FAST FACTS: 3rd telco player selection rules

Ralf Rivas
Here are the requirements for companies vying for the Philippines' 3rd major telecommunications player slot

MANILA, Philippines – All the hype comes closer to fruition as the bids for the 3rd major telecommunications player slot will be opened on Wednesday, November 7. (LIVE: Bidding for the 3rd major telco slot)

To challenge the duopoly of Smart and Globe, the aspirant must be able to fulfill the following requirements:

  • A minimum paid-in capital of P10 billion
  • Must have at least 10 years of experience in delivering telecommunications services on a nationwide scale
  • No relationship to the dominant telcos and no outstanding liabilities with regulators
  • Bidders can be a single domestic firm or a consortium holding a congressional franchise to install, operate, and maintain telecommunications networks and services

The company with the Highest Level Commitment of Service (HCLOS) will be picked as the new major player. The 3 major areas of the HCLOS are:

  • National population coverage (40%) – The winner must be able to service at least 10% per year or 50% by the end of the 5th year of the national population after winning the slot. At the maximum, the winner should cover 50% during the first year up to 90% by the fifth year.
  • Capital and operational expenditure (35%) – The company must spend or invest not lower than P40 billion for the first year and P25 billion for succeeding years for a total of P140 billion. The maximum level was set at P140 billion for the first year and P25 billion thereafter for a total 5-year outlay of P240 billion.
  • Minimum average broadband speed (25%) – The minimum average broadband speed must at least be 5 megabits per second (Mbps), with one point to be awarded per year for every 2 Mbps extra up to a minimum average speed of 55 Mbps at most.

Prospective bidders can offer more than the maximum values for all 3 selection criteria, but no additional points will be awarded unless there is a need to break a tie.

The Department of Information and Communications Technology and the National Telecommunications Commission set the following fees to ensure that bidders have funds to undertake such a capital-intensive endeavor:

  • P700 million for participation security
  • P14 to P24 billion for performance security
  • P10 million for non-refundable appeal fee

At least two companies have taken their concerns against the criteria to court.

– Rappler.com

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.