3rd telco player needs P10-B net worth

The Department of Information and Communications Technology (DICT) issued on Monday the draft guidelines it would use to select a “new major telco player” that would break the duopoly of PLDT Inc. and Globe Telecom and hopefully improve internet services to the public.

Already, at least two potential participants—NOW Telecom and G.Telecoms—indicated that the terms of reference appeared fair and that they would need to engage with their various partners.

The terms were contained in a joint memorandum circular from the DICT, the Department of Finance, the National Telecommunications Commission and the National Security Council.

Key requirements were a valid congressional franchise, valid until at least Dec. 31, 2023, to install and operate nationwide telecommunications facilities and services.

Participants should have a net worth of at least P10 billion, or provide proof they could raise this amount, and should be at least 60 percent Filipino-owned. Moreover, they should not be a “related party” to any group with at least 40 percent market share in the mobile and broadband wireless segments. So far, that definition covers PLDT and Globe.

Consortiums should have at least one partner with expertise and experience operating a telecommunications network and no liabilities to the NTC.

Potential groups are vying for the government’s store of valuable radio frequencies, which a third telco can use to launch mobile services such as text messaging, calls and internet-powered apps, where demand is growing the fastest.

Available to a third player were frequencies in the 700 Megahertz (MHz), 850 MHz, 2100 MHz, 2010 MHz, 2.5 gigahertz (GHz), 3.3 GHz, 3.5 GHz and 10.5 GHz bands.

These would allow a third player to launch 3G, 4G and eventual 5G services—although none in the 2G segment since these were fully allocated to PLDT and Globe.

Acting Secretary Eliseo Rio Jr. of the DICT said the rules would be refined further during a stakeholders’ meeting on Feb. 27 this year.

He said in an interview Monday that the tentative bid deadline was set on May 18, 2018, to attract more bidders as potential participants sought extra time.

Rio said President Duterte did not object to the extension of the initial March 2018 deadline.

The DICT said the winning bidder would be selected based on the “highest calculated and responsive bid.” This was defined as the net present value of committed investment for five years plus the net book value of existing telco facilities, in case this applied.

In addition, a new telco player would be barred from merging with a company with a market share of at least 40 percent. The penalty is the “automatic” return of all assigned radio frequencies.

DICT wants a new major telco to roll out commercial services within 12 months of being awarded. Moreover, the new player should cover at least 80 percent of provincial capital cities, towns and chartered cities within five years of receiving its award.

NOW Corp. CEO Mel Velarde said the company wanted to review the terms “thoroughly” with its foreign partners and lenders.

Sundance Apolinario, chief information officer of G.Telecom, said the requirements were “doable.”

A performance bond of half a percent of the total committed investment was set. This will be prorated on an annual basis. Failure to spend the specific amount for the year would cause the new player to forfeit the bond for that period.

The DICT estimated that a new player could spend anywhere from P150 billion to P300 billion in its first five years.