Tuesday, May 23, 2017
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PLDT, Globe fight with gov’t regulator over SMC telecom sale

Industry giants  Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom stood their ground Monday as they said the government’s newly-created antitrust watchdog had no power to undo their joint acquisition last month of a potential rival telco unit.

PLDT and Globe made separate disclosures to the Philippine Stock Exchange Monday morning to reiterate their P70 billion buyout of San Miguel Corp.’s Vega Telecom Inc. and two other telco companies with reported links to SMC last May 30 was “deemed approved”.

The main target was SMC’s valuable radio frequencies, including those in the powerful 700 megahertz band, which both PLDT and Globe said was needed for them to rapidly improve the quality of mobile high-speed internets services.

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The filings were made to inform the exchange that the Philippine Competition Commission (PCC) wrote PLDT and Globe to inform them their initial transaction notice — a key requirement — was deficient and defective in form and substance. That would have required both companies to re-submit their notices to the PCC.

Both telcos said they disagreed with the view of the PCC.

In separate letters, they told the PCC that the notices they respectively filed underwent thorough review, did not contain any false information and were sufficient and compliant under the law.

PLDT noted in its letter the acquisition of Vega, which owned most of the frequency assets included in this deal, was “deemed approved and cannot be subject to retroactive review by the Commission.”

Globe gave a similar position, adding their notice was given to the PCC before the release of the implementing rules and regulations of the Philippine Competition Act, meaning “it may no longer be challenged.”

The deal was sealed on May 30, 2016, before the competition rules came out on June 3. The rules will take effect after 15 days.

Globe also said the so-called “deficiency in form and substance” of a notice “is not a ground to prevent the transaction from being deemed approved.” It said this can only happen if the notice contained false information.

“In this regard, the company stated that the notice does not contain any false information,” Globe said.

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PCC chair Arsenio Baliscan did not immediately respond to a request for comment Monday morning. However, the PCC has taken a different view in its previous statements.

It stated the provisions of the Competition Law are “fully in effect and do not require the final issuance of IRR to trigger effectivity.”

“The mere filing of a notification with the PCC does not guarantee a ‘deemed approved’ status for the subject transaction, even under the transitory rules. Parties to a proposed merger and acquisition cannot make the determination of whether a transaction is deemed approved; this is for the PCC to determine,” the PCC said.

The PCC has the power to stop deals it determined would  “substantially” restrict or lessen competition. Telcos can file an appeal to the Court of the Appeals to challenge its decisions.

Also, under the rules, not all “prohibited” mergers are banned. These can be allowed if the buyers can prove the benefits  are “greater than the effects of any limitation on competition.”

PLDT noted that their agreement Globe “will not substantially prevent, restrict or lessen competition.” This was because they were returning some of the acquired frequencies in the 700 MHz, 850MHz, 2500 MHz and 3500MHz bands to the government. They said this was enough to allow the entry of a third player in the market.

Critics, however, pointed out that the government should not leave crucial decisions on frequency allocations in the hands of the private sector.

In their filings, PLDT and Globe also pointed out the benefits to the public arising from the unlocking SMC’s unused radio frequencies. In the past week, both have started outfitting cell sites in Metro Manila with equipment to transmit the 700MHz frequency and detailed rollout plans for 2016.

PLDT said it would “fire up” 360 of its 700MHz cell sites this year in Metro Manila, Cebu and Davao, while Globe will have 200 cell sites, separate announcements showed./rga

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TAGS: Business, Globe, PCC, Philippine Competition Commission, PLDT, SMC, telecom, Vega Telecom
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