THE P100-billion unsolicited proposal for the creation of 25,000 common towers across the Philippines will be some sort of a litmus test for the fairly young Department of Information and Communications Technology (DICT), as this will be a precedent for future private-sector offers for tech projects.
Eliseo M. Rio Jr., the agency’s chief, said his group welcomes that unsolicited proposal from Internet Society Infrastructure that was submitted late Wednesday.
At a glance, the proposal involves the creation of 25,000 common towers for telecommunications use through a P100-billion capital spent over seven years.
“We are viewing this as a test case for unsolicited proposals,” Rio said.“We will study their proposal and conduct our due diligence.”
The said exercise, he noted, will take “about a month to finish.”
“We will just look at their proposal and ask them clarificatory questions. Then, we will come up with some kind of background investigation on their financial and technical capabilities,” Rio explained. This is the first unsolicited proposal that the department received since its birth about two years ago.
“Our timeline is we would like to have this as soon as possible, especially if they have the capability,” he said. “But it will be subject to a Swiss challenge.”
Under the implementing rules and regulations of the build-operate-transfer law, the government must subject unsolicited proposals to a Swiss challenge—a legal process of inviting other groups to bid for an unsolicited deal.
The original proponent then has the right to submit a counteroffer.
“Once we are done with the review, we can decide whether to award them the original proponent status or reject the whole proposal,” Rio added.
Being granted an original proponent status will give the proponent a competitive advantage over its would-be competitors during the competitive challenge for
the project.
After receiving the original proponent status, the company and the implementing agency will then enter into an exclusive negotiations process to further polish the offer to make it more beneficial to the state and the public.
The offer will then be subject to the approval of several bodies under the National Economic and Development Authority, including the Neda Board, which is chaired by President Duterte.
Once it gets the green light from the Neda Board, the project will then undergo the Swiss challenge.
Common tower policy
Rio noted that this unsolicited proposal may set the tone for the common tower policy that the government is developing.
Under the said policy, the government intends to award two tower companies with licenses to build and operate common towers.
The two companies will be required to erect 25,000 towers each—for a total of 50,000 towers—over a period of seven years for $2 billion each.
Based on the preliminary guidelines released by the government on Thursday, two independent entities will have to build 25,000 towers each until the first half of 2027.
For the first year, each company shall build 1,000 towers on the first year, 2,000 for the second, 3,000 on the third, 4,000 on the fourth, and 5,000 for the fifth to seventh years.
“The unsolicited proposal may be part of the common tower policy. Should the result of the Swiss challenge be favorable to an entity, maybe we can award the second slot through another unsolicited proposal—if any,” Rio said.
However, he noted that if “five or more” tower companies join the competitive challenge exercise for the first unsolicited proposal, the agency may choose to craft a terms of reference (TOR) for a “beauty contest.”
Rio said the beauty contest may take the following as main factors: time of construction, cost of services and number of towers to be built.
“The purpose of that exercise is to bring down the cost of services for the consumers,” he said. “But we will study if that is allowed under the rules.”
The government’s common tower initiative is a much-needed policy that is expected to dramatically improve telco services in the Philippines.
Having common towers—infrastructure where radio transmitters are housed—allows for a faster expansion and modernization of the rapidly changing telco infrastructure
and technologies.
Lags in Asia
Based on a study made by TowerXchange, an independent community for operators, tower companies, investors and suppliers interested in emerging-market telecom towers, the Philippines lags behind its neighbors in Asia when it comes to cell-site build.
The number of unique physical cell sites in the Philippines is one of the lowest in Asia, with a combined 16,300 cell sites.
China has the highest number with 1.18 million cell sites, followed by India with 450,000 and Indonesia with 76,477 cell sites; while Vietnam has 55,000, Thailand with 52,483, Pakistan with 28,000, Bangladesh with 27,000 and Malaysia with 22,000 sites.
With 113 million mobile subscribers and only a combined total of 16,300 towers from PLDT Inc. and Globe Telecom Inc. servicing them, the Philippines has the lowest tower density score in Asia, with a meager 0.14 to Asia’s current giant China’s 1.43.
Having common towers is seen to benefit all telcos—including the future third player —as this removes a huge portion of a telco’s capital requirements annually.