Telco group cites ?realistic? study saying PH doesn?t need 3rd player

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UP professor emeritus Epictetus Patalinghug presenting his study at the Philippine Telecom Summit last March UP professor emeritus Epictetus Patalinghug presenting his study at the Philippine Telecom Summit last March[/caption] In a statement, the Philippine Chamber of Telecommunication Operators (PCTO) said the research done by UP professor emeritus Epictetus Patalinghug is the only ?in-depth? and ?realistic? take on the current state of the local telco industry. Patalinghug first presented his findings during the Philippine Telecom Summit in March organized by the Department of Information and Communications Technology. He again discussed it in a forum at the Asian Institute of Management. In his report, Patalinghug argued that a third player may have a difficult time attaining financial viability in the short run due to its late-mover disadvantage and the need to penetrate undeveloped areas where deployment cost is higher than the almost saturated urban markets. PCTO chairperson Eric Delos Reyes said the study is the only paper that captured the real state of the industry. ?The study anchored on economic principles and covered all aspects of the industry which can help our legislators, regulator and policy makers in improving the state of Philippine telecommunications,? Delos Reyes said. The barriers to entry, according to Patalinghug, include the need for a congressional franchise, spectrum availability, huge capital requirements, and the various licenses and permits from the different sectors of the government. Delos Reyes said the entry barriers may be the reasons why the Philippines has not seen new major telecoms companies investing in the country in the last 15 years or so while others have tried but did not stay long. ?From the business perspective, putting up a huge amount of money late in the game may not be viable considering that there is no immediate profitability due to the huge capital expenditure (capex) needed to build up the infrastructure and the high cost to maintain the operation annually in order to be competitive against incumbent players,? he said. In addition, Delos Reyes pointed out that the cost of acquiring new subscribers, as a late entrant, traditionally is more expensive. ?The massive capital requirements to bridge the gap that the two existing telcos have already built over the last few decades make the market not viable for the entry of a new player,? Patalinghug said. ?Our analysis is that a third player can enter the market if it is cost insensitive for the next ten to fifteen years. No private firm can afford that,? he added. ]]>

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