PCC spurns telcos’ request for dialogue

By Riza Lozada 

There appears to be no immediate end in sight to the standoff between the country’s telecommunications giants and the newly formed regulator, the Philippine Competition Commission (PCC), over a P70-billion telecommunications megadeal. 

The bleak prospect surfaced as the PCC rejected a request by Globe Telecom and Philippine Long Distance Telephone Inc. (PLDT) for a dialogue with the PCC “to resolve uncertainties concerning the joint buyout of San Miguel Corp.’s (SMC) telecommunication assets.”

But the impasse appears not to have deterred Globe in its determination to start improving its services through its newly acquired tool from SMC. It has activated the first 700 MHz site in Quezon City, and has started

utilizing the 2600 MHz spectrum for sites in the Visayas and Mindanao.

The dispute between the telcos and the PCC center on whether or not the deal in which PLDT and Globe bought SMC’s unit Vega Telecoms complied with the Philippine Competition Act (PCA) provisions on mergers and acquisitions.

PCC Chairman Arsenio M. Balisacan said in a published interview there was no need for a dialogue at this stage since the deal has neither been approved nor rejected by the commission.

“That has not been the process,” Balisacan said. “The point where we meet the parties is when we launch an investigation or inquiry. We are not at that stage.”

In a letter dated June 14, the two telcos asked the PCC for a meeting to shed light on certain issues that the Commission may have regarding the transaction.

In the letter, the Globe and PLDT said: “Consistent with our earlier declaration, we express our willingness to cooperate with the Honorable Commission to settle the issues surrounding the transaction having in mind the tremendous benefit that the public will gain from the immediate unlocking of the advantages of the underutilized frequencies underpinning the transaction.”

Lawyer Froilan Castro, Globe general counsel, expressing concern over the impasse, said, “this is creating an atmosphere of uncertainty hanging over the industry, which in turn, cause investors to take a cautious position. We are willing to cooperate and work with the PCC for the approval of the transaction.”

Investors initially cheered the buyout, with Globe rising to P2,310 per share at the end of trading day on May 30, when the deal was announced, from P2,188 per share from the previous trading session.

But after the PCC’s announcement to review the deal, Globe share prices slid to P2,280 per share at the end of trading day of June 20.

Both telcos insisted the transaction was above-board and did not violate any provision of the country’s anti-competitive law.

Despite refilling the notices to the PCC, the concerns of both telcos insofar as the initial findings of the PCC remain unanswered, Globe Telecom said in a statement.

There was no market share gain or loss for any of the parties involved in the acquisition of SMC’s telco assets, Castelo said, because majority of the companies that belonged to SMC were not operating.

Castelo also said that the return of a complete set of 2G, 3G, 4G, and potential 5G, including 20 megahertz (MHz) of the 700 Mhz spectrum to the government fully supports open market competition, enabling the entry of another industry player in future.

“Amid the clamor for faster and better mobile internet in the country, Globe has remained committed to expanding our capabilities through investments in our network. Considering the challenges in building a superior telecommunications network across the archipelago, particularly in terms of site acquisitions, co-use of the 700 MHz spectrum among existing players will fast-track the improvement of mobile internet services in the country through additional capacity and greater coverage,” Castelo said.

Less than a week since it gained access to the unused SMC frequencies, Globe activated the first 700 MHz site, located near Hardin ng Bougainvillea in UP Diliman, Quezon City. The coverage of the 700 MHz has already been expanded and is now covering key locations in Quezon City such as Horseshoe Village, New Manila, Tomas Morato, G. Araneta Avenue, Talayan Village, North Avenue, Project 6, Mindanao Avenue, Philam Subdivision, Trinoma and SM City, Culiat, New Era, Commonwealth Avenue, Tandang Sora, Tierra Pura, Barangay Holy Spirit, BF Quezon City, Mapayapa, Don Antonio, C.P. Garcia, Katipunan Avenue, also covering Ateneo Miriam and Loyola Heights.

Castelo said Globe is already doing additional spending to retrofit cell towers in order to utilize the 700 Mhz for public benefit. “It would be a shame to dismantle all these given the extensive resources being spent,” said Castelo.

Globe also revealed last week that it has also started utilizing the 2600 MHz spectrum for 130 sites mostly in the Visayas and Mindanao, providing customers in those regions with more network capacities to support the growing demand for bandwidth. The number of cell sites with activation of the new 2600 MHz allocation is expected to grow to more than 800 sites by the first week of July, the company said. The additional allocation in the 2600 MHz band is also among the assets freed up as a result of the acquisition deal.

The PCC said it is mandated to act on corporate transactions despite a two-year adjustment period. Companies would be allowed within the transition period to “reverse their structures and deals,” Balisacan said.

Nonetheless, the transition period “does not affect the commission’s mandate to implement the law,” the PCC chairman said in a meeting with the European Chamber of Commerce of the Philippines (ECCP).

In that meeting, Balisacan discussed the main thrusts of the competition law and its implementing rules.

Balisacan said the PCC has received 47 notifications regarding transactions that need to be cleared by the Commission.