MANILA - The Senate Committee on Public Services on Monday deferred the renewal of DITO Telecommunity's franchise, saying the third telco should first prove that it could deliver its "promised" services.
DITO - a consortium between Davao tycoon Dennis Uy's Udenna Corp and China Telecom - earlier committed to provide at least 27 mbps internet speed to 37 percent or some 7,425 barangays in its first year of service.
The coverage is expected to increase to 50 percent in its second year, 70 percent in its third year, and 84 to 90 percent in its fourth year in business, DITO Chief Administrative Office Adel Tamano said.
"When DITO applied for this franchise, they should have had the forecast of what they were going to spend," Senate Committee on Public Services chair Grace Poe said in the telco's franchise hearing.
"They should be able to provide the initial commitment they made if they are able to do that, then we will give them the additional 25 years," she said.
Tamano noted that the viability of DITO would depend on how the public reacts to their services, which the company promised to be faster and "more affordable" compared to what is being offered by Smart and Globe.
"For this year and next year, we are confident we have sufficient funding. What will be truly critical... is that we have our services next year," Tamano told senators.
"There will be more viability in our enterprise if our franchise is approved," he said.
Senate Majority Leader Juan Miguel Zubiri backed DITO's push to have its 25-year franchise renewed before its current license to operate expires in 2023 saying most franchise appllicants only get loans once their permits have been approved.
"We have a lot of applicants that are shell companies as of this time," Zubiri said.
"Without the approval of the loans, hindi nila magagawa lahat 'yan [deliverables]. Hindi naman sila as big as Ayala or MVP (Manny V. Pangilinan)," he said.
Uy, a Davaoeño tycoon who has expanded his business portfolio since President Rodrigo Duterte rose to power in 2016, holds 60 percent of DITO while China Telecom owns a 40 percent share.
"They should not have anticipated that they will get a renewal of their franchise unless they are able to produce the commitments that they were able to make," Poe said.
"What we're trying to prevent here is other applicants will anticipate a renewal and they are not anymore rolling out unless they get that renewal of the franchise. I don't want a committee to be a hostage of that," she said.
"We're just here to safeguard the commitments made to the government," she said.
Zubiri agreed with Poe that "the commitments of roll out" should be made regardless of the renewal of DITO's franchise.
Opposition Sen. Risa Hontiveros lauded the committee's decision to defer the renewal of DITO's franchise, saying that lawmakers must further study the effects of the third telco's entry considering that China owns a portion of the company.
"It's quite a unique franchise, a unique company... because of the national security issues that have been raised," she said.
"Considering that's a quarter of a century franchise... Ang dami pa nating ire-resolve with China here in our region," she said.
China earlier passed a law mandating all Chinese citizens - including businessmen with stakes overseas - to support national intelligence work.
The controversial law has prompted other governments, including the the United States, to shun deals with Chinese companies, citing national security concerns.
DITO is expected to launch its internet packages next year, including a "real 5G" service.