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Stock Commentary

Globe claps back, seeks P622-M for “fraudulent calls”

Merkado Barkada
Globe claps back, seeks P622-M for âfraudulent callsâ
Simple “but for” analysis would show any attorney that we could be dealing with a causative link between interconnection, and GLO’s continued exposure to fraudulent international calls using DITO’s network.
Merkado Barkada

Globe Telecom [GLO 2032.00 1.84%] [link] responded to Dito Telecom’s [DITO 3.76 1.83%] anti-trust complaint with a complaint of its own, this time to the National Telecommunications Commission (NTC), and for P622 million in penalties related to what GLO refers to as “fraudulent calls” that reach GLO subscribers after originating on DITO’s network.

GLO said that its users receive over 1,000 such calls per day, and that DITO has not done anything to stop these calls from “bypassing proper voice traffic channels”.

GLO is also asking to disconnect its network from DITO until DITO has taken “positive and concrete steps” to stop these calls and pay GLO what it believes it is owed under the terms of the interconnection contracts.

This came in response to DITO’s filing of a complaint with the Philippine Competition Commission (PCC), which alleged that GLO and SMART [TEL 1749.00 0.34%] were abusing their dominant positions in the industry by preventing a certain percentage of interconnection call traffic.

DITO responded to GLO’s compliant to the NTC by claiming that GLO’s complaint was an “admission” that GLO was using the threat of disconnection as a negotiating tactic to compel DITO to do things that are unrelated to the interconnection, which DITO claims is a violation of the Philippine Competition Act.

DITO also clarified that the fraudulent calls were being placed by “third parties”, such that DITO is also the victim, and then went on to claim that users on the DITO network also received such calls coming from the GLO network.
 

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Now this is getting to become a real mess.

The amount of the penalty sought by GLO isn’t that large compared to DITO’s ballooning net losses (P3.6 billion last quarter), but it’s certainly not going to help if the NTC (or any other body) agrees with GLO’s allegations and works to compel DITO to pay the fine.

It’s probably dangerous to engage in analysis of DITO’s statements and logic here, but it’s interesting that DITO doesn’t necessarily refute GLO’s accusations about the number of fraudulent calls that are coming from DITO’s network to GLO’s, in fact, DITO itself refers to the calls as fraudulent; DITO’s only real issue here is that it claims to “have data” that shows that it has worked to try to stop the fraudulent calls.

I think it’s also kind of cute for DITO to say that interconnection, under the law,  is unrelated to DITO’s inability to stop fraudulent calls from flooding the GLO network.

Simple “but for” analysis would show any attorney that we could be dealing with a causative link between interconnection, and GLO’s continued exposure to fraudulent international calls using DITO’s network.

All that said, this clash still lacks focus, and that tells me that we’re probably in for another couple rounds of the “he-said-she-said” before something more official happens, like the PCC’s initial response to DITO’s complaint that it must deliver next week. 

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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.

DITO TELECOMMUNITY INC.

GLOBE TELECOM INC.

PHILIPPINE STOCK EXCHANGE

PLDT INC.

SMART COMMUNICATIONS INC

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