Sear group: Revoke China Telecom-Udenna’s interim 3rd telco status

The disqualified bidder backed by Ilocos politician Luis “Chavit” Singson has asked the selection committee to revoke the provisional third telco status of the venture between Dennis Uy’s Udenna Corp. and China Telecom, and potentially declare a bidding failure.

This emerged as Singson’s LCS Group together with TierOne — collectively known as the Sear Telecommunications Consortium — filed its appeal before the National Telecommunications Commission (NTC) on Friday.

In its appeal, it assailed Udenna-China Telecom’s telco franchise holder, Mindanao Islamic Telephone Co. [Mislatel], for breach of contract and submitting “sham” documents to the NTC. 

“Sears Telecoms Consortium is thus constrained to ask the SC [selection committee] to reconsider the declaration of Mislatel as the provisional NMP [new major player] pending investigations of the foregoing matters,” showed a portion of its appeal, which was distributed to reporters on Friday.

The development signaled the potential for further delays in the third telco selection process, which had grown more heated in the aftermath of the bid last Wednesday.

Sear Consortium pointed to an agreement last May 30, 2018 between Digiphil Technologies Inc. and Mislatel, which stated that both would jointly provide affordable internet to underserved and unserved areas across the Philippines. The agreement included joining the government’s third telco selection process. 

Sear Consortium said the deal barred Mislatel from partnering with other groups without its consent. Instead, it alleged that Mislatel “inordinately and in gross violation of its contractual commitment to exclusively venture with Digiphil partnered with Udenna Corp., Chelsea Logistics Holdings Corp. and China Telecommunications Corp. in their bid as NMP.” 

It added that no such consent was sought from Digiphil, which also paid Mislatel’s outstanding liabilities to the NTC. 

Sear Consortium further alleged that Mislatel submitted false documents by not readily disclosing Digiphil as a shareholder and their joint venture agreement, among others. It added that the selection committee should forfeit their P700 million bid security.

“This much is clear: Mislatel is guilty of fraudulent and obstructive practice. For this reason, the SC [selection committee] can declare a failure of such selection process,” Sear Consortium said.

After their appeal was filed, Singson told reporters on Friday that Sear Consortium would have won the third telco race had they not been disqualified by the NTC last Wednesday. 

Sear Consortium was the second group to file an appeal Friday after Philippine Telegraph & Telephone Corp., another disqualified bidder. 

Sear Consortium was disqualified because it lacked a valid letter of credit for the P700 million bid bond, a security the NTC placed to ensure that only serious contenders would join. 

Singson explained that their foreign lenders wanted clarity on the forfeiture terms contained in the bid rules. On Friday, Singson presented four manager’s checks and a letter of credit to prove that they could put up the P700 million bid bond.  

Sear Consortium officials on Friday also insisted that their bid was superior to that of Mislatel. The NTC’s rules grade bidders on their internet speed, population coverage, and spending over the five-year commitment period. 

According to Sear Consortium, their offer was a full 100 percent population coverage on the first year, owning to their broadband satellite, which will be launched in 2019. In terms of internet speed, it promised 56 Megabits per second on the first year while capital spending through the five year period amounted to P540 billion— well above the upper limit established by the NTC, which earlier estimated that a third telco would need to spend P140 billion to P240 billion. With those figures, Sear Consortium would have scored a perfect 500 points. 

Mislatel Consortium, meanwhile, offered 37 percent population coverage in the first year going up to 84 percent by year five. Its promised internet speed was 27 Mbps on the first year and then 55 Mbps in the succeeding years while spending would reach a total of P258 billion. Its total score amounted to 456 points. 

To ensure their commitments, the government said the winner would need to put up a 10 percent performance bond based on its total five-year spending program. 

The Udenna-China Telecom venture will be named the final third telco player should they hurdle the verification period, which would last three days. 

The winner in the third telco exercise will be granted a set of 3G, 4G and potential 5G radio frequencies. These will be used to provide voice calls, text messaging and mobile internet, putting the new major player in direct competition with the services offered by incumbents PLDT Inc. and Globe Telecom. /kga