New telecom player must prove its worth

The search for the country’s third major telecommunications player is virtually over, except for the claims and counterclaims of two disqualified bidders.

The bidding, by far the biggest conducted under the administration of President Rodrigo Duterte, was completed in less than a year since he ordered the National Telecommunications Commission and the Department of Information and Communications Technology on Dec. 19, 2017 to search for a third major telecom player.

The selection committee of the NTC declared last week Mislatel Consortium, a joint venture of Dennis Uy’s Udenna Corp., its subsidiary Chelsea Logistics Holdings Corp. and Chinese state-owned China Telecommunications Corp., as the new major player.

Mislatel committed to invest P257 billion over a five-year period, including P150 billion in its first year of operations. In terms of internet speed, the group committed to provide 27 megabits per second in its first year, and 55 mbps in five years. The company plans to cover 84 percent of the population in five years and 34 percent in its first year of operation.

It’s a gargantuan task for Mislatel, which is being given chance to break the duopoly of Smart Communications Inc. and Globe Telecom Inc. and provide competition to the two in the hope of improving and speeding up telecom services in the Philippines.

Big banks are expected to offer and arrange financing schemes for Mislatel to fund the new telco’s capital investments. For Dennis Uy, the telco award will redefine his budding conglomerate that started out as a petroleum dealer. It will test his financial clout and the telco venture will determine if he is ready to join the big boys of Philippine business.

NTC stays firm

The NTC, meanwhile, denied the separate appeals of Sear Telecommunications Inc. and Philippine Telegraph and Telephone Corp. after they submitted “incomplete” and “non-compliant” bids. 

PT&T failed to submit a certification of technical capability from the NTC, while Sear Telecom of former Ilocos Sur governor Luis “Chavit” Singson was disqualified for not submitting the “participation security” of P700 million. The NTC committee said PT&T and Sear could still file an appeal to NTC en banc until Thursday for a fee P10 million. 

PT&T said its management and legal team were reviewing the denial of the company’s appeal to determine the next course of action it would take.

The bidding process at best was open and consultative. As early as January 14, 2018, the DICT and the NTC held several consultations and public hearings with industry stakeholders as well as local and foreign telco experts to gather information and comments to help the government craft the terms of reference, or TOR. 

President Duterte in April issued Administrative Order No. 11 creating the Oversight Committee composed of the DICT secretary as chairman, the Finance secretary as vice chairman and the Executive Secretary and the National Security Adviser as members.

All potential bidders were made aware of the TOR during the consultations and public hearings. They were part of the exchange of views and their comments were solicited before the final shape, size and color of the TOR was released publicly by the NTC. Potential bidders were also given the chance to submit clarificatory questions. 

The NTC and DICT on October 7, 2018 announced an invitation to bid and offered the selection documents for sale the next day. The potential bidders, thus, knew what they were getting into. 

Hours prior to the opening of the selection documents, only three submitted their bids out of the 10 that purchased the documents.

Only one emerged as a qualified bidder who was later on declared the third provisional telco player. The process was open to the public, streamed live and attended by observers from the Commission on Audit, Department of Justice and the Philippine Competition Commission.

The NTC and the DICT have already put the third telco player to task. It should be made to account for each and every promise it made. The government also has the right to cancel the award if the new major player fails to deliver its commitment under the TOR. 

Day in court

Disqualified bidders PT&T and Sears Consortium, meanwhile, can file a case with the court. Their complaints can only be addressed by a regular court, and the not the DICT nor the NTC.

Chavit’s group failed to turn in participation security amounting to P700 million, a requirement clearly stipulated in the TOR, which should come from a bank. Sources said Chavit’s group submitted the security on Friday, two days after the deadline.

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Topics: National Telecommunications Commission , Luis Chavit , Mislatel Consortium , Rodrigo Duterte , PT&T , Sear Consortium , National Security Adviser
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