Bidder for third telco sues NTC, calls selection process 'money-making scheme'

ABS-CBN News

Posted at Oct 09 2018 09:52 PM | Updated as of Oct 10 2018 11:42 AM

MANILA (UPDATED) - A company that joined the bidding to become the Philippines' third major telecommunications player confirmed on Tuesday that it is suing the National Telecommunications Commission (NTC) for allegedly turning the selection process into a money-making scheme. 

NOW Telecom, an affiliate of listed firm NOW Corporation, said in a statement that the terms of reference (TOR) for the selection process contained requirements that were not taken up during public hearings. 

“NOW Telecom is suing NTC to protect the interest of its public shareholders and President Rodrigo Duterte from any suspicion that he is complicit to the money making schemes in the TOR for the third telco,” NOW Corp president and CEO Mel Velarde said in the statement. 

NOW Telecom said among these new requirements are: P700 million Participation Security, P14 billion to P24 Billion Performance Security, and P10 million non-refundable Appeal Fee. 

The company claimed that these violated existing laws and were barriers to entry. 

It added that these can also be declared onerous, confiscatory and potentially extortionary. 

The Department of Information and Communications Technology (DICT), meanwhile, defended the terms of reference. 

DICT Acting Secretary Eliseo Rio said the securities and fees required are consistent with the rationale on bidding and procurement processes and are even lower than those required by the laws on procurement. 

"This is to attract possible participants while ensuring that the winner will be able to withstand intensive competition against the entrenched duopoly," Rio said in a statement. 

Rio said the "participation security" is meant to ensure that bidders have the financial capability to compete with the duopoly of PLDT and Globe. The performance security meanwhile aims to guarantee and assure the government that the third telco will deliver its commitments for the 5-year commitment period. Finally, the appeal or protest fee, aims to discourage frivolous motions and protests, Rio said.

The DICT chief also questioned the timing of NOW's suit and the firm's capability to participate in the selection process. 

Rio said the participation fee of P1 million may have been a significant cost to NOW Telecom's mother company, NOW Corp whose 2017 operational income stood at P6.3 million.

"The third telco must not only be technically capable, but more importantly the financial muscle to compete with the giants, Globe and Smart," Rio said. 

NOW Telecom denied that it was out to delay the selection process. 

The company said it prefers to have Duterte receive all the bidding documents on November 7 and that the President himself choose the third major telco player.