100% Foreign Ownership of Telecommunications Companies in the Philippines

TL;DR: Since Republic Act No. 11659 took effect in 2022, telecommunications is no longer a “public utility” under Philippine law, so the constitutional cap that limited foreign ownership to 40% does not apply to it, and a wholly foreign-owned telecom corporation is legally possible. Ownership is only the first gate. You still need NTC authorization to operate, and the law gives the President power to block foreign control of a public service on national security grounds. A second law, Republic Act No. 12234 (the Konektadong Pinoy Act), adds NTC registration rules for data transmission providers.

The old rule: telecom as a public utility

The 1987 Constitution, in Article XII, Section 11, says no franchise, certificate, or other authorization to operate a public utility goes to anyone who is not a Filipino citizen, or to a corporation at least 60% owned by Filipino citizens. The same section says foreign investors’ participation in the governing body of a public utility is limited to their share of the capital, and that all executive and managing officers must be Filipino citizens. Foreign investors could therefore hold at most 40% of the equity of a public utility, and their seats on its board were capped at that share.

The Public Service Act (Commonwealth Act No. 146, 1936) did not define “public utility.” According to Cruz Marcelo & Tenefrancia’s summary of the law, what counted as a public utility had always been left to judicial interpretation. Section 34(g) of RA 11659 names the classification of telecommunications entities as public utilities in Republic Act No. 7925, the Public Telecommunications Policy Act, as one of the provisions it amends. In practice, a foreign carrier that wanted a Philippine telecom subsidiary needed a Filipino partner holding at least 60% of the capital. Joint ventures with local conglomerates were the standard way in.

The constitutional text did not change. What changed was the statute that decides which businesses count as public utilities.

What RA 11659 changed

President Duterte signed Republic Act No. 11659 on March 21, 2022. According to Cruz Marcelo & Tenefrancia, it was published in the Official Gazette on March 28, 2022 and took effect 15 days later, on April 12, 2022. The law amends the Public Service Act and splits two ideas the old statute had merged.

• A public service is a wide category of regulated activity, including telecommunications.
• A public utility is a much narrower category, and only public utilities are subject to the 60% Filipino ownership requirement in the Constitution.

Section 4 of the Act, which replaces Section 13(d) of the Public Service Act, defines a public utility as a public service that operates, manages, or controls for public use one of these sectors only:

1. Distribution of electricity
2. Transmission of electricity
3. Petroleum and petroleum products pipeline transmission systems
4. Water pipeline distribution systems and wastewater pipeline systems, including sewerage pipeline systems
5. Seaports
6. Public utility vehicles

The Act adds that no other person is deemed a public utility unless a later law says so. Telecommunications is not on the list. Airports, airlines, and railways are not on it either. The same section also says that nationality requirements shall not be imposed by the administrative agencies on any public service that is not a public utility.

The Foreign Investment Negative List is a separate test. Forvis Mazars reports that the 12th Negative List (Executive Order No. 175, issued June 27, 2022) reflected RA 11659 by removing telecommunications from the public utility restrictions in List A. The current list is the 13th Regular Foreign Investment Negative List under Executive Order No. 113, dated April 13, 2026. Read our guide to the 13th Negative List to check your service against it.

Before and after

The table shows the shift in one line. The ownership gate opened, and the operating gate did not.

What still counts as a public utility

If your plan touches any of the six sectors above, nothing in this article helps you. Those businesses keep the 40% foreign equity cap. Section 20(i) of the Public Service Act, as amended by Section 10 of RA 11659, makes void any sale or transfer of shares to an alien that would reduce Philippine nationals’ ownership of a public utility below 60% of its capital. The constitutional rule on executive and managing officers continues to apply to them.

A mixed project is the usual trap. A foreign company that wants to build towers, lay fiber, and run a seaport-adjacent cable landing station as one venture should map each activity to its own legal classification instead of assuming the whole venture is open. The telecom operating company can be wholly foreign-owned. A separate entity that runs a seaport cannot.

The practical registration path

A foreign investor who wants to hold 100% of a Philippine telecom company registers as it would any other foreign-owned domestic corporation. The steps run roughly like this.

1. Check the Negative List. Confirm that your specific telecom service, and any non-telecom business the company will also run, is not restricted by the current Foreign Investment Negative List. Our guide to the 13th Foreign Investment Negative List explains how Lists A and B work and how to read the current edition.
2. Choose the entity and the capital structure. A stock corporation incorporated with the Securities and Exchange Commission is the usual vehicle. The general structure for a corporation with 100% foreign shareholders is covered in 100% foreign ownership in the Philippines.
3. Incorporate through the SEC. File the articles of incorporation and by-laws and obtain the certificate of incorporation. The SEC does not issue a telecom license. It registers a corporation. Section 16(a) of the amended Act allows NTC certificates to be issued only to corporations organized under Philippine law, so the operating company must be a Philippine corporation.
4. Register with the tax and local authorities. The corporation needs a BIR registration, a mayor’s permit, and the other standard registrations of any domestic company.
5. Apply to the NTC. Obtain the authority the specific telecom service requires. This is a different process with a different agency, and it can be the slowest part.

You can sequence steps 3 and 5 in parallel to save time, but you should not commit funds to network equipment before you know the NTC will authorize the service.

The NTC authorization is a separate hurdle

Owning the corporation 100% does not replace the separate authority to provide telecommunications services. Under Section 2(b) of the amended Act, a “certificate” means any franchise, certificate of public convenience, certificate of public convenience and necessity, concession, or other appropriate form of authorization for the operation of a public service. Section 3(m) lists the NTC among the agencies that took over the powers of the old Public Service Commission. RA 11659 changed who can own the operator. It did not turn the NTC into a simple registry.

Whether your service also needs a franchise from Congress is a separate question. Section 4 of the Act says any franchise or certificate needed to operate a public service is granted by Congress, unless an existing law has delegated that power to an administrative agency. It also says nothing in the Act requires a legislative franchise where no law requires one. Which path applies depends on the telecom law that covers your service, so ask the NTC.

Two more points from the statute:

• Franchise terms. Section 31 says any franchise, certificate, concession, or authorization under the Act is not exclusive, cannot run longer than 50 years, and can be amended, altered, or repealed by Congress when the public interest requires.
• Fees and timelines. The Act lets agencies collect reasonable fees and charges (Section 22). Ask the NTC for the current fee schedule and processing time for your service instead of relying on a secondary source.

Information security and audits

Section 26 of the Act requires persons and companies engaged in the telecommunications business to obtain and maintain certification from an accredited certification body that they comply with relevant ISO information security standards, as prescribed by the DICT. Keeping that certification is a continuing condition for keeping your franchise or other authority to operate. The requirement does not apply to micro, small, and medium enterprises under RA 6977.

Section 29 requires administrative agencies to ensure an annual performance audit by an independent evaluation team. For critical infrastructure and public utilities, the audit covers risk assessment, emergency response, and cybersecurity.

National security limits that came with the liberalization

Congress paired the opening of ownership with several controls. They matter more to a telecom investor than to an investor in, say, a restaurant chain.

Presidential power to suspend or prohibit

Section 23 of the Act lets the President suspend or prohibit a proposed merger or acquisition, or any investment in a public service that effectively gives a foreigner control, in the interest of national security. The President acts after review and a recommendation from the relevant agency, and the power can be exercised within 60 days from receipt of that recommendation. A foreign buyer of a telecom operator should treat this as a real approval risk and build time and a long-stop date into the deal terms.

Critical infrastructure and reciprocity

Section 2(e) defines critical infrastructure as a public service that owns, uses, or operates systems and assets, physical or virtual, so vital to the Philippines that their incapacity or destruction would have a detrimental impact on national security. The definition expressly includes “telecommunications,” along with other vital services the President may declare. Section 25 provides that foreign nationals shall not own more than 50% of the capital of entities engaged in operating and managing critical infrastructure, unless their country accords reciprocity to Philippine nationals.

A telecom business is therefore within the definition’s reach. Whether a particular network or service is critical infrastructure depends on its role in national security, not on its label. Ask counsel to analyze your service before you assume the 100% figure applies without the reciprocity test.

Foreign state-owned investors

Section 24 bars an entity controlled by or acting on behalf of a foreign government, or a foreign state-owned enterprise, from owning capital in any public utility or critical infrastructure. The ban applies to investments made after the Act took effect. A foreign state-owned enterprise that already held capital may not invest additional capital. The exception is sovereign wealth funds and independent pension funds of each state, which may collectively own up to 30% of the capital of such services. If your investor group includes a state-linked fund, this section can change the whole structure.

Existing franchises and contracts

Section 32 protects vested rights and existing contracts. Current concession agreements and similar contracts covering activities classified as public utilities stay valid on their existing terms until they expire or end. The reform does not rewrite the terms of an existing operator’s arrangement.

Pending challenges and how settled the reclassification is

The law is in force, and the Foreign Investment Negative List reflects it. It is not entirely free of dispute, and we did not confirm the status of any constitutional challenge to RA 11659 from a Supreme Court source. The Act includes a separability clause (Section 33), so if the Court struck down some provisions, the remaining ones would stand. A foreign investor putting significant capital into a telecom operator should have counsel confirm the docket before closing and should price the residual risk into the structure.

Data transmission providers under RA 12234

Republic Act No. 12234, the Konektadong Pinoy Act, is dated August 24, 2025. The enrolled copy records that it lapsed into law without the President’s signature, under Article VI, Section 27(1) of the Constitution. It takes effect 15 days after publication (Section 35).

The Act sets the framework for “data transmission industry participants” (DTIPs). Its scope (Section 4) covers all DTIPs, including VoIP providers, internet service providers, and satellite systems providers. Telecom entities that also provide data transmission are covered for that business.

What it changes for a data transmission provider:

• Registration with the NTC. All DTIPs must register with the NTC. Section 8(a) applies “notwithstanding” any other law and makes NTC registration the entry procedure for the industry. The Act does not create a congressional franchise for data transmission. Existing legislative franchises for telecom stay valid only insofar as they do not cover data transmission services (Section 30(a)).
• Foreign ownership. Section 8(a) subjects foreign entities entering the industry to the Foreign Investments Act, as amended by RA 11647, and to the Public Service Act, as amended by RA 11659. The Act sets no separate foreign ownership cap. Its definition of DTIP (Section 3(i)) excludes foreign government-controlled entities and state-owned enterprises, except independent pension funds, sovereign wealth funds, and multinational banks.
• Backbone and gateways. Anyone seeking to operate an international gateway facility or a core or backbone network needs NTC authorization, which considers the proposed route or rollout plan (Section 8(b)).
• Spectrum. A DTIP that uses spectrum must secure NTC authorization and an assignment (Section 8(a)). Assignments follow the Spectrum Management Policy Framework (Section 10). No frequency may be recalled within 18 months of the award of a provisional authority, license, or registration (Section 10(i)). The NTC must act on permits to import equipment within seven days, or they are deemed approved (Section 10(g)). Assignments and joint use applications must be notified to the Philippine Competition Commission (Section 10(j)).
• Cybersecurity. Every DTIP must follow cybersecurity best practices, is subject to a performance audit by the DICT’s Cybersecurity Bureau, and must obtain a third-party ISO-based cybersecurity certification within two years of registration (Section 9). This applies alongside the RA 11659 certification for telecom businesses.
• Open access. Access providers must offer access to infrastructure on the access list on fair and non-discriminatory terms, and publish a Reference Access Offer (Sections 12 and 13).

The Act requires the DICT to issue implementing rules within 90 days of effectivity (Section 31). Several NTC deadlines run from the effectivity of those rules, including the registration eligibility criteria, which the NTC must formulate within one month of the rules taking effect (Section 7(b)). We did not confirm whether the implementing rules have been issued, so check the status before you rely on the registration criteria.

A worked example

Take a Singapore-based network operator that wants to offer fixed-line broadband in the Philippines.

• Before RA 11659. It would have needed a Filipino partner holding at least 60% of the Philippine operating company, Filipino executive and managing officers, and a board seat count limited to its equity share. The Singapore parent topped out at 40%.
• After RA 11659. The parent can incorporate a Philippine subsidiary that it owns 100%, and it can appoint its own directors and officers, because the public utility nationality rules do not reach telecommunications, provided the critical infrastructure reciprocity test is met.
• What the operator still has to do. It must clear the Negative List check, incorporate with the SEC, and apply to the NTC for authority to provide the service. It must register with the NTC as a DTIP under RA 12234 and obtain the ISO information security certification under Section 26 of RA 11659, unless it is a micro, small, or medium enterprise. If the national security angle is triggered, it should expect scrutiny of the ownership chain. If its service is critical infrastructure, it should be ready to show reciprocity from Singapore or reduce its stake to 50%. If a state-linked fund is a shareholder, it should check the 30% ceiling in Section 24.

Planning checklist for a foreign investor

1. Identify the exact service category and map it against the six public utility sectors and the current Negative List.
2. Decide whether the business could be critical infrastructure, since telecommunications is named in the definition, and test the 50% reciprocity cap.
3. Screen every upstream shareholder for foreign government control and state-owned enterprise status.
4. Ask the NTC about franchise, authorization, fees, and timing for your specific service.
5. Confirm the information security certification and, for data transmission, the RA 12234 registration and cybersecurity requirements.
6. Build national security review time into deal documents.
7. Confirm the status of any court challenge to RA 11659 immediately before you fund the entity.

This guide is general information, not legal advice on your specific facts. Book a consultation if you want a fixed-scope review of your telecom structure before you file.