PLDT to give up Cure frequencies 'at no cost'

MANILA, Philippines (UPDATED) – PLDT Incorporated has agreed to give up its surrendered frequencies at no cost to a potential 3rd player in the telecommunications industry, according to the acting chief of the Department of Information and Communications Technology (DICT).

After his talk with PLDT president and chief executive officer Manuel Pangilinan on Tuesday night, February 6, DICT Acting Secretary Eliseo Rio Jr said the tycoon settled for not getting any monetary compensation for the Connectivity Unlimited Resource Enterprises (Cure) frequencies the telco surrendered back in 2012.

"After talking to MVP yesterday, PLDT will return the Cure frequencies at absolutely no cost, that can now be awarded to the new major telco player as per instruction of [President Rodrigo Duterte]," Rio said in his official Facebook page on Wednesday, February 7.

PLDT executives could not be reached as of posting.

Duterte previously threatened to send tax auditors to telecommunications companies demanding payment for returning radio frequencies to the government. 

Presidential Spokesperson Harry Roque had also said that the government "won't pay" for the frequencies it gave out for free.

In response to PLDT's decision to give up the frequencies, Roque said on Wednesday that it would "facilitate the setting up of the new major player that can effectively compete in the market."

The Cure frequencies will form part of the bundled spectrum which the DICT will award to a new major telco player by March, Rio said.

The amount of spectrum assigned to a telco impacts the cost of the build capacity, overall network performance, ability to offer new multimedia services, and general customer experience of wireless services.

PLDT-NTC agreement

PLDT agreed not to get any monetary compensation for its Cure investments, despite a provision in a 2011 agreement between the National Telecommunications Commission (NTC) and the telco giant. (READ: Duterte order on Cure frequencies for 3rd telco contradicts PLDT-NTC deal)

Back in 2006, the government had allocated some 3G frequencies to Cure, which was initially owned by businessman and former trade minister Roberto Ongpin.

Cure was granted a 25-year congressional franchise in 2001, 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 PLDT's wireless unit Smart Communications Incorporated.

In 2008, PLDT bought Cure from Ongpin for $10 million to launch Red Mobile, a mobile service that piggybacked on Smart's infrastructure.

PLDT's investments in Cure also include a P65-million annual spectrum users' fee.

In 2011, PLDT was instructed to turn over Cure's congressional franchise and frequencies to the NTC, as part of the conditions imposed when the regulator approved PLDT's merger with Digitel Telecommunications Philippines Incorporated.

Part of the 2011 agreement was that the NTC would bid out the surrendered frequencies, so PLDT would be given monetary compensation to recoup its Cure investments.

In the agreement, Rio had said, "PLDT [is] entitled to recover the reasonable cost of its investments in Cure, considering its latest audited financial reports. In case actual proceeds exceed the cost recovery amount, PLDT will have to pay NTC a minimum of 50% of the excess, less government fees and taxes."

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.

Duterte ordered the department to name a 3rd telco player by March, Roque had said. (READ: Duterte rejects DICT request to extend deadline for 3rd telco–