For any telecom firm to enter into business they need a well developed infrastructure such as Satellite, Mobile tower, Fibre optics etc. which they can access with relative ease. Developing economies such as Philippines have these available up-to some acceptable extent and is in progress to develop and upgrade existing infrastructure.
Apart from that there are other barriers such as price control by the government, Foreign direct investment cap on telecom sector in Philippines. Also there is duopoly in Philippines telecom sector which is dominated by Globe Telecom Incorporated and PLDT incorporated. However, environment in Philippines is favourable for investment since they have invited international player to invest in Telecom Sector. The objective is to break PLDT Inc. and Globe Telecom Inc.’s duopoly. To overcome these barriers Telus could use the strategy followed by the Vodafone India Ltd. to enter Indian market. Telus can enter Philippines by acquiring a stake in small telecom such as Philippines telegraph and telephone corporation (PT&T) to form a merger, just as Vodafone has acquired 66% in Hutichision essar to enter into Indian market.
According to rapper, “Philippines telegraph & telephone corporation is actively searching for financial and strategic investors” to regain its status as a major telecommunications force in the country”.(Naming Philippines’ 3rd telco might take longer than expected , 2018). For short term perspective Telus should focus on understand cultural consideration, legal restriction, environmental risks, pricing and taxation system in Philippines while building customer base and developing relationships.
Family conglomerate runs business in Philippines and developing good relation ship with them is key to setup a business in Philippines. Once they have overcome this limitation they can go for negotiations to form complete merger and acquire the firm completely. There are some advantages of such Merger and Acquisition discussed as follow: Companies such as Philippines telegraph and telephone corporation (PT&T) have consolidated core position which can be used by Telus to set up a good base for overall expansion in market. Since, Philippines telegraph and telephone corporation (PT&T) and Telus will share infrastructure and many resources it is quick and efficient method to access a market.
Philippines telegraph and telephone corporation (PT&T) will have access to Telus’s financial and management resources. With Merger Telus will have access to Philippines telegraph and telephone corporation (PT&T)’s asset and will share a proven workforce, operations and system of each other. Effect on Pre-existing Firm Philippines telegraph and telephone corporation (PT&T) will have access to Telus’s management resources. They will share financial resources with Telus as a result they will have more capital to invest and compete with existing firms. They have to give up management control to the partner firm upto some extent. Exit strategy Before any investment should made, contingency plan in case of failure to meet strategic plan should be decide. In case of partnership, there should be exit clause in this situation in the partnership agreement in case partner wants to exit. Reasons for ending a partnership Partners fail to meet their strategic objectives. Difference in management style or strategic objective. Financial issue. Partner fail to stick to the terms of the agreement. Partnership has fulfilled its purpose.
The exit strategies that can be adopted by Telus are discussed as follow: Acquisition- Company is purchased by another business or its share in merger or acquisition can be purchased by another business. Sale- They can sell their share in the market where it could be purchased by the individual. Buy out- Partner’s share is purchased by other partners or they arrange someone for buyout exiting partner. Of course there are other exit strategies Such as reorganization and closing operations but they re not viable option. Reorganization they need more than one partner and for Closing operations it means loss of investment.