THE Philippine Competition Commission (PCC) stands by its position that Globe Telecom and PLDT Inc. should not have proceeded with the payment of their final instalment on the telco deal with San Miguel Corp. (SMC).
“Completing the payment for the telco assets is a move that unduly pre-empts the forthcoming rulings of the Supreme Court and Court of Appeals,” the commission said in a statement on Wednesday.
PLDT and Globe completed their acquisition of SMC’s telecommunications unit by paying the final instalment of P13 billion on Tuesday. SMC President Ramon Ang was also reported to have confirmed the completion of the deal.
Atty. Froilan Castelo, general counsel of Globe, said that the company has proceeded and completed the transaction without any legal impediment or court order. These include the network roll-out of the 700MHz nationwide, co-use of spectrum between Globe and San Miguel, and the full payment of the commercial agreement.
“Globe insists that it is in compliance of all regulatory requirements in completing the contractual obligation in the acquisition of the telco assets of San Miguel; and that Globe did not violate any rule or prevailing law at the time the transaction was signed,” Castelo said.
“Given the pending cases in the courts, this press statement of the PCC is in violation of the gag order issued by the Court of Appeals. This is contemptuous and PCC should be held liable for this,” he added.
The two telcos agreed in May last year to buy SMC’s Vega Telecom for about P70 billion. At the center of the deal is the 700-megahertz spectrum frequency, which is more cost-efficient to operate, has wider coverage, and reaches indoor areas better.
SMC had initially planned to use the asset itself, holding talks with Australian carrier Telstra Corp. Ltd. for a partnership valued at around $1 billion. But negotiations fell through in March 2016.
SMC earlier said it decided to sell its telecom assets because the legal and commercial risks in the investment were far too large to take on alone. It added that the deal seemed the most beneficial for consumers, since Globe and PLDT would be able to maximize the assets much faster.
But according to the PCC, this big-ticket deal goes beyond the purchase itself because of its impact on public interest.
“As with any transaction required to be notified to PCC, the P69.1-billion deal needs to be reviewed through a market competition lens to safeguard consumer welfare over the long term,” the PCC said.
In April this year, the PCC filed a petition with the Supreme Court to allow it to review the acquisition by PLDT and Globe of SMC’s telco assets. It said that the telco deal review would have been completed earlier if only the parties submitted the required notification.
“The PCC may be fairly new and companies are still adjusting to the regulatory framework of the Philippine Competition Act, but they must strictly adhere to the law. Globe and PLDT should not be exempted,” it added.
“As things stand, the courts have yet to decide whether Globe and PLDT are legally entitled to proceed with their transaction. The PCC upholds the principle that all parties should respect and afford the courts the necessary latitude to decide on this issue. The telco firms should not pre-empt the judiciary’s decision by taking actions which would make it more difficult to implement forthcoming rulings,” PCC said.
The PCC said that since the courts have not yet decided on the petitions involving the deal, then it would be best for Globe, PLDT and SMC to wait until a final verdict is issued on the matter.
However, the telcos have not received any order from either the Court of Appeals or the Supreme Court to prevent them from implementing their agreement with SMC, said PLDT chief corporate services officer Ray Espinosa.
Under PLDT and Globe’s agreement with SMC, both telcos are obliged to make the payment on the date specified, which was May 30, 2017.
with JAMES GALVEZ