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Biz Buzz: Heading off a transport crisis

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Biz Buzz: Heading off a transport crisis

/ 01:15 AM June 21, 2017

Unless the government’s regulatory agencies act soon, there could be another mini crisis in the local transportation sector brewing. And we’re not talking about the daily breakdowns of trains of the Metro Rail Transit system.

We’re talking about the accreditation issued by the Land Transportation Franchising and Regulatory Board for transport network company (TNC) Grab Philippines which is expiring soon.

How soon? Biz Buzz learned that the company’s license to operate as a TNC is set to expire in less than two weeks—13 days from today, by July 3, to be exact.

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That could explain why Grab Philippines boss Brian Cu called a press briefing to express his wholehearted support for the government’s modernization program for the country’s aging public utility vehicles, without reservations (even though no one really knows the exact details of the plan yet).

Tucked nicely toward the bottom of Grab’s press statement was a subtle appeal for the Transportation Department and the LTFRB to act on the request of the company for either a new accreditation or the extension of the existing one so that it may continue to serve the thousands of people who commute around the traffic-cursed metropolis each day.

And, just to be sure, Grab pointed out that it has already submitted to the government all its requirements for accreditation and is now just waiting for the regulators to act on its request.

Incidentally, Grab’s Cu is not related to Globe Telecom CEO Ernest Cu despite early rumors that they were, probably because of the strong support Grab is enjoying from the telco and Ayala malls where it has many kiosks.

Grab Philippines is a unit of the Singapore-headquartered tech firm that began in Malaysia some years ago, for everyone’s information.

In any case, watching eagerly from the sidelines is Grab’s main rival Uber Philippines, which is also eager to expand its local footprint, but is not as pressed for time since its operating license runs until late August of this year.

The question now is will the government act fast enough to head off another problem in the transportation sector? We’ll know in 13 days. —DAXIM L. LUCAS

Slowly but surely

JG Summit Holdings, the conglomerate founded by tycoon John Gokongwei, may have to wait a bit more to unlock more values out of its investment in PLDT Inc. But the group is ready to boost its exposure in another enterprise led by businessman Manuel V. Pangilinan.

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The conglomerate recently raised its interest in utility Manila Electric Co. to 29.56 percent from 27.12 percent. This was after it picked up 27.5 million shares of Meralco at P250 each on June 14, based on a report on change in ownership filed by JG Summit president Lance Gokongwei.

JG Summit’s purchase of additional shares in Meralco happened at around the same time that Metro Pacific Investments Corp. (MPIC) raised its interest in Meralco and power generation firm Global Business Power Corp. by buying out the shares held by the PLDT group for P21.8 billion.

PLDT Communications and Energy Ventures (PCEV)’s divestment of its remaining 25-percent stake in Beacon Electric Asset Holdings (which owns 35 percent of Meralco and 56 percent of Global Business Power) allowed the PLDT group to focus on its core businesses while allowing the First Pacific group to simplify and consolidate its power industry investments in MPIC. —DORIS DUMLAO-ABADILLA

Where was Andrew Tan?

The question was on everyone’s mind following the tragedy that hit Resorts World Manila earlier this month. The tycoon was not exactly in hiding but Andrew Tan preferred to be one with the families of the victims in his own way.

Thus on June 10, Saturday, he and his whole family joined hundreds of Resorts World Manila and Alliance Global employees and officers who participated in the ninth day mass for the victims of the tragic incident that left 37 people dead.

The mood was somber, but there was also the feeling of encouragement after Andrew’s son, Kevin, who heads RWM’s crisis response team, pledged that resources would be made available for RWM and its thousands of employees to rise stronger and better. Company chair David Chua was hugging everybody, bosses and rank and file alike, condoling with them, keeping their hopes and morale up. It was Chua who, with a small group, believed in the Philippines and opened RWM in 2009, helping make the gaming industry in the Philippines prosper.

The most poignant moment came from COO Steve Reilly. He related that hours into the incident, he went to his hotel room to rest. As he closed the door, he dropped to his knees on the floor, crying and sobbing “until there were no more tears.” He added: “I prayed so hard like I have never prayed before” until he felt “a touch” and an inner voice telling him to rise up “because you have to be strong.” He rose, washed his face, straightened himself up and went back to the place that brought his company to its knees.

But it won’t be for long. The mall has re-opened, but it will take time before the casino comes back to life. —TINA ARCEO-DUMLAO

Consumer IPO

There are many food retailers doing well at the local stock exchange, the latest addition to which is Po family-led Shakeys Pizza Asia Ventures Inc., which now trades under the ticker PIZZA. But there are many others out there with the potential to join their ranks.

One of these is the Araneta family’s Philippine Pizza Inc. (PPI), Philippine franchise owner of international food brands Pizza Hut, Taco Bell and Dairy Queen.

In an interview with Jorge Araneta, chair and chief executive officer of the Araneta Group (which is behind the 35-hectare Araneta Center in Cubao), he shared that the restaurant holding firm now had more than 300 outlets in the country. Pizza parlor chain Pizza Hut has 200 stores while soft ice cream chain Dairy Queen has 100. Mexican-inspired restaurant chain Taco Bell, which is just starting in this market, now has about a dozen outlets.

Araneta said PPI had no plans to go public at the moment but would do this “eventually.” All of PPI’s three brands are up for expansion, riding on improving consumer affluence in the country. —DORIS DUMLAO-ABADILLA

Stuck with two telcos?

Few topics are as unifying among telco customers here as their clamor for a real challenger to the PLDT Inc. and Globe Telecom duopoly.

But ask Sudev Bangah, IDC country manager for the Philippines and Indonesia, and it’s less about the number of players rather than the quality of service and new innovations they might introduce.

Bangah provided some interesting context on the utility of another telco player in what is an increasingly mature market.

Bangah, no doubt drawing from the experience of markets elsewhere, noted that a third or fourth player is ultimately “just about driving down the price.”

As such, this kind of environment may diminish the telco industry’s ability to cater to what IDC is calling future citizens, a sort of blending of one’s work and personal life. Bangah said this would only be possible on the back of high-tech services that telcos should provide.

Those hoping for a new challenger should not begrudge experts for their views.

Most of these insights are based on practical facts, for example, the fact that it really is difficult for a challenger to enter the Philippines, given a long-standing regulatory environment that clearly favors incumbent players.

A scan of recent reports would show that a lot of third-party groups have heavily discounted the chances we would see a true third telco player any time soon. (This also depends on the results of a legal battle between the Philippine Competition Commission and PLDT-Globe but that is another matter).

Bangah is correct in pointing out that a potential price war would be unhealthy for the industry. Having said that, we’re fairly certain consumers of today and tomorrow would not mind one bit. Even future citizens would like their services inexpensive. —MIGUEL R. CAMUS

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