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Velarde firm sues NTC over 3rd telco bidding rules

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By Denise A. Valdez, Reporter

NOW Telecom Company, Inc. is suing the National Telecommunications Commission (NTC) over alleged insertions of new requirements in the terms of reference for the new major telecommunications player.

In a statement on Tuesday, the affiliate of listed Now Corp. said it filed the case against the NTC at the Manila Regional Trial Court Branch 42, questioning certain items in the terms of reference, such as the “(1) P700 million ‘participation security’; (2) P14 to P24 billion performance security; and (3) P10-million non-refundable appeal fee,” saying these are barriers to entry.

Under Sec. 11 of the terms of reference, the company should post a performance security in favor of the NTC. The performance security should be maintained at 10% of the remaining cumulative capital (capex) and operational expenditure (opex) commitments for the rest of the commitment period.

An earlier draft only required that the performance security be either 10% cash bond or 30% surety bond of the annual capex and opex.

In the final terms of reference, the participation security was also raised to P700 million from the original amount of P500 million.

Now Telecom said these changes, which it claimed were not discussed during the public hearings, violate existing laws and can be considered “onerous, confiscatory and potentially extortionary.”

“Now Telecom is suing NTC to protect 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 Chief Executive Officer Mel V. Velarde said in the statement.

Mr. Velarde said the company would prefer Mr. Duterte receive the bidding documents for the third telco auction on Nov. 7. He said it would be “best” if Mr. Duterte, not the NTC, choose the new major telco player.

Department of Information and Communications Technology (DICT) Acting Secretary Eliseo M. Rio, Jr. defended the higher participation security, saying it has been “set high to more or less guarantee and assure the government that the third telco will deliver its commitments.”

In a statement, Mr. Rio said the appeal fee was also deemed necessary to prevent further delays in the entry of the third telco.

“DICT and NTC take exception to Now Telecom’s allegation that this initiative is a money-making scheme. All the above-mentioned fees are consistent and even lower than government standards and the requirements of RA 9184. This is to attract possible participants while ensuring that the winner will be able to withstand intensive competition against the entrenched duopoly,” he said.

Mr. Rio said Now Telecom could have earlier raised the questions on the terms of reference, which were published late last month.

“The selection of a third telco is no small matter and to set the bar low for those who apparently cannot meet the standards is detrimental to the people who will directly benefit from a third telco that has not only the technical capacity, but more importantly the financial muscle to compete with the giants, Globe and Smart,” he said.

Prior filing a case versus the NTC, Now Telecom bought selection documents from the government agency on Monday, firming up its interest to participate in the bidding.

Aside from Now Telecom, other prospective bidders that acquired the bid documents are Dennis A. Uy’s Udenna Corp., Norway’s Telenor Group, a consortium formed by TierOne Communications International, Inc. and Luis “Chavit” C. Singson’s LCS Group of Companies, and a local company that refused to be named.

The DICT set the deadline for submission of bids on Nov. 7, and the awarding of the third telco before Christmas.

Mr. Rio previously said the DICT and NTC are committed to follow the timeline, in adherence to the request of Mr. Duterte.

The President said last month he will “take over” the selection of the third player if it isn’t named by November.