What A Steal!

Heneral Lunacy | July 7, 2016

Indonesia is set to auction telecom frequencies to private parties for an estimated $80 billion- News item.

Subramanian Swamy, one of India’s most notable anti-corruption figures, petitioned the country’s Supreme Court in 2010 to prosecute the telecommunications minister for awarding cellphone spectrum to companies below market rates. “That helped fuel the perception of widespread corruption and led to the defeat of India’s longtime governing Congress Party.”- International New York Times, July 4 2016.

These two pieces of news highlight the tragedy that has befallen our country over the recent “sale” for P70 billion of largely unused telecom frequencies by San Miguel Corp. to PLDT and Globe.These frequencies are owned by the nation but the parties and their expensive lawyers found a way to deprive our country of the money. Shares of SMC, Globe and PLDT rose after the announcement to the tune of about P100 billion.

The transaction was reportedly approved by the National Telecommunications Commission (NTC), the Dept. of Transport and Communication and possibly Malacanang shortly before the Duterte Administration was to take office. The sale has still to be approved by the newly formed independent, quasi-judicial Philippine Competition Commission for possible anti-trust violations. The international chambers of commerce have supported the review. The telecom companies oppose it based on a technicality. They threaten to go to court if the PCC nixes the deal. The PCC is headed by ex-NEDA Secretary Arsi Barasican who is undeterred.

Even if the PCC  approves the deal, there remains the issue of who should pocket the P70 billion, is it SMC or the State, and who is accountable for the snafu? SMC, Globe and PLDT claim it is all kosher. Theirs is not to referee the game, only to play it. The ultimate responsibility for the fiasco is the PNoy Government which approved it at midnight. Is the Duterte Administration prepared to overturn the transaction if not on legal grounds, then on moral ones?  The owners of SMC, Globe and PLDT are involved in many other regulated industries including banking, energy, toll roads, mining and ports. Would they fight the new Government in court to save the deal at the expense of these other investments?

Manny Pangilinan has said the Government should not interfere. Manny is the CEO of PLDT which was awarded its franchise by the Republic essentially for free. PLDT is a public utility which is defined as an industry imbued with national interest and public welfare. The Philippine telecom industry has globally  among the highest costs for internet and mobile phones and the slowest speed, just ahead of last place Afghanistan. The latter has been at war for over 30 years so maybe it has an excuse. Philippine telcos make a gross profit margin on mobile and broadband of around 40% and a return on owners’ equity of over 25% p.a. By comparison the interest rate on your bank deposit is 0.50% p.a. The industry is a duopoly. Manny says the Government should not interfere. I now understand why he says that.

In an unrelated matter the Commission on Audit and the Philippine Supreme Court declared the Government owes contractors P24 billion over the Terminal 3 Airport. Nurses’ salaries and SSS pensions cannot be raised due to budget constraints. New classrooms, teachers and infrastructure are needed. P70 billion would have paid for all these. They will now have to be funded by taxpayers. In addition, consumers will presumably be asked to  underwrite the P70 billion the telcos paid SMC so it’s a double whammy. The nation just got presented a bill for P140 billion.

May God have mercy on us.

Source: www.heneralunacy.wordpress.com