Senate requires Smart to sell shares to public

By Luis Leoncio

The Senate had spelled out conditions for the exten­sion of the franchise of Philippine Long Distance Telephone Co. (PLDT) mobile unit Smart Communications for anoth­er 25 years, including the public listing of the company’s shares.

Smart’s current 25-year fran­chise expires on March 27 and the mobile- phone giant is now asking Congress for a 25-year extension.

As a public-utility firm, the conditions of its franchise compel Smart to offer at least 30 percent of its stock to the public. However, Smart has not complied, maintain­ing that its parent company, PLDT, is a publicly listed entity thus, it no longer needs to fulfill this condi­tion.

Smart and PLDT, however, have separate registrations under the Securities and Exchange Com­mission (SEC).

Sen. Grace Poe, chairman of the Senate Committee on Public Services, said her panel had recom­mended the approval of House Bill 4637 that seeks to extend Smart’s franchise on five conditions: that the term “co-use” in the applica­tion of the franchise is deleted to prevent it from being invoked in employing anti-competition prac­tices; the retention of the original wording in Republic Act (RA) 7294 that granted the company its fran­chise that mandated the public list­ing of Smart’s shares of stock; that Smart is required to install facilities and bring under its coverage areas not yet served, specifically calami­ty-prone ones, where the presence of telecommunication services can help in times of disaster; the compa­ny is also obligated to upgrade and program its entire infrastructure to be on standby to send out free mobile disaster alerts as man­dated by RA 10639; the com­pany would be required to seek congressional consent on the sale, lease, transfer, usufruct or assignment of the franchise, except in certain cases.

Poe said during the hear­ings that the regulator Secu­rities and Exchange Com­mission (SEC) was told of the sense of the Senate that it must enforce the provision of the law requiring Smart to list its shares and that any failure on its part to comply must be severely penalized.

“When RA 7294 was en­acted, Internet was in its infan­cy and Mark Zuckerberg was in first grade. In the quarter of a century that has passed, information technology has rapidly advanced, such that Smart’s franchise, for it to the attuned to the age of Face­book, must also be upgraded,” Poe said.

She said the modifications were evident in a side-by-side comparison of Smart’s expir­ing franchise and the bill that the House had passed.

“It would have been ex­pedient for the legislature to roll over Smart’s franchise by simply extending it but we know that obsolescence does not only plague technology but regulatory frameworks as well,” she added.

“Smart may have 70 mil­lion subscribers but it must also subscribe to the law as its large customer base under­scores its status as a vital in­dustry,” Poe said.

“After power and water, broadband has become the third utility. There are now more phones than people, and more SIM than the popula­tion,” she added.

Poe noted that while the archipelago is crisscrossed by electrical lines from hun­dreds of power distributors, and there are over a thousand water districts and companies piping in water to homes, cel­lular phone service is dominat­ed by only two players.

“The privilege, however, of cornering this market, and making money out it, and of using publicly owned airwaves, comes with the non-negotia­ble condition that business will be conducted in an honest and honorable way that satisfies the individual customer, the common good, and national development goals,” she add­ed.

Sen. Risa Hontiveros also urged Smart to be more trans­parent as a condition for the extension of its franchise.

“It cannot be business as usual for our telcos. We call on Smart to fully comply with the terms of its franchise and to be more transparent about its corporate structure and own­ership,” Hontiveros said.

Hontiveros noted reports that the Philippines currently has the slowest internet speed in the Asia-Pacific due to the lack of other providers and the fact that only one company controls much of the country’s infrastructure.

She said Smart subscrib­ers should be given the service they paid for.

“We will not allow Smart’s subscribers to be held hostage to inferior service while pay­ing fees that are comparatively higher than many of our Asian neighbors,” she added.