In his fifth State of the Nation Address on July 27, President Rodrigo Duterte challenged telecommunications companies to improve their services before December or they may face closure.
He specifically described the services of Ayala-led Globe Telecom Inc. and Smart Communications Inc., the wireless arm of PLDT Inc. led by PLDT chair and CEO Manuel V. Pangilinan, as “less than ideal.”
“Alam mo itong… I’ll be straight, iyong Smart pati itong Globe, ilang taon na ito, at ang sagot palagi sa akin, ‘the party cannot be reached.’ Eh nasaan pala pumunta ‘yung y*** na ‘yon?” Duterte said in his speech.
“Eh kung ganoon lang naman ibigay ninyo sa amin, we are a republic, a sovereign country, bear that in mind because the patience of the Filipino people is reaching its limit, at I will be the one to articulate the anger of the Filipino people. And you might not want what I intend to do with you,” he added.
Duterte said that Filipinos shouldn’t wait 10 more years before they could enjoy the quality of telco services in other countries.
He also threatened to seize telco firms if they are not ready to improve and the country would just return to landline telephones again.
“I might just as well close all of you and we revert back to the line telephone at kukunin ko ‘yan, i-expropriate ko sa gobyerno,” Duterte said.
In his rant against the two companies, the president rambled on calling Jesus Christ and accused them of giving Filipinos “half-cooked transactions, lousy service” that Filipinos pay for.
He then stressed that he would talk to Congress to find a way to shut them down if the deadline was not met.
“Tell us now if you cannot really improve on it because I will work by December. I have two years. The next two years will be spent improving the telecommunications of this country without you. I will find a way. I will talk to Congress and find a way how to do it,” Duterte said.
READ: Duterte threatens closure or gov’t takeover of ‘lousy’ telecom firm
Members of the House of Representatives last July 10 denied ABS-CBN’s application for a fresh 25-year franchise, which affected more than 11,000 workers across the country.
Duterte had also been vocal against renewing the broadcast giant’s previous franchise since the start of his presidency due to alleged critical reporting of his policies and not airing his political advertisements back in 2016.
Can the government seize telco providers?
In an interview with ANC on Tuesday, Senate President Vicente “Tito” Sotto III said government may take over telecommunication firms by crafting a new law.
“That is possible. The government can remove those franchises anytime with another law,” Sotto said.
He also stressed that Duterte only referred to Smart and Globe, and not intended to other foreign investors.
Sen. Panfilo “Ping” Lacson likewise said that threats to seize private properties worked before, citing the cases of the Philippine Airlines and the Mile Long property in Makati.
“This kind of ‘threat’ worked in the past: Mighty’s P40-billion tax settlement; Philippine Airlines’ settling a P6-billion obligation to the government; the Mile Long property taken over by government; and the rehabilitation of Boracay, to name a few cases that did not need to undergo lengthy and expensive court litigations,” Lacson said in a statement.
“Whether the government takeover of telcos is justified and compliant with the provisions of the Constitution, given the circumstances, is another matter altogether, however,” he added.
Similar to broadcast frequencies, the telecommunication industry in the country also only operates after being granted by a congressional franchise.
Globe was incorporated as Globe Wireless Limited on Jan.16, 1935, with a franchise to operate wireless long-distance message services.
Its name changed to the present one in 1992. Singapore Telecom Inc. also became its partner.
PLDT was incorporated and given a franchise to operate telephone services in the country on Nov.r 28, 1928.
Smart Communications received the congressional franchise in April 1992.
In March 2000, PLDT acquired Smart, which was the largest mobile operator at that time.
If the government did succeed in shutting them down, what would be the consequences?
The thousands of workers employed in Globe and Smart branches across the country would be the first to feel the blow.
In 2018, Globe has about 8,000 employees nationwide.
Based on Smart Communications’ LinkedIn profile, its offices have around 5,000 to 10,000 employees.
Both firms also provide the majority of the country’s wireless communications and digital services.
In Yugatech’s report, in 2018, Globe has 2,598,171 postpaid subscribers and 71,495,420 prepaid subscribers.
In the same year, PLDT-Smart recorded a total of 2,320,039 for postpaid and 58,218,978 for prepaid.
Threats against a listed duopoly with thousands of employees and nationwide coverage would also dampen investor confidence, the Management Association of the Philippines said.
The organization of business leaders also said that when big businesses fall short of expectations in comparison with their Asian counterparts, “they should be nurtured to grow further to help generate more jobs for our countrymen and help our country compete with its peers.”
What will be left when Globe and Smart are seized?
There’s another new telecom player in the market that seeks to challenge the long-standing duopoly of Globe and PLDT-Smart.
DITO Telecommunity Corporation just won its license to operate in the country in 2019.
It is formerly the Mindanao Islamic Telephone Co. or Mislatel consortium of Udenna Corporation, which is owned by Davao businessman Dennis Uy, Chelsea Logistics Company, and Chinese state-owned China Telecommunications Corporation or China Telecom.
However, China Telecom, one of the largest telecommunication companies in the world, had been fraught with cyber-security controversies and ranked low in the worldwide rankings of internet speed.
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Editor’s Note: Manuel V. Pangilinan is chairman of PLDT-Smart. A unit under PLDT’s media conglomerate has a majority stake in Philstar Global Corp., which runs Philstar.com. This article was independently produced following editorial guidelines.