Talks of a wireless joint venture between beer giant San Miguel Corporation and Australia’s biggest phone and Internet company Telstra have broken down, as the two parties have conceded that they are no longer forming a third telecom operator in the Philippines, where Internet connectivity is notoriously slow and expensive, not to mention controlled by two large conglomerates, PLDT and Globe Telecom.
SMC president and COO Ramon Ang yesterday told the Philippine Daily Inquirer that SMC and Telstra have “agreed that we can no longer continue with the talks” despite working around the clock to “resolve some issues.” Ang said the local conglomerate would continue to push through with its plans to launch an affordable and high-speed Internet service, regardless of whether it finds a new investor to take Telstra’s place.
In a separate report by The Australian, Telstra chief Andrew Penn confirmed the latest development to what has been one of the biggest tech stories in the Philippines of last year.
“While this opportunity is strategically attractive, and we have great respect for San Miguel Corporation and its president Mr. [Ramon] Ang, it was obviously crucial that the commercial arrangements achieved the right risk-reward balance for all involved,” Penn said. It was previously reported that Telstra was looking to spend up to $US1 billion for proposed mobile plans in the country.
Telstra, for its part, has offered to provide infrastructure-related assistance and consultancy support to SMC and will continue to pursue growth opportunities in Asia. The latter has gained considerable momentum since the Australian carrier acquired submarine communications network Pacnet in 2015 for $US697 million.
The latest State of the Internet report by U.S.-based online content and network firm Akamai reveals that the Philippines has the second-worst average download speed (2.8Mbps) in the Asia-Pacific region, besting only India. By comparison, top-ranked South Korea averaged a speed of 20.5Mbps.
We can’t say we’re surprised to hear that negotiations have sputtered and came to a halt Sunday, leaving a trail of disappointment and unmet expectations. Anyone who has been following this story since it broke could see the writing on the wall, and Telstra must not have liked what it saw.
The skyrocketing estimates of offering affordable, reliable, and high-speed Internet service in an archipelago; the increasingly louder call to reallocate the much-sought-after 700MHz wireless frequency, which is currently mostly held by Liberty Telecom, a subsidiary of San Miguel Corporation; SMC’s failed attempt at making a dent in the local telecoms industry with Wi-Tribe — you can take your pick between these red flags, but there are other concerns.
But the bottomline is the arrival of a third force in the Philippines’ telecom market has been pushed back indefinitely, which means the long-suffering customers of existing telcos will continue to have little to no choice for quality mobile and broadband service.
Below is a copy of Telstra’s press release regarding the failed joint venture.
Negotiations ended on Philippines wireless joint venture
Telstra and San Miguel Corporation have been unable to reach commercial arrangements on a possible equity investment in a wireless joint venture in the Philippines and negotiations have therefore ceased.
Telstra Chief Executive Officer Andrew Penn today said the organisations had agreed at the weekend to bring negotiations to an end.
“Despite an enormous amount of effort and goodwill on all sides, we were simply unable to come to commercial arrangements that would have enabled us all to proceed,” Mr Penn said.
“While this opportunity is strategically attractive, and we have great respect for San Miguel Corporation and its President Mr Ang, it was obviously crucial that the commercial arrangements achieved the right risk-reward balance for all involved.”
Telstra has offered to continue technical network design and construction consultancy support to San Miguel Corporation, should those services be required.
“We continue to pursue growth opportunities in Asia consistent with our strategy. Following our April 2015 acquisition of Pacnet, Telstra is now one of the largest connectivity providers in Asia,” Mr Penn said.
“Our investment decisions will be guided by our capital management framework. Investments remain an important part of our future to ensure sustainable growth in earnings and shareholder returns over time.”
Telstra last year confirmed it had been negotiating a possible joint venture with San Miguel Corporation and envisaged investing up to USD$1 billion should the joint venture proceed.
The US finally lifts sanctions over ZTE
They can make phones again!
If you’ve followed your history classes closely, you’ll know that relations between China and the US have been tenuous throughout the years. As of late, Chinese companies — specifically, ZTE — and the US government have constantly been at loggerheads with each other.
Now, a new chapter is finally trying to close off this volume in the China versus US saga.
Following ZTE’s eventual compliance with trade sanctions, the US government has lifted their indefinite ban over the company’s deals with American businesses. Once again, ZTE is free to obtain the parts essential to their phones from the US.
Previously, the US government initiated the ban in response to ZTE’s violations of trade policies with Iran. For reparation, lawmakers offered to stave off more repressive sanctions if ZTE paid fines and replaced their erring employees.
Despite the offer, ZTE failed to comply with these conditions. As a result, the US had no choice but to ban ZTE from initiating business with any American company. This presented a crippling scenario for the company. ZTE’s phones rely heavily on American components including Qualcomm, the company’s chip supplier.
For months, ZTE has crawled through a terrible limbo of being physically incapable of producing any phones. The company’s employees were left to twiddle their thumbs.
Eventually, President Donald Trump tried to rescue the company, citing lost Chinese jobs because of the job. Unfortunately, his rescue efforts came to no avail.
Now, the US has finally acquiesced to give ZTE another chance. Finally, ZTE took the offer and complied with US demands. The company has changed its board and paid US$ 1.4 billion in fines. Additionally, the company has added a compliance team hired by the US to monitor ZTE’s actions should they violate policies again.
Overall, this entire saga is a symptom of the US’ distrust over the Chinese agenda. Besides ZTE, Huawei, and Xiaomi are also feeling the heat of US tensions. At least, the ZTE brouhaha has ended. For now, at least.
Xiaomi’s IPO performs poorly in stock market on first day [Update: It’s doing better now]
Could hamper its performance this year
It’s a bad time to invest in China. After the escalating feud between ZTE and the US, more Chinese companies are feeling the brunt of tense Sino-American relations.
Presently, Chinese phone maker Xiaomi has made a lackluster debut on the stock market. Expecting a valuation of over US$ 100 billion, the company has punched in only US$ 54 billion in valuation, making only US$ 4.7 billion in the IPO.
As for individual stocks, Xiaomi opened to a tepid HK$ 16, much less than their expected HK$ 17.
Prior to the debut, controversies have mired the Chinese market. Just from the company’s perspective, Xiaomi has notoriously expanded their product lineup to include the divisive lifestyle market, most of which have not seen overwhelmingly positive returns yet.
Additionally, ZTE’s troubles with the American government have signaled that Chinese products still aren’t welcome in the West. So far, the issue has affected sales of other Chinese companies including Xiaomi and Huawei, despite their popularity in other countries. Of note, both companies still top the charts all over the world.
Regardless, Xiaomi CEO Lei Jun remains confident that their disappointing IPO is only a minor setback to their overall plans. More importantly, he cites that Xiaomi’s goal of maintaining only a five percent profit is still on track.
However, the IPO trouble will undoubtedly cause speed bumps with the company’s plans to expand to the US later this year.
Update (7/10/2018): After the tumultuous debut, Xiaomi’s stocks showed signs of life the day after. During afternoon trading, the shares’ value rocketed up by 9 percent. As a result, their price increased by as much as HK$ 18.56, well above the company’s expectations.
The jump came as Xiaomi announced its inclusion into the Hang Seng Composite Index. The move allows investors from mainland China to invest in Xiaomi’s stocks. Arguably, Chinese investors show more interest toward the company’s future compared to other foreign investors looking at the political issues in the US.
Xiaomi had already decided on the inclusion in the past. However, the company opted to postpone the move in favor of the Hong Kong debut.
Galaxy S9 is Samsung’s least popular phone since the Galaxy S3
According to latest sales reports
After the ancient rulers of Nokia, the twin kingdoms of Apple and Samsung conquered the land with an iron fist. Under their rule, the land grew and prospered with iPhones and Galaxies.
We all know the story by now. Samsung and Apple have stood atop the smartphone industry for more than a decade. With how technology is developing, it seems likely that both brands will remain as two of the top phone manufacturers.
However, Samsung’s sales reports hint that it’s losing its grip on the industry’s peak.
According to the company’s earning guidance for the second quarter, Samsung lost 0.7 percent in sales. Last semester, Samsung posted consolidated sales of 60.56 trillion in Korean won. This semester, the company posted only approximately KWR 58 trillion. However, according to The Verge, the company still saw an 11 percent increase in overall profit.
While 0.7 percent doesn’t seem like much, the loss is the first time in a while that Samsung’s sales have not grown. For the past quarters, Samsung has enjoyed record-breaking numbers on its sales column. The positive trend has finally buckled this year.
Meanwhile, according to Financial Times and Wall Street Journal, the loss came from the Galaxy S9’s less-than-spectacular sales. With current sales, the Galaxy S9 is the company’s least popular phone since the Galaxy S3 in 2012.
As of late, Samsung has suffered mounting pressure from other brands outing their own competitive flagships (see: Huawei P20 Pro). Coupled with its lack of redeemable features, the Galaxy S9 is a tough phone to sell.
Moreover, with Apple taking its screen business elsewhere, Samsung might see a drop in component sales as well.
Regardless, the company will surely still enjoy massive sales numbers. At the same time, the drop should inspire the company to take measures with next year’s Galaxy S10 to get back to their winning ways.
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