A Chinese firm, China Telecom, would not undergo public bidding in its bid to make an investment as the third telecommunications or telco company in the country, Malacañang spokesman Harry Roque said on Wednesday.
“Let me be clear on this. The offer to China was made in a bilateral talk between the President [Rodrigo Duterte] and the Chinese Premier [Li Keqiang]. It appears to have been accepted because the Chinese government nominated China Telecom. It was offered and accepted, [and]we will honor our word,” Roque told reporters.
The bilateral meeting between Duterte and Li happened after Manila’s hosting of the Association of Southeast Asian Nations Summit in November 2017.
Under the 1987 Constitution, foreign companies can only own 40 percent at most of public utility companies such as telecommunications firms.
Roque said the Chinese side has been informed that its entry should be compliant with this constitutional provision.
The country, according to the Palace spokesman, will only be open to the entry of other foreign players if the Chinese firm would not be amenable to complying with the 40 percent restriction of the Constitution.
“Chinese ownership will be limited to 40 percent and the Department of Information and Communications already said that they would want a Filipino consortium to own the 60 percent majority stake in this third telecommunications firm. If for any reason this is not acceptable to China Telecom, then we have no choice. We will have to look for other players because we will have to honor what the Constitution provides,” Roque said.
He, however, maintained that the Chinese firm is not walking away from the deal.
“We do not know if it will actually push through. As you know, the devil is always in the details. But there are no indications that China Telecom does not want to push through with the project. But unless it is actually up and going, I guess there is always a possibility that others may be involved if, for any reason, China Telecom or China decides not to push through with their commitment,” Roque said.
President Duterte ordered government regulatory agencies in December 2017 to speed up the entry of China Telecom in the Philippine market, saying the Chinese firm should be operating in the country within 90 days or less.
Opposition lawmakers, including former police chief and now Sen. Panfilo Lacson and ex-Marine Gary Alejano have warned the government against tapping a Chinese firm for telecommunications since it could jeopardize the country’s national security.
There are only two telecommunications firms in the country, PLDT (which also operates Smart Communications) and Globe.
The entry of Chinese firms in public utility services in the country, however, has always been marred with controversies.
The $329-million National Broadband Network project with Chinese firm ZTE was canceled by then-President Gloria Arroyo in 2007 over allegations of overpricing.
Another derailed project with a Chinese firm was NorthRail, which was supposed to connect Caloocan City (Metro Manila) to Bulacan but was shelved because of alleged irregularities in the contract.
Based on Commission on Audit findings, the Philippine government overpaid the Chinese contractor for the project by at least $129 million.