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PLDT, Globe launch legal bid to stop PCC review of San Miguel deal

13 Jul 2016

Philippine Long Distance Telephone Co (PLDT) and Globe Telecom yesterday lodged separate filings to the Court of Appeals to stop the Philippine Competition Commission (PCC) from scrutinising their deal to buy San Miguel Corp’s (SMC’s) telecoms assets for around PHP69.1 billion (USD1.48 billion). The telecoms giants – whose buyout has drawn criticism from some quarters over competition concerns – are seeking to stop the competition regulator from reviewing the deal on the grounds that the PCC has already rubber stamped it. PLDT head of regulatory affairs, Ray Espinosa, says that under the PCC’s own rules the transaction has already been ‘deemed approved’, citing the watchdog’s own memorandum circulars, which require all companies to notify the PCC in mergers or acquisitions worth PHP1 billion or more. For its part, Globe added: ‘The PCC cannot by whim or caprice state that it wants a review without any legal basis. The PCC cannot withhold and block the transaction out of a process not found in their own rules, and not disclosed to the public.’

In May this year beer and food conglomerate SMC gave up on its long-harboured ambitions to shake up the Philippines’ uncompetitive mobile market when it agreed to sell its telecoms assets to the nation’s effective duopoly – PLDT and Globe.

In 2014 SMC had unveiled an ambitious plan to build and operate a third national mobile network via its Vega Telecom subsidiary, and last year announced that it was in talks with Australian telco Telstra concerning a joint venture. Even when discussions ended without agreement in March this year, SMC president Ramon Ang bullishly stated his company would continue to go it alone. By late May, however, it became clear that Ang had thrown in the towel when PLDT shareholder First Pacific Co, a Hong Kong holding company controlled by Indonesian tycoon Anthoni Salim, and Ayala subsidiary Globe Telecom both issued statements confirming they were each buying a 50% stake in Vega Telecom, ending the prospect of a third player entering the market. Under the deal, the two heavyweights gained coveted 700MHz band spectrum for the future deployment of 4G mobile services and also agreed to return other frequencies to the government. While this spare spectrum could still allow a new competitor to enter the market, given SMC’s failure to launch, the huge capital investment needed to get a venture off the ground, and the dominance of PLDT and Globe, any would-be entrant faces overwhelming odds.

In response to the Court of Appeals filings, the PCC – an independent body created in February under landmark fair trade legislation – issued a brief statement: ‘We are disappointed that they have decided to resort to a lawsuit against the PCC to prevent a comprehensive review of this deal.’

Philippines, Globe Telecom (incl. Innove), PLDT Inc. (incl. Smart Communications)

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