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OSG seeks dismissal of petition questioning 3rd telco selection process

/ 07:14 PM November 05, 2018

The Office of the Solicitor General (OSG) has asked a Manila court to dismiss the petition filed by NOW Telecom Co. Inc. that questions the government’s selection process of a third telco player.

In a memorandum submitted on behalf of the National Telecommunications Commission (NTC), Solicitor General Jose Calida said the NOW’s petition lacks merit.

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In its petition, filed at Manila Regional Trial Court Branch 42, NOW is questioning the key financial requirements that the NTC has included for aspiring third telco participants.

NOW is referring to the imposition of participation security, performance security, and an appeal fee, as well as the requirement that the roll out plan be submitted 90 days after the selection of a new major player.

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NOW maintains that it has no intention of stopping the bidding process for a third telco player.

Aldrich Fitz U. Dy, NOW’s legal counsel, said the telco firm would be willing to post the participation and performance securities, but it would want the securities deposited in court so that it would have an opportunity to be heard in case the government would want to forfeit the securities.

READ: Aspiring 3rd telco player won’t impede in gov’t selection process

But Calida said NOW’s fear was unfounded.

“This fear [on a forfeited participation, performance and appeal fees] is just a figment of plaintiff NOW Telecom’s imagination and finds no bases in fact and law,” Calida said.

“An injunctive writ cannot be issued simply because plaintiff NOW Telecom surmises that the NTC might forfeit the participation security without affording it opportunity to be heard,” Calida added.

According to Calida, the terms under Memorandum Circular No. 09-09-2018, which includes the participation security, do not violate applicable laws.

This position was shared by no less than Justice Secretary Menardo Guevarra, who had earlier pointed out that the terms of reference for the bidding procedures set by the NTC were “legal and not violating any laws.”

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Calida pointed out that P700-million participation security, the P14-billion to P24-billion performance security, and the P10-million nonrefundable appeal fee were all necessary in the determination of financial eligibilities of bidders and not a “money-making scheme” or extortionary as alleged by the petitioner.

He stressed that the third telco should not only be technically capable but should also have the “financial muscle” to compete with current telecom giants Globe and Smart.

According to him, such securities and fees imposed are consistent with the bidding and procurement processes and are actually even lower than those set by the Government Procurement Reform Act, or Republic Act No. 9184.

The OSG explained that the participation security aims to ensure participation of serious contenders, who have the required financial capability to be a third player that can compete with the existing duopoly.

The participant is given certain options on what form they wish to put up the security such as cash, bank drafts or letters of credit.

The performance security, on the other hand, seeks to assure the government that the third telco will deliver its commitments for the 5-year commitment period.

Requirements for cash deposits have been removed and the participant has been given options as to the forms provided in the TOR.

Lastly, the NTC said the appeal or protest fee is a usual item in the procurement processes, which will discourage frivolous motions and protests.

The OSG also denied NOW’s allegation that there was no prior consultation in approving the terms of reference.

Calida said the terms of reference were the “result of public consultations and hearings, review by the Oversight Committee and lengthy and comprehensive studies with international consultants” and that “public and stakeholders also had the opportunity to submit their position papers on the matter.”

Under the assailed final terms of reference issued by NTC, the winning bidder will be chosen based on the highest committed level of service for over a period of five years.

It set three criteria – national population coverage with a weight of 40 percent, minimum average broadband speed at 25 percent, and capital and operating expenditure at 35 percent.

The rules also provide that the minimum population coverage for the first year should be 10 percent, a figure that should reach 50 percent by the fifth year.

The new player is expected to invest a minimum of P40 billion in the first year and P240 billion in five years.

The selection committee will use a point system based on the documents submitted by the potential players.

After submission of bid proposals, the NTC will formally open the bidding selection on Nov. 10. The government hopes to name the third telco before the end of this year.

NOW is one of the 10 companies and consortiums that have participated in the bidding for the third telco so far and paid a P1-million participation fee.

Its mother firm, Now Corp., only had operating income of P6.3 million in 2017.

The nine other bidders so far are Chinese state-owned firm China Telecommunications Corp., Austrian firm Mobiltel Holdings GmBH, Dennis Uy’s Udenna Corp., the joint venture of businessman Chavit Singson’s LSC Group of Companies and TierOne Communications, Norway’s Telenor Group, Philippine Telegraph and Telephone Corp. (PT&T), former congressman Felizardo Colambo’s AMA Telecommunications, and two undisclosed companies.

Streamtech Systems Technologies Inc. of former Sen. Manny Villar, which recently secured its franchise to operate, is also reportedly joining the bidding for the third telco. /atm

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TAGS: Jose Calida, Now Telecom Co. Inc., Office of the Solicitor General, OSG, third telco firm
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