PLDT-Digitel share-swap agreement: Needs Congressional Approval or Not?

The controversial PLDT-Digitel issue pertains to the recent share-swap deal between the two telecom giants that transpired without having to pass through Congressional approval. This is not at all a new issue. This has been happening time and again due to infirmities or lack of clear statements in the existing law.

The Committee on Public Services in the 11th Congress, passed three measures wherein Congress authorizes the transfer and assignment of the control from one Broadcast / Telecom company to the other:

1.) Concurrent Resolution No. 24 – Transfer and Assignment of the Controlling in RGMA to Television Int’l Corp., FLG Management and Development Corp. and Rachel G. Espiritu;

2.) RA 9046 – Assigning and Transferring the Franchise of Calbayog Telephone System under RA 8590 to West Samar Telecoms; and

3.) Concurrent Resolution No. 30 – Transfer and Assignment of the controlling interest of Leonardo S. Sarao and Ma. Lutgarda Sarao-Conchu in Quest Broadcasting Inc. to Jose Luis L. Vera.

In the 13th Congress however, the Committee on Public Services tried passing a similar Concurrent Resolution to authorize the transfer the controlling interest of Merridean Telecoms to SMART. Inspite of a lengthy and heated debate on the matter, the Concurrent Resoultion on the Merridean-SMART deal did not pass the halls of the Senate.

What is interesting to note here is that, inspite of the failure to pass the concurrent resolution in the Senate, the Buy-out of Merridean by SMART pushed through as if consent coming from Congress did not matter.

On the same level, while the acquisition of Islacom by Globe Telecoms did not pass through scrutiny of Congress , the transaction between the two TELCOS materialized.

Again, all these are happening and it will continue to happen if the infirmities and the way the NTC interprets and enforces the law will not be overhauled. Particularly referring to the provisions of the respective legislative franchises of TELCOS. While it is clear in Sec. 16 of RA 9180 (Digitel Mobile Phils) which states that lease, transfer, grant the usufruct, sell nor assign to other persons or company canot be made without the approval of Congress; there is also Sec. 18 of the same law which speaks about Equality. Wherein it is worded in said section 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.

The stated conflicting provisions should be redefined in order to make clear the real intention of the government whether or not the purpose is to get Congressional approval or not, this will make all stakeholders, specially NTC, to be guided properly.

Over rated Authority of NTC

Another important related issue that Congress should look into is the extent of the authority of the legislative franchise being granted by Congress. It has been observed by the previous Chairmen of the Senate Public Services Committee that even after Congress gives an applicant-TELCO a franchise to operate nationwide, the NTC after such granting of franchise does not automatically and/or immediately allow TELCOS to operate, sometimes it takes them one year to issue a CPCN or the Certificate of Public Convenience and Necessity.

Lets take the case of a franchise grantee “Cable Link” as an example. It has been revealed that inspite of a National Franchise was granted to them by Congress, the National Telecommunications Commission, until at this point in time, will not allow them to operate in Angeles, Pampanga. The point here is that once Congress already gave their approval for a TELCO to operate nationwide, no amount of NTC restrictions should stop TELCOS from operating within their authorized operating area as specified under their Congressional Franchise. It should be made clear that if the policy makers are to polish the Telecoms Act, a Franchise granted by Congress should be supreme over NTC regulations. Otherwise, what is the use of giving Legislative Franchise if the NTC will overturn it anyway.