3rd telco plan faces new hurdle

A Filipino lawyer is seeking to invalidate the whole third telco selection process on grounds that the bidding rules were unconstitutional and failed to fully ensure national security.

If allowed to prosper, the case filed last Dec. 17 by movant-intervenor Marlon Anthony R. Tonson could invalidate the selection of Mislatel Consortium, the venture led by businessman Dennis Uy’s Udenna Corp. and state-backed China Telecom, from being named as the new major telco player last November.

Moreover, it would lead to the rewriting of the selection rules crafted through most of 2018 as part of the Duterte administration’s desire to break the industry dominance of PLDT Inc. and Globe Telecom that has been described as slow and expensive.

Tonson’s filing was made through counsel Valeña Law Office. He wants to join the Supreme Court case earlier filed by disqualified bidder Philippine Telegraph and Telephone Corp. (PT&T) against the National Telecommunications Commission and to include additional respondents.

While PT&T is mainly seeking to undo its Nov. 7 disqualification and have its bid documents opened, the case filed by Tonson wants to nullify the entire bid process altogether, starting with the voiding of Memorandum Circular (M.C.) 09-09-18, as the selection rules are formally known.

“PT&T is asking for a second round still within the auspices of M.C. 09-09-18,” a portion of the filing, obtained by the Inquirer, showed. “Movant-Intervenor takes the case a step further and asks for the entire scrapping of M.C. 09-09-18.

In the filing, the movant-intervenor argued that the selection rules were unconstitutional because these were anticompetition and lacked the “proper screening tests to uphold the nationality restriction for public utilities.”

Moreover, he claimed the rules failed to place the necessary safeguards against possible intrusions to national and individual security.

As part of the filing, the movant-intervenor wants to include the Philippine Competition Commission, the third telco selection committee and China Telecom as respondents in the case.

Mislatel Consortium, so-named after its telco franchise holder Mindanao Islamic Telephone Co., was confirmed as the new major player last Nov. 19. It emerged as the sole qualified bidder on Nov. 7 after rivals PT&T and Sear Consortium were disqualified by the selection committee.

Mislatel Consortium is now undergoing the post-qualification phase before being assigned a set of valuable radio frequencies that will allow it to launch mobile services to compete with PLDT and Globe.

The post-qualification phase includes finalizing its ownership structure. Mislatel spokesperson Adel Tamano said during a Senate hearing last Nov. 27 that China Telecom would own a 40-percent stake with the rest held by Udenna and unit Chelsea Logistics Holdings.

In the court filing, the movant-intervenor argued that foreign governments should be barred from owning a stake in a local public utility.

This could have wide implications, including for PLDT and Globe, whose strategic foreign investors NTT Group of Japan and Singapore Telecommunications, respectively, are partly owned and controlled by their home governments.

He also argued that provisions in the rules went against free competition. He cited the multibillion-peso financial bond and P700-million participation security as portions that “hindered genuine competition in the selection process.”

He claimed the selection rules failed to fully account for cybersecurity risks.

The selection rules stated that the new major telco player must submit a detailed description showing how it would safeguard the security of its network. Moreover, the third telco must comply with the National Cybersecurity Plan of the Department of Information and Communications Technology.