Udenna-China Telecom deal may prompt more Chinese firms to enter PH

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May 1, 2019

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THE $5.4-billion deal signed last week by Udenna Corp. and subsidiary Chelsea Logistics Holdings Corp. with China Telecommunications Corp. for a telecommunications joint venture may prompt more Chinese firms to pour investments in the Philippines.
    “[T]he huge investment is significant because it represents a long-term commitment by China to the Philippines and indicates that China desires warmer relations with the Philippines beyond the Duterte administration,” Foundation for Economic Freedom (FEF) President Calixto V. Chikiamco said in a mobile message Sunday.
    Global research firm Fitch Solutions had said in a report in November the entry of a new telco player joined by a Chinese company is a “clear sign” of the Duterte government’s “warming posture towards China.”
    Rizal Commercial Banking Corp. Economist Michael L. Ricafort said in an e-mail the investment between Udenna and China Telecommunications may prompt other firms to follow suit.
    “This huge foreign direct investment (FDI) from China, a manifestation of improved diplomatic ties/relations between Philippines and China over the past 2-3 years especially in terms of increased business transactions between the 2 countries, would send a strong positive signal for other large Chinese companies to follow by also putting/locating huge investments in the Philippines…,” he said.
    “Further increase in FDIs from China presents a huge opportunity for the Philippines, going forward, as China has yet to become a major source of FDIs for various industries…” Mr. Ricafort added.
    The investment agreement signed by members of the Mislatel consortium in Beijing last week formalizes its earlier commitment to invest $5.4 billion (about P279 billion) in Mindanao Islamic Telephone Company, Inc. (Mislatel), which is the group’s franchise holder to operate as a telco in the Philippines.
    When Mislatel consortium joined the government’s third telco player auction last November, the group committed a combined capital and operating expenditure of P257 billion over a five-year period.
    “The investment by China Telecom into Udenna will help strengthen the technical and financial capabilities of Udenna to enter the telco market and give competition to the entrenched players Globe Telecom, Inc. and Smart Communications, Inc.,” Mr. Chikiamco said.
    Asked if more deals between Chinese and Philippine companies will come soon, the FEF president said, “yes.”
    “The Philippines is an attractive investment destination for Chinese businessmen as it is with Japanese and other foreign investors because of the country’s high growth rate, very favorable demographics, and untapped potential in terms of tourism, infrastructure needs, mining, etc.,” he said.

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