Playground grudge match

I remember as a young boy how Filipino men folk would get a kick out of making boys fight each other through a series of challenges. It often started by asking if one boy was afraid of the other and if he said no, he would then be challenged to hold his potential opponent in the ear or in the nose or the pee-pee!

I can still remember the “tambays” going: “Sigue nga, pitikin mo sa tenga kung hindi ka takot” (Ok if you’re not scared, flick or smack him on the ear). Ultimately, pride will get in the way and the two boys will start sparring like native chickens, out to prove themselves and define their territories.

This is the same way I view the grudge match that has erupted between Telecom giants Globe and Smart, concerning the latter’s acquisition of Digitel, the company more popularly known as Sun.

From respected corporations and brand names, the two companies have just about gone down to the level of kids squabbling in the playground or fishmongers going tit for tat. But just like in the case of Filipino children, I believe that the two giants are not wholly at fault for fighting with each other.

Yes they may have issues with each other but at the end of the day, would the situation have gone this far if the concerned government agencies were doing their job or taking pre-emptive action on the highly publicized issues? Of course not!

Whether it is the NTC, the SEC or the Stock Exchange, I don’t know, but someone should have known early on whether or not it was proper or legal for either Globe or Smart to bid or buy the majority shares of stocks of Sun, before it turned into a childish squabble or a consummated sale.

No less than Congressman Jackie Enrile was the first to “flag” his concern claiming that buying Sun as a company or most of its shares is not as simple as buying ice cream since the principal business operates on the basis of a Congressional franchise.

Then there is the NTC circular that limits ownership of “radio frequency” at 10 megahertz per company. However, the actual situation is that in the process of acquiring or buying smaller operators, Smart now controls 45 megahertz versus Globe’s 10 megahertz.

Beyond the issue of direct competition or the absence of it, the regulators must also investigate why a company would sell off a supposedly successful, fast rising challenger in the telecoms industry.

Just when everybody recognizes Sun as a viable and preferred service provider, the owners sell off everything they own, including their customers. The business would be nothing if it were not for their customers, who bought into the business based on current management practices, services and philosophy.

But in this day and age, we have seen far too many upstart companies get all dressed up, attract customers, and then bail out to the competition to the highest bidder! The curious thing is that these are often competing brands to giant corporations. From Mang Inasal to Sun Cellular, the bail out or buy out has often left consumers stuck or left behind, while the previous owners laugh all the way to the bank!

On the reverse, it is also a dangerous practice; to allow the rise of third generation Pacmans who simply eat up or buy out the competition and ultimately take away competitive prices and innovative products and services.

To be fair to giants like Smart etc. answers must be given to such questions like: Would such a transaction create a virtual monopoly of the telecoms market? Does buying the majority shares alone establish the probability of a monopoly or a duopoly where Globe comes in as a very weak number two?

What impact or risks does the sale of Sun/Digitel pose on its stockholders as well as those of Smart, once Smart absorbs the financial liabilities of Digitel? Do investors and ordinary shareholders even understand the consequence of the buy out in terms of their shares being diluted in value? 

From beginning to end, the playground squabble is undoubtedly a regulatory issue or to be more accurate: failure to regulate.

As a result, we now have the grudge match where Globe is demanding regulatory enforcement while Smart is accusing Globe of being cry babies simply because they failed to clinch the deal. Apparently, Smart won fair and square, but was there ever a contest?

It was not very long ago that representatives of the Securities and Exchange Commission, as well as officials of the National Telecommunications Commission found themselves at the Senate where they were interrogated, berated and humiliated for lapses in judgment and failure to perform their duties as regulators.

Apparently, very little has changed.

Perhaps our Senators and Congressmen should once again invite the regulators to Congress and ask the regulators if they are really regulating or just signing off on applications, permits and franchises.

I have repeatedly raised the scandalous fact that Philippine radio, particularly FM radio, is run by a cartel or a handful of family corporations on the basis of documentary misrepresentation, yet the NTC has never lifted a finger. Should I ask why? Or how much?

In the whole week or so that Globe and Smart have been at each other’s throat, I have not heard or read anything that tell us that the regulators have stepped in and shush the battling brats. I appreciate that mere bureaucrats would not wish to be squashed in the clash of the Titans, but that’s their job and they do so not in the interest of the titans but to protect public utility, stock value, and public interest.