Senate ruling on Mislatel's franchise 'cured' violations in the telco industry, DICT chief claims

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Department of Interior and Local Government chief Eliseo Rio Jr. (FILE PHOTO)

Metro Manila (CNN Philippines, February 7) — The Senate decision to approve the transfer of Mindanao Islamic Telephone Company (Mislatel)'s franchise to the consortium which will be the country's new major telecommunications player has "cured" franchise violations in the telco industry, Department of Information and Communications Technology (DICT) chief Eliseo Rio said.

"It also cured the telecommunication industry because these violations, these deficiencies are also rampant in other telco franchises," Rio told CNN Philippines Thursday.

Senator Juan Miguel Zubiri earlier raised in previous Senate hearings that several telco companies have committed violations against their own Congressional franchises, but warned that revoking these will prove detrimental to public interest.

But courts handling cases on the franchise's validity may still issue a quo warranto petition, Rio said.

"The court can decide on whether this 'cure' is legal or not," he said.

On Wednesday, the Senate adopted a House resolution approving this transfer of controlling interests, and subsequently the franchise. Senators Franklin Drilon, Francis Escudero, and Risa Hontiveros voted against the measure.

Drilon cited three of Mislatel's franchise violations: that Mislatel failed to inform Congress on its transfer of 75 percent of its shares to new owners, that it failed to operate within a year after it received its franchise in 1998, and that it failed to make a public offering equivalent to 30 percent of its outstanding capital stock within five years from the commencement of operation.

The Senate decision effectively transfers the original Mislatel franchise to the consortium also dubbed as 'Mislatel' -- comprised of Davao-based businessman Dennis Uy's Udenna Corporation, Chelsea Holdings Logistics Corporation, and state-run China Telecommunications Corporation (China Telecom).

The consortium will have up until February 17 to complete their post-qualification requirements to the DICT and the National Telecommunications Commission (NTC) upon receiving the Congressional franchise. The NTC is then given 15 days to grant the certificates of public convenience (CPC) and the frequencies to the new telco player.

"Realistically, if that comes maybe after elections, then Mislatel would need about a year or so to roll-out their infrastructure, but maybe within 6 to 10 months after that they could be getting their first subscribers especially in Metro Manila," he said.

But even though roll-out would take a year, Rio said Mislatel's entry into the telco duopoly has already stirred improvements from the existing telco giants.

"Even Globe and Smart are improving their own networks. So the effect of Mislatel coming in is already being felt with Globe and Smart putting in their biggest CAPEX (capital expenditure) so that they can improve their network," he said.