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Editorial

Sore bidder

/ 05:09 AM October 15, 2018

Just when everyone thought the process of selecting the third telecommunication company to break the PLDT-Globe duopoly was proceeding smoothly, a legal challenge has arisen from one of those that, early on, had been going public it would vie for the slot.

NOW Telecom, an affiliate of publicly listed NOW Corp. led by
businessman Mel Velarde, announced on Tuesday last week that it had sued the National Telecommunications Commission (NTC) at the Manila Regional Trial Court on Oct. 8, the same day it acquired documents from the NTC for the forthcoming bidding.

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The firm wanted the NTC to remove key portions of the bidding rules that set hefty financial commitments, claiming these were “onerous, confiscatory and potentially extortionary.”

But the terms of reference or bidding parameters were meticulously drafted through most of the year with the help of local and international experts, multiple government agencies and the third telco aspirants themselves.

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Some of the areas being questioned under NOW’s petition, such as the 10-percent performance security, were included to ensure that a third player had enough financial muscle to compete with incumbent players and deliver on the promise of improved services and lower costs.

Eliseo Rio Jr., acting secretary of the Department of Information and Communications Technology (DICT), had already defended the provisions, saying the government wanted to attract a strong contender.

He argued that the bond was there because the government wanted a third telco that could compete with Globe and PLDT subsidiary Smart Communications.

The issue on the performance security, which would be forfeited in case a new major telco player repeatedly breached its commitments, was not raised by other potential participants, he pointed out.

It would be easy to give credence to the claims of NOW if the other prospective bidders support it. But none of those that joined the hearings and consultations and eventually bought the bid documents went along with NOW’s complaint.

In fact, prospective participants in the government’s third telco initiative said they continue to support the selection process.

These included Philippine Telegraph and Telephone Corp., businessman Dennis Uy’s Udenna Corp., and Telenor Group, a venture between Ilocos Sur politician Luis “Chavit” Singson’s LCS Group of Companies and TierOne Consortium.

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Last Friday, China Telecom and Austria’s MobilTel also bought the P1-million bid documents.

The day after the suit got published, DICT’s Rio issued a strong rebuke against NOW and suggested that the company likely fell short in terms of its financial capabilities.

He pointed out that the entry of a third telco was no small matter, and to set the bar low for those that apparently could not meet the standards was detrimental to the Filipino people who are the target beneficiaries.

He also noted that NOW had ample time to raise its concerns during the 15-day window before the bidding rules took effect on Oct. 6.

Even NOW’s public shareholders did not seem to like the idea of their company suing the government. Last Wednesday, the firm’s share price fell more than 30 percent by the closing bell in heavy selling, wiping out some P3.5 billion in terms of market value.

The next day, NOW shares lost another 15 percent as investors continued to dump the stock. It recovered part of the heavy losses at the end of the trading week.

Rio indicated that “the President will not be happy with this development.” President Duterte, who had promised early on to break the PLDT-Globe duopoly, threatened last September that he would assume control of the selection process if the DICT failed to meet the deadline.

It’s encouraging to hear that the Manila court had declined to issue a restraining order on the selection process.

As it stands, the bidding will proceed as expected next month, and a new player to break the PLDT-Globe duopoly — and hopefully improve internet services, something long yearned for by the Filipino public — will be known by then.

In the meantime, those without the capability to join the bidding should stay out and not be allowed to muddy the waters.

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TAGS: Chavit Singson, China Telecom, Dennis Uy, Eliseo Rio Jr., Inquirer editorial, LCS Group of Companies, Luis Singson, Mel Velarde, MobilTel, NOW Corp., NTC, Philippine Telegraph and Telephone Corp., PLDT-Globe duopoly, telecom, telecom firms, Telenor Group, TierOne Consortium, Udenna Corp.
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