Dito's bid for fresh 25-year franchise in limbo ahead of March 2021 commercial rollout
MANILA, Philippines — Uncertainty grows ahead of Dito Telecommunity Corp.'s much-awaited commercial launch next year after senators, who were unconvinced that the company can fulfill its promises, put the firm's bid for a new franchise in limbo.
Unlike in the House of Representatives which only took two months to approve the franchise bill, the third telco player's application for a fresh license is already facing headwinds at the committee level in the Senate, with senators deferring deliberations until the company provides a convincing proof that it can meet its goals.
Mindanao Islamic Telephone Company (Mislatel) currently acts as the franchise holder of Dito, the 60-40 joint venture between Davao-based tycoon Dennis Uy and state-owned China Telecom. Granted in April 1998, Mislatel's 25-year franchise will expire in 2023 or in the middle of Dito's nascent commercial operations.
"When DITO applied for this franchise and made all these commitments, they should have had the forecast of what they were going to spend already," Sen. Grace Poe, chair of the Senate Committee on Public Services, said in the telco's franchise hearing on Monday.
"They should not have anticipated a renewal of its franchise unless they're able to produce the commitments that they're able to make without additional funding," Poe added.
A non-renewal of franchise would be detrimental to the ambitions of Dito, which needs to provide 27 mbps minimum average internet speed to 37% of the country's population in its first year of operations. In its fifth year, the Uy-led firm must cover 84% of Philippine population.
The company had to delay its technical launch scheduled for July this year by six months due to business disruptions from coronavirus lockdowns. During the technical launch, the government will check Dito's capability to meet its commitments. But the telco company said it remains on track to its commercial launch in March next year despite the delays.
For his part, Senate Majority Leader Juan Miguel Zubiri warned that banks may refuse to lend money to the capital intensive telco startup if its franchise application hangs in the balance. "They're not as big as Ayala or MVP (Manny V. Pangilinan)," Zubiri argued, referring to the owners of incumbents PLDT Inc. and Globe Telecom Inc.
But Poe was unfazed. "What we're trying to prevent here is other applicants will anticipate a renewal and then they are not anymore rolling out unless they get that renewal of the franchise," she said. "I don't want our committee to be a hostage of that."
For the technical launch in January, Dito hired R.G. Manabat & Co. to conduct an independent audit of the firm's ability to meet government-mandated targets. For now, company officials said Dito is already in the middle of its friendly user test.
"There will be more confidence in the viability of our enterprise if the franchise is extended," Adel Tamano, company chief administrative officer, told senators.
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