NTC vows to issue consumer-friendly decision on PLDT-Digitel merger

MANILA, Philippines—The National Telecommunications Commission (NTC) has been studying all angles to protect the interests of the consumers in the proposed merger of the Philippine Long Distance Telephone Co. (PLDT) and Digital Telecommunications Philippines Inc. (Digitel), and would work to come up with a decision before the end of the week.

NTC Deputy Commissioner Carlo Martinez said this on Wednesday but refused to confirm if NTC would ask PLDT to give up some of its allegedly “excess” radio frequencies before allowing it to take over Digitel.

Martinez, however, said the NTC has been looking into the possible implications of the PLDT-Digitel deal on the telecommunications industry. “We’re still trying to determine the conditions that we will impose… to safeguard the interests of consumers,” he told reporters. “If we deny the application, we are also looking at what will be the basis for that.”

Martinez said the regulator’s three-member commission would try to come up with a decision before the end of the week.

Earlier, PLDT and Digitel’s parent firm, JG Summit Holdings, set a deadline of August 26 to complete the P74.1-billion acquisition. PLDT needs the NTC’s green light before it can take over Digitel’s operations.

Digitel operates mobile brand Sun Cellular which, with 15 million subscribers, is the third-largest telecom company in the Philippines. The deal will give PLDT a 70-percent market share in terms of industry revenues and subscribers.

PLDT chairman Manuel V. Pangilinan expressed impatience over the NTC’s alleged foot-dragging, saying the company would walk away from the deal if it was not approved before the end of August.

Martinez said that while the regulator has been taking PLDT’s deadline into consideration, the law gave the NTC three months to decide on cases. “The last filing on the case was received early this month so we still have a lot of time.”

Martinez discussed the deal with PLDT and Digitel lawyers on Wednesday. “They seemed to be open to the conditions we were talking about,” he said.

Rival Globe Telecom Inc. has been the chief oppositor to the PLDT-Digitel deal. The Ayala-led firm earlier called on the NTC to strip PLDT of one of its frequencies in the third-generation (3G) band to avoid creating an imbalance of allocations in favor of one group.

Martinez declined to say whether the “conditions” to be imposed on PLDT would be to force the company to let go of its frequency assignments, but noted that an outright approval would be unlikely.

“Our duty is to protect consumers,” he said.

PLDT regulatory affairs head Ray C. Espinosa said they saw no legal basis for an order that would force PLDT to let go of any of its frequencies. He said frequencies could only be taken back if these were not being used and if the company failed to pay the required fees for the use of the frequencies, owned by the state under the law.

The disputed 3G frequencies are used to deliver high-speed mobile broadband services to subscribers. Mobile Internet is seen as the next growth area for local telecom firms, which are struggling with the country’s maturing mobile phone market.

Meanwhile, Senator Joker Arroyo has warned colleagues looking into the PLDT-Digitel deal against releasing a committee report before the PLDT acts on a Supreme Court decision questioning its ownership.

“Unless the PLDT (reforms) its ownership structure to conform to the decision of the SC, it is respectfully submitted that the committee would do well to hold in abeyance any action,” Arroyo said in his dissenting opinion.

The Senate committee on public services is now circulating a 12-page report assuring that the country has sufficient laws to prevent a telecommunications monopoly from occurring following the PLDT-Digitel deal.

The report also said that the transaction “is consistent with or not in violation” of provisions of the congressional franchises awarded to the two companies.

This after two hearings conducted in mid-2011. The committee made no mention of the Supreme Court decision. So far, four senators including committee chairman Ramon “Bong” Revilla Jr., resigned senator Juan Miguel Zubiri, Sen. Edgardo Angara and Senate majority leader Vicente Sotto III have signed the report.

However, Arroyo referred to a Supreme Court ruling that was unrelated to the issue and indicated that the PLDT has violated the constitutional provision on 60-40 ownership ratio for Filipinos and foreigners in a company.

Quoting from the high court decision, Arroyo said, “Filipinos hold less than 60 percent of the voting stock, and earn less than 60 percent of the dividends, of the PLDT.” In his dissent, he reported that foreigners “own 64.27 percent of the common shares of the PLDT” and this class of shares “exercises sole right to vote in the election of directors, and thus exercisees control over PLDT.”

Filipinos, he added, owned only 35.73 percent of PLDT’s common shares. Sotto, as majority leader, is tasked with scheduling debates on the report should Revilla decide to submit it to plenary for passage. “I don’t think the report will counter what the SC (Supreme Court) is saying,” he assured.