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No TRO on 3rd telco bidding

China Telecom, Austria’s Mobiltel buy bid documents
/ 05:27 AM October 13, 2018

Editors’ note: We are republishing this story to correct the earlier report that mistakenly attributed parts of the NTC’s arguments as part of the Manila court’s ruling. The author apologizes for the error/s earlier reported.

The National Telecommunications Commission (NTC) won an early round in a legal battle initiated by an aspiring telco player that wanted changes to the government’s selection rules.

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This came as the Regional Trial Court of Manila decided on Friday to deny NOW Telecom’s request for a temporary restraining order (TRO), saying the company failed to prove that its rights were violated and that there was any urgency to issue a TRO. NOW Telecom had also sought a preliminary injunction, which will be taken up in hearings set on October 23 and 24 this year, the decision dated October 12 read. 

The order is an early blow to the cause of NOW Telecom, which questioned key financial requirements that the NTC had included in the final terms of reference. On the other hand, it was welcome news for the NTC and the Department of Information and Communications Technology (DICT), which led the crafting of the final terms through most of 2018, as well as the other aspiring third telco participants who have taken no issue with the rules. 

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In support of the third telco selection process, China Telecommunications Corp. and Austria’s Mobiltel Holding GMBH paid the P1 million fee to acquire selection documents on Friday. 

So far, eight companies have bought bid documents from the NTC. The list includes Philippine Telegraph and Telephone Corp., Udenna Corp., Norway’s Telenor Group, a venture between Ilocos politician Luis Chavit Singson’s LCS Group of Companies and TierOne Consortium, as well as NOW Telecom.

Up for grabs are a coveted set of 3G, 4G and potential 5G radio frequencies that a third player will use to provide mobile services and compete with incumbents PLDT Inc. and Globe Telecom. 

In its petition, NOW Telecom challenged the NTC’s decision to include “virtually all” remaining radio frequencies in the third player selection process. The company has long maintained that it has a right to be awarded frequencies given that it holds the necessary franchise and license from the regulator. 

It also questioned the hefty financial commitments, mainly the P700 million participation security and the performance security, which could amount to P14 billion to P24 billion. The latter figure was derived from the fact that the performance security was set at 10 percent of the committed capital and operational expenditures estimated at  P140 billion to P240 billion over a five rear period. NOW Telecom said the financial requirements were illegal and amounted to extortion. 

“The matter will have to wait until most or all of the evidence—testimonial and documentary— from both sides, have been adduced, especially considering the highly technical and complicated nature of the subject involved,” a portion of the order read. 

The Manila Court ultimately ruled that there was no urgency to issue a TRO since the bid submission deadline was set on November 7, 2018. 

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“From the time of the issuance of this order until said time, there will still be ample opportunity for plaintiff to prove its entitlement to the issuance of an injunction,” the order read. 

NOW Telecom, in a press statement this week, wanted the government to scrap the NTC’s selection process altogether and have President Duterte make the final decision on which group will be awarded the radio frequencies and become the third mobile player. The selection rules of the NTC will score bidders that offer the highest commitments on internet speed, investment and population coverage. 

The performance and participation bonds, on the other hand, were included to ensure that a new major telco player had the financial muscle to compete against the incumbents while delivering on a promise to improve services and lower costs for consumers.

ERRATUM FROM PDI-BUSINESS: In an earlier version of this story, the author erroneously quoted portions of the NTC’s arguments as part of the Manila Court’s decision. We apologize for the error.

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TAGS: Austria’s Mobiltel, Business, China Telecom, Internet, third telco
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