Lawmakers want PLDT-Sun union delayed pending Supreme Court ruling

Two lawmakers want to disconnect the Philippine Long Distance Telephone Co. (PLDT) and Digital Telecommunications Inc. (Digitel) merger until the Supreme Court shall have ruled with finality on a question of the buyer’s foreign equity and Congress has determined whether the union complies with the franchises it had granted the two utility firms.

Bayan Muna party-list Representative Teodoro Casiño said the National Telecommunications Commission (NTC) and the Securities and Exchange Commission (SEC) should be sanctioned for rushing approval of the merger, while Quezon City Representative Winnie Castelo wants PLDT and Digitel to prove to Congress their merger would not violate their franchises.

Monopolistic

Casiño argued the share-swap deal that would create the largest local telecommunications firm with a 71-percent market share would be in violation of  the constitutional prohibition on monopolies.

“PLDT is the biggest and most powerful telecommunications company in the country. Its owners also own and control Meralco, Maynilad, Channel 5, the North Luzon Expressway and a chain of high-end hospitals, among others. It also owns Smart Communications, Red Mobile, Piltel Talk ‘n Text.

“Under this deal, nothing will stop PLDT from limiting, discontinuing or disrupting Sun Cellular’s unlimited text and call plans, even if they say they will not. And with Sun out of the way, nothing will stop PLDT-owned Smart Communications from conniving with Globe Telecom to raise rates the way they always wanted to. There will be nothing to stop PLDT from using its enormous market power to strangle the competition or bend it to its will,” Casiño said.

Castelo said the NTC should have waited for the Supreme Court to render a final decision on PLDT’s and the SEC’s appeal of the high tribunal’s June 28 ruling that found PLDT was 60-percent owned by foreign investors, specifically First Pacific Ltd., the investment arm of the Salim family of Indonesia.

Complications

“Unless the equity structure is settled, the merger will continue to face legal impediments, leading to further complications,” said Castelo, who wants Congress to investigate if the merged entity would require the grant of a new franchise by the legislature.

Casiño said the NTC’s and SEC’s actions essentially undermined the power of Congress to grant franchises as they approved the merger without the approval of the lawmakers.

He said the NTC approval was done in “bad faith” as it was reached while Congress was in recess.

“The NTC and SEC should follow the law—put the deal through a transparent process such as a public hearing and in Congress investigate it to determine if the consumers would benefit from the merger,” said Casiño.

He cited Section 15 of Digitel’s franchise (Republic Act No. 7678), granted in 1994, which says that Digitel “…shall not lease, transfer, grant the usufruct of, sell nor assign this franchise or the rights and privileges acquired thereunder to any person, firm, company, corporation or other commercial or legal entity, nor merge with any other corporation or entity without the prior approval of the Congress of the Philippines.

Fly-by-night operator

“Neither shall the controlling interest of the grantee be transferred, whether as a whole or in parts and whether simultaneously or contemporaneously, to any such person, firm, company, corporation or entity without the prior approval of the Congress of the Philippines.”

Casiño said Congress has to screen the deal to ensure the franchise does not fall into the hands of fly-by-night operators and that it does not create a monopoly.

He said congressional approval could only be waived if the  surviving entity was the franchise holder.

“In this case, the franchise holder Digitel would be gobbled up by PLDT,” said Casiño. “I don’t think they (lawmakers) contemplated allowing, without their consent, a deal that would reverse the policy of de-monopolization in the telecommunications industry.”