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Monday, December 26, 2016

Philippine telecoms drop rates after Duterte threatens duopoly

Interconnection rates to drop by more than a third
CLIFF VENZON, Nikkei staff writer
President Duterte is unhappy with the slow speed of communications in the Philippines. © AP
MANILA -- Philippine telecom companies PLDT and Globe Telecom on Monday agreed to lower call rates after President Rodrigo Duterte last week revived threats to dismantle the duopoly.

Officials from the companies signed a memorandum of understanding to reduce the interconnection rate to 2.50 pesos per minute by next year from four pesos at present. Rodolfo Salalima, the information and communications secretary, and Gamaliel Cordoba, chief of the telecommunications commission, witnessed the signing.

Duterte returned from an Asia-Pacific Economic Cooperation summit in Peru and a stopover in New Zealand last week to find more fault with the telecom and power sectors. Users constantly complain about low internet speeds, while energy regulators have failed to curb corrupt practices -- allegedly leading to the suicide of a former government official early this month.

"The only way to make this country move faster to benefit the poor is really to open up communications, the airwaves, and the entire energy sector," Duterte said in what he called "a strong message" on Nov. 24. "It is about time that we share the money of the entire country and, to move faster, make competition open to all."

The agreement between PLDT and Globe may satisfy Duterte for now, but it could also pressure margins already hurt by competition from free messaging and calling apps like Viber and Messenger.

Officials hope the lower charges will increase calls. "The lowering of the interconnection rate could again help us be much more aggressive in voice calling going forward," said Gil Genio, Globe's chief technology and information officer.

PLDT, which is backed by Japan's NTT Group, saw its share price drop 2.11% on Monday, while Globe, which is partly owned by Singapore Telecommunications, was down 0.69%. Manila's benchmark index fell 0.93% in the same period.

Earlier in November, officials from both companies called for "rationality" in the pricing of their prepaid data packages after both saw third-quarter earnings fall.

Monday's agreement is the latest cooperation between the two rivals. In late May, they jointly acquired San Miguel's telecom assets for around $1.5 billion to share the frequencies. The deal came after Duterte criticized the country's lumbering internet.

Duterte has previously unnerved some businessmen. Roberto Ongpin, the former chairman of PhilWeb, an online gaming company, sold his stake after the president identified him as an "oligarch" he wanted "to destroy."

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