By Philip M. Lustre Jr.
They have moved with surgical precision and haste.
They have moved with surgical precision and haste.
In a single, swift and decisive move, the duopoly of the PLDT Group and Globe Telecom has acquired the telecommunications assets of food conglomerate San Miguel Corporation (SMC) in a deal that is seen to strengthen the duopoly of the two telecommunications giants in the country .
The deal could involve the sale to the duopoly of SMC assets that could reach $ 1.2 billion (or about P56 billion), the acquisition of Vega Telecom Inc., which owns controlling interests in at least five telecommunications firms, the return of 700 MHz of radio spectrum to the government, and assumption of P17 billion in unpaid debts and liabilities of the acquired firms.
The deal came at the most inauspicious time.
The Philippine Competition Commission (PCC), the newly formed quasi-judicial body whose mandate is to enforce and implement the provisions of the Philippine Competition Act, or RA 10667, has yet to come out with its implementing rules and regulations (IRRs) .
Outgoing President Benigno S. Aquino III has signed the competition policy on July 21, 2015 mainly to ensure efficient market competition and level the playing field among businesses engaged in trade, industry, commercial and all economic activities, but without the IRRs, the PCC is a toothless and powerless agency to deal with antitrust issues or creation of monopolies, oligopolies and duopolies, or any other combinations that could restrain trade and commerce.
The timing of the deal business becomes more dubious as the outgoing president has signed into law only last week the creation of the Department of Information and Communications Technology (DICT), which is mandated to come out with policies on telecommunications and information technology.
The DICT would have to come out with its own implementing rules and regulations (IRRs) in the next six months on how it would impose and implement policies on the country's telecommunications and IT sector.
Moreover, the deal came exactly a month before incoming president Rodrigo Duterte would take his oath and assume the presidency.
Duterte has openly articulated the people's complaints about slow Internet services, warning that if the telecommunications players would not improve, other firms would come in to compete against the major players.
In his press conference this morning, where he announced the deal PLDT-Smart, PLDT chairman Manuel Pangilinan said they intended to tell the Philippine Competition Commission and to its present commissioners led by chair Arsenio Balisacan that "it is already a done deal."
In fact, Pangilinan and Ray Espinosa, PLDT on regulatory affairs chief, announced that payments would be made to SMC within days to ensure a successful transaction among the participating parties. In short, the PCC would not be in a position to stop it even if it violates the law on competition.
It would be a fait accompli even before the official notice of the deal reaches the desk of PCC chair Arsenio Balisacan, who earlier resigned his post as socio-economic planning secretary and NEDA director general to become the first PCC chair.
The two PLDT officials described the deal as a "win-win" for everybody, particularly the public, which has been clamoring for faster and more efficient Internet services.
In a joint statement, PLDT and Globe said they would acquire Vega Telecom Inc., which owns controlling interest in Bell Telecommunication Philippines Inc., Eastern Telecommunications Philippines Inc., Cobaltpoint Telecommunication Inc., Tori Spectrum Telecommunication Inc., and Hi-Frequency Telecommunication , Inc.
In addition, PLDT said it would acquire a 50-percent stake in New Century Telecoms Inc. and eTelco Inc.
Globe said it would acquire 50 percent of Bow Arken Holdings Inc and Brightshare Holdings Corp.
Espinosa explained the deal would not require any congressional approval because they were not dealing with franchises or operating vehicles.
The two dominant telecommunications giants were acquiring the parent companies, Espinosa said.
There is no immediate explanation for the almost surgical move to acquire the two firms, but even Pangilinan dropped strong hints it had the approval of the incoming president, as he claimed that he was informed of the deal.
But industry sources said no less than the incoming president has taken a direct hand to force SMC honcho Ramon Ang to sell those assets to the coveted two telecommunications giants.
When he declared that the telecommunications industry would be opened to other parties, the reality was that SMC assets would be acquired by the two giants, industry sources.
With one month to go before he assumes the presidency, the incoming president would not be accused of anything in the deal. There is no crime when he is not yet in power, they said.
Outside parties, particularly foreign firms, understand that it is very difficult to enter the Philippine telecommunications market because of existing restrictive environment, which include public policies.
The industry sources said has become a virtual pariah among the big business leaders because he did not support Duterte but chose to stay with his favored presidential candidate, Sen. Grace Poe.
Pangilinan, or MVP as he is called in the business circles, originally supported Vice President Jejomar Binay but took a jumpship in the homestretch and went to support the incoming president.
Not to be outdone, the Ayala family, majority owners of Globe Telecom, likewise jumped ship to support Duterte. They originally supported Roxas.
Lawyer Rodolfo Salalima, who is the chief lawyer of the Ayala business interests and possibly the incoming DICT secretary, was reputed to have engineered the Ayalas' jumpship to the camp of the incoming president.
Pangilinan could hardly describe the mechanism on how the two telecommunications giants would divide the SMC telecommunications assets, but said a mechanism to identify which assets would go to each party was being devised and conceived.
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