference in October that his company will launch a third major telecommunications player in the country by 2016. (READ: Ramon Ang: We hope to open 3rd major telco by 2016)

Sought for comment, Cu said Globe will only include the possible entry of Telstra-San Miguel in its game plan once the deal is signed.

"They are priming the market. We've been working on our network for 13 years now. Do you think they can deliver on Day One?" Cu said.

He added that all Globe is doing now is what it has been doing best – continuing to gain market share and to maintain innovation in market.

"We have [the] formula that’s worked really well for us for the last 5 years," he added.

Meanwhile, Manuel V. Pangilinan, chairman of Philippine Long Distance Telephone Company (PLDT), said it will take into account the possible entry of Telstra-San Miguel in its 2016 plan.

"We need to protect our market share for prepaid and postpaid. We'll feel it immediately but it depends on what their tactics (are). It's hard to speculate. But really, they wouldn’t come in without a fanfare. The novelty of a new player ... some people will be lured to try," Pangilinan said on November 3.

No savior

But for National Broadband Network (NBN)-ZTE deal whistleblower Rodolfo "Jun" Lozada, a new telco player like Telstra would not make much of a difference.

Lozada cited a report in May 2015 by Australia's Telecommunications Industry Ombudsman stating Telstra as the most complained telco firm in the country.

"Positioning themselves as the ’savior’ and ’third player’ that will solve the problem of slow Internet speed in the country has not easily swayed customers and stakeholders who are aware of Telstra’s own service delivery issues in Australia," Lozada said in a statement. (READ: New Internet speed minimum throwback to '90s?)

While improved service and increased competition will always benefit consumers, Lozada said the country needs NBN to solve slow Internet woes.

"We don’t have an NBN here in the Philippines which is likened to roads used to move people and goods around," he said.

A $329-million NBN project was previously awarded in 2007 to Chinese contractor, Zhing Xing Telecommunications Equipment Inc. (ZTE), but later rescinded by former President Gloria Macapagal-Arroyo after reports of massive irregularities surfaced. Lozada was named emissary or representative in the negotiations for the NBN project.

"We need these roads to move these goods freely to create trade. Prior to that, all the agricultural goods were moving freely. Now that we have an era where we're now trading digital goods, almost all of the roadways, and the path of digital goods are privately owned," Lozada added. – Rappler.com

PLDT prepares for entry of Telstra in PHL

PLDT is preparing to improve further its services for the possible entry of Australia’s telecoms giant Telstra in the Philippines.

“We are preparing the network, with Telstra’s entry or not, in delivering coverage and speed,” PLDT Chairman Manuel V. Pangilinan said in a press briefing.


He said that PLDT will increase its capital expenditures next year from $4.6 billion in the last six years.

“The levels (Capex) will be alleviated,” Pangilinan said.

Telstra would be investing less than US$1 billion in the Philippines through a partnership with local conglomerate San Miguel Corp. (SMC).

Andrew Penn, Telstra chief executive officer, earlier said that should Telstra decide to pursue its Philippine venture, it would only initially invest less than USD 1 billion, in contrast with previous reports, because of some regulatory concerns.

Telstra to cut costs and spend up to $US1 billion in Philippines to fight rivals

Telstra chief executive Andy Penn will combat rising competition and falling revenues by slashing costs and boosting the levels of customer service delivered through computer systems rather than people.
Speaking to investors in Sydney on Thursday, Mr Penn also revealed that the telecommunications giant was willing to pump up to $US1 billion ($1.4 billion) into owning a 40 per cent stake of a joint-venture to build a new mobile network in the Philippines, which would value the South-East Asian company at $US2.5 billion.
The push to slash human costs and push hard into relatively risky growth businesses in regions like Asia and eHealth come at a crucial time for Telstra as it faces pressure from competitors, regulators and the steady rollout of the national broadband network.
Telstra on Thursday night announced it would slash a total of 411 jobs from its call centres throughout Australia, of which 276 work for third-party contractors.


But Mr Penn was also maintained guidance for mid-single digit growth in revenue and low-single digit growth in earnings before interest, taxation, depreciation and amortisation for the telco giant.
"There is no doubt the dynamics in our core markets have changed – the competitive environment has increased in fixed, mobiles and in media and we're also further down the path towards the full migration to the NBN," he said. "The long-term migration to the NBN has a material [negative] impact to the financials of Telstra.
"[Over the next five years] we will need to continue to drive growth and our productivity programs further than before."
Telstra shares fell 1.4 per cent on Thursday to $5.50. The stock has fallen 10.6 per cent in the last six months.
Mr Penn said a push by all telcos to ramp up download allowances has contributed to a slight fall in the amount of cash generated from each postpaid mobile customer during the three months ending September 30, 2015 compared to the year before.
While Telstra is not certain if this will become a long term trend going forward, it does show that competition is having a real financial impact on the company. Mr Penn also added that the three months ending September 30, 2014 had been a bumper period.
Changing its accountability
Telstra chief financial officer Warwick Bray said the company was changing the way it held itself accountable on reducing the cost of doing business while being more productive with the resources available.
It has boosted productivity by $1 billion every year, of which around $500 million to $550 million has come from cutting expenses, moving some redundant jobs offshore and boosting automation.
"If given a choice, 75 per cent of … customers would rather go online and self-serve to resolve their problem," he said. "This represents an opportunity for our customers and for us to reduce call volumes into our assurance contact centres."
He said giving customers the ability to run their own accounts through smartphone apps and internet sites were helping to increase the number of customers fixing their own problems.
"This year we are increasing the automation in our NBN activation process, reducing the time to a working service while reducing the customer and employee effort required to achieve a market-leading NBN experience," Mr Bray added.
Mr Penn also provided a much clearer picture of Telstra's potential partnership with Philippines beer and food giant, San Miguel. Both companies want to become a third force in the Philippine's mobile market, up against local incumbents PLDT and Globe Telecom.
Estimates of how much the project would cost had varied wildly from $US500 million ($700 million) to $US3 billion ($4 billion) and Telstra shareholders are expressing concern about the lack of detail.
But Mr Penn provided more clarity and said Telstra would spend no more than $US1 billion for a 40 per cent stake of a joint-venture, which is the most a foreign company can own there. This money would go towards the construction of the mobile network along with extra cash raised by borrowing from banks.
Media outlet TMT Finance, which first revealed Telstra's push into the Philippines, reported that the telco has picked four banks to give it a $US500 million loan for the project – BDO, ANZ, DBS and Standard Chartered.
Mr Penn also slammed the Philippines' existing players, Globe and PLDT, which currently dominate the mobile market for their service levels.
"Let's face it – go to the Philippines, experience for yourself the sort of lousy service you get from the incumbent operators and you will see that the opportunity there for new operators to provide a much better quality service over an LTE network using better spectrum," he said.
"As for why not Myanmar … we recognised [the Philippines] would be a significant project and we got a lot of work there supporting San Miguel in terms of network rollout and design."
Nikko Asset Management portfolio manager Michael Maughan said it was good to see Telstra provide an upper limit for its investment in the Philippines.
"It's not an insignificant amount but it's probably within the limits of what the market is willing to see committed," he said.
He added that shareholders should not be overly concerned by the fall in postpaid handset revenue per user yet.
"What Telstra is telling you is it doesn't know how the competitive environment is going to play out," he said. "But competitors should be under no illusions that it will remain competitive.
"Telstra won't be sacrificing share to maintain margins - it will price its products competitively."