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Court of Appeals allows Extelcom to intervene in 3G lawsuit

13 Jul 2010

The Court of Appeals in the Philippines has upheld Express Telecommunications (Express Telecom, or Extelcom’s) application to intervene in a legal dispute concerning the award of the country’s final third-generation (3G) mobile operating licence. In its ruling the court said Extelcom’s quest for the 3G concession could be jeopardised if a separate lawsuit involving the first four 3G licences is settled without the telco’s participation. In its legal dispute, MultiMedia Telephony Inc has questioned the 2005 award of licences to PLDT’s Smart Communications, Globe Telecom, Digitel Mobile Philippines (Sun Cellular), and Smart’s sister company Connectivity Unlimited Resources Enterprise (RED Mobile). MultiMedia Telephony wants the last slot itself and with regulators looking to auction off the frequencies, it has now been joined by another Filipino operator, Bayan Telecommunications (Bayantel), which has also questioned the 2005 awards in the courts as part of its own effort to secure the last concession. Bayantel opposes the decision of the regulator, the National Telecommunications Commission (NTC’s), to allow companies which already hold UMTS spectrum frequencies to bid for the last 3G slot. A minimum reserve of PHP65 million (USD1.41 million) has been set for the licence.

According to TeleGeography’s GlobalComms Database, the NTC began the process of awarding five 3G concessions on 28 December 2005 via a tiered beauty contest procedure. The first tier required that all new applicants (i.e. those that did not already operate a 2G network) first submit bids to install, operate and maintain a UMTS network before going through to the quasi-judicial phase. Under the second tier, applicants were also required to meet several conditions relating to payment of statutory fees as well as meeting criteria for 3G network interconnection and roaming. As a result of NTC’s 30-mark scoring system two firms — AZ Communications and Pacific Wireless — limped out at the quasi-judicial stage, both failing to achieve the minimum 70:30 debt-to-equity ratio score. Next Mobile was also barred from the next phase for its unpaid regulatory and spectrum users’ fees amounting to PHP126 million (USD2.56 million). This left Smart Communications, Globe Telecom, Digitel (Sun Cellular), BayanTel, MultiMedia Telephony and Connectivity Unlimited Resources Enterprises (CURE, or RED Mobile) to go forward to the final stage. Smart topped the overall ranking, scoring 30 out of 30, partly by dint of it already having GSM coverage of 88% of cities and municipalities via a network of more than 5,000 base stations. It was joined by Globe, Digitel and RED Mobile, each of which scored well to secure licences, leaving Bayantel and MultiMedia Telephony empty-handed – they were effectively ruled out when they were each given 18.5 points by the NTC.

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