Globe: TRO on Bayantel rehab delays improved services

MANILA, Philippines – It is another round of delay for the Ayala-led Globe Telecom, as the Court of Appeals issued a temporary restraining order (TRO) preventing the National Telecommunications Commission (NTC) from acting on its application to take over the Lopez-owned Bayan Telecommunications Inc. (Bayantel).

The appellate court issued a 60-day TRO on October 9, acting on the petition filed by dominant carrier Philippine Long Distance Telephone Company (PLDT).

PLDT previously argued that the transaction between Globe and Bayantel contravenes Republic Act 7925 or an act to promote and govern the development of the Philippine telecommunications and delivery of public telecommunications services, as well as the laws and rules on assignment and allocation of radio frequencies.

“It is grossly unfair and anti-competitive for Globe to have access to 42.8% more 4G frequencies than PLDT which has double the number of subscribers of Globe,” PLDT said in its 21-page petition.

Bayantel also failed to roll out its cellular mobile telephone system operations and that NTC should have recalled the radio frequencies allocated to the cash-strapped company, PLDT said.

However, Globe said the proposed takeover and rehabilitation of cash-strapped Bayantel encourages competition in the telecommunications industry and is expected to benefit the consumers.

“The telecommunications industry should not be held hostage by a single dominant player. As a public utility company, we have a responsibility to serve the expanding needs of Filipino consumers through improved products and services,” Atty. Froilan Castelo, general counsel of Globe, said.

Despite the temporary setback, the company would still pursue the rehabilitation of Bayantel, Castelo added.

“We are eager to see through the completion of Bayan’s rehabilitation,” Castelo said.

Delaying delivery of improved services

PLDT’s petition for a TRO would further delay proceedings and impact Bayantel’s 350,000 customers in terms of much needed service improvements, Bayantel head of legal and regulatory affairs Ariel Tubayan said.

“This bid to delay the completion of the corporate rehabilitation of Bayan hampers the intention of both companies to ensure the viability of Bayan’s operations,” Tubayan added.

Globe said the master restructuring agreement (MRA) between Globe and Bayantel as approved by the Pasig City Regional Trial Court is based on a broad sectoral recognition of the need for Bayantel’s rehabilitation, starting with its major creditors like Goldman Sachs Group, Clearwater Capital Partners, Avenue Capital, and the United Kingdom-based Spinnaker Capital.

Under the transaction, Globe would acquire a 56.6% stake in Bayantel through the conversion of 69% of Bayantel’s total debt.

In return, the outstanding principal debt of Bayantel would be reduced by 69% to $131.3 million from $423.3 million.

On May 30, Globe and the Lopez Group asked the rehabilitation court to restructure Bayantel’s $423.3 million debt to prevent default. Bayantel’s outstanding debt stood at $497 million when it was placed under corporate rehabilitation in 2004.

Bayntel has reportedly settled a total of P8.19 billion ($182.75 million) since it filed for supervised rehabilitation proceedings under the regional trial court in Pasig City and intends to pay its $325 million outstanding debt within 2023. – Rappler.com