PLDT asks NTC to disregard 'extraneous' issues
() - August 1, 2011 - 12:00am

MANILA, Philippines - Telecommunications leader Philippine Long Distance Telephone Co. (PLDT) has asked the National Telecommunications Commission (NTC) to disregard extraneous issues being raised by Globe Telecom and other oppositors and to proceed with approving the sale and transfer to PLDT initially of a 51.55 percent equity in Digital Telecommunications Phils. Inc. (Digitel).

In a memorandum to the NTC, PLDT emphasized that its application for the approval of the fact of sale and transfer of Digitel’s shares to PLDT should have been resolved in a mere summary hearing by the commission on the existence of the jurisdictional requirements under Section 20(h) of the Public Service Act.

PLDT also stressed that no legal or factual bases exist to conclude that the transaction is monopolistic, anti-competition, or anti-consumer, similar to the Globe-Islacom merger; and that the extraneous issues being raised by the oppositors cannot be properly raised in the proceedings given that the scope of the latter is limited to determining whether the requirements under PSA Sec. 20(h) have been complied with by PLDT and Digitel in filing the joint application.

It pointed out that as opposed to other acts of the NTC which expressly require prior notice and hearing or those which would involve the indiscriminate participation of the public, the transaction merely requires the previous approval and authorization of the NTC without need of a full blown hearing.

PLDT said that oppositors’ attempts to unduly muddle the issues and deviate from the plain and straightforward consideration by the NTC of the fact that PLDT acquired 51.55 percent of Digitel’s outstanding capital stock is contrary to the summary nature of proceedings under Sec. 20(h) of the PSA.

Those that are opposing the PLDT-Digitel joint application are Globe, Eastern Telecommunications Phils. Inc., TXTPower, TXTM8, and Sealand Telecommunications Co.

PLDT added that the NTC proceeding on the joint application is not the proper proceeding for Globe to ventilate its grievances on its imagined and speculative “resultant effects” of the transaction. “Globe’s intervention has only served to unduly delay or prejudice the adjudication of the rights of PLDT. Besides, Globe’s purposed rights can be fully protected in a separate hearing,” it said.

The country’s largest telecommunications company noted that the mere fact that Globe is a market rival of both PLDT and Digitel does not vest in it any right to intervene in the NTC proceeding. “Globe’s fear that the approval of the joint application ‘will further consolidate and cement unto PLDT and its group more monopolistic powers, advantages, dominance, and market influence to the detriment of Globe’ is purely imagined and speculative.”

As for Sealand and ETPI, PLDT said the two do not oppose the transaction per se, but merely advocate for the imposition of stricter regulations upon PLDT and Digitel. “Their position however pertains to the NTC’s rule-making function and cannot be the proper subject of the proceedings on the joint application. More importantly, they are not affected parties,” it added.

PLDT also told the NTC that while Globe advocates for the equal distribution of frequency assignments among telcos and the elimination of monopolies, yet it previously orchestrated a merger with Isla Communications (Islacom) which saw Globe increase its frequency assignment in the 900 Mhz frequency band by 7.5 Mhz and dominate the market for GSM services.

It likewise pointed out that while Globe alleges that statements in the joint application by PLDT and Digitel should be supported by additional reports, studies, or analyses prior to NTC approval, when Globe and Islacom filed their own application for the approval of their merger under Sec. 20(h) of the PSA, Globe did not submit such information.

“Globe also claims that PLDT cannot acquire Digitel’s frequencies without violating a frequency cap for entities with more than 50 percent of common stocks owned by the same person or group of persons. Yet, it had had no qualms about its acquisition of additional frequencies when it merged with Islacom. Had Globe been successful in its own bid to purchase Digitel, it would not find itself in violation of said frequency cap,” it added.

PLDT also noted that Globe accused PLDT of “frequency hoarding” when, in fact, under the 900 Mhz radio frequency band, Globe is allocated 17.5 Mhz, but uses it only for GSM services even when such frequency is 3G-capable. “Globe’s refusal to use other frequencies for 3G is indicative of its lack of any real intention to fully and efficiently utilize its frequency allocations, which constitutes hoarding,” it said.

It stressed that while Globe criticizes the joint application for allegedly being anti-competition, such criticism is ill-motivated and a purely hypocritical attack against its competitors. “First, Globe has admitted to having placed a bid to buyout Digitel. Second, Globe merged with Islacom under the same rational as the present joint application. Third, at the time of the Globe-Islacom merger, Globe had a dominant market share and enjoyed more frequency bands,” PLDT told the NTC.

Earlier, Globe maintained that the PLDT is a foreign company and is therefore not entitled to acquire more than 40 percent of Digitel.

In its memorandum submitted to the commission, Globe argued that the Supreme Court has already ruled that PLDT is not a Philippine national nor a duly authorized domestic public utility.

It said that assuming for the sake of argument that the ruling is not yet final and executory, the burden of proof to prove that it is a Philippine national rests entirely with PLDT.

The NTC is expected to come out with its ruling on PLDT and Digitel’s application seeking approval for the acquisition by PLDT of an initial 51 percent of Digitel by next week.

Globe also pointed out that PLDT is not a Philippine national as defined by the Foreign Investments Act of 1991 which states that “a Philippine national shall mean...a corporation organized under the laws of the Philippines of which at least 60 percent of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines.”

The Ayala-owned telecom firm stressed that independent and even in the absence of the SC ruling in the Gamboa case, PLDT is a foreign corporation and is in violation of the Foreign Investments Act.

It insisted that the sale and purchase agreement (SPA) which the parties want the NTC to approve is null and void being in restraint of trade and for failure to comply with the requisites of a perfected contract.

APPLICATION DIGITEL FOREIGN INVESTMENTS ACT FREQUENCY GLOBE ISLACOM NTC PLDT
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