PHILIPPINE international trade performance further shrank in April as the coronavirus disease 2019 (COVID-19) pandemic and the global lockdown restrictions constricted trade activity, the Philippine Statistics Authority (PSA) reported on Wednesday. Read the full story.
By Arjay L. Balinbin, Reporter
THE Department of Information and Communications Technology (DICT) finally released on Monday evening the long-awaited rules governing the shared use of telecommunications towers.
Signed by DICT Secretary Gregorio B. Honasan II on May 29, Department Circular No. 8 sets the policy guidelines on the co-location and sharing of telco towers for cell sites, which would provide “quality, efficient, fast, affordable, and secure ICT (information communications technology) services.”
“In order to fast-track the country’s digital transformation and prepare the country for its transition to the ‘New Normal,’ there is a need to expedite the roll-out of ICT infrastructure and facilities that could accommodate the increasing demand for connectivity and better quality of ICT services, especially in the unserved and underserved areas,” the circular stated.
The rules do not include the contentious proposals that would limit the number of common tower companies to two, and restrict existing telecommunications companies from building their own towers.
Under the guidelines, mobile network operators or telcos may build new telecommunications towers, but they should “provide ample access slots” for other players and the DICT to “co-locate, mount or install their respective antennas, transmitters, receivers, radio frequency modules, radio-communications systems, and other similar active ICT equipment.”
“Settled na lahat ’yun. Bago inilabas ang final version na ito. Of course, stakeholders were consulted kaya nga tumagal almost ng one year. So lahat ng mga contentious issues before had been settled,” former DICT Undersecretary Eliseo M. Rio, Jr. told BusinessWorld in a phone interview on Wednesday.
“For example, ’yung gusto ni RJ dalawa lang, wala na ’yun,” he added, referring to newly appointed DICT Undersecretary Ramon P. Jacinto who previously wanted to allow only two companies to build common towers.
Mr. Rio stressed under the DICT circular, all new towers, even if they are built by telcos, will be available for sharing.
“If telcos want to come up with a new tower, they will have to get a permission from the National Telecommunications Commission (NTC) at di naman papayag ang NTC na magbigay ng permit for a tower that will be exclusively used by one telco,” he explained.
Under the guidelines, interested tower companies engaged in the business of establishing or operating one or more shared telecommunications towers should secure a certificate of registration from the DICT. Existing telecommunications companies with legislative franchise and certificate of public convenience and necessity (CPCN) are exempt from the requirement.
Tower companies should have relevant construction experience, registration, license, and financial capacity, equivalent to a category A contractor or higher of the Philippine Contractors Accreditation Board.
The circular also states all private sector agreements for tower-sharing should provide for “fair, cost-based, reasonable, competitive, transparent, non-exclusive, and non-discriminatory terms, conditions, fees, and charges.”
Common tower agreements should be complemented by appropriate service level agreements that comply with global and domestic standards, and subject at all times to pertinent laws and department circulars, rules and regulations.
The DICT, which has the authority to regulate the construction, maintenance, and operation of common towers, is mandated to periodically monitor the charges and fees imposed by common tower owners or operators.
As for the towers built by telcos prior to this issuance, Mr. Rio said these will not be covered by new rules.
“Hindi na sila gagalawin, especially ’yung towers na na-put up ng Globe and Smart na about 30,000. Bahala na sila if they want to have their towers taken over by common tower providers or sila mismo ang mag offer sa competitors nila,” he said.
The DICT is also mandated to provide “reasonable assistance” to common tower providers or telcos in obtaining access or right-of-way to public or private land “as may be necessary for the installation, construction, maintenance or operation” of shared towers.
The department may also participate in the use of the common towers “whenever deemed necessary and desirable in the public interest” for the implementation of the government’s Free Public Internet Access Program.
Under the guidelines, common tower owners or operators should not offer or impose terms, conditions, fees, and charges to the DICT “that are more onerous than those offered or imposed upon its private sector clients.”
Barangays, local government units, and national government agencies are required to strictly adhere to the 7-working-day maximum time period mandated by law for processing and approving the application of common tower providers for licenses, clearances, permits, certifications, or authorizations to construct, install or operate shared towers.
There is a “non-extendible” period of 20 working days for documents that require the approval of a local legislative body.
Homeowners associations are given a maximum of 10 working days to refer to their members the application of common tower providers. They will have to decide on the application within the non-extendible period of 30 working days.
The DICT had pushed the concept of tower sharing to improve tower density, which is said to be one of the lowest in the region at 4,000 subscribers per tower. Allowing common towers means more than one telco can use a single tower, thereby increasing the number of subscribers being served by each tower.
THE Philippine financial system may face as much as $505.3 million (P25.2 billion) in incremental “collateral damage” caused by distressed banks, as credit and contagion risks rise amid the pandemic, the ASEAN+3 Macroeconomic Research Office (AMRO) said on Tuesday.
“As a result (of the pandemic), banks are confronted with sharp drops in revenue and rising credit risks… Concurrently, banks are facing increasing bad loans, as corporate customers go under and unemployed retail borrowers struggle to service their obligations,” AMRO said in a analytical note “COVID, Credit, and Contagion risks to ASEAN+3 Financial Systems.”
In the note, AMRO did a stress test for “additional expected costs to the wider financial system from shocks to individual ASEAN+3 banks as a result of the pandemic.” Additional costs refer to the loss on top of direct credit costs already booked in the financial system before the pandemic, and costs to the wider financial system beyond the direct damage to an individual banks’ asset quality, it said.
The stress test was done by applying the actual increase in probability of default (PD) since January, prior to the global spread of the pandemic of 20 basis points (bps) to each bank.
AMRO estimated the incremental expected “collateral damage” from distressed banks on the Philippine financial system will reach $505.3 million.
The Philippines’ potential “collateral damage” are the fourth highest in the region, after China’s $19.777 billion, Singapore’s $2.926 billion and Japan’s $2.541 billion.
Hong Kong, on the otherhand, faces incremental expected losses of $292 million, followed by Indonesia’s $287 million, Korea’s $226 million, Vietnam’s $225 million, Thailand’s $133 million, and Malaysia’s $3.5 million.
Based on the impact on other financial systems excluding its own, AMRO estimated the “collateral damage” of Philippine banks in distress on the wider ASEAN financial system is valued at $3.7 million, while a $191-million impact on the financial system of ASEAN+3 is seen. The potential impact on the rest of the world’s financial system is at $184 million.
Meanwhile, AMRO projected the estimated additional credit loss of Philippine banks from source entity to direct creditors is at $252.2 million, based on the nine banks it studied.
“The total incremental expected losses to the wider financial system from a bank’s distress may be attributable to two key sources,” it said, citing the direct credit losses from defaulted obligations and the “collateral damage due to contagion through financial interconnectedness.”
AMRO explained that default risk is the likelihood that a bank cannot pay off its debts, while contagion risks are from several factors such as “borrowing-lending relationships, common business models and stakeholders, capital market transactions and market sentiment.”
For the global systemically important banks (G-SIBs), AMRO saw an incremental expected credit losses of as much as $10 billion and another $10 billion in contagion losses to the wider global financial system, while for the domestic systemically important banks (D-SIBs), the estimated incremental losses are lower at $10 million to over $1 billion in credit losses and $10 million to $1 billion for contagion losses.
“The additional expected losses from credit and contagion risks could have important ramifications for the affected FIs (financial institutions) and at the extreme, for the fiscal purse,” it said, adding that the “actual failure of any one of the G-SIBs or D-SIBs could have massive implications for the global or regional financial system.”
According to AMRO, the aim of the study is “to provide financial regulators with a gauge of the potential magnitude of any financial fallout from the ripple effects ultimately triggered by the pandemic, and allow fiscal authorities to gauge the contingent claims from the banking system if any provision or capital buffers pre-pandemic are not sufficient to cover such additional costs.” — Beatrice M. Laforga
