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Mislatel franchise faces scrutiny

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Mislatel may have violated conditions of its franchise as it failed to secure congressional clearance for the transfer of its controlling stake to new investors. He also noted the company failed to operate within a year after it secured the franchise in April 1998.

AS THE NEW MAJOR telecommunications player prepares to submit its rollout plans to the government next month, Mindanao Islamic Telephone Company, Inc. (Mislatel) is now facing questions over the validity of its franchise.

During the Senate public services committee hearing on the “third telco” bidding on Thursday, Senate Minority Leader Franklin M. Drilon said Mislatel may have violated conditions of its franchise as it failed to secure congressional clearance for the transfer of its controlling stake to new investors. He also noted the company failed to operate within a year after it secured the franchise in April 1998.

Mislatel, along with China Telecommunications Corp. and businessman Dennis A. Uy’s Udenna Corp. and Chelsea Logistics Holdings Corp., is part of the consortium that won the third telco bidding in November 2018.

Mr. Drilon noted that in 2015, Mislatel’s incorporators issued 70% shares to new investors, who effectively took full control of the company. The investors were Nicanor L. Escalante, Danilo M. Cortez and Levitico C. Toquero, who each bought an 11.67% stake in Mislatel. Their company CTE Vector Holdings, Inc. also took a 34.99% stake in Mislatel.

The five original incorporators, Marte L. Lascano, Romeo V. Sabillo, Howard U. Evangelista, Winsberg L. Austria and Mariano Pamintuan, Jr., were left with a 30% stake in Mislatel.

Mr. Drilon said Mislatel’s franchise required it to secure congressional approval for any transfer of controlling stake in the telco firm.




“The grantee shall not lease, transfer…sell nor assign this franchise…to any person, firm, company, corporation…nor shall the controlling interest of the grantee be transferred, whether as a whole or in parts…without the prior approval of the Congress of the Philippines,” Section 15 of Mislatel’s congressional franchise, or Republic Act No. 8627 stated.

“The transfer of control in Mislatel itself has not been approved by Congress. I am referring to the transfers done in 2015…when the original stockholders transferred and ceded 70% of Mislatel to the group of CTE. That transfer of control has never been approved by Congress, and therefore, that puts into doubt the franchise of Mislatel,” Mr. Drilon said.

Mr. Escalante, president and CEO of Mislatel, acknowledged the failure to secure approval of the deal from Congress, saying: “Hindi lang naasikaso [It just wasn’t processed].”

He also addressed Mr. Drilon’s question about Mislatel’s failure to start operations — another requirement in its congressional franchise.

“Our records show that sometime in 2001, Mislatel was issued a provisional authority for a local exchange in Parang, Maguindanao… The company was ready to roll out…in 2003 according to our records, but the peace and order situation in that area…did not allow the company to operate,” Mr. Escalante said during the hearing.

Mr. Drilon said Congress can revoke a franchise if a company is found to have failed to comply with the conditions. “There is nothing that will prevent us from revoking a franchise, or in terms of a franchise, it is ipso facto void. Meaning it will not need to complete any action because it is ipso facto revoked,” he added.

In response, Mislatel Spokesperson Adel A. Tamano cited a Supreme Court decision wherein a franchise can be revoked if a quo warranto petition is filed.

Senate Public Services Committee Chairman Grace S. Poe-Llamanzares said the committee will come out with its position on the issue of Mislatel’s franchise.

“For the interest of the public, definitely mamadaliin namin na magkaroon ng opinyon ukol dito, kung ano ba ‘yung posisyon ng Senado at sana before the Feb. 17 (deadline) [we will hasten the process to come up with an opinion on this, on what the Senate’s position will be, hopefully before the Feb. 17 deadline,” Ms. Poe-Llamanzares said.

Department of Information and Communication Technology Acting Secretary Eliseo M. Rio, Jr. said should Congress ultimately decide to revoke the franchise of Mislatel, the government would have to redo the third telco bidding.

Bahala yung Senate. Alam niyo naman ito numbers game eh. Kung dalawang senador ayaw at majority gusto, pasado yan [It’s up to the Senate. You know this is a numbers game. If two senators don’t want (to uphold Mislatel’s franchise) and the rest wants to, then Mislatel will pass],” he told reporters after the hearing.

NTC Commissioner Gamaliel A. Cordoba said Mislatel only lacks three requirements before it may be awarded the certificate of public convenience and necessity (CPCN) and frequencies to start operations: its business plan, rollout plan and authentication of foreign documents.

Mr. Rio said Mislatel has until Feb. 17 to turn over its submissions, after which the NTC will have 15 calendar days to evaluate the documents and require the group to submit its performance security of P25 billion.

“Upon posting authentication of the performance security, then and only then shall NTC issue a CPCN that will mark the beginning of year 1 where the commitment of Mislatel will be recorded. It is expecting to be around March 19 of this year,” he said.

Meanwhile, Mr. Uy, founder of Udenna Corp., attended the Senate hearing for the first time and faced questions on the Mislatel consortium’s plans to challenge the duopoly of PLDT, Inc. and Globe Telecom, Inc.

“On the matter of no experience, I think our partners have technical experience, China Telecom will be able to deliver promises. And in all businesses, as a businessman, I think we are capable in due time to be able to learn and compete in telco,” Mr. Uy said, adding Mislatel aims to be the “best” telco. — D.A.Valdez

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