The emerging cast of telecommunications companies bidding to become the country’s third major player is drawing the attention of the business community. Stock market investors and speculators alike are also keenly watching the final line-up that will vie for the new telecom franchise.
The initial list of companies that bought documents from the Department of Information and Communications Technology and the National Telecommunications Commission has not yet included powerhouse groups. The big boys are expected to formally join the bidding exercise soon and stir the telecom industry.
Seven so far have expressed interest in the bidding procedure led by Dennis Uy’s Udenna Corp., the joint venture of LSC Group of Companies of businessman and politician Luis Crisologo “Chavit” Singson and Davao telco operator TierOne Communications, Norway’s Telenor Group, Philippine Telegraph and Telephone Corp., NOW Corp. of businessman Mel Velarde and two others who requested not to be named for the meantime.
Other groups that are expected to purchase bid documents shortly are China Telecom, LG Uplus Corp., Korea Telecom, Vietnam Telecom, Converge ICT, Transpacific Broadband Group Inc. and EasyCall Communications Philippines Inc.
One of these prospective foreign telecom bidders are expected to tie up with local partners and this is when the fun begins. The local partner will likely be a listed company, which is expected to fuel stock market speculations as the auction stage progresses.
One company, however, is already causing trouble to the two government agencies at the helm of the auction exercise. The government earlier formed an inter-agency committee to oversee the selection of a sorely needed telecommunications franchise holder. A year-long consultation with stakeholders was held to ensure all their concerns were put to rest and level the playing field.
But the painstaking process seems not enough for one the bidders. After buying the P1-million bid documents, NOW Corp. haled the NTC and the DICT to court for “implementing… provisions in the memorandum circular that are detrimental to its rights.”
An official of NOW Corp. is claiming that no less than President Rodrigo Duterte will receive all bid documents on Nov. 7 and pick the third telco player, and not the NTC which was designated when the terms of reference governing the auction were drawn up last year.
Raising the issue now when the deadline is about three weeks away is incomprehensible. A lower court in Manila, nonetheless, denied NOW’s petition to temporarily stop the selection process.
Big war chest needed
Under pressure by both the executive and the people to break the duopoly in the country’s telecommunications industry, NTC Commissioner Gamaliel Cordoba and DICT Secretary Eliseo Rio Jr. have been walking the proverbial tightrope to balance the interests of the regulator, players and even public interest groups keenly watching the developments.
Even President Duterte has given his blessing to the selection process. “Just do what is right,” Rio quoted Mr. Duterte as telling him. “The President is supporting us. The President came up with an oversight committee. The oversight committee approved all of these rules and regulations.”
The government has drawn up stringent terms of reference for new players to join the telecom sector to separate the chaff from the grain. The winning bidder must have enough funds in its war chest to achieve a certain degree of performance that the public expects from the third telco. Except for NOW, seven other bidders have no qualms about the terms of reference.
NOW is also blaming Rio for his alleged “reckless” statement that caused the loss of about P7 billion in stock market capitalization. NOW head of investor relations Miguel Lopez said the company’s lawyers were studying possible legal recourse against Rio.
Lopez said Rio’s statement naming NOW–with only P6.3 million net income in 2017–as the mother company of NOW Telecom was “false and a malicious lie.”
“NOW Telecom is only an affiliate of NOW Corporation,” Lopez said. He said NOW Corp. held only 19-percent ownership stake in NOW Telecom. Lopez said the reckless statements of Rio damaged the value of NOW Corp. shares in the market, resulting in the loss of about P7 billion in market capitalization.
Rio countered that his statement about NOW was not the reason for the drop of its shares in the Philippine Stock Exchange.
“They are blaming me, but more or less it’s because of their action,” Rio said, adding that NOW’s share price declined on Oct. 9 even before he made the statement on Oct. 10.
“What I said is just true. They should tell the public that on Oct. 9, nobody made any statements. How can they say that I’m the reason? Their action caused the drop of its share prices. I think the people are punishing them enough, we don’t have to do anything (with it),” Rio said.
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