Corporate Securities Info

Confidence issue of 3rd telco

/ 05:06 AM November 20, 2018

Under normal circumstances, the selection of the consortium consisting of Udenna Corp., China Telecom, Chelsea Logistics Holdings Corp. and Mindanao Islamic Telephone Co. (Mislatel) as provisional third telco operator would be welcome news.

The consortium headed by businessman Dennis Uy, a significant financial contributor to President Duterte’s election campaign, appears to be a viable alternative to the PLDT and Globe Telecom duopoly.


But no, its selection has been marred by questions about the legality of the disqualification by the National Telecommunications Commission (NTC) of two other bidders—the Sears consortium led by former Ilocos Sur Gov. Chavit Singson and PT&T—for their failure to meet certain prequalification requirements.

Mislatel’s participation in the consortium is also under scrutiny because of its alleged violation of the conditions of its franchise and the transfer of its ownership without the prior concurrence of Congress.


In addition, Rep. Danilo Suarez, the minority leader of the House of Representatives, has served notice of his intention to question before the Supreme Court on national security grounds the constitutionality of the award in case the Uy-led consortium is named third telco operator by the NTC.

Considering Uy’s political clout, it is doubtful if any of these legal challenges will succeed. Months before, President Duterte said he wanted a Chinese company to break the PLDT-Globe duopoly.

The President’s “love affair” with China and Chinese companies is evident from his attendance in several China-sponsored social activities and ribbon-cutting ceremonies of Chinese companies in the country.

Thus, for all intents and purposes, the provisional award to the Uy-led consortium is a done deal.

No amount of protests from some sectors of our society will overturn the NTC (or higher ups?) order to allow a Chinese government-controlled company to have a hand in the operation and management of a vital aspect of our daily life.

Judging from the financial statements of the companies that comprise this consortium, it is apparent it has the resources needed to build, operate and maintain a telco that can provide relief from the duopoly’s poor services.

That capability, however, is not assurance it will be able to easily win the patronage of the subscribers of PLDT and Globe.


This early, expect the two telcos to exert all efforts to improve their services and strengthen their hold over their customers to discourage them from switching to the incoming telco operator.

Even if the consortium is able to meet its construction and operation commitments, it has a huge credibility or confidence problem ahead of it.

The participation of a Chinese government-controlled company in the consortium has, rightly or wrongly, engendered fears the private data of its subscribers would find their way to China’s database and be used for surveillance or unauthorized purposes.

The lingering question is: Can China be trusted to abide by our data privacy laws?

Note that in earlier surveys conducted by the Social Weather Stations, China suffers from a low trust rating among Filipinos. This mistrust is exacerbated by reports of China’s aggressive actions in some islands in the West Philippine Sea that are within the Philippines’ exclusive economic zone.

President Duterte’s public expression of admiration for China (which some quarters describe as subtle subservience) despite such actions has failed to ease skepticism about China’s true intentions in its commercial dealings in the Philippines.

And now comes the prospect of a Chinese government-controlled company getting involved in the operation and management of a telco that will handle private and public communications.

Thus, for personal security reasons, some telco users cannot be faulted to entertain second thoughts about giving up their PLDT or Globe subscription in favor of the Uy-led consortium.

A tough confidence or credibility problem awaits President Duterte’s protégé.

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