DITO says it may invoke force majeure if it misses roll-out target date due to virus in China

Third telco DITO Telecommunity Corporation said it may invoke “force majeure” should the onslaught of the new coronavirus disease (COVID-19) in China drastically affect the scheduled delivery of its services.

DITO chief administrative officer Adel Tamano said that if this happens, the telco may ask the Department of Information and Communications Technology (DICT) for a grace period for its roll-out.

“Under Philippine law, something like coronavirus it can be considered a force majeure,” Tamano said.

“We can use that as legal basis, let’s say if we have a delay, we can ask for a grace period,” he said.

Just last week, the company said that the virus is not affecting its roll-out schedule, even though China's state-run China Telecommunications Corporation (China Telecom) is its technology partner.

DITO Telecommunity has committed to deliver 55 megabits per second (mbps) of internet speed and cover 80% of the population within five years after its commercial roll-out in March 2021.

In July, the government will inspect if the telco is on track in meeting its commitments—by that time, DITO should have put in place a network of 1,600 towers which can cover 37% of the population with a speed of 27mbps.

For his part, DITO Telecommunity chief technology officer Rodolfo Santiago said the company is taking various mitigating measures to ease the disease’s impact, even though COVID-19 epicenter Hubei in China is a source of materials it needs. 

“‘Yun kasing naapektuhan yung Hubei province and that is one of the manufacturing hubs of China. ‘Yung impact sa roll-out namin is ‘yung steel or tower components and fiber cable,” Santiago said.

“We are sourcing from other countries. Our vendors naman, Huawei, ZTE, and Nokia...pinakiusapan nila 'yung subsidiaries nila in other countries doing the same roll-out na pwede ba unahin muna ang Pilipinas,” he said.

Nevertheless, Tamano said, the telco aims to meet the government's July deadline for the company's initial commitments.

“The policy that Dito is taking is that we understand the public wants the service today, so we are taking all the remedial measures that we can so that we will not delay our roll-out,” he said.

“We will find ways to mitigate all the effects of the situation so that our roll-out will not be delayed. We are going to stick to our timeline,” he added.

Information Secretary Gregorio Honasan II said the government will be considerate if there is indeed a “force majeure.”

“If there is force majeure, of course it will affect their timetable.  What we are saying is, if it is out of their control, the law is not so strict as to prevent us from giving them some leeway,” Honasan said.

Tamano, however, DITO will only invoke force majeure when it has exhausted all efforts to mitigate the impact of the COVID-19 on its schedule.

“Actually, it makes better business for us to do it within the proper time that is why we are very cautious in considering a delay,” Tamano said.

Honasan has stressed that there will be consequences if DITO fails to meet its commitments on time.

The Cabinet official said the government might revoke the telco’s Certificate of Public Convenience and Necessity (CPCN) or its authority to operate as well as its radio frequencies.

The government may also take DITO’s performance bond of P25.7 billion, Honasan said.

There will also be penalties of “P10.7 billion in the second year, P8 billion in third year, P5.3 billion in fourth year, and P2.7 billion in fifth year” of missed commitments.

DITO, formerly known as Mislatel Consortium, is comprised of Davao-based businessman Dennis Uy’s Udenna Corporation, its subsidiary Chelsea Logistics Holdings Inc., Mindanao Islamic Telephone, and China Telecom.

It received its certificate of public convenience and necessity from the National Telecommunications Commission (NTC) in July 2019 to operate as the third major telco. — BM, GMA News