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Philippines to allow China-backed telco to build towers on military bases

MANILA, Sept 11 (Reuters) - The Philippine military agreed on Wednesday to allow a new cellphone network powered by a Chinese state telecoms giant to install communications equipment on its army bases, despite concerns among some lawmakers about possible espionage.

The military said in a statement it had signed a preliminary agreement with Mislatel, a consortium controlled by Philippine tycoon Dennis Uy, to install communications facilities and towers at its camps and installations.

Uy, a close associate of President Rodrigo Duterte, was awarded the country's third telecoms license last year, helped by the last-minute withdrawal or disqualification of other bidders.

His two holding companies, which have no prior experience in telecommunications, have partnered with China Telecom, which currently owns a 40% stake, the maximum permitted under an archaic Philippines law that the government has promised to amend to support foreign investment.

The agreement comes despite calls for deeper scrutiny from some Philippine lawmakers concerned that state-controlled China Telecom could be a "Trojan horse https://reut.rs/2NXdg9g" with the capability to access state secrets.

It comes at a time of heightened cyber security fears surrounding Chinese national icon Huawei Technologies, the world's largest telecommunications equipment maker, which has been placed on a U.S. trade blacklist since May.

Washington has been urging its allies, Manila included, not to use Huawei gear, which the Beijing government could use for espionage, an allegation Huawei has denied.

In a statement, the Armed Forces of the Philippines (AFP) said Mislatel "guarantees that the devices, equipment, and/or structures installed at the site provided by the AFP shall not be used to obtain classified information" as a measure to prevent electronic espionage.

It noted that the AFP had a similar arrangement with the other two domestic mobile firms, Globe Telecom and rival PLDT.

The move aims to free-up state land to construct towers to try to address a shortfall that has for years resulted in intermittent signals, patchy coverage and dropped calls, with the country's two networks inundated with traffic among the country's 107 million population. Globe and PLDT blame excessive permit requirements for slowing their network expansion.

Once operational, the new player's network will be called Dito, or "here" in Filipino.

"The roll-out of Dito's towers is indeed one Herculean feat," Uy said in a statement. "We are nearer our goal of building a wide and robust network."

(Reporting by Martin Petty; editing by Emelia Sithole-Matarise)