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Tougher rules in store for 3rd major telco

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GROUPS looking to vie for the distinction of becoming the Philippines’ third major telecommunications service provider likely face tougher financial and technical requirements, according to departments overseeing the process.

“[I] find the proposed process fails to set up parameters that will ensure that the third telco has the capability — both financial and technical, to compete in the long term,” Finance Secretary Carlos G. Dominguez III said in a statement last weekend.

The Finance chief is the vice-chair of the oversight committee for the entry of a new major telco that is led by the Department of Information and Communications Technology (DICT).

“I’ve expressed my concerns on the proposed process as I find the pre-qualification criteria as being weak, and I think that scoring should not be based on ‘commitments’,” Mr. Dominguez explained.

“You know, the beauty contest in the past resulted in frequency hoarding and those companies failed to improve service. They just made money by flipping assets government owns. I don’t want that to happen again.”

Draft rules for the selection of a “new major player” in the telecommunications market have set criteria like committed investment for five years, possession of a Congressional franchise, P10-billion minimum paid-up capital and at least five years of experience in telecommunications.

Sought separately for comment, DICT Secretary Eliseo M. Rio, Jr. said in a telephone interview on Sunday: “We will ask them for show money, so that they can compete with PLDT, Inc. and Globe Telecom, Inc.”

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.

“Globe and Smart (PLDT’s Smart Communications, Inc.) have been in the business for years and the third player should not start from like how the two started,” Mr. Rio explained.

Mr. Dominguez has said earlier that the third major telco may need at least P200 billion to “effectively compete.”

“Government should not forget what the task at hand is. The mandate of the President was not only to bring in a third telco player, but more importantly, to ensure that its entry will result to rendering of better services to the consumers at the lowest possible cost,” Mr. Dominguez said in his latest statement.

Referring to the task of drawing up the new criteria, he said: “We hope to be done with this task by Friday next week.”

According to the latest draft rules, the new major player that will have been selected will have to post a five-year performance bond worth 0.5% of committed investment, comply with the 70:30 debt-to-equity ratio, deposit at least 30% of the committed investment for five years with a government financial institution specified by the Finance department within 30 days of award, among others.

It will also have to start commercial operations not later than one year after the date of award and cover at least 80% of provincial capital cities and towns and 80% of chartered cities within five years.

Mr. Rio has said he expects the DICT to name the third major telco by the end of August at the earliest.

The oversight committee is also reviewing issues such as frequency assignments, use of unused fiber of the National Transmission Corp., common tower policy and interconnection rates. — E. J. C. Tubayan and P. P. C. Marcelo