Eligibility of 3rd telco player questioned

MANILA, Philippines — The consortium granted provisional authority to operate as the country’s third telco player has no franchise and thus should be stripped of its newly won entitlement as challenger to the so-called “duopoly” of local telecommunications giants, an infrastructure think tank said yesterday. 

Infrawatch PH, through convenor Terry Ridon, claimed that the congressional franchise granted to Mindanao Islamic Telephone Co. (Mislatel) in 1998 had been automatically revoked for the group’s failure to list in the stock market, a condition set for the granting of franchise. Ridon was a member of the House committee on legislative franchise.

“Sorry to rain on the parade of the Mislatel consortium, but the public needs to know that the franchise of Mislatel is non-operational,” he said.

“In fact, it has been automatically revoked in 2003 for its failure to join the stock market. We have checked the list of companies currently in the PSE (Philippine Stock Exchange); there is no publicly traded entity named Mislacom,” said the former Kabataan party-list lawmaker.

The Mislatel consortium – comprising Udenna Corp. of Davao-based businessman Dennis Uy, its subsidiary Chelsea Logistics Holdings Corp. and China Telecommunications Corp. – was named provisional new player in the telco industry after two other groups were disqualified for incomplete requirements.

Ridon, also the former chairman of the Presidential Commission for the Urban Poor under the present administration, said the law that granted franchise to Mislacom requires the company to offer at least 30 percent of its outstanding capital stock in the stock exchange within five years from commencement of its operations.

“We have not monitored the entry and participation of Mislacom in the Philippine Stock Exchange at present, and we highly doubt that Mislacom had ever participated in the PSE in the past,” he pointed out.

“This only means that Mislatel lost its franchise automatically in 2003, when it failed to join the stock market. Correspondingly, Mislatel as a telco, and Mislatel consortium, have absolutely no personality to join and participate in the proceedings to become the new third major player,” he added.

The former lawmaker urged the Department of Information and Communications Technology (DICT) and the National Telecommunications Commission (NTC) to disqualify the consortium for gross misrepresentation.

“Mislacom had ipso facto lost its franchise in 2003 yet it has represented itself as in possession of a valid and subsisting franchise before our government authorities,” he said.

“Anything less than an outright disqualification of the consortium will taint the entire selection process as flawed and biased towards an obviously unqualified entity,” he added.

 No special treatment

At Malacañang, presidential spokesman Salvador Panelo denied the “baseless assumption” that Uy’s group had received special treatment.

“Given the character of this President, it’s farfetched. As we all know, relationship, alliances, friendships do not matter with this President. What matters to him is you follow the law and I’ll be with you, you don’t follow it and I’ll be against you,” he said.

“There are legal requirements for the entry of a third player. In the preliminary screening of that particular corporation or the person you mentioned, Dennis Uy, has passed it. From what I gathered, the other bidders lacked certain requirements that is why that particular corporation won over them,” he said.

“Well, it doesn’t make you close to the President if you support the President. Number two, the President’s policy is not to interfere with his departments as well as the committees created by those departments,” Panelo maintained.

“So, the President has nothing to do with any of those bidding, any of those negotiations or contracts. That’s the policy of the President and it holds until the end of his term,” he added.

He stressed losing bidders may always appeal Uy group’s winning bid.

For Senate Majority Leader Juan Miguel Zubiri, the government’s choice of the consortium was aboveboard.

“It is fair to say that the transaction is aboveboard. Let us wait for the DICT to come up with the final recommendation or final report,” Zubiri said at the Kapihan sa Senado forum yesterday.

“In fairness, Dennis Uy’s (partner) is the third biggest company in China with 250 million subscribers. Our two other players have 40 million subscribers,” he said. “They are five times bigger than the two telcos here combined.”

The two local telcos he was referring to were Globe Telecom and Smart Communications.

Zubiri said what’s important is for the third telco to deliver its promises of low rates, fast internet connectivity and better service.

On national security concerns, Zubiri said China Telecoms is publicly listed, and its book is open for public scrutiny.

“I don’t think it would be fair to say that this is a problem for national security. I believe China telecoms is publicly listed firm so their books are open,” he pointed out.

No need for Charter amendment

He also stressed that having a China-owned telco operate in the country would not require amending the provision in the Constitution that limits ownership of public services-related enterprises to 40 percent.

“We don’t actually need to amend the Constitution because the Constitution states that public services should be Filipino owned, 60-40,” he said. “What we would like to happen is to amend the Public Services Act so that way hindi na po questionable ang pagpasok ng foreign entities,” he noted.

He claimed that many countries in Europe allow foreign groups to control some enterprises to ensure better services for the people. “It is what you call open competition,” he maintained.

He noted that a Chinese company owns 40 percent of the National Grid Corp. “Sa totoo lang kung gusto nila i-brownout ang Philippines, isang switch lang (To be frank, if they want brownout in the Philippines, it just takes one switch). But they have been doing their part in helping develop our energy sector.”

As legal questions have been raised against Mislatel’s winning bid, Aangat Tayo party-list Rep. Neil Abayan said there is actually room for more telcos in the Philippines.

“All this talk about having just a third telco, in my view, limits our country’s growth potentials and consumer options,” he said.

“There is room for more than just three players, given the fact that our country has a number of unused spectrum frequencies, has thousands of telecom dead spots nationwide and knowing that internet and other technologies can widen our telecom options,” he explained.

He said the country has a fast-growing population and an expanding economy needs more telcos.

Abayon said the DICT and the NTC should try to recover unused radio frequencies.

He said a published 2017 NTC report showed “there are some government agencies and several private sector entities which have been assigned but did not use and pay for frequencies.”

He said radio frequencies are considered state assets and should be returned to the government for use by other interested parties like new telecom service providers.

Opposition Sens. Franklin Drilon, Riza Hontiveros, Leila de Lima, Francis Pangilinan and Antonio Trillanes IV, for their part, have expressed concern over the legality of the deal with Uy’s group.

“We do not want another NBN-ZTE ($329 million) and North Rail ($421 million) anomalous deals in our midst which, if not exposed, would have robbed the people of billions of pesos,” the senators said in a statement, referring to anomalous deals entered into with China during the Arroyo administration.

“What qualified it in the first place? Why were the other bidders booted out? What is the track record of the winning bidder in the telecommunications business? Was the government opening up the bidding to other players just a formality?” they asked.

“The government should be transparent about these matters because allowing the joint venture to enter the industry means giving them access to our daily communication activities, a security issue for our country and our people.”  – With  Jess Diaz, Cecille Suerte Felipe, Christina Mendez