PLDT’s acquiescence to help speed up search for third telco —Palace official

The decision by PLDT Inc. not to seek remuneration for the spectrum frequencies it previously returned to the government will speed up the entry of a third player in the telecom industry, a Malacañang official said Wednesday.

The government intends to reassign the frequencies to the third telco player, which the Department of Information and Communications Technology (DICT) expected to reveal next month. The frequencies were earlier assigned by the National Telecommunications Commission (NTC) to Connectivity Unlimited Resources Enterprises (CURE), a unit of PLDT.

“Now that there are sufficient frequencies available ... siguro ay uusad na po talaga ‘yan," presidential spokesman Harry Roque told reporters.

The NTC compelled PLDT to surrender the CURE frequencies in exchange for approving its share purchase deal in acquiring Digitel Telecommunications Philippines Inc. (Digitel), the owner and operator of Sun Cellular.

The CURE frequencies consist of 10 megahertz (MHz) out of 55 MHz in the 3G frequency band.

DICT Officer-in-Charge Undersecretary Eliseo Rio noted in a separate statement the NTC conducted a bidding for five 3G slots, with four telcos qualifying to take part—four of which were awarded the following bands:

• 15 MHz to Smart/PLDT

• 10 MHz to Globe

• 10 MHz to Sun

• 10 Mhz to CURE

In 2007, PLDT bought CURE and operated the telco using the brand name RED Mobile, Rio said.

In 2011, PLDT acquired Sun and filed a petition for NTC approval of the acquisition.

“When Smart/PLDT bought Sun, however, it did not violate any law because there was no Antitrust Law in the Philippines. But the NTC was of the opinion that holding 35 MHz of 55 Mhz of the 3G frequency is too much for one telco group to hold,” Rio noted.

To address the issue, the government compelled PLDT to divest from CURE and surrender its frequencies in exchange for the NTC approval the acquisition.

“This middle-ground also served to appease oppositors and the public who were concerned with antitrust issues despite the clear absence of an antitrust law,” Rio said.

“Since the NTC cannot make divestment as a condition, as there is no law on this in the Philippines, Smart/PLDT was compelled to write a letter to the NTC stating that it is voluntarily going to divest itself of CURE,” he said.

In October 2011, PLDT issued the letter and the NTC, in turn, issued its decision approving the application. The decision became final and executory on Nov. 10, 2011.

Rio cited the divestment mechanism of PLDT from CURE:

• PLDT to rearrange CURE within 9 months such that its only assets will be its congressional franchise, affected frequencies and related permits

• CURE will be auctioned through competitive bidding under NTC supervision

• PLDT shall be entitled to recover the reasonable cost of its investments in CURE considering its latest audited financial reports. In case actual proceeds exceed the cost recovery amount, PLDT will pay NTC a minimum of 50 percent of the excess, less government fees and taxes

• PLDT given a 9-month transition period to migrate CURE’s customers to Smart

• Divestment sale to be conducted within 6 months after the transition period during which CURE shall continue to pay Spectrum User Fees but is not allowed to use the 3G frequencies

Roque noted that President Rodrigo Duterte was pleased and relieved by PLDT’s move on the matter.

“The President said he is thankful for PLDT’s cooperation dahil naiintindihan naman ng Pangulo, at malinaw sa Pangulo, na itong pagkakaroon ng third telecoms carrier ay makikinabang ang buong bayan. So nagpapasalamat po ang Pangulo d’yan. All is well,” the Palace official said.

The DICT has said that the President did not take it well when PLDT chairman Manny Pangilinan came up with innuendos regarding compensation for the CURE frequencies it returned to the NTC in 2011.

On Tuesday, Duterte also threatened to place under tax audit telecommunications firms seeking compensation for the frequencies.

Duterte wants to have a third telco operational within the first quarter of 2018 to break the so-called duopoly of Globe Telecom and PLDT, but the department has said that potential bidders were asking for a mid-April deadline due to several holidays.

The President rejected the DICT’s request for more time. —With a report by Ted Cordero/VDS, GMA News