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Gov’t names provisional 3rd major telco

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bidding NTC
Auction officials and telco representatives open boxes with bid documents at the National Telecommunications Commission office in Quezon City -- PHOTO BY DENISE A. VALDEZ

By Denise A. Valdez
Reporter

A CONSORTIUM formed by China Telecommunications Corp., Dennis A. Uy’s Udenna Corp. and its subsidiary Chelsea Logistics Holdings Corp. — under the name of franchise holder Mindanao Islamic Telephone Company, Inc. (Mislatel) — emerged as provisional winner in the government’s search for the country’s third major telecommunications service provider after its two contenders were disqualified.

The auction’s outcome could still change, however, as the disqualified bidders said they will file motions for reconsideration within three days, which the selection committee will have to review within three days of receipt of such appeals.

The consortium committed for its five years of operations a cumulative coverage of 84.01% of the population, total capital and operational expenditure of P257 billion, and minimum average broadband speed of 27 Megabits per second (Mbps) in its first year of operation and 55 Mbps in succeeding years, earning it a total of 456.80 points out of the auction’s maximum 500 points. Commitments on population coverage (with 40% weight), minimum average broadband speed (25%) and capital and operational expenditure (35%) are the three criteria used to grade the bidders.

Sear Telecommunications, Inc. — the franchise holder for the consortium of LCS Group of Companies and TierOne Communications International, Inc. (LCS-TierOne) — and Philippine Telegraph and Telephone Corp. (PT&T) were disqualified for lack of required documents.

LCS-TierOne was not able to comply with the required “performance security” commitment worth P700 million, while PT&T did not have a certification from the National Telecommunications Commission (NTC) proving its 10-year national scale experience.

Once the selection committee completes its review of both companies’ appeals next week, it may then recommend to the NTC en banc the final winner. The NTC en banc will declare the winner of the auction, who will then be given 90 days to complete submission of its business and roll-out plans, among other requirements.

It will get a certificate of public convenience and necessity (CPCN) valid for 15 years or the length of the franchise of a bidder, whichever is shorter; and radio frequency bands of 700 megahertz (MHz), 2100 MHz, 2000 MHz, 2.5 gigahertz (GHz), 3.3 GHz and 3.5 GHz.

In Wednesday’s auction, LCS-TierOne called out the participation of Mislatel in the winning consortium, saying the company has a live contract with a member of its own group, DigiPhil Technology. “We are in consideration of P10 million that is a limitation in the use of the franchise in the sense that Mislatel is not allowed to have its franchise… used by somebody else without a prior official consent of DigiPhil. DigiPhil, in other words, has the right of first refusal,” LCS-TierOne legal counsel Raoul C. Creencia told reporters.

He said the company will file a case at either the Pasig or Makati regional trial court against Mislatel in the coming days.

Representatives of two other firms showed up at the NTC office — Now Telecom Co. Inc. and Converge ICT Solutions, Inc. — but decided not to submit their documents.

Now Telecom said it was advised by its legal team to not to participate as such action may affect its petition for injunction against the NTC, which it brought up to the appellate court on Wednesday. “Our potential filing for the new major player bidding will potentially affect the case and we were advised by our legal counsels not to submit our bidding documents at the moment,” Now Corp. investor relations officer Juan Miguel M. Honorico-Lopez told reporters.

Converge ICT, on the other hand, argued that the auction did not provide a level playing field, since bidders were imposed requirements which major telcos PLDT, Inc. and Globe Telecom, Inc. did not have to comply with in order to operate. “What is demanded from the bidders today were not asked from the dominant players before,” Converge ICT Special Assistant to the President Aristoteles Z. Elivaña told reporters.

More companies had been expected to participate in the bidding as 10 groups bought selection documents. The others were Villar-led Streamtech Systems Technologies, Inc.; AMA Telecommunication Corp.; Norway’s Telenor Group and Austria’s Mobiltel Holding GmbH.

Information and Communications Technology Acting Secretary Eliseo M. Rio, Jr. said the bidding turned out well.

“We think NTC did a very good job… The thing that I could have been more happy with kung sana marami pa ‘yung nag-bid [is if there wesre more bidders],” he told reporters.

The search for a new major telco player came at the order of President Rodrigo R. Duterte, who wants a challenger to the duopoly of PLDT and Globe.

PLDT, which currently has a mobile subscriber base of about 59 million, declined to comment on the procedure. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.

Globe said in a statement it welcomed a new challenger, but hopes the government would keep supporting it in serving its 67-million mobile subscriber base.