MANILA, Philippines — Mislatel, chosen by the government to be the third player in the country’s telecommunications industry, may end up being fully controlled by state-owned China Telecommunications Corp. through some legal maneuvers that would skirt constitutional limits on foreign ownership and raise national security concerns, senators warned yesterday.
The possibility was brought up at the resumption of inquiry of the Senate committee on public services into the government’s selection of the third telco, where senators raised possible national security implications of having a state-owned foreign corporation becoming part of the country’s communications and information structure.
The National Telecommunications Commission (NTC) earlier awarded the “New Major Player” (NMP) status to the Mislatel Consortium, which is composed of China Telecom, with a 40 percent stake; Udenna Corp. (35 percent) and Chelsea Logistics Holding Corp. (25 percent).
The latter two corporations are owned by Davao City-based business tycoon Dennis Uy, who was a major contributor to President Duterte’s campaign during the 2016 elections.
Consortium partner Mislatel (Mindanao Islamic Telephone Co. Inc.) holds a congressional franchise to operate as a telco.
Once the government finally grants the license, Mislatel will be the surviving entity with the consortium having stakes in the company.
Sen. Francis Escudero pointed out during the hearing that while China Telecom only has a 40 percent stake, nothing prevents the Chinese state-owned firm from putting up additional capitalization to fund the multibillion-peso telco rollout.
This means Udenna and Chelsea could borrow money from China Telecom and, in exchange, there could be side agreements where their voting rights will be held by the foreign entity.
“You can give proxy votes to them (China Telecom)? They can very well have voting rights and you’ll have a foreign entity controlling,” Escudero asked consortium representatives led by lawyer Adel Tamano.
Uy was not present during the hearing, prompting Sen. Antonio Trillanes IV to ask the committee – chaired by Sen. Grace Poe – to send another invitation.
Tamano said there is no legal prohibition for the two local partners to borrow from China Telecom, even as he gave assurances that there would be no violations of the law with the partnership.
“There is no prohibition on that (loan), again the prohibition is in the management and control of the company, as a Filipino company the management and control must rest with the Filipino, but in terms of whether or not one shareholder wants to extend a loan to another, that is a common practice,” Tamano told reporters after the hearing.
Over P250 billion is needed by the third telco in five years to comply with the requirements set by the government to roll out its network nationwide.