House to investigate the sale of Digitel shares to PLDT

A lawmaker today called for a congressional inquiry into the controversial sale of Digitel Telecommunications Philippines Inc. (DTPI) shares to the Philippine Long Distance Telephone Company (PLDT), saying it is an outright violation of the franchise law.

Rep. Arturo Robes (Lone District, San Jose del Monte City), author of House Resolution 1161, asked the House Committees on Legislative Franchises and Information and Communication to look into the legality of the sale or disposition of shares by the DTPI to the PLDT. 

Robes also urged the House body chaired by Rep. Marcelino Teodoro (1st district, Marikina) to summon the officials of both companies and those who were involved in facilitating the sale of shares.

PLDT recently acquired 51.55 percent of Digitel, which owns the Sun Cellular brand, from the Gokongwei Group and hoped to purchase the remainder from small shareholders during a mandatory tender offer.

Congress passed Republic Act 7678 on February 17, 1994, granting Digitel Telecommunications Philippines Inc. (DTPI), a private telecommunications corporation, the right to construct, install, operate and maintain telecommunications systems throughout the Philippines for 25 years. Its franchise will end in 2019.

Robes said a legislative franchise is a grant of the right or special privilege by the State to an entity through the legislature as a requisite for the operation of public utilities including telecommunication services.

"It's a corporate act that comes close to a violation of its legislative franchise, particularly Section 15 of RA 7678," Robes said.

Robes said Section 15 of RA 7678 states that the grantee shall not lease, transfer, or sell its franchise to any person, firm, company or commercial or legal entity, nor its controlling interest be transferred, whether in whole or in part to any person, firm, company, corporation or entity without the prior approval of Congress as grantors of franchises.

Under the law the DTPI is required to file a detailed annual report to the Congress of the Republic of the Philippines with respect to its programs, operations and/or compliance with the terms and conditions of the franchise, Robes said.

At present, the DTPI provides various telecommunications services primarily in the Philippines. The company also offers SUN cellular voice products and services comprising local calls, national and international toll services, a suite of value added services and payphones and prepaid phone cards through Digitel prepaid and Digitel prepaid IDD brands. 

The company operates 694 regional and local exchanges in 281 towns and cities in Luzon.

Earlier, Ayala-led Globe Telecom, a competitor in the telecom industry, has asked the National Telecommunications Commission (NTC) to intervene in the recent acquisition by Philippine Long Distance Telephone Co. (PLDT) of a majority stake in rival Digital Telecommunications Phils. Inc. (Digitel).

In a letter to the NTC, Globe warned that the PLDT-Digitel deal threatens free competition and ultimately gravely places at risk the public good, given the significant market power and influence now consolidated and vested in the PLDT Group.