Mislatel franchise revoked — Franklin Drilon

 MANILA, Philippines —  The Mislatel consortium is not eligible to be the Philippines’ third telecommunications player with its franchise “deemed revoked,” Senate Minority Leader Franklin Drilon bared yesterday.

During the continuation of the Senate committee on public services’ hearing on the third telecommunications company (telco) in the country yesterday, Drilon said Mislatel violated the conditions of its privilege for failing to continuously operate a year after securing congressional approval of its franchise in 1998.

Drilon said they need not do anything because the franchise “is ipso facto revoked.”

Sen. Grace Poe, chair of the committee, said the National Telecommunication Commission (NTC) should have raised the issue on the Mislatel franchise from the very beginning.

Poe admitted after the hearing that the revelation of Drilon will further delay the operation of the third telco, which vowed to provide fast and efficient internet connection, because the committee must determine if Mislatel still has an existing “legitimate franchise.”

“We really want to have a third player but of course we should adhere to the law. They should have fixed their franchise first before they came here,” Poe said.

The Mislatel consortium, composed of Davao-based businessman Dennis Uy’s Udenna Corp. and Chelsea Logistics Holdings Corp., state-owned China Telecom and franchise holder Mindanao Islamic Telephone Co. Inc. (Mislatel), had been declared as the provisional new major player in the telecoms industry on Nov. 7  as its offer was the only one of three bids found to be complete and qualified.

During the hearing, Drilon also pointed out that Mislatel did not secure congressional approval for its transfer of major control to three shareholders – Mislatel president and chief executive officer Nicanor Escalante, Danilo Cortez and Levitico Toquero.

Drilon said each of the three stockholders have 11.67 percent of Mislatel shares, while CTE Vector Holding has 34.99 percent share, or a total of  70 percent.

He said CTE stands for Cortez, Toquero and Escalante.

Drilon noted Mislatel received its congressional franchise to operate in Mindanao in 1998 but the company has yet to start operations two decades since. 

Escalante said the company tried to operate in Parang, Maguindanao but plans did not materialize due to “peace and order” concerns.

Not revoked

Mislatel’s legal counsel Adel Tamano countered Drilon’s position, citing a Supreme Court ruling that supported their company’s situation.

“The Supreme Court made a very simple decision that since a franchise is a property right, there is a due process requirement for it to be revoked and direct action for a quo warranto is the proper action to take,” Tamano told the senators.

“So until such action is undertaken by the state, collateral attacks on a franchise are not permitted,” Tamano said.

But Drilon maintained that decisions on franchises belong to Congress, which has the authority to grant these privileges that are “subject to conditions.”

“Facts now are coming out that they failed to secure congressional approval in the transfer of the control, and they have not operated since they secured the franchise, which was a violation of the requirements in the franchise,” Drilon said.

Acting Information and Communications Technology Secretary Eliseo Rio Jr. said Mislatel was allowed to present their franchise during the post qualification process by the department and the NTC.

“Mislatel’s provisional status may be cancelled should post qualification assessments find that its franchise is invalid,” Rio said. “If you do not pass the post qualification, you will simply not be given a franchise.”

Eye of a needle

Uy, chairman of Udenna and Chelsea Logistics who did not attend the two previous Senate hearings, faced the chamber yesterday and said the consortium did not violate any law.

“I am the chairman and officer of various publicly listed companies and as evidenced by my track record as a businessman of over 20 years, I have fully complied with the PSE (Philippine Stock Exchange)’s very stringent standards on public disclosure,” Uy said.

Uy said the consortium went through the “eye of a needle” before being chosen as third telco and his “companies operate on the highest standards of accountability.”

“Mislatel went through (the) process of preparing for the bid for almost a year,” Uy said in his opening statement.

Uy also said they were one with the committee in ensuring that the country’s security and interests are protected despite its partnership with China telecom. – With Richmond Mercurio, Christina Mendez