DITO Telecommunity easily hurdled the third and final reading in the Lower Chamber with 240 affirmative votes.
Culture Spotlight

How the country’s third major telco got a 25-year franchise renewal — a timeline

The Dennis Uy-led company says it’s on track for commercial roll out by March 2021. BY RHIA GRANA
RHIA GRANA | Aug 26 2020

In no more than three months, the House of Representatives has approved the 25-year franchise renewal bid of the Dennis Uy-led telco DITO Telecommunity.

Formerly known as Mindanao Islamic Telephone Company, Inc., or Mislatel, the consortium is composed of Udenna Corporation (which is in the business of retail and distribution of petroleum products and lubricants under the Phoenix brand), Chelsea Logistics Holdings Corp. (the shipping business arm of Udenna Corporation), and China Telecommunications Corporation or China Telecom (a Chinese state-owned telecommunication company).

House Bill No. 7332 easily hurdled the third and final reading in the Lower Chamber and got 240 affirmative votes and only seven negative votes from the legislators. DITO’s original franchise under Mislatel is set to expire on April 24, 2023.

The law states that the franchise shall be deemed ipso facto revoked in the event the grantees fail to operate continuously for two years. It also mandates DITO to offer at least 30 percent of its outstanding stocks to Filipino citizens, and to submit an annual report to Congress about its compliance to the terms of its franchise. Failure to do so will result in a PHP 1 million fine for each day it fails to submit a report.

The bill also states that the President is allowed to temporarily take over and operate the company’s facilities in the interest of public safety, security, and welfare.

DITO is committed to cover at least 37 percent of the population, with an average minimum internet speed of 27 megabits per second (Mbps). It is also required to put up 2,500 cell towers by July 8, 2020. The company had obviously missed its technical rollout deadline last July, as it had only completed 300 operational cell sites, which is less than a quarter of the 1,300 needed to meet their target. DITO cited delays brought by the coronavirus pandemic, and was able to obtain a six-month reprieve on its commitment.

Despite the delay, DITO insists it is on track to meet its public rollout target in March 2021. Under the terms of reference, it can miss targets twice. Beyond that, the telco would lose its PHP 24-billion performance bond.

As the bill had already passed the lower chamber, the Senate can now start deliberations on DITO’s franchise.

Here’s a timeline of the company’s history, and the country’s pursuit of a third telco:

April 19, 1998: Mislatel secured a 25-year franchise

Mislatel has actually been in existence for over 20 years. It acquired its congressional franchise under Republic Act No. 8627 in 1998. The said RA allowed the franchise to construct, install, establish, operate and maintain a telecommunication system throughout the Philippines. However, Mislatel failed to start its operations following the approval of its permit from the National Telecommunications Commission (NTC).

President Duterte presents the Certificate of Public Convenience and Necessity (CPCN) to Mislatel through its Chairman Dennis Uy during a ceremony at the Malacañan Palace on July 8, 2019. Also in the photo are NTC Commissioner Gamaliel Cordoba and DICT Secretary Gregorio Honasan II. Ace Morandante, Presidential Photo

 

December 2017: President Duterte ordered the NTC and DICT to ensure a third telco player

The President wants a third telco player to be up and about by the first quarter of 2018, said Presidential Spokesperson Harry Roque. Before this announcement, Malacañang had announced that the president has offered China the privilege of becoming the third telecommunications carrier in the country.  

 

November 2018: DICT chose Mislatel as the Philippines’ third telco player

After a bidding that was live-streamed through the agency’s official Facebook page, DICT claimed that Mislatel was the only bidder that was able to submit a complete set of requirements.

Other companies vying for selection like the Philippine Telephone and Telegraph Corporation (PT&T), Sear Telecom Consortium of Tier One Communications, and LCS Group of Companies were disqualified due to their failure to submit participation security and certification of technical capability.

 

May 22, 2019: Congress approved the transfer of ownership of Mislatel

The House of Representatives concurred with Senate amendments to House Concurrent Resolution (HCR) 23, which approves the transfer, sale or assignment of the controlling interest of Mislatel.

HCR 23 was filed at the House on December 3, 2018. The Senate adopted it with amendments on February 6, 2019 before the House agreed with the Senate’s amendments.

 

July 8, 2019: NTC formally grants Mislatel’s permission to operate

The Mislatel consortium was issued the Certificate of Public Convenience and Necessity (CPCN) allowing it to operate the third major telecommunications company in the country. The certificate was presented by President Rodrigo Duterte himself, together with Department of Information and Communications Technology (DICT) Secretary Gregorio Honasan, and NTC Commissioner Gamaliel Cordoba in a ceremony held at the Malacañan Palace.

In the said event, Duterte posed a challenge to Mislatel to “break the prevailing duopoly in the telecommunications industry” and to “fulfill your commitment to provide better telco services to our people.” He, of course, was referring to the duopoly of PLDT/Smart and Globe Telecom.

The license to operate was granted following Mislatel’s compliance to the requirement to put up additional paid-in capital of PHP 10 billion and performance security bond of PHP 25.7 billion. The company vowed to offer only 4G technology in line with its commitment to increase internet speed in the country to 55 Mbps.

It was also on this date when Mislatel issued a statement that the company will be renamed DITO Telecommunity Corporation. “Dito” was said to be derived from the Filipino word meaning “here” (referring to the Philippines), which is a response to the stakeholders” question on where they plan to set up a firm that would provide a “world-class service.”

 

August 16, 2019: DITO announces building its campus in Clark Global City

DITO subleased an eight-hectare property in CGC to house its main Data Center. According to a news release published in Udenna Group’s website, the Data Center will be designed after Google’s campus-style headquarters. It will hold the operational departments, Network Operations Center, Servecall Center, and Regional Center. It will also serve as the hub for DITO’s R&D in the telecommunications space.

 

October 3, 2019: DITO seals partnership with LCS Group and Sky Cable Corp.

Dennis Uy’s DITO joined forces with Luis Chavit Singson’s LCS Group for the lease of common towers that the latter will be putting up nationwide. A former rival, LCS also bid for the third telco slot, but later on conceded to DITO. DITO also signed a deal with Sky Cable Corp. for the utilization of unused fiber-optic cables within Metro Manila.

According to DITO’s Administrative Officer Adel Tamano, the existing telecommunication assets of the two partners will support DITO’s rollout “without having to build everything from scratch.”

 

March 12, 2020: NTC was directed to monitor compliance of telcos

In a report to the DICT on its current progress, DITO claims it’s on track for its March 2021 commercial launch. They reported the successful series of local and international test phone calls made.

DITO also reported that the local calls made represent the five DITO vendors in the country, namely Huawei for North Luzon, Northern and Southern for National Capital Region (NCR); ZTE for South Luzon and the Visayas; and Huaxin for Mindanao. Two (2) successful international phone calls had also been made, one to Hong Kong and another to Beijing with China Telecom.

 Dennis Uy, chairman of Udenna Corporation and DITO Telecommunity and Wilfredo A. Placino, president of Udenna Land, Inc. and Clark Global City, viewing the architectural model of Clark Global City. Photo from Udenna Group's official website

July 2020: DITO expresses commitment to push through with March 2021 launch

DITO reported that the pandemic caused a number of key infrastructure delays. Despite this, its commitments, such as the commercial launch this March 2021, will proceed as scheduled, said Tamano. The company also mentioned that it is hiring more staff to support network expansion in line with its target launch. “The March 2021 date, that’s the latest we will launch.  We are moving heaven and earth to meet that, but we are pushing it earlier,” Tamano maintained.

In his last SONA last July 27, Duterte threatened to shut down the operations of the Smart Telecommunications and Globe Telecom if they failed to improve their services by the end of the year.