Senate rubber stamps transfer of Mislatel control to Udenna, China Telecom to sidestep franchise violation concerns

7 Feb 2019

The Philippines’ Senate yesterday (6 February) allowed the transfer of control of ownership of Mindanao Islamic Telephone Company (Mislatel) to the consortium led by Dennis Uy’s Udenna Corp, Udenna subsidiary Chelsea Logistics Holdings and foreign state-owned carrier China Telecom. Under the House resolution adopted by the Senate, Mislatel’s ownership structure will be: Udenna Corp (35%), Chelsea Logistics (25%) and China Telecom (40%), while the ruling also confirmed that the consortium will take over Mislatel’s operating franchise in the country.

Prior to the decision, Senate Committee on Public Services vice chair Francis Escudero had admitted that there were defects in Mislatel’s franchise, noting: ‘According to the representatives of Mislatel, they did not make a public offering equivalent to 30% of their shareholdings owing to their non-operation.’ The franchise granted to Mislatel back in 1998 required it to be in operation one year after the franchise was granted, and to make a public offering of 30% of its shares. However, the company failed to launch, repeatedly blaming the ‘peace and order situation in Maguindanao’ as the reason.

The decision by the Senate has been welcomed by Department of Information and Communications Technology (DICT) Acting Secretary Eliseo Rio Jr., who said it had effectively ‘cured’ any franchise violations relating to the new third telco, but admitted it was up to the courts to decide on whether this ‘cure’ is legal or not.

The consortium now has until 17 February 2019 to complete its post-qualification requirements to the DICT and the National Telecommunications Commission (NTC), upon receiving the Congressional franchise. The NTC is then given 15 days to grant the certificates of public convenience (CPC) and the frequencies to the new telco player.