Committed services and not financial resources will be the basis for choosing the country’s third major telecommunications player, the Department of Information and Communications Technology (DICT) said as it announced the dropping of a P10-billion net worth requirement.
“The P10-billion capital required will be [taken]out [because]we have been receiving … comment[s]from the stakeholders themselves,” DICT officer-in-charge Eliseo Rio said at a second public consultation on the selection of the third telco player on Tuesday.
The DICT earlier this month released a draft memorandum circular mandating, among others, that any telco looking to challenge the PLDT and Globe Telecom duopoly should be worth at least P10 billion.
“[H]indi na yung pera yung tinitignan, but ‘yung actual committed roll-out mo (We will no longer look at the money but instead the actual committed roll-out)… the area you will cover, internet speed you are going to commit, ano yung mga (what) services that you will have after five years,” Rio said.
Noting that the selection process normally takes into account the committed investment, Rio said “we took that out” because prospective investors had claimed that their systems were more efficient and up-to-date.
The chief of the National Telecommunications Commission, Gamaliel Cordoba, said a performance bond would be mandated in lieu of the capital requirement.
“The performance bond — this is just the figure that we put, P40 billion, it can go higher or lower — we’re asking for help from the Insurance Commission on the best way on how to …[settle]funding,” Cordoba added.
Should the winning bidder fail to meet its commitments, the second-placer will take over and be allowed to tap the previous winner’s performance bond, Rio said.
Cordoba, meanwhile, said the new telco should be also able to service at least 15 percent of the population within the first year of operations.
“This 15 percent is comprised of the population of 25 percent of cities and provincial capitals; 10 percent of the first and second class municipalities; [and]5 percent … of third and fourth class municipalities,” he said during the public consultation.
The second year should see coverage increase to 30 percent of the population, 45 percent on the third, 60 percent during the fourth and 70 percent by the fifth year.
“This is in terms of people reached. We expect in year seven or eight, the new player would be able to cover 80 percent,” Cordoba said.
Rio said a revised memorandum circular could be released next week and a public hearing staged “ten days after that”.
Cordoba said the final circular would be released on April 9 and submission of bids scheduled for May 24.
The third telco, Rio said, could be named by “end of May or June.”
In January, he identified Philippine Telegraph & Telephone Corp. (PT&T), NOW Corp. and Converge ICT Solutions Inc. as having expressed interest in joining the upcoming auction.
PT&T downplays probe
In a related development, PT&T expressed optimism that its bid chances would not be affected by questions over its franchise.
“This will not affect the 3rd telco bid,” PT&T Chief Operating Officer Miguel Bitanga told reporters in a text message.
“Congress is conducting an inquiry on our compliance to our franchise, of which we were asked to submit a position paper. We are confident that once this paper is submitted, our compliance will be both proven and clear,” he said.
A newspaper on Monday reported that the House of Representatives committee on legislative franchises was probing a change of ownership at PT&T that was made without prior approval by Congress.
PT&T confirmed the report in a disclosure and said that its position, “based on the applicable law on the matter and the factual circumstances surrounding the sale … the approval by Congress is not required…”.
The company announced last August that investment company Menlo Capital Corp. had acquired a 70 percent stake from Republic Telecommunications Holdings Inc.
Businessmen Lucio Tan Jr. Salvador Zamora II and Benjamin Bitanga used Menlo to enter the telecommunications business.
Zamora and Bitanga were subsequently elected as chairman and chief executive officer, respectively, of the company.