8 Things You Need to Know About '4th Telco' NOW Telecom

On September 14, 2020, the National Telecommunications Commission (NTC) granted NOW Telecom Company, Inc., an extension of its provisional authority to install, operate, and maintain a nationwide mobile telecommunications system. According to the company, the authority essentially allows the company to operate as the country’s fourth telco.

Although an NTC official said it has not categorically identified a "fourth telco" in a statement to Businessworld reported on Tuesday, the company said it is standing by its statement.

"As clearly confirmed by NTC Deputy Commissioner Engr. Edgardo V. Cabarios himself in a phone message to BusinessWorld on Monday, NOW Telecom is the country’s fourth telco player," the company disclosed to the Philippine Stock Exchange on Tuesday. "In addition, Mr. Cabarios confirmed that there are only four entities authorized by NTC to operate mobile networks or specifically having a cellular mobile telephone system (CMTS) license: PLDT group, Globe group, DITO, and NOW Telecom."

Here’s what you need to know about NOW Telecom:

1| What is NOW Telecom

NOW Telecom is an affiliate of listed company NOW Corp. Originally incorporated in 1996 as MF Schroder & Co., a securities trading business, NOW Corp has expanded over the years and now has several subsidiaries that focus on providing telecommunications, media and information technology products and services through software licenses and services, IT manpower and resource augmentation; and broadband and wireless cable TV services.

2| NOW Telecom can operate in outer space

In February 2018, President Rodrigo Duterte granted NOW Telecom a renewal of its legislative franchise to operate for another 25 years “to engage in the business of providing telecommunications including electronic communications and electronic communications services throughout the Philippines and between the Philippines and other countries and other territories, including outer space.”

3| NOW Telecom is planning to go public

In addition to being granted the authority to operate a nationwide telco system, NOW Telecom said it is currently setting the stage for its public listing as well as its 5G network rollout.

NOW Telecom said it is planning a listing listing by way of introduction (LBWI) and has has named Unicapital Inc. as its financial advisor for a planned corporate restructuring as well as issue manager for the listing.

“We are moving forward with the corporate restructuring of NOW Telecom to take it to the next level,” said NOW Group of Companies founder and CEO Mel V. Velarde. “NOW Corp and NOW Telecom were the first to introduce 5G broadband speed of up to 2Gbps direct to our existing enterprise clients. Our next move is to extend the said service to the residential and consumer markets.”

4| NOW Telecom has earmarked P34.5 billion for its 5G rollout

NOW Telecom said it plans to spend $713 million (about P34.5 billion) for its five-year 5G fixed wireless access business plan. “The company aims to deploy the 5G FWA network in the National Capital Region and offer a broadband plan of up to 10 gigabit per second service,” it said in a new s release. “Of the $713 million, around $152 million will be used in the first three years, mostly to acquire new 5G radio equipment.”

5| NOW Telecom partnered with a South Korean telco

In 2019, NOW Telecom signed a memorandum of understanding with SK Telecom, South Korea’s largest telecom provider, “to help design the company’s 5G network.” It also inked an MOU with Singapore-based HyalRoute Group, through local subsidiary Philippine Fiber Optic Cable Network, Ltd. (PFOCN), in connection with shared fiber infrastructure assets nationwide.

6| NOW Telecom needs to meet certain conditions

In granting Now Telecom the provisional authority, the NTC gave the company specific conditions which it must be able to meet. Foremost of these is “the infusion of an additional capital of at least P1.9 billion based from the first two years capital expenditure of Php6.3 billion in the submitted rollout plan and approval by the Securities and Exchange Commission (SEC) of the increase in the authorized and paid-up capital.”

The NTC also required NOW Telecom to “accelerate the installation of broadband data service in the suburban and rural areas and that in each of the phases of project implementation, it shall strictly comply with the 70:30 ratio of urban to suburban and rural network rollout coverage.

In addition, the NTC also prohibits NOW Telecom from sharing or co-using its frequency to either PLDT, Inc./Smart Communications, Inc., Globe Telecom, Inc., DITO Telecommunity Corporation, their affiliates, or any other entity without first securing approval from the Commission.

7| NOW Corp. is led by broadcast industry veteran Mel Velarde

NOW Corporation’s president and CEO is Mel Velarde, who co-founded and led the day-to-day business development and operations of ABS-CBN subsidiary Sky Cable. He was also appointed Philippine Commissioner to UNESCO, where he served as chairman of the Science and Technology Committee.

Velarde also bid for the country’s third telco, which was eventually won by Dennis Uy’s Dito Tel.

8| Although it touts itself as the “fourth telco," NOW may not be able to compete with the big players just yet

In a report on GMA News, NTC Deputy Commissioner Edgardo Cabarios said that NOW may not have enough frequencies to compete with incumbents Globe Telecom Inc., PLDT Inc., and even third player Dito Telecommunity Corp.

"If you talk about mobile, tatlo lang. You have one coming in,” Cabarios said. “Of course, NOW is an authorized mobile network operator...Meron siyang spectrum but of course limited," he said in September 2019.

The NTC commissioner added that most of the frequencies held by NOW are only on the 3,500 megahertz (MHz), the midband of the spectrum, which can only cater to a niche market.

"You really cannot compete,” Cabarios said. “Niche marketing lang 'yan. You are hitting a niche market. Otherwise, hindi talaga puwedeng makipagsabayan ka.”

By PAUL JOHN CAÑA | Esquire