Senate upholds PLDT-Digitel share-swap deal

MANILA, Philippines - The Senate committee on public services moved yesterday to uphold the P70-billion deal between the Philippine Long Distance Telephone Company (PLDT) and Digitel Telecommunications Philippines, Inc. (Digitel), saying it is consistent with its legislative franchise and in the interest of the public.

In a 12-page report, the committee chaired by Sen. Ramon Revilla, Jr. said the PLDT-Digitel deal is a transaction done in the regular course of business of two companies in the telecommunications industry.

Revilla’s report said the committee “is of the view that the proposed acquisition by PLDT of a controlling interest in Digitel (Sun Cellular) is consistent with, and not in violation” of, the said legislative franchises.

The report said that even rival Globe Telecom admitted that the transaction was legal.

“It is apparent that the PLDT-Digitel transaction is no different in form and substance from Globe’s acquisition of Isla Communications way back in the year 2001,” the report read.

It was also established during the Senate hearings that there were at least some preliminary discussions between Globe and Digitel to indicate the former’s interest in acquiring the assets of Digitel.

Senator Joker Arroyo, who sought the investigation of the deal, gave the lone dissenting opinion on the report that is being circulated among senators.

Arroyo recommended that the committee should hold in abeyance any action on the deal until PLDT restructures its ownership structure to conform to the decision of the Supreme Court, referring to the 10-3 vote against PLDT in a decision promulgated on June 28 this year.

“The committee can discuss anew the issues before it if and when PLDT complies with the Supreme Court decision,” Arroyo added, saying that PLDT in the meantime is estopped from consummating the swap-deal with Digitel in light of the SC decision.

On the issue of whether the share-swap deal between PLDT and Digitel constituted a violation of the law prohibiting monopolies and cartels, the committee held that “there is effectively no comprehensive anti-trust legislation in the Philippines” and that existing laws are confined to prohibiting combinations, arrangements and practices in restraint of trade.

“The fear raised by various parties that the share-swap deal is against public interest and consumer welfare is premature and unfounded at this time,” the report said.

The committee pointed out that no rate adjustments or reduction in benefits or types of services being provided by Digitel-Sun Cellular have occured after the share-swap deal. Should there be any adjustments, the committee said the National Telecommunications Commission (NTC) has sufficient regulatory powers to address these to protect public interest and consumer welfare.

Revilla’s committee suggested that the NTC thoroughly review all the terms and conditions of the PLDT-Digitel share-swap deal and monitor the operations of the telecom companies to “guard against any undue impositions and practices that would undermine public interest and consumers’ welfare.”

The Senate report also required the NTC to submit a report to the committee on franchises containing all pertinent data, existing policy issuances, circulars, rules and regulations on the current distribution and allocation of frequencies among the various operating telecommunications companies to enable Congress to determine if these are “in keeping with the national interest and protection of the consuming public.”