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Telstra backs out of $1b Philippines wireless joint venture

Telstra has abandoned its negotiations with San Miguel over forming a wireless joint venture in the Philippines.
Written by Corinne Reichert, Contributor

Telstra has cited the lack of an acceptable "risk-reward balance" as the reason for abandoning negotiations with Filipino giant San Miguel Corporation over a $1 billion equity investment in a wireless joint venture in the Philippines.

Telstra said the two companies were "unable to reach commercial arrangements" over the joint venture, announced at the end of last year, to form a wireless provider.

San Miguel, which generates approximately 6.2 percent of the Philippines' GDP through its infrastructure, fuel, oil, power, and mining, food, and beverage business, would have been its partner in the joint venture.

According to Telstra CEO Andrew Penn, negotiations ceased over the weekend.

"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," 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 will, however, extend its technical network design, construction, consultancy, and support to San Miguel, and will also continue eyeing opportunities into Asian expansion.

"We continue to pursue growth opportunities in Asia, consistent with our strategy," Penn said.

"Following our April 2015 acquisition of Pacnet, Telstra is now one of the largest connectivity providers in Asia.

"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 bought Pacnet for $697 million in December 2014, though it retired Pacnet's branding in April 2015 and sold off the company's Singaporean and Thai ISP assets for AU$4.4 million to a Singaporean cloud and datacentre company in November.

In January, Telstra also acquired Kloud, which provides professional and managed cloud services to enterprises for more than 80 corporate and government customers across Australia and the Asia-Pacific region.

Telstra Ventures also made a multimillion-dollar investment in Taiwanese video big data and analytics company Gorilla Technology Group in March 2015, saying the company could provide beneficial video analytic software solutions for the government, security, broadcast, and retail sectors.

Telstra has additionally invested in tech companies worldwide over the past two years; it acquired unified communications solutions and contact centre provider North Shore Connections Group in August 2013; network integration services provider O2 Networks for a reported AU$60 million in January 2014; and information security, networking, and data management provider Bridgepoint in October 2014.

Telstra also invested $270 million in Silicon Valley-based video-streaming and analytics company Ooyala, taking control of the company in the process in August 2014. This was followed in September by Telstra contributing to a $50 million Series D funding round for ecommerce platform Bigcommerce, and joining a number of other backers in a funding round for DocuSign, an electronic signatures company.

In December 2014, Telstra Ventures announced an equity investment in Elemental, a software-defined video solutions provider for multi-screen content delivery, and a minority equity stake in Panviva, an Australian cloud-computing business process guidance software provider.

On the ehealth side of things, Telstra acquired UK health analytics company Dr Foster in March 2015; in April 2015, Telstra Health acquired telehealth service Anywhere Healthcare; and in October 2015, the telco acquired ehealth management system EOS Technologies.

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