Philcomsat’s sorry saga

There was a time when the Philippine Communications Satellite Corp. or Philcomsat was the telecommunications model of the country. The company practically defined the framework for the telecom industry, and for decades provided satellite communications services for the entire nation.

That was then. The sorry saga that is Philcomsat today says a lot about wasted opportunities and the government’s indifference to the problems besetting the sequestered telecom firm. More importantly, there are now insinuations that the group of minority shareholder Victor Africa, which wrested control of management from the government in 2000 by force, has allegedly plundered Philcomsat and the Philippine Overseas Telecommunication Corp. (POTC), a wholly owned subsidiary of the former.

Since 2001, no one knows what has been happening in these two firms. Africa has reportedly turned down requests from the Presidential Commission on Good Government to open the companies‚ books and submit them to an audit, a strange thing altogether since the government actually owns majority of POTC and Philcomsat.

There are reports that POTC and Philcomsat are now in the red, allegedly due to mismanagement. It would certainly appear that way if we go by the previous financial reports of Philcomsat: in 1999, the company posted a net income of P100.2 million on revenues of P268.19 million. In 2000, net income grew to P121.75 million on revenues of P298.87 million. However, in 2001 – when the Africa group had already taken the reins to the two companies – Philcomsat posted a net loss of P71.9 million.

Africa and his group have been at the helm of Philcomsat since 2000, the year they took over management literally by force. They even kicked out a government nominee and barred him from entering the company premises. That brazen act now seems to symbolize the kind of struggle the government faces in POTC and Philcomsat. Africa and his group have even gone to the extent of ignoring the most recent board elections in POTC and Philcomsat (August 2004) which was validated by the PCGG and the Securities and Exchange Commission.

To better understand the situation at POTC and Philcomsat, a brief background: Philcomsat and POTC were sequestered by the government in 1986. In that same year, Jose Yao Campos surrendered to the PCGG two companies – Independent Realty Corp. (IRC) and MLDC Land Development Corp. (MLDC) – which owned 40 percent of POTC’s stock. A compromise agreement forged between then PCGG Commissioner Hermilo Rosal and the late Marcos crony Potenciano Ilusorio in 1998 diluted the government’s stake in POTC to 35 percent. The agreement, later contested by the PCGG, would eventually be upheld by the Supreme Court.

Before the High Court ruled on the compromise agreement, the 60 percent owned by different owners was broken down into the following: the group of former Ambassador Manuel Nieto Jr. (13.1 percent), Honorio Poblador group (12.3 percent), Potenciano Ilusorio group (13.1 percent), Africa group (7.1 percent), Roberto S. Benedicto group (7.1 percent), and the family of Senator Juan Ponce Enrile (6.6 percent). How the compromise agreement reshapes the ownership landscape is still unclear, but it will eventually play a crucial role in determining the fate of the two telecom firms.

That compromise agreement now forms the crux of a fierce battle for control of POTC and Philcomsat between the PCGG on one hand and a group of minority shareholders led by the Africa group on the other. Sources close to both groups say Africa has been using the Supreme Court ruling on the compromise agreement as basis for his control of Philcomsat since the ruling would supposedly justify Africa‚s takeover of management in 2000. Curiously, the Supreme Court ruling is mum on the Africa group’s rump election in 2000.

This now raises some issues that would also play a crucial role in determining the fate of POTC and Philcomsat: should the omission of the 2000 rump election in the High Court’s ruling on the compromise agreement be taken to mean that is no ruling yet on who should actually have control of the two firms?

These legal questions have strong repercussions on POTC and Philcomsat, and to the rule of law itself. PCGG nominee Manuel Andal (he is, on record, Philcomsat treasurer but don‚t tell that to Africa) was right in declaring that the issue is not whether government owns 35 percent or 40 percent. It’s still the money of the people of the Republic of the Philippines, he said.

We believe it is high time for the government, whether through the PCGG, the National Telecommunications Commission (NTC) or even the Office of the President, to fix the problems at POTC and Philcomsat. The problem seem to be simple enough to solve: install the duly elected board in the two firms using laws, corporate regulations and plain and simple common sense. And if indeed there has been plunder and mismanagement, then let the axe fall where it may. What is the government afraid of anyway?

Can’t turn them off

And now for some very disturbing news.

If you bought a Sony Bravia LCD or rear-projection screen TV within the past year, you may have a little bit of a problem on your hands. Roughly 400,000 of the TVs which were sold in North America, South America and Asia cannot be turned off or come out of standby mode once they pass 1,200 hours of use.

Japan’s Sony Corp. has just warned that about 400,000 if its Bravia brand liquid crystal display (LCD) and rear-projection TVs launched last year may malfunction due to faulty software.

According to a Sony spokesperson, after 1,200 hours of use, the TVs may not be able to be turned off or switched out of stand-by-mode. The TVs were sold in Japan, the United States, South America, China and other Asian countries.The software for those sets receiving digital or cable broadcasts can be upgraded automatically but Sony must dispatch a person to fix those TVs that are receiving analog signals

The number of TVs affected comes to about 10 percent of the 4.2 million LCD and rear-projection TVs Sony is aiming to sell in the current business year to March. Sony has enjoyed strong sales of its Bravia brand TVs since launching them worldwide late last year, taking market share from LCD rival Sharp Corp. in the United States market during the key year-end holiday season.

Sony has admitted that about 18,000 of these very expensive tv sets it sold in China have a software glitch that makes it difficult to turn the TV on or off. The TV sets in question belong to five models, two of which are rear projection models, manufactured between August and Nov. last year at Sony’s Shanghai factory.

It is now offering free software upgrade to consumers who have bought the models - KF-E42A10, KF-E50A10, KLV-V26A10, KLV-V32A10 and KLV-V40A10. Apparently, Sony discovered the error while running tests on the TV sets. The clock in the software resets itself after 1,200 hours of operation.

Users will have to pull the plug and then plug it back in to get the TV up and running. So far, of the 17,923 affected models sold in China, 12,844 are rear projection TV sets and 5,079 are LCD TV sets. Consumers would have to leave their TVs running for 50 days non-stop before the error occurs. Sony has admitted that the glitch affects the same models sold worldwide.

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