Paving the way for the third telco player

President Duterte’s policy pronouncement of breaking the duopoly in the telco industry via the entry of a Chinese third player has moved every stakeholder concerned.

The National Transmission Corp. (Transco), for instance, has started gathering support for its plan to include telecommunications services in its charter, so it could partner with the third player.

“I already forwarded to the secretary of the Department of Energy [DOE] and to our board my position paper to convert Transco from utility company to a utility telco,”  Transco President lawyer Melvin Matibag said.

The DOE, for its part, said it would support Transco’s plan. “It is good to provide consumers more choices,” Energy Secretary Alfonso G. Cusi said.

Transco was created under Republic Act (RA) 9136, or the Electric Power Industry Reform Act (Epira) of 2001.

Since March 1, 2003, Transco operated and managed the power-transmission system that links power plants to the electric-distribution utilities nationwide. The same law mandated the privatization of Transco through an outright sale or management concession agreement.

Precious assets 

Following a public bidding conducted in December 2007, the Transco concession was awarded to the National Grid Corp. of the Philippines (NGCP), which eventually secured a congressional franchise to operate the transmission network through RA 9511.

Transco turned over the management and operation of its nationwide transmission system to the NGCP in January 2009. Ownership of all transmission assets, however, remains with Transco.

Realizing how precious Transco’s assets are, Matibag said Transco can be the third player in the lucrative telco business currently dominated by giants Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom Inc.

“Some experts in telco are saying that only the government can compete with the two telco giants. No one else can come in. So, if it’s government combined with somebody that has the technical and financial capabilities to do it, then here comes a third player,” he said.

Need for franchise 

The fiber-optic cables owned by the state span 6,154 kilometers, or 160,779 fiber kilometers, which, the Department of Information and Communications Technology (DICT) said, “can accommodate the needs of a third or even fourth telco [player].”

The support of the DOE, however, is not enough.

Transco’s charter must be amended. It needs Congress’s approval.

“We will ask Congress to amend our charter to include telecommunications as business of Transco. In the amended charter, the franchise to operate a telco can be included. We have the facilities nationwide. In fact, Globe and Smart lease some of Transco’s towers to provide services to remote areas,” Matibag said.

He did not say when, but he already informed some of the lawmakers about this—and they are receptive to the idea.

“I have been doing the informal talks already.  Most of the congressmen, senators I talked to are very interested and will sponsor it,” he said.

China partner 

Earlier, Duterte asked China to try to invest in the Philippine telecom industry.

DICT Officer in Charge Eliseo Rio Jr. said the Chinese government selected China Telecom to invest in the Philippines upon invitation by the President during a bilateral meeting on November 16.

For this to happen, China Telecom needs to partner with a Philippine telco firm.

Rio said the government is now looking at who will partner with China Telecom on a 60-40 ownership basis.

This makes it more pressing for Transco’s charter to be amended, if it wants to enter the telco business and partner with China Telecom.

“We want to push Transco to be part of…whatever project it is, considering the owner of the facility is Transco,” Matibag added.

Another emerging player 

Also seeking to be a major player is Philippine Telegraph & Telephone Corp., which had said it was talking with China Telecom and Datang Telecom about strategic partnerships.

The Philippine Competition Commission (PCC) is also ready to do its part to realize Duterte’s pronouncement.

The antitrust body said it could be approached by Transco for advice in relation to the state corporation’s plan to venture into telecommunications.

PCC Chairman Arsenio M. Balicasan said the potential entry of a joint venture between the government and a private corporation would have “to undergo the competition lens.”

However, since no concrete details have been divulged yet by Transco, the PCC official said his office can, at the moment, provide guidance.

“We also have an advisory role,” Balicasan noted, referring to PCC’s mandate that ensures businesses compete and consumers benefit.

“In some cases, especially working with other government agencies, we don’t have to wait for the formation of the joint venture.  We can contribute, discuss, we can give advice. That’s what we also do in Congress, when they craft laws, franchises, when it comes to improvement in efficiency of the sector,” the PCC chief said.

Previously, Matibag said his office has received strong interest from 10 firms willing to forge a partnership to pursue Transco’s plans.

Balicasan said he will wait for Transco’s final direction on this, but pointed out that they need to work closely together, since this involves a government project.

Image credits: Rodjulian | Dreamstime


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