SEC okays PLDT waiver of escrow in Digitel deal

MANILA, Philippines - The Securities and Exchange Commission (SEC), the country’s corporate regulator, has approved in principle a request from the Philippine Long Distance Telephone Co. to be exempt from putting in escrow the shares it will pay the Gokongwei Group for a 51.55-percent stake in Digital Telecommunications Philippines Inc. (Digitel).

PLDT recently acquired Digitel from the Gokongwei Group.

SEC commission secretary Gerard Lukban said though that PLDT has been directed to formally seek exemptive relief as required by SEC rules.

He noted that PLDT would have to spend more than P100 million if it were to put the shares under escrow.

PLDT and the Gokongwei Group have asked the SEC to waive the escrow requirement since the transfer of ownership is assured by the fact the PLDT will own controlling interest in Digitel.

“Being liabilities of PLDT controlled subsidiary, these liabilities are deemed to be of acceptable credit standing and are collectible in full,” the SEC said.

PLDT and Digitel’s rival Globe Telecom which is owned by the Ayala Group assailed the deal as a threat to free competition in the telecommunications industry.

“With so much clout, significant market power and influence now consolidated and vested in the PLDT group, free competition is threatened and ultimately the public good is gravely placed at risk,” said Globe counsel Rodolfo Salalima.

Furthermore, Globe said with the deal, PLDT now has the dominant market clout.

As such, Salalima said the spectrum frequency assignment must be revisited by the National Telecommunications Commission and distribute this fairly to other players to give them a chance against PLDT.

“Theoretically, Smart and Sun should not be assigned more than 224 Mhz of the spectrum (as against the 372 Mhz after their consolidation) to cater to 60 million subscribers,” Globe said.

Globe said it costs less to serve the same number of subscribers with more spectrum from an investment-to-capacity perspective.

The rival firm also said with the deal, PLDT-Digitel would be able to serve more customers and deliver more services than Globe.