PLDT returns frequencies for free

PLDT Inc. will waive all costs linked to the surrender of valuable radio frequencies to the government, foregoing a potential multibillion-peso windfall while avoiding further confrontation with President Duterte, who had expressed his displeasure with the earlier arrangement.

This was first announced by Eliseo Rio Jr., acting secretary of the Department of Information and Communications Technology (DICT), through a social media post on Wednesday.

Rio said PLDT chair and CEO Manuel V. Pangilinan agreed that the company would return “at absolutely no cost” 10 Megahertz (MHz) of the 2100 MHz spectrum assigned to telco operator Connectivity Unlimited Resource Enterprise (Cure). PLDT bought Cure in 2008.

Cure’s frequencies are also known as third-generation spectrum, which is used for mobile calls, texting and internet browsing on 3G handsets.

These will form part of the frequencies the government plans to award to a prospective third telco player that Mr. Duterte hopes will break the industry duopoly of PLDT and Globe Telecom by March this year.

The decision came after the President, through his spokesperson, on Tuesday said he was “displeased” with the government having to pay for frequencies, which are owned by the state and are assigned to the private sector, which pays a fee for its usage.

PLDT acquired Cure for P420 million and launched a service called Red Mobile, which did not prosper and was eventually discontinued.

Cure was again the focus of attention in 2011, when PLDT acquired Digital Telecommunications Philippines, the operator of Sun Cellular.

The National Telecommunications Commission at the time determined that PLDT held the majority of 3G spectrum and ordered PLDT to divest Cure. Given the absence of any antitrust law, the NTC had no legal basis to require PLDT to give up Cure, Rio explained. The “middle-ground” was a conditional divestment.

One such condition was that PLDT would be entitled to “recover the reasonable cost of its investments in Cure.”

A final amount was never determined despite years of study. More recently, the NTC pegged the amount at around P3 billion.

Apart from Cure’s 3G frequencies, the government is looking at awarding a slew of 4G and even potential 5G frequencies for faster and higher-capacity internet to a third player, Rio said.

He said in a text message that some of the spectrum to be awarded to a third player were those in the 2.5 Gigahertz, 3.3 GHz, 3.5 GHz and 10.5 GHz bands.

Some of those frequencies are deemed crucial in delivering “the first wave of 5G deployments,” according to the GSM Association, the global trade organization of the telco industry.

The final standards for 5G will be issued in 2019 and its commercial rollout is anticipated a year later, GSMA said. By 2025, Asia Pacific will account for the biggest share of 5G connections, it added.

Rio said awarding those frequencies represented a major advantage for a third player since it would not be saddled by the costs related to the rollout of older 2G and 3G networks. Globe and PLDT are also spending massive amounts to deploy 4G.