Alcatel asks gov't to honor MTDP contract

Telecommunications giant Alcatel is asking the Philippine government to honor its contract under the defunct P53-billion Municipal Telephone Development Program (MTDP) while expressing a desire to review the service contract and possibly negotiate for better terms, the Economic Mobilization Group (EMG) indicated that government is likely to honor the contract even if the project has run out of funds.

But the EMG said it wants to make sure that "every single component of the project is the best among several options."

Alcatel signed in 1995 a memorandum of understanding with the Department of Transportation and Communications (DOTC) for a service contract worth $57.057 million.

Under this contract, Alcatel agreed to provide communications facilities to 1,202 barangays in Davao del Sur, Davao del Norte, Davao Oriental and Campostella Valley.

Alcatel was to provide each barangay with five working lines with the ability to activate five more when needed, for a total of 12,020 telephone lines. The company had partially fulfilled its commitment until the program was ordered scrapped by the Economic Coordinating Council (ECC) in January.

The ECC had decided to drop the program, saying that the private sector was doing a good enough job meeting their commitments to roll out land lines under their franchise agreements with the government.

At the time the program was junked, some P17-billion worth of contract have already been bid out to various telecommunication companies and the standing policy of the ECC was to review the contracts individually to determine which would be honored and which would have to be rescinded.

EMG documents showed that Alcatel is making new representations lobbying for government to honor its contract. The DOTC said the company's project is ongoing but the department's concern is to implement the project not only in areas to be served by Alcatel but in other areas that are unserved or underserved by existing telecommunication companies.

This means government will not only honor Alcatel's contract but possibly negotiate for its expansion to cover other areas to be identified by the DOTC.

Sources said this is possible if Alcatel will agree to undertake the contract without further guarantee financing by the government. Only the roll-outs covered by the original contract would be covered by government guarantees. "In the first place, the whole MTDP was scrapped because the government doesn't have the money it would take to guarantee all the projects in it," the source said.

The final order of the EMG, documents revealed, was for the National Economic and Development Authority and the Investment Coordinating Committee to review Alcatel's contract as well as the status of all contracts that were in the process when the program was shut down.

Since the project has been junked, other contracts that have not been laid out by February 2000 were quietly folded while all existing contracts were immediately freezed pending the review ordered by the ECC.