Telstra abandons Philippines mobile expansion

Negotiations between Telstra and San Miguel Corporation to build a new mobile network in The Philippines have broken down.

Last year Telstra said it had envisaged investing up to $US1 billion in the potential joint venture with San Miguel Corporation, a conglomerate most famous internationally for its beer brewing, but which claims to account for about 6 per cent of The Philippines' gross domestic product.

In a statement issued to the Australian Securities Exchange this morning, Telstra said the two firms had been unable to reach agreement on the commercial arrangements for a joint venture.

Telstra's chief executive officer, Andrew Penn, said the organisations had agreed at the weekend to bring negotiations to an end.

"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," he said.

"While this opportunity is strategically attractive, and we have great respect for San Miguel Corporation and its president, Mr Ramon Ang, it was obviously crucial that the commercial arrangements achieved the right risk-reward balance for all involved."

Telstra has offered to continue to provide technical network design and construction consultancy support to San Miguel Corporation, should those services be required.

Telstra says it will continue to pursue growth opportunities in Asia.

The telecommunications firm said, after the acquisition of Pacnet last April, Telstra was now one of the largest connectivity providers in Asia.

Telstra is holding a conference call at 10:30am (AEDT) to discuss the unsuccessful negotiations.

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