Senator calls for probe into PLDT-Digitel deal

Sunday, May 22, 2011
Sunstar Manila
Jonathan de Santos/Sunnex


SENATOR Joker Arroyo has filed a resolution directing the Senate to look into a business merger that will give two telecommunication companies 70 percent of the telecoms market.


Arroyo has tasked the Senate committee on public services to find out if a “share-swap deal" between Philippine Long Distance Co. (PLDT) and Digitel Mobile Philippines Inc. is in the public interest.


He also wants the committee to see if the PLDT-Digitel merger is consistent with the franchises granted to them by Congress.]


"As a result of PLDT's previous acquisition of Smart, Talk N' Text (Piltel), and Red Mobile (CURE), together with its most recent deal with Sun Cellular (Digitel), it would control 70 percent of the total cellular subscribers while Globe controls the remaining 30 percent," the resolution read.


According to its website, Smart had 45.6 million mobile phone subscribers by December 2010. Digitel's Sun Cellular, on its website, says it has "more than 15 million subscribers."
Arroyo said the PLDT-Digitel deal "could result in a duopoly" between PLDT Digitel and Globe, and that this "raises the question of whether it is to the public good."


In April, Arroyo said the PLDT-Digitel deal will need the approval of Congress because under Digitel's franchise, it cannot "sell nor assign this franchise or the rights and privileges acquired."
The franchise also prohibits it from merging with another company or transferring controlling interest "without prior approval of the Congress of the Philippines."


But Senate President Juan Ponce Enrile has taken a different view.


In April, he said Digitel already has a franchise, as do PLDT and its subsidiary Smart Communications. He said the deal does not change the franchises given to either company.


"The only thing that happened is that Digitel shares were sold [by the Gokongwei group]," he said.


Enrile said Congress granted the franchise to Digitel, not to the Gokongweis.


In March, Senator Ramon Revilla Jr., chairman of the committee on public services, told the National Telecommunications Commission to give the Senate its position on PLDT's acquisition of Digitel.


"While a change of ownership of corporations is usually ordinary business, telecommunications is imbued with public interest and we must ensure that public interest is upheld in this transaction," he said.