DITO Telecommunity - Philippines Narrative

DITO is a joint-venture company comprising Udenna Corporation, Chelsea Logistics and Infrastructure Holdings Corporation (Chelsea), and China Telecommunications Corporation. As a separate entity, the ownership of DITO Telecommunity is listed as Udenna Corporation (35%), Chelsea Logistics Corporation (25%), and China Telecommunications Corporation (40%).

At the end of 2019, China Telecommunications Corporation assertedly had mobile subscribers of about 336 million, wireline broadband subscribers of about 153 million, and access lines in service of about 111 million. China’s government controls China Telecom.

Lack of Competition/Uneven Playing Field

The disqualification of two out of only three bidders made the selection of Mislatel practically unopposed. The other bidders’ disqualification eliminated the competition for Mislatel and limited the hurdle to only meeting the minimum requirements set in the bidding process.

Lack of Clarity and Transparency on Bid Rules

Controversy surrounding the situation was further fueled when the disqualified bidders did not accept the decision and appealed it instead. Philippine Telegraph & Telephone Corporation (PT&T), for instance, was disqualified because it was unable to secure a certification from the National Telecommunications Commission (NTC) stating that the company had been operating on a national scale for the past ten years, even though it had been operating for around fifty-six years. The issue stems from the NTC’s requirement that bidders should have been operating on a national scale.

Under the terms of reference, the term national scale refers to the “provisioning, delivery and operation of telecommunications services for a country, or particular regions thereof, as geographically designated by the telecommunications authority of that country.” However, Clarificatory/Amendatory Bulletin Numbers 1 and 5 issued by the selection committee stated that the term regional operations only apply to foreign telcos. In other words, foreign firms with regional operations would qualify, but local firms—such as PT&T—would need to have operations in Luzon, Visayas, and Mindanao.

Legal Challenges

The venture between TierOne and the Luis Chavit Singson (LCS) Group filed a lawsuit to disqualify Mislatel. Digiphil, on the other hand, sued Mislatel, its chair, Danilo Cortez, and its president, Nicanor Escalante, for breach of contract. In the lawsuit, Digiphil asserted that its agreement with Mislatel was to provide affordable broadband services and also venture into the third telco selection process that included both exclusivity and a right of first refusal, which required Mislatel to seek the consent of Digiphil before partnering or selling shares to any other group. It was further reported that a copy of the contract showed that a broad range of activities was covered, including venturing into “cellular mobile telephony” and “in general any other business or service that is within the scope of the legislative franchise.”