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Curing the 3rd telco’s defects

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FINEX Folio -- By J. Albert Gamboa

FINEX Folio

BEFORE adjourning for a three-month recess, the Senate approved a concurrent House of Representatives resolution that effectively paves the way for a third major telecommunications player to operate in the Philippines.

This legislative measure allowed the ownership of Mindanao Islamic Telephone Company, Inc. (Mislatel) to be transferred to the namesake Mislatel Consortium comprised by China Telecom Corp. Ltd., Udenna Corp., and Chelsea Logistics Holdings Corp.

The latter two are owned by Davao’s emerging taipan Dennis Uy, a close friend of President Rodrigo R. Duterte who donated P30 million to his presidential campaign kitty in 2016. That much-ballyhooed amount does not even come close to what other pals of the former Davao City mayor had contributed, not to mention friends whose help cannot be quantified.

When the bidding for the country’s third telco was underway, Mr. Duterte put across his message to Department of Information and Communications Technology (DICT) Acting Secretary Eliseo Rio, Jr. during a Cabinet meeting in Bicol, to go full speed with the selection process “basta wala lang corruption.”

A recent hearing of the Senate committee on public services chaired by Senator Grace Poe opened a veritable Pandora’s box when Senate Minority Leader Franklin Drilon inquired about when and where Mislatel operated. The panel that included Mr. Rio and National Telecommunications Commission (NTC) chief Gamaliel Cordoba was stunned and frozen by Mr. Drilon’s question.

It turned out that Mislatel never operated at all after it was granted a congressional franchise through Republic Act (RA) No. 8627 in 1998. This triggered a scrutiny of RA 8627, particularly Section 7 on the term of franchise which explicitly stated that it shall be deemed ipso facto revoked in the event the grantee fails to comply with any of the following conditions: commence operations within one year from the approval of its permit by the NTC; operate continuously for two years; and commence operations within three years from the effectivity of RA 8627.

Since Mislatel had not complied with all three conditions, why did the DICT and NTC favor it on top of the two other bidders, Philippine Telephone & Telegraph Corp. (PT&T) and Tier One Communications, Inc.? Ten other firms bought bid documents worth P1 million each but mysteriously withdrew on the eve of the bidding.

Affidavits of non-operation later surfaced, and changes of ownership invited further questioning as the sale of shares by the original owners to a new group in 2015 was never reported to Congress. These are pre-qualification issues that should have been grounds for disqualification.

In an excruciating attempt to offer an alibi, the Mislatel panel claimed they tried to operate in Maguindanao province but that the peace and order situation there derailed their plans. What a lame excuse considering that its franchise to construct, establish, install, maintain, and operate wire and/or wireless telecommunications systems granted by RA 8637 was nationwide.

Malacañang was closely monitoring the public hearings, which were covered by the major television networks as well as in social media. Presidential Spokesperson and Chief Legal Counsel Salvador Panelo was quoted as saying at a Palace briefing: “If they don’t have a franchise, how can they operate? We will look for another company that has a franchise.”

Obviously, Mr. Rio did not read the message because he subsequently said that Mislatel’s franchise could be cured through an act of Congress since it was Congress that gave it a franchise in the first place. Was he speaking for himself and not as a Cabinet member? Did he not remember Mr. Duterte’s statement about hating even just a whiff of corruption?

Meanwhile, Ms. Poe justified her endorsement of the concurrent resolution due to the public’s “desperation” to have a new player that promises better services. “We took out anything that pertains to calling Mislatel a new major player or third telco. We’re treating it as a regular franchise because later on, someone might go to the court as say Congress recognized Mislatel as the third telco,” she said in an interview.

But shouldn’t the other bidders been given the chance to cure their defects? There seems to be no level playing field after all.

 

J. Albert Gamboa is CFO of the Asian Center for Legal Excellence and Chairman of the FINEX Media Affairs Committee’s Golden Jubilee Book Project.