Philippine president Rodrigo Duterte defended a deal allowing a Chinese state-backed telecommunications company to construct and manage communications towers on bases belonging to the military in a statement to journalists on Wednesday.

Why it matters: In stark contrast to the US-led campaign cautioning against China’s involvement in the construction of 5G networks worldwide, President Duterte rejected claims that China Telecom could use its position to spy on the Philippines military.

Details: The Armed Forces of the Philippines (AFP) signed a relevant memorandum of understanding last week with Dito Telecommunications, a consortium led by domestic conglomerate Udenna Corporation and China Telecom. The deal would allow Dito Telecommunications, previously known as Mislatel, to install bases and relay towers on military bases. The AFP has similar deals with two homegrown telecom firms, Globe Telecom and PLDT-Smart, the AFP told local media.

  • The memorandum is still awaiting approval from the Philippine Defense Secretary Delfin Lorenzana, who was traveling abroad when the agreement was struck and reportedly not informed about it.
  • A member of the opposition in the Philippine Senate Risa Hontiveros filed a resolution on Monday to investigate the deal after hearing that the defense secretary was “left in the dark.” Other senators including the Senate president condemned the agreement.
  • The AFP chief of staff defended the deal on Monday, saying that the military did not intend to bypass the defense secretary, and that similar colocation agreements exist with local telecom operators.
  • Duterte’s office dismissed these fears as “bordering on paranoia,” claiming that the deal was examined by government security experts, the Financial Times reported.

Context: The new consortium was formed as a ploy to break a monopoly held by Globe Telecom and PLDT-Smart, aiming to be the country’s third largest telecom player. Dito Telecommunications is led by Dennis Uy, a known local businessman and reportedly a close friend of Duterte’s, who has no experience in telecom services.

  • China Telecom owns 40% of Dito Telecommunications.
  • Despite a long-standing alliance with the US, Duterte has pivoted towards China. The two countries cooperate in joint military exercises and counter-terrorism.
  • In a state visit to Manila in March, the US Secretary of State Mike Pompeo said that using Huawei equipment in the development of 5G networks poses a risk to national security in the Philippines, and alluded that the deal may cause a shift in its relationship with the US.
  • The Duterte government has signed agreements with Huawei for four smart city projects around the Philippines, and is eyeing contracts for surveillance equipment with Chinese partners.

Eliza was TechNode's blockchain and fintech reporter until July 2021, when she moved to CoinDesk to cover crypto in Asia. Get in touch with her via email or Twitter.

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