New Philippines telco Mislatel faces national security fears

Philippines third telco mislatel
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ITEM: The Philippines officially has a third telco – it’s called Mislatel, and because it counts China Telecom as a minority investor, critics are already expressing concerns over the national security implications.

On Monday, the National Telecommunications Commission confirmed its decision to award a new telecoms license to Mislatel (full name: Mindanao Islamic Telephone Co), a consortium comprising local conglomerate Udenna Corporation – run by tycoon Dennis Uy – which owns 60% of the business, and China Telecom, which owns the remaining 40%.

Philippines President Rodrigo Duterte has been pushing for the establishment of a third telco to take on incumbent PLDT and rival operator Globe Telecom, who are the last telcos standing following a wave of market liberalization in the late 1990s, but who have also been criticized for poor service quality.

Earlier this month, the NTC provisionally awarded the new license to Mislatel after disqualifying rival entrants Philippine Telegraph and Telephone Corp (PT&T) and Sear. With the last of the legal appeals to that decision dismissed, Mislatel was given the green light on Monday.

Mislatel has committed to invest P257 billion ($485 million) in its first five years, including P150 billion in capex in its first year and P27 billion for the next four years. For that money, it plans to provide just over 37% nationwide coverage in Year 1 of operations and up to 84% in Year 5. Mislatel also pledged to provide internet data speeds of at least 27 Mbps in Year 1 and 55 Mbps after that.

The coverage and broadband speed figures are well above and beyond the minimium criteria laid out in the bidding process, according to Rappler.

The promised data speeds are also considerably higher than what Globe and PLDT’s wireless arm Smart Communications currently offer. According to the latest figures from OpenSignal, Globe’s average overall download speed was only 5 Mbps as of August 2018, although that is actually up nearly 14% from six months earlier. Smart’s overall average has grown 29% to 7.5 Mbps. To be clear, that includes both 3G and 4G connections. In terms of 4G alone, Smart currently averages around 13 Mbps, while Globe averages 7.3 Mbps.

Perhaps inevitably, the involvement of China Telecom in the venture – as well as President Duterte’s push for a third telco and his relationship with China – has drawn fire from Duterte’s critics. On Tuesday, one opposition lawmaker said China Telecom’s participation was a potential national security risk, reports ABS-CBN News:

“China is known for monitoring online its citizens and with their entry in the telco industry, it is just a matter of time that our national database will be in their hands,” Akbayan Rep. Tom Villarin told reporters on the same day Chinese President Xi Jinping arrived in Manila for a state visit.

Meanwhile, Rappler – a long-time critic of Duterte – has raised other questions regarding the legitimacy of the bidding process and Dennis Uy’s allegedly cozy relationship with Duterte.

Both Udenna and China Telecom have brushed off national security concerns. A Udenna spokesperson said such concerns would be addressed once Mislatel reveals its rollout plans.

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