DITO Telecommunity Corporation, the third telco player in the Philippines owned by Dennis Uy, a Davao-based businessman close to President Rodrigo Duterte, plays an important role for China in her ambition to solidify presence not only in the country’s telco industry but also in Southeast Asia and the rest of the world.
Formerly known as Mindanao Islamic Telephone Company, Inc. or Mislatel, DITO Telecommunity consists of two companies owned by Uy, namely Udenna Corporation and Chelsea Logistics Corporation, and the Chinese state-owned China Telecommunications Corporation (China Telecom). By the virtue of the 1987 Philippine Constitution, Uy still owns 60% of the company, while the remaining 40% stake goes to China Telecom.
The good news is, DITO Telecommunity’s setup complies with the law. But the bad news is, the company serves as a mere instrument to further expand Chinese presence in the country. In DITO’s setup, Udenna Corporation handles business operations, while China Telecom takes care of the technological aspect and infrastructure deployment.
While Chinese businesses have been existing in the Philippines since time immemorial, the dominance of big businesses from China has become more apparent in recent years. This became stronger under President Duterte who unabashedly expressed his inclination toward China.
One of these big Chinese businesses, Huawei, which has been banned and maligned by the United States (US) due to cybersecurity concerns, will play a substantial role in 5G deployment in the country. Huawei made a strong remark on this when it launched the Huawei Mate 30 5G back in February, making the brand among the first ones to locally unveil a 5G smartphone in 2020. Noteworthy, Huawei is the second most sold Chinese smartphone brand in the country after OPPO (16.26%), occupying 13.6% of local consumer market share.
Besides Huawei, eight other companies compete in selling 5G hardware in all carriers across the globe: Altiostar, Cisco Systems, Ericsson, Nokia, Qualcomm, Samsung, Datang Telecom/Fiberhome, and ZTE.
Do note that the last two are also Chinese companies. ZTE made headlines back in 2007 when the government, under former President Gloria Macapagal-Arroyo, signed the $329 million National Broadband Network deal with the Chinese company.
The deal envisioned the rollout of an information highway that would link all government offices across the country. But it turned out to be a noble ambition marred with controversies. Tarnished with anomalies like graft and corruption, investigations took place, leading to Macapagal-Arroyo’s cancellation of the project.
Out of the nine 5G players, established Filipinos telco giants Globe and Smart have wholeheartedly welcomed Huawei with solid support from the Duterte government and its main IT agency, the Department of Information and Communications Technology (DICT). This means that all 5G facilities across the archipelago will use Huawei hardware. The Philippines is just one of the 130 countries where Huawei 5G hardware will have a presence.
Of course, in the case of DITO Telecommunity, the preference over Huawei 5G technology seems favorable as it goes along with China Telecom’s presence in the carrier department. Last year, DITO Telecommunity inked a deal with the Armed Forces of the Philippines, giving the new telco player a chance to put up facilities inside military bases. Most likely, DITO will utilize Huawei hardware in these infrastructures.
From a macroscopic perspective, China’s presence in all areas of the Philippine telecommunications landscape is very obvious – from the carrier level (DITO Telecommunity with China Telecom) to the hardware level (Huawei). China’s presence extends even to the backbone level of our country’s information highway, with the National Grid Corporation of the Philippines (NGCP) being 40% owned by the State Grid Corporation of China (SGCC). Meanwhile, Chinese smartphone brands, like OPPO, Huawei, and Vivo, account for nearly 60% of the Filipino consumer market share.
With China being present and deeply engraved in all affairs of our telco industry, it is quite hard to imagine how the government can ensure that our cyberspace is free from Chinese infiltration. Do note that Chinese companies, state-owned or not, can be forced by their government to share information if legally required to do so. This is one of the crucial things that the Duterte administration should be worried about.