SMC BUYOUT DONE WITHOUT PCC APPROVAL

PLDT, Globe may face fines for telco deal

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BOTH PLDT and Globe Telecom Inc. are facing the danger of paying a huge penalty for not complying with the rules of the Philippine Competition Act. The penalty, according to The Manila Times’ calculation, could range from P691 million to P3.455 billion.

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The Philippine Competition Commission (PCC) is firm in its stance that the P69.1-billion buyout of San Miguel Corp.’s (SMC) telecommunications business by PLDT and Globe is “not deemed approved.”

PLDT and Globe had signed separate share purchase agreements (SPA) with SMC Group on May 30 to acquire the SMC telco assets, and have since laid plans to develop the necessary infrastructure to utilize the assets, key among them SMC’s share of the valuable 700MHz broadcast band. They claim that they have notified the PCC on May 30, a day before the approval of the final IRR on May 31.

They also say that they assumed the P69.1-billion transaction was “deemed approved” as the date of their notification letter to the commission appeared to be covered by the terms of PCC’s second memorandum circular—MC 16-002 —which, they claim, stated that covered transactions are “deemed approved” if they are “consummated after the effectivity of this Memorandum Circular but before the effectivity of the implementing rules and regulations [IRR].”

The PCC which is mandated to review and evaluate mergers and acquisitions (M&As) worth P1 billion and above for anti-trust practices and abuse of market dominance, met separately with PLDT Inc. and Globe Telecom Inc. to discuss and attempt to arrive at an understanding regarding the review of the 50-50 acquisition of SMC’s telecom business under Vega Telecom Inc.

It had earlier warned PLDT and Globe that consummating the deal before the PCC concluded its review could make the two companies subject to penalties.

“The PCC stands by its position that the acquisition is not deemed approved and has to be reviewed under the Philippine Competition Act and its implementing rules and regulations [IRR],” the commission said.

“As conveyed to the parties, they are in the meantime directed to, and should be guided by, Section 17 of the PCA which provides that ‘an agreement consummated in violation of this requirement to notify the Commission shall be considered void and subject the parties to an administrative fine of 1 percent to 5 percent of the value of the transaction,’” the PCC said.

PLDT spokesperson Ramon Isberto said the company is “deferring comment on this matter,” while Globe representatives were not available for comment as of press time.

If approved, the P69.1-billion buyout is expected to improve internet data services in the country, and at the same time solidify the duopoly’s control of the country’s telecommunications sector.

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7 Comments

  1. This deal will do nothing to improve internet speeds, reduce costs or improve services.

    While the parties argue about the legitimacy of the deal, PLDT and Globe are dismantling the only high-speed mobile internet network in the Philippines and terminating the employees and contractors.

    The Deterte government, presumably via the PCC, must place a Temporary Restraining Order on PLDT and Globe to stop the distraction and waste, and stop the Duopoly removing any chance we have of a competitor, good internet and reasonable prices.

    Who will save us from this disastrous outcome of Deterte doesn’t??

    San Miguel clearly doesn’t want to be in the telecom business, so the government needs to attract and incentivise a competent foreign operator to team-up with a local entity to being real choice and competition for us all.

    We all need to be angry and show the government that the ways of the past, and the way this hopeless Duopoly is operating, is completely unacceptable.

    Express your anger. Demand action. Didn’t settle.

  2. Clinton Alley on

    All asides the 900 odd employees that have effectively lost their jobs, it is also all 4 telecoms vendors being ZTE (RAN), Nokia (Core & MS), Ericsson and Huawei (CW), as well all subcontractors, OEMs / VARs, tantamount to a couple of thousand jobs.

    In concluding the way the article reports this is a little wrong, as the
    “…buyout is expected to improve internet data services in the country,…”
    This would or should have occurred regardless of buyout, and if had been done as a 3rd or nth operator would have negated the following statement “at the same time solidify the duopoly’s control of the country’s telecommunications sector.” This would of in turn facilitated not only better network quality, throughput / volume etc., but also competitive pricing through comparable network performance, which would have subsequently improved all operators.

  3. Isn’t the joint decision of PLDT & Globe to invoke the 30-day termination notice for Belltel’s consultants tantamount to a consummation of the agreement? Their representatives were the ones who actually signed the termination notices, a right which, if the sale has ‘t been consummated yet, is supposed to be held by Belltel’s original owners/management (read: SMC).

  4. Robert Reyes on

    How about the 900 belltel so called employees that would be force to resign because of the deal?

    • For your information, the contracts of the first batch of consultants have already been terminated last June 30.

  5. the acquisition might improve internet data service but not the pricing, we will remain as having the most expensive internet provider in asia due to duopoly of this two foreign owned telcos.

    PCC should look into the ownership of these two telcos.

    • Improved internet data services is NOT TRUE. The acquisition will only improve the coverage area for the sites that will be using the 700Mhz frequency.