Duterte order on Cure frequencies for 3rd telco contradicts PLDT-NTC deal

MANILA, Philippines – President Rodrigo Duterte instructed the Department of Information and Communications Technology (DICT) not to shell out a single centavo for the frequencies surrendered by PLDT Incorporated when it merged with Digitel Telecommunications Philippines Incorporated in 2011.

"The President made it clear that he doesn't want to pay for the surrendered Cure (Connectivity Unlimited Resource Enterprises) frequencies. He made it clear that he wants the frequencies back, give it to the 3rd telco, without spending anything," DICT Acting Secretary Eliseo Rio Jr said in a phone interview on Tuesday, February 6.

This, however, runs contrary to a provision in the agreement between the National Telecommunications Commission (NTC) and PLDT back in 2011, when the regulator approved the telco's acquisition of Digitel.

Turning over Cure's congressional franchise and frequencies to the NTC was part of the conditions imposed by the NTC when it approved the PLDT-Digitel merger.

Rio confirmed that part of the agreement was that the NTC would bid out the surrendered frequencies, with PLDT being given monetary compensation.

'Flaw in the system'

But during the Cabinet meeting last Monday, February 5, Rio said Duterte refused to give PLDT monetary compensation for the surrendered Cure frequencies.

"It (monetary compensation) was PLDT's requirement. The NTC's solution [at] that time was to bid out the frequencies to interested telcos. But since it was surrendered, nothing [has] happened," Rio said. "Now, the President wants to award it to the winning 3rd telco."

Rio said Duterte's statement was triggered by news reports, with PLDT chief Manuel Pangilinan floating an amount of "about P3 billion" as a "good price" for the Cure frequencies.

"This was brought up by [Finance] Secretary [Carlos] Dominguez [III] during last night's Cabinet meeting. The President reacted to this and expressed that he really, really wants a 3rd telco player by March," the DICT chief told Rappler.

Sought for comment, Pangilinan told reporters that he has "yet to read the official statement." (READ: Naming Philippines' 3rd telco might take longer than expected)

"It's the first time I'm hearing that. I have yet to check," he said on the sidelines of a launch in Makati City on Tuesday.

PLDT wireless unit Smart Communications Incorporated bought Cure from the Ongpin family in 2008. PLDT used Cure to launch Red Mobile, a mobile service that piggybacked on the infrastructure of Smart.

Cure was established in 2001 by companies controlled by the Ongpin group, as former trade minister Roberto Ongpin's corporate vehicle for telecommunications-related acquisitions.

Back in 2001, Cure was granted a 25-year congressional franchise, but it only became active when the NTC awarded it one of the 4 3G licenses in 2006. The other licenses were given to Globe Telecom Incorporated, Sun Cellular, and Smart.

It was in July 2012 when PLDT surrendered the Cure frequencies to the NTC, with the telco expecting to be paid back for its total investments. These include, among others, the $10-million acquisition price for Cure and the P65-million annual spectrum users' fee.

Now, the DICT plans to conduct a "reverse bidding," where it will grant a provisional authority and award the available 3G and 4G frequencies – including those of Cure – to whoever would become the 3rd telco player.

This is related to the President's directive to come up with a 3rd telco player by March this year. (READ: Duterte rejects DICT request to extend deadline for 3rd telco– Rappler.com