Solons denounce PLDT buyout

The disclosure by the Gokongwei group that it has acquired a controlling stake in the Philippine Long Distance Telephone Co. (PLDT) was severely criticized yesterday by a number of congressmen led by Rep. Prospero Nograles (Lakas-NUCD), a ranking member of the committee on transportation and communications of the House of Representatives.

Nograles denounced the sale of the controlling stake in PLDT to the group of taipan John Gokongwei Jr. by the Salim family-controlled First Pacific of Hong Kong.

"The Salims may consider the PLDT transaction a simple exit mechanism for unloading their investments, in the Philippines," said Nograles. "But what they don’t realize (and probably don’t care about) are the adverse effects the takeover will have on the country. We will once again find ourselves facing a monopoly. The combination of the leading player with the second largest fixed-line operator will return the country to pre-liberalization period of the telecommunications industry. Sino ang magiging kawawa? Siempre, ang taong bayan! (Who will suffer? Of course the ordinary people)," he added.

There will be no more competition contrary to the liberalization policy laid down by Congress when it enacted Republic Act No. 7925 in 1995. It was due to the liberalization policy that the Philippines had increased the teledensity ratio from 0.8 telephones per 100 persons in 1992 to what we have now which is 14 telephones per 100 persons. We are now seeing the fruits of liberalization, but the takeover by Mr. Gokongwei will reverse the process," he said.

Various analysts have said that a Gokongwei buyout of Salim’s controlling 24.4 percent stake in PLDT will likely lead to a merger with Digitel. The congressmen led by Nograles see such a combination to be detrimental to consumers as this will allow Gokongwei to gain a monopolistic control over basic fixed line telephony, with 95 percent share of the market in an industry that is supposed to be undergoing deregulation.

Congressman Aurelio Umali pointed out that the entry of Digitel as the third cellular operator and provider of wireless services was the strategy of government, particularly the National Telecommunications Commission to foster more competition vis-à-vis the current Globe-Smart duopoly.

"Healthy competition promotes better services and lower costs. Mobile services subscribers overall stand to benefit from the introduction of a third market player — Digitel," he explained.

He said that by taking control of PLDT, Gokongwei will effectively also take control of the largest combined wireless operator in the country. Smart and Piltel which have recently announced that they have more than seven million subscribers.

Contrary to earlier reports, the PLDT sale between Gokongwei and Salim is far from a "done" deal and Nograles vowed that he would be among those closely monitoring the developments.

"There are no indications as to when a possible takeover could be reached but the parties involved better understand that we will not allow any buyout to take place without public knowledge and scrutiny. Too much is at stake here," he said.

In view of the congressmen’s concerns on the issue, Rep. Jacinto Paras, chairman of the committee on transportation and communications announced that he will immediately conduct a legislative inquiry into the said controversy.

"I will convene the committee to look into the takeover as PLDT is a public utility operator and is, therefore, imbued with public interest and, therefore, Congress should see to it that public welfare is served among all and that the paramount interest of the subscribers is protected."