THE assertion of the Philippine Long Distance Telephone Co. (PLDT) that contested radio frequencies held by Bayan Telecommunications Inc. (Bayantel) must undergo a public auction would further delay the corporate rehabilitation program of the cash-strapped firm, a ranking official of Globe Telecom Inc. said. The general legal counsel of the second-largest telecommunications company in the Philippines said the disputed frequencies are vital in the completion of the rehab of Bayantel, slamming the Manuel V. Pangilinan-led corporation for delaying the much-needed restructuring of the debt-ridden firm to improve its services. “The radio frequencies were already assigned to Bayantel. These frequencies are an essential part for the success of Bayantel’s rehabilitation as approved by the Pasig Regional Trial Court,” Globe General Legal Counsel Froilan M. Castelo said.
In a disclosure to the local bourse on Thursday, PLDT First Vice President and Head of Investor Relations Melissa V. Vergel de Dios said an auction must be staged for the frequencies held by the Lopez-led telecommunications firm, as provided by law.
“Its PLDT’s position that the arrangement circumvents pertinent laws and regulations regarding the assignment, allocation, or use of radio frequencies that call for the public auction of the contested radio frequencies, which remained idle for over 10 years or since the grant of provisional authority to Bayantel way back in 2000,” she said. Vergel de Dios, citing Republic Act 3259 or the law on telecommunications franchises, said the acquisition also requires a congressional approval.
“It should be noted that Bayantel’s franchise also specifically prohibits the transfer, sale or assignment of any right or privilege granted it without the approval of Congress, under Section 13 of Republic Act No. 3259,” she said.
Castelo, however, clarified that a congressional approval is no longer needed since Globe’s acquisition of Bayantel only involves transfer of shares of stocks much like when PLDT purchased Digitel Mobile Philippines Inc. (DMPI).
“Let us reiterate that Bayan and Globe have a responsibility to serve the expanding needs of Filipino consumers through improved products and services. The success of Bayan’s rehabilitation will give the Filipinos a better alternative service provider,” he said.
The corporate restructuring of the cash-strapped telecommunications firm, currently controlled by the Lopez family, was seen to be completed by yearend. The Court of Appeals issued a 60-day temporary restraining order (TRO) against the proceedings of the National Telecommunications Commission (NTC) in connection with Globe’s takeover of Bayantel.
The court granted the very urgent motion filed by the PLDT for a TRO on the implementation of orders issued by the NTC on the restricting plan.
The magistrates held that stakeholders in the telecommunications industry have “a clear right to be protected on account of the State’s policy to protect all telecommunication companies from unfair competition and to due process.”
In opposing the takeover, PLDT argued that the transaction violates the law on fair competitions, which mandates a healthy competitive environment where telecommunications carriers are free to make business decisions and to interact with one another in providing telecommunications services, with the end view “of encouraging their financial viability while maintaining affordable rates.”
The appellate court also gave the NTC and its co-respondents Globe and Bayantel 20 days from notice to show cause why a writ of preliminary injunction should not be issued.
Globe Treasurer and CFO Albert M. de Larazzabal said his firm sees potential delays in the restructuring program of the Lopez-led telco due to the stay order. It is expected to be completed by yearend.
The Lopez-led carrier is currently under corporate rehabilitation under guidance of the Regional Trial Court in Pasig City Branch 158.
The case stemmed after the rehabilitation court approved Bayantel’s amended rehabilitation plan and master restructuring agreement which allowed its creditors the option to convert their restructured debt in the total amount of $114 million into additional equity.
As the principal creditor, Globe agreed to convert its exposure into 56.6 percent of Bayantel’s oustanding shares.
However, the Public Service Law requires the approval of the telco regulator for the transfer of more than 40 percent of a grantee’s subscribed capital stock.
Globe acquired 98.26 percent of Bayantel’s loans and 100 percent of Radio Communications of the Philippines Inc.’s (RCPI) liabilities.
RCPI is a unit of Bayantel, both of which are owned by the Lopez Group. The acquisition cost $130 million, lower than the $400-million face value of Bayantel’s aggregate debt.
Once completed, Globe would effectively hold a 57-percent stake in Bayan. The Lopez family is looking at divesting its entire shareholding in its telco business, pending the approval of the NTC.
The acquisition would aid Globe in further improving the quality of its network as it would enable further growth in data with the additional spectrum from the Lopez-led firm, Fitch Ratings earlier commented.
(With Jae Denise Adolfo)