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UPDATE 2-Philippines' new China-led telecom firm surges after Duterte's 'chilling' threat

Published 07/28/2020, 01:20 PM
Updated 07/28/2020, 07:00 PM
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* PLDT, Globe shares fall to on Duterte tirade
* Firm owned by Duterte ally, Chinese state rallies
* Comments may have "chilling effect" on investors - analyst

(Recasts, adds details, comments)
By Neil Jerome Morales and Karen Lema
MANILA, July 28 (Reuters) - Shares in a new Philippine
cellphone firm owned jointly by state-run China Telecom
0728.HK and a tycoon close to President Rodrigo Duterte soared
on Tuesday, a day after the firebrand leader threatened to shut
down its two rivals.
DITO CME DITO.PS , a holding company for new operator, DITO
Telecommunity, jumped nearly 11% compared to falls of over 3%
for PLDT TEL.PS and Globe Telecom GLO.PS - whose billionaire
owners Duterte has repeatedly attacked for being "oligarchs",
threatening state intervention in their business empires.
Duterte on Monday called their services "lousy" and
threatened their closure during an annual state of the nation
address that could unnerve investors concerned about political
risks. Six months ago he targeted water companies owned by the same
tycoons - the Ayala family and Manual Pangilinan - leading to
the cancellation of 15-year extensions to their concessions.

Monday's outburst also targeted owners of ABS-CBN ABS.PS ,
a top broadcaster that angered Duterte by not showing his
campaign commercials, which led to the president's Congressional
allies rejecting its bid last month to renew its 25-year
broadcast license. "Given what recently happened to ABS-CBN, this is a clear
and present danger to the businesses mentioned," Francis Lim,
head of the Management of the Association of the Philippines,
said of Duterte's threat to shut down Globe and PLDT.
"He can make it happen and that sends a chilling effect to
business and potential investors."

BIG WINNER
A big winner from Duterte's political rise has been Dennis
Uy, a 40-something ethnic Chinese tycoon from the president's
hometown and the biggest contributor to his 2016 election
campaign.
Uy's DITO won a telecoms license in 2018 that followed
months of Duterte saying he had offered China the "privilege" of
a license. China Telecom teamed up with Uy and was the only
qualified bid.
Uy's business empire has enjoyed explosive growth during
the Duterte presidency, with the number of firms held by its
flagship, Udenna Corp, quadrupling to over 100.
Several ventures include Chinese firms, private and
government, with the China National Offshore Oil Corp (CNOOC)
among those that have benefited from Duterte's pro-Beijing
stance.
The reclusive Uy last year joined Forbes Magazine's "richest
list" in a month when he acquired half of the country's natural
gas reserves, a high-speed ferry company and exclusive rights to
sell Ferrari sports cars.
Experts and bankers have told Reuters that Uy has benefited
not from Duterte's intervention, but a perception their close
ties would lead to preferential treatment, which also makes him
attractive to Chinese firms seeking a Philippines foothold.
A spokesman for Uy in December told Reuters his spending
spree showed his confidence in Duterte creating "an even playing
field" and Uy had not used their friendship to gain an
advantage.
Meanwhile, DITO said it would not comment on Duterte's
remarks but was committed to a March 2021 launch.
PLDT declined to comment and Globe said it had improved
services.

(Editing by Martin Petty)

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