Go-signal to Mislatel as telecom player seen

MANILA, Philippines — The Senate is expected to green-light today the transfer of ownership of Mindanao Islamic Telephone Company Inc. (Mislatel) to a consortium named by the Department of Information and Communications Technology (DICT) and the National Telecommunications Commission (NTC) as the country’s third telecommunications player.

The plenary is scheduled to vote on House Concurrent Resolution 23, which approved the transfer of the controlling interest of Mislatel’s owners to its new partners that formed the Mislatel consortium.

Sen. Grace Poe, chair of the Senate public services committee, sponsored the resolution on the floor on Monday.

The committee wrapped up its inquiry last week into the DICT and the NTC’s selection last November of Mislatel Consortium to compete against Smart and Globe.

The consortium is composed of two firms – Chelsea Logistics and Udenna Corp. – owned by Davao-based businessman Dennis Uy; state-owned China Telecommunications Corp. and Mislatel.

Poe said the committee removed any reference to Mislatel as the third telco or the “new major player” (NMP) as the validity of its franchise could still be questioned in courts.

“We took out anything that pertains to calling Mislatel a new major player or third telco. We’re treating it as a regular franchise because later on someone might go to the court and say Congress recognized Mislatel as the third telco,” Poe said in a television interview.

Even if the Senate allows Mislatel to continue operating, Poe pointed out interested parties are not precluded to avail themselves of legal remedies in the courts.

Poe said she endorsed the resolution – passed last year in the House of Representatives – because of the public’s “desperation” to have a new player that promises better telco services.

Poe said she felt it would be “unfair” not to present it on the floor to allow other senators to debate on the issue.

She said Mislatel also risks losing more than P25 billion in performance bond should they fail to meet commitments in the first year of operation as required by the DICT and NTC.

Poe said the resolution does not in any way preclude Congress from altering, modifying, amending or repealing Mislatel’s franchise granted under Republic Act 8627 in 1998 should it fail to make good its commitments regarding coverage and internet speed.

It does not also mean an automatic renewal of its franchise set to expire in 2023, she added.

Senate Minority Leader Franklin Drilon and other senators earlier disputed the consortium’s claim that it can operate as a third telco with the franchise it has from Mislatel.

A group of investors, led by Nicanor Escalante, took control of Mislatel with 70 percent ownership in 2015 but Drilon maintained any transfer of ownership must first get the nod of Congress, which had granted franchise to its original owners.

Legal experts, including officials of the Integrated Bar of the Philippines, told the Senate committee last week they believe Mislatel no longer holds a valid franchise.

The way to resolve the matter, they said, is for a quo warranto case to be filed before the Supreme Court or for Congress to uphold or repeal the franchise.

The widely held view among lawmakers is that Mislatel no longer had a valid franchise before being part of the consortium, not only for failing to get the nod of Congress in the transfer of ownership, but also for not having operated at all as stipulated in RA 8627.

Adel Tamano, spokesman for the consortium, said the firm intends to use the resolution in courts where its legal standing may be questioned.

Sen. Francis Escudero said the issue of validity of franchise can be cured with a congressional approval of the transfer of ownership, which already implies settlement of the issue.

Escudero expressed disappointment that Mislatel consortium abetted the apparent lack of diligence from the DICT and the NTC, which led to the prospective third player’s facing serious legal challenges.

He warned Mislatel could lose in a quo warranto case and faces uncertainty if Congress would renew its franchise.

Senate President Pro Tempore Ralph Recto last week warned the matter must be seen in a bigger perspective as it involves the country’s security.

He said China Telecom would have almost 40 percent interest in Mislatel Consortium under its application but the state-owned firm could end up owning the entire company if the proposed Public Services Act is passed in Congress.

The bill allows 100 percent foreign ownership in public utilities. 

DICT acting Secretary Eliseo Rio admitted that it was possible the China Telecom could eventually fully own Mislatel in such a situation.

Recto pointed out the consortium was the only firm that has entered into an agreement with the National Transmission Corp. (TransCo), which is also partly owned by a state-owned Chinese firm.

He also said the government is moving to establish a surveillance system in key urban areas, including Metro Manila, to be funded and equipped by China.

“You cannot look at this in isolation to many other things happening,” Recto said, noting China’s continued militarization of Philippine-claimed areas in the West Philippine Sea.