Senate allows transfer of Mislatel franchise to Dennis Uy-led consortium

Published February 6, 2019, 8:24 PM

by Dhel Nazario, Jeffrey G. Damicog, and Rey G. Panaligan

By Vanne Elaine Terrazola

The Senate Wednesday night adopted the House of Representatives’ resolution allowing the transfer of ownership of the Mindanao Islamic Telephone (Mislatel) Company to the consortium chosen to be the country’s new major telecommunication player.

Despite issues on the validity of its legislative franchise, majority of the senators present in their session gave their nod on the House Concurrent Resolution No. 23, which authorizes the sale of the controlling interest of Mislatel Company to the consortium owned by Davao-based businessman Dennis Uy’s Udenna Corporation and Chelsea Holdings Corp., and the state-run China Telecommunications Corp.


Only Senate Minority Leader Franklin Drilon, Sen. Panfilo Lacson and Sen. Risa Hontiveros voted against the adoption of the measure.

The Senate’s adoption of the resolution would give the green light for the operation of the Mislatel consortium as the third telco player to break the decades-long duopoly in the Philippines’ telecommunication industry.

The government requires the consortium to secure a congressional franchise before it can roll out its services as the new telco player.

Drilon, however, warned that allowing the grant of the franchise to the consortium without addressing legal questions on its franchise would “weaken” the Upper Chamber, specifically its oversight function on the compliance of companies with the conditions of their franchise.

During his interpellation on the resolution, the Minority Leader maintained that Mislatel Company committed a violation of its 1998-issued franchise when the firm, as admitted by President and Chief Operating Officer Nicanor Escalante, failed to operate within one year, and to inform Congress about the changes in its leadership in 2015.

He reiterated that Mislatel’s franchise should be considered “ipso facto” revoked for these violations.

Senator Francis Escudero, who sponsored the resolution in place of Sen. Grace Poe, chairperson of the Senate Committee on Public Services, however, pushed for the adoption of the House measure so that the third telco player will not be prevented from providing their services.

Escudero also noted that the House of Representatives earlier decided to grant the franchise and leave the legal concerns to the courts.

He said the 18th Congress, anyway, could further discuss the issues on the validity when Mislatel consortium asks for the renewal of their franchise which is set to expire in 2023.

“The next Congress will be free to decide on this matter squarely because [the discussion will focus] on the renewal of the franchise,” Escudero said.

But Drilon feared that the Senate’s action might be a precedent and encourage companies to ignore the conditions of their franchises.

“I am afraid that in future deliberations, this act of Senate will be cited as a precedent for anyone whose compliance with law is put to test,” he told his colleagues.

Poe earlier said that her panel removed any reference to Mislatel as the third telco or the new major player since the validity of its franchise could still be questioned in courts.

Interested parties, she said, may still seek legal remedies despite Congress’ approval of Mislatel.

Mislatel consortium, in November last year, was declared by the National Telecommunications Commission as the new major player after the two other bidders – Philippine Telegraph & Telephone Corp. (PT&T) and the Singson-led SEAR Telecom, composed of LCS Group and TierOne – were disqualified in the selection process.

The firm shall submit the legislative franchise to the NTC as part of the 90-day post qualification process, which is due on February 17.

Udenna Corp. and Chelsea Logistics Holdings Corp. would own 35 percent and 25 percent, respectively, while China Telecom would hold a 40-percent stake in the consortium.