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3-4 applicants good enough for ‘third player’ auction — DICT

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DICT Acting Secretary Eliseo M. Rio, Jr. — PHILSTAR

THE Department of Information and Communications Technology (DICT) said it will consider the selection process for the new telecommunications industry entrant, the so-called “third player,” to be successful if it attracts three or four applicants.

“If there are companies ready to compete with Globe (Telecommunications, Inc.) and Smart (Communications, Inc.), why not go ahead? Why should we wait for others? Maybe those who did their homework are more serious than those who are coming in late,” DICT Acting Secretary Eliseo M. Rio, Jr. said.

Mr. Rio was speaking at a public hearing in the context of the government’s timetable for selecting a third player by December. It was the first public hearing to finalize the memorandum circular on the terms of reference (ToR) which will govern the selection process.

Asked if the timeline is still achievable, Mr. Rio told reporters, “Actually we would like it to be even earlier. Even for the public, December might be too late.”

He said while there is a need to review all the inputs from the public hearing and the position papers solicited for submission within 10 days after the event, applicants who “did their homework” early are expected to be ready to participate in the auction once terms are finalized.

He noted that three or four applicants would be sufficient for a competitive auction, which the DICT has scheduled for the fourth quarter. Bid documents are expected to be ready by Sept. 26.

Mr. Rio’s readiness to accept applicants who can participate in the auction immediately followed a question raised during the hearing that a US company may need six months to prepare for a bid.

He also signalled his preference to gauge bidder interest in the frequency currently on offer, rather than add more spectrum for the use of the third player.

“When the third player enters the market, it will have nearly zero subscribers. It might take six months for them to hit 1 million. So they don’t need that much frequency,” Mr. Rio said.

Regarding the Philippine Competition Commission (PCC)’s warning that the draft ToR as written might trigger a review of the transaction if the PCC’s suggested changes are not incorporated, Mr. Rio said the DICT will adopt the PCC’s suggestions, as these are expected to smooth the process of welcoming a third player.

PCC Chair Arsenio M. Balisacan said last week that the agency may waive its 90-day review of the winning bidder if the DICT adopts its recommendations for the ToR.

The PCC has said it wants a more precise definition of “Related Party,” a prohibition on mergers, combinations or becoming a related party to an incumbent, a rule governing the return of frequency, and the clawback of spectrum in case of non-use, among others.

Mr. Rio said 15 telcos are “sort of qualified” to participate in the bidding because they have congressional franchises and are not affiliated with Globe or Smart.

Among the Philippine companies, he identified as potential entrants Philippine Telegraph and Telephone Corp. (PT&T), NOW Corp., Converge ICT Solutions, Inc., Transpacific Broadband Group International, Inc. (TBGI), EasyCall Communications Philippines, Inc. and TierOne Communications International Inc.

The international companies Mr. Rio listed include China Telecom, South Korea’s KT Corp. and LG Uplus Corp., an unidentified Japanese company, Vietnam’s Viettel Telecom, Norway’s Telenor Group and an unidentified US company.

Reuters, citing a company statement, has reported that Viettel, a unit of military-run Vettel Group, is interested in the auction and is awaiting the release of the selection terms to determine whether “the conditions of the bidding document are in line with the strategy of Viettel.”

Viettel operates in 10 countries with 43 million subscribers, Reuters reported.

The government aims to find a third player to compete with incumbents Smart, a unit of PLDT, Inc., and Globe. The selection process oversight committee will select a winner based on highest committed level of service, with points awarded for capital investment plans, percentage of the population served, and broadband speeds achieved over a five-year rollout.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls. — Denise A. Valdez

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