Phil Long Distance Telephone Co.
PLDT, Globe mum on ‘competition’ EO

PHILIPPINE Long Distance Telephone Co. (PLDT) and Globe Telecom Inc. kept mum on a new directive from Malacañang that authorizes the Department of Justice (DOJ) to investigate cases involving violations of competition laws.

“We have to wait and see. We can’t comment at this point,” said Ray Espinosa, PLDT regulatory head, in a text message on Thursday.

Under Executive Order (EO) 45, President Aquino designated the DOJ as the “Competition Authority” in charge of cases involving competition issues to help deter and break up monopolies and cartels in the country to ensure a level playing field.

The order, which stressed the need “to promote competition and level the playing field in the market,” was issued on June 9.

As Competition Authority, the DOJ will enforce competition policies and laws to protect consumers from abusive, fraudulent or harmful and corrupt business practices; supervise competition in markets, through the strict enforcement of competition laws; and monitor and implement measures to promote transparency and accountability in the markets.

PLDT and Globe said separately they have yet to see a copy of the EO.

“We still need to read the EO. We have no copy yet,” said Globe legal counsel Rodolfo Salalima in a text message.

James Go, Digital Telecommunications Philippines Inc. (Digitel) president, also refused to comment when he was asked during Thursday’s Cebu Air Inc. press conference. Go is a member of the airline’s board of directors.

The EO was signed at a time when Globe is urging the government to issue new antitrust laws and policies, including one that would impose stricter regulations against a dominant player like PLDT, which is buying majority control of Digitel, the listed phone firm of the Gokongwei family.

Globe had asked the National Telecommunications Commission (NTC) to issue a memorandum circular defining a monopoly and with it include restrictions to protect market rivals; reassign the PLDT group’s frequencies; enforce aggressively interconnection of networks between PLDT and other carriers; and formulate a policy on IP peering, which is similar to interconnection among carriers except that it applies to the Internet space.

“We haven’t seen the EO yet. It’s best if we take a look at it first before we can comment on it,” said NTC Commissioner Gamaliel Cordoba. The NTC, in an order issued on June 11, set a second public hearing on PLDT and Digitel’s joint application. Without the green light of the NTC, the PLDT-Digitel transaction could not be closed.

In a public notice, the NTC has set in the afternoon of June 21 the presentation of PLDT and Digitel’s evidence and the cross- examination of its witnesses.

Those opposing the application of PLDT and Digitel may also present their own evidence and witnesses on the same afternoon and, if necessary, the hearing will continue in the afternoon of June 22.

Sealand Telecommunications Co. Inc. urged the regulators not to act with undue haste in concluding the proceedings, “considering that the issue on hand is of national importance as it evolves around the control over infrastructure that plays a vital role in the country’s economy,” said Sealand legal counsel Jose Ismael B. Valmores in a statement.

“Setting aside only two afternoons for the presentation of witness and evidence is too short and clearly insufficient for all parties to present their evidence,” Valmores added.

Under the NTC Rules of Procedure, hearings normally start with a prehearing conference followed by the presentation of evidence by all parties involved.

Valmores pointed out that, under the NTC’s own rules of procedure, those opposed must be given enough time to scrutinize the documentary evidence to be presented by the applicants.

“It would be unreasonable to require the oppositors to submit their comment on the same day that they receive the applicants’ formal offer of evidence. The oppositors would not have enough time to examine the documents and prepare an exhaustive comment,” Valmores said.
#12 TEL up 5.45%, go Phisix go! Smile

PLDT bucks DOJ intervention

PHILIPPINE Long Distance Telephone Co. (PLDT) on Tuesday bucked a proposal from second-ranked Globe Telecom Inc. for the Department of Justice to intervene in an ongoing hearing on the merits of the market leader’s looming acquisition of Sun Cellular.

“Globe is stepping up the pressure on government so that it will bestow upon Globe, as if as a matter of entitlement, state sponsored concessions which will change the market driven advantages of its rival, particularly PLDT and Digitel,” Ray Espinosa, head of PLDT Regulatory Affairs and Policy said in a statement.

Espinosa said the undue benefit that Globe is trying to extract through a combination of public pressure and political rhetoric flies in the face of the Anti-Graft and Corrupt Practices Act, which prohibits government from giving undue benefit to any private party.

PLDT’s statement came on the heels of Globe’s clamor for the DOJ to investigate and stop the P69.2 billion PLDT-Digitel transaction.

PLDT is about to buy 51.5 percent of Digital Telecommunications Philippines Inc. from Gokongwei-led JG Summit Holdings Inc.

President Benigno Aquino 3rd had ordered the National Telecommunications Commission and other agencies to look into the matter. The President also issued Executive Order (EO) 45, appointing the DOJ as the lead agency that would investigate monopolies and cartel behavior to protect consumers.

Globe’s latest stunt to take undue advantage of EO 45 is intended to throw the ongoing NTC proceedings into confusion. Globe’s legal counsel is fully aware that EO 45 was not intended to divest the NTC of its jurisdiction and statutory powers as the regulator of the telecommunication sector,” Espinosa however said.

Under EO 45, Justice Secretary Leila de Lima was designated as the country’s “competition authority,” and was mandated to “investigate all cases involving violations of competition laws and prosecute violators to prevent, restrain and punish monopolization, cartels and combinations in restraint of trade.”

Rodolfo Salalima, Globe legal counsel, had said the DOJ should act swiftly to prevent the PLDT-Digitel deal from resulting in a telecom market player so big as to have the power and means to effectively stifle competition.

Salalima said Globe has always warned against the possible return of monopoly as the PLDT-Digitel deal will result in one company cornering the bulk of a very limited spectrum of frequencies.

Jess Sandow, convenor of Samahang Laban sa Monopolyo, said their group is hopeful that EO 45 will effectively guard the economy against the onslaught of monopolistic greed among businessmen while an honest-to-goodness legislation against monopoly is not yet in place.

“With the implementation of measures to promote transparency and accountability in markets, the consumers expect an environment that promotes quality goods and services at prices that are not dictated by unfair trade acts and practices,” Sandow said in a statement.

The group held a picket outside the NTC during the hearing of the merger of PLDT-Digitel.

Besides Globe and SLaM, Eastern Telecommunications Philippines Inc., Sealand Telecommunications Inc. and consumer groups TXTPower and TXTMate are opposing PLDT’s acquisition of Digitel because of the negative repercussions on industry competition and consumer interest.

State-run Philippine Institute for Development Studies earlier said the PLDT-Digitel deal may affect competition because of high entry barriers and the absence of effective competition.

PLDT shares rose to P2,322 apiece on Tuesday from P2,202 last week.
No PLDT-Digitel deal by June 30

Wednesday, 22 June 2011 21:23 Lenie Lectura / Reporter
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THERE won’t be any deal between Philippine Long Distance Telephone Co. (PLDT) and Digital Telecommunications Philippines Inc. (Digitel) by their target deadline of June 30.

On the second day of the hearing held at the National Telecommunications Commission (NTC), the agency scheduled further hearings until the second week of next month.

“It was Globe [Telecom Inc.] that requested this, and we are giving them the opportunity to cross-examine our witnesses because we have nothing to hide,” said Ray Espinosa, PLDT head of regulatory affairs and policy, in an interview after Wednesday’s hearing.

Lawyer Rodolfo Salalima, Globe legal counsel, informed the NTC that he will be out of the country.

PLDT will present its fourth and last witness on Thursday, after which the counsels of Globe and other opposing parties can cross-examine PLDT’s witnesses.

The NTC has set tentative hearings from July 5 to 7 and from July 12 to 14.

We still can’t say when we will be able to finish it. It depends on the complexity of the case, and the legal division is not the only department that will be involved. We still have to refer the case to the commissioners,” said NTC legal head Dennis Babaran.

Espinosa said PLDT could neither urge nor impose the regulators to act swiftly on the case. PLDT and Digitel are seeking regulatory approval for the former to acquire a majority stake in the Gokongwei-controlled phone firm. Without the green-light from the NTC, PLDT and Digitel could not close the transaction valued at P69.2 billion.

“We will just play it by the ear because we don’t want to set another target deadline,” said Espinosa, when asked of the target date for the closing of the transaction.

But it should not take long for the NTC to decide, he said, adding, this is just a “simple matter, and there is no legal complication.”

“The decision-making process should not take a long time because this is not a complicated matter. It’s not like applying for a provisional authority or CPCN [certificate of public convenience], which take so long. The facts and documents have all been submitted and we have fully established that there is a share and purchase agreement,” said Espinosa.

Seeking the NTC’s nod is not the only requirement that should be met. PLDT and Digitel still have to secure certain approvals from the Securities and Exchange Commission and the Philippine Stock Exchange.

“But the NTC approval is the crucial one. We may obtain other regulatory approvals by June 30,” Espinosa said.

PLDT already obtained its shareholders’ approval on June 14, when they voted overwhelmingly in favor of the telecom company’s investment in Digitel during the annual stockholders’ meeting.

Meanwhile, a newly formed consumer group, Samahan Laban sa Monopolyo (SLaM) urged the NTC to uphold public interest in the ongoing hearing and to rule in favor of the consumers and stop the impending monopoly.

Jess Sandow, convener of SLaM, said the group is opposing any form of monopoly particularly in public services and utilities to the detriment of the general public and the consumers.

TXTM8 Consumer Group Tayo Inc., meanwhile, lauded the issuance of Executive Order 45 by President Aquino designating the Department of Justice as the competition authority.

Globe, in a statement, said PLDT once again chose to obscure the real facts by presenting witnesses who were incompetent to testify on facts related to the transaction.

The cellular firm was referring to the financial controllers who essentially prepare and sign-off on financial documents.

“We are no closer to understanding the real deal. By their own admission, PLDT’s witnesses could not relay details of the transaction in question since they are beyond the scope of their professional function. Why PLDT put such witnesses on the stand is a mystery,” said Globe.
Fitch upgrades PLDT credit rating, may raise score further

PHILIPPINE LONG Distance Telephone Co. (PLDT) has bagged another credit score upgrade, this time from Fitch Ratings which noted the improved climate in the country and possible gains from the telco’s acquisition of rival Digital Telecommunications Philippines, Inc. (Digitel).

The telecommunications giant’s long-term foreign currency issuer default ratings was raised to BBB- from BB+ with a stable outlook, Fitch said in a statement late on Friday.

Its credit score for debts in local currency was meanwhile raised to BBB+ from BBB, with the outlook for this rating on “positive watch.”

A BBB rating means that the likelihood of a default are “currently low,” thus better than a BB rating where there is an “elevated vulnerability” to a default risk.

The upgrade came after Fitch similarly raised its credit rating for the Philippines last week on the back of fiscal gains.

But PLDT’s score, particularly for debts in foreign currency, “continues to be constrained by the Philippines’ country ceiling of BBB-, reflecting the country’s foreign currency transfer and convertibility risk,” Fitch said.
SC orders SEC to look into foreign ownership in PLDT

MANILA, Philippines - The Supreme Court has directed the Securities and Exchange Commission (SEC) to investigate telecom giant Philippine Long Distance Telephone Co. (PLDT) for possible violation of the constitutional limit on foreign ownership in utilities.

The order was given out during Tuesday's regular en banc session wherein the court tackled a petition filed by human rights lawyer Wilson Gamboa seeking to annul the sale of the government's 46% stake in Philippine Telecommunications Investment Corp. (PTIC), part owner of PLDT, to Hong Kong-based First Pacific Co. Ltd. in 2007.

The sale, equivalent to a 6.4% indirect stake in PLDT, increased First Pacific's holdings in PLDT to over 30% at that time.

Gambao said that with the sale, First Pacific and another foreign stockholder, NTT DoCoMo, ended up owning over 50% of PLDT outstanding common shares, violating the 40% constitutional limit on foreign ownership of a public utility.
MVP says probe on PLDT ownership weighs on stock price

MANILA, Philippines - The chairman of Philippine Long Distance Telephone Co. (PLDT) said a Supreme Court order for the securities regulator to study whether the leading telecom has breached foreign ownership rules could lead to "tremendous selling pressure."

The Supreme Court directed on Tuesday the Securities and Exchange Commission (SEC) to investigate PLDT for possible violation of the 40% constitutional limit on foreign ownership in utilities.

In determining the level of foreign ownership, the court told SEC to use only voting or common shares and exclude preferred or non-voting shares in assessing the capital stock of the firm.

"Our investors are asking why are they changing the rules. It's not good from a foreign investor's perspective to change the rules. That could lead to tremendous selling pressure on PLDT prices," chairman Manuel Pangilinan told reporters.

PLDT shares fell as much as 3.75% before paring losses to close down 3.17% on Wednesday. - Reuters
When will the Philippine government learn that Keynesian economics is the best way to bring us straight into poverty? Our failure as a nation to rise economically isn't due to a free market economy (we don't have one), but due to rabid intervention and protectionism. Capitalism will save us, socialist policies will lead us to ruin.

I'm speaking from experience here, specifically with regards to the limit on the amount of agricultural land one can own in this country. It is frustrating that a government has the ability to dis-empower would be entrepreneurs who have the capital and know-how to utilize farm lands efficiently. The post-Marcos constitution and bureaucracy is counter-productive to long-term development. The 2008 crisis isn't a product of free market economics but of Keynesian ideas if one considers the role of the Federal Reserve and government intervention in blowing up that bubble. In short, Keynes = Major Fail!

You have over simplified and grossly underestimated the problems of our nation. I think your take on land reform and business in whole is wanting. Dig up on history and get out of your bubble. It is folly for you to arrive at a straight forward conclusion. I'm flabbergasted with your supposedly learned view, seems like you read a book and agreed with all its contents without thinking.
The World is a Vampire . . .
I'm not the one in a bubble, Keynesian's are the ones living in bubbles. They are the dominant force in academia right now, so I don't think they are the ones who have the authority to accuse others of being in ivory towers. Speaking of bubbles, they're one of the groups responsible for the sub-prime mortgage crisis. Fannie Mae and Freddie Mac were government-sponsored organizations, not to mention the Federal Reserves' ridiculous policy on lowering interest rates to record lows. So it would be naive to blame everything on Wall Street when the Bush administration and the Fed fed the fuel to the fire.

Granted, I may have spoken rashly with regards to the problems of our nation, and I agree that it will take more than a discussion via an internet thread to arrive at a comprehensive assessment. However, as I have said in my previous post, I was speaking from experience and not from some book I read with regards to my gripes with land reform. It doesn't take an MBA to know that having a limit on the amount of agricultural property an entrepreneur can own is bad for business, with regards to economies of scale. The land reform system we have in place now has created in its wake idle farm land across the nation, and denies would-be entrepreneurs the opportunity to effectively utilize our countries' agricultural potential. You say I read this in a book? I own farm land and have been engaged in farming activities for awhile now. As you have demanded from me not to jump to "simplistic" conclusions, do not accord to me baseless assumptions on my person.

Oh, and since we're on the subject of history, why is land reform such a huge failure? Issues of squatting, bureaucratic inefficiencies in the provision of capital and other inputs for farmers, corruption (remember jocjoc?), the list goes on and on. If it's the real world we're talking about, the track record of agrarian land reform speaks for itself.

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