PLDT-Digitel merger OK, Senate finds

After finding nothing wrong with the deal, a Senate committee on Tuesday tossed legal questions on Philippine Long Distance Co.’s (PLDT) acquisition of Digital Communications Philippines Inc. (Digitel) to the National Telecommunications Commission (NTC).

“We didn’t find any violation on the part of Digitel and PLDT. We’re leaving it up to the NTC to decide the legality and other issues like frequency,” Sen. Ramon Revilla Jr., chair of the public services committee, said after a caucus of senators. “That is the decision of the caucus.”

Revilla said both PLDT and Digitel had separate franchises and, hence, didn’t need to secure approval for their deal.

The committee will submit its report on Wednesday after concluding its two-day hearing on Tuesday, and will carry this recommendation, he said.

Senate President Juan Ponce Enrile said there was no need for PLDT and Digitel to secure congressional approval for the deal, and that they could proceed with it.

“This is purely a private transaction,” he told reporters. “If you have questions about the validity, go to court, not Congress.”

PLDT forged in April a share-swap deal with the Gokongwei family, the owners of Digitel, that gave it a 51.55-percent controlling stake in Digitel.

PLDT is the operator of mobile brands Smart, Talk ‘N Text and Red Mobile, while Digitel operates the Sun Cellular mobile network.

Globe Telecoms has charged that the PLDT-Digitel deal would revive a monopoly in the local telecom industry.

Enrile said there was no need for a congressional franchise since both PLDT and Digitel had their own franchises.

Enrile agreed with Section 16 of Republic Act No. 9180, which granted a legislative franchise to Digitel, which “states that the grantee shall not lease, transfer, grant the usufruct of, sell or assign this franchise… without the prior approval of Congress.”

He, however, said this was balanced by Section 18, which states that “Any advantage, favor, privilege, exemption or immunity granted under existing franchises, or may hereafter be granted, shall ipso facto become part of previously granted telecommunications franchises and shall be accorded immediately and unconditionally to the grantees of such franchises.”

“Is there a need to approve the transaction? That depends on the franchise of Digitel. They’re authorized to sell a controlling interest without having to go to Congress,” he said.

During Tuesday’s hearing, Sen. Joker Arroyo said Congress failed to review small transactions in the past, but could not abdicate its role of approving the deal when the “public good is involved.”