Philippine Long Distance Telephone (PLDT) and Globe Telecom’s recent acquisition of San Miguel’s telecom firms and their franchises for P69 billion (P52 billion in cash and the assumption of P17 billion of debts) marks the total domination by three foreign companies of our telecom industry. This is in sharp contrast to the telecom industry in all Asian countries, which are controlled by their nationals.
Especially as the food and beverage conglomerate gave up its subsidiaries’ franchise over the 700-megahertz radio spectrum, crucial to the expansion of PLDT/Globe’s cellphone coverage, San Miguel obviously abandoned its dream of challenging the two foreign-owned firms in the telecom industry after its plans to take in the Australian Telstra as its technical partner fell through.
With their dominance of such lucrative public utility firms that exploit a natural and national limited resource (bands of the radio spectrum, which mobile telephony uses) and which have a captive market, foreign owners of these two firms have siphoned off huge profits from the country.
That PLDT and Globe are Filipino firms is, in effect, the biggest corporate deception ever foisted on the nation.
The two firms have been claiming over the past 16 years that they are Filipino-controlled and dominated. PLDT, in its reports to the Philippine Securities and Exchange Commission (SEC), claims it is majority Filipino-owned, with its latest “General Information Sheet” report to the SEC declaring foreign ownership of only 18 percent. Globe reports 27 percent foreign ownership.
These are lies, fabrications made possible, believe it or not, by President Aquino’s reversal – through an SEC ruling – of a Supreme Court decision in 2011 (reaffirmed in 2012) that had exposed PLDT’s violation of the 40 percent constitutional ban. (More of that in Friday’s column.)
The facts are incontrovertible, which are reported in the official reports of the two telecom companies and their foreign owners.
The Hong Kong-based, Bermuda-incorporated First Pacific Co., Ltd. – owned 45 percent by the Indonesian magnate Anthoni Salim – has 25.6 percent of PLDT’s common shares, according to the firm’s annual reports published in Hong Kong, and on its official website (www.firstpacific.com). First Pacific is the single biggest shareholder of PLDT and its undisputed controlling stockholder.
This is also disclosed in PLDT’s reports to the US Securities and Exchange Commission, which the firm is required to submit because 20 percent of the firm’s equity is traded on the New York Stock Exchange in the form of American Depositary Shares (ADS).
According to PLDT’s reports to the US and Philippine SECs, two subsidiaries of NTT Telegraph and Telephone Corp., the world’s third largest telecom firm – NTT Communications Corp. and NTT Docomo – hold 20 percent PLDT’s stock. A separate 18 percent of PLDT common shares are held by foreigners via the stock market and 12 percent are in the form of ADS.
This means that foreign ownership of PLDT totals 76 percent, way above the 40 percent limit the Constitution allows foreigners to hold.
Globe portrays itself as one of the corporate jewels of the crème de la crème elite, the Ayala clan, with Jaime Augusto de Zobel himself reportedly boasting that taking the property firm into the high-tech industry has been his distinct contribution to the conglomerate.
The truth, though, is that Ayala Corp. is a minority stockholder, owning 30 percent of its common shares.
Its biggest stockholder, with a 47 percent stake, is Singapore Telecommunications (SingTel), a subsidiary of Singapore’s state investment fund Temasek Holdings. By virtue of its state ownership, Temasek belongs to the 5.4 million Singaporeans who are represented by their prime minister, Lee Hsien Loong. Such an irony: A firm owned by 5.4 million Singaporeans is one of the two companies dominating the telecom industry of another country with a much bigger population of 100 million Filipinos.
Combined with a further 15 percent stake held by foreign stock market investors, foreign holdings in Globe total 62 percent. Singtel itself, in its 2015 annual report, declares the “percentage of effective equity interest” it holds in Globe as 47.2 percent, with its investment in the firm amounting to US$800 million as of end-March 2015.
It is really amazing how PLDT and Globe have been able to propagate their big lie that they are Filipino-owned, and to trample on our Constitution largely unnoticed. I am not even the first to have claimed that they are not Filipino-owned – the two firms did.
In an episode that is utterly hilarious, if not for what it says about our regulatory agencies and the press – that they are utterly inutile—Globe and PLDT themselves accused each other of being foreign-dominated, presenting basically the same fact as I have pointed out.
Globe’s NTC plea
Globe in August 2011 asked the National Telecommunications Commission (NTC) to stop PLDT from acquiring tycoon John Gokongwei’s Digitel not only because the huge merger would stifle competition in the industry, but that in violation of the Constitution the foreigners owned more than 40 percent of its shares. Globe even asked the NTC to cancel all telecom franchises given to PLDT as such violates the Constitution.
PLDT’s chief counsel, Ray Espinosa, swiftly reacted, claiming that Globe openly discloses that Singtel owns 47 percent of the firm’s common shares, and therefore, is a foreign company.
Obviously told by their superiors that their accusations were tearing asunder the lies they have been propagating for a decade, the press releases suddenly ceased. None of the NTC or the SEC or the press, investigated the very serious accusations.
Foreign dominance of our telecom firms now is, indeed, so ironic. The deregulation of the sector in 1993 had been President Fidel Ramos’ biggest and most successful reform program. It, however, only led to the loss by an old elite, the Antonio Cojuangco clan, of its telecom monopoly, which was replaced by three foreign companies.
“So what if foreigners own our telcos?,” some might say. This is just one of the many “what ifs:”
Based on the dividends PLDT and Globe have paid out to their shareholders from 2000 to 2015, and their foreign ownership shares, foreign owners have taken $8 billion of profits out of the country from 2000 to 2015.
That’s equivalent to six years of foreign investment inflows into the country, or about P400 billion. If state firms had owned our telcos – as they do in China, Singapore and Vietnam—that P400 billion would have been a huge source of funds for the government, which could finance an entire railway system for Luzon or five light railway systems in the metropolis. (That P400 billion over 15 years means P27 billion annually, a mammoth amount compared with the P3 billion turned over annually to the state coffers by the government’s biggest profit-maker, Pagcor.)
This is one reason, other than the industry’s being too important for the economy to let foreigners control it, why nearly all Asian countries – Japan, South Korea, Singapore, China, Indonesia and Vietnam – despite opening up their other industries to foreigners, have allowed only their nationals, public or private firms, to dominate their telecom sector. The most common structure in Asia, in fact, is to have state firms or corporations with a significant state ownership dominate their local telcos, even as these entities get foreign minority partners, as they do in several countries.
The ‘Cha-cha’ agenda
The proposed lifting of the Constitution’s restrictions on foreign ownership of public utilities—which Salim and Singtel have evaded—will only mean the legalization of their violation of the 1987 Constitution, with the two foreign-owned companies dominating this crucial public utility forever.
This is due to the fact that because of the industry’s nature and dynamics, only two dominant players ultimately emerge, with much smaller players able to get only a small, 10 to 20 percent, of the market – until they are absorbed by the bigger players. The telecom sector in each country in the world, without exception, is dominated by only two huge firms, in some cases, with a minority share of the market – 10 to 20 percent – held by other small players.
This, in fact, has been the case here: PLDT and Globe gradually absorbed other players such as Isla Communications and Digitel. Try valiantly as it did, San Miguel with its vast resources couldn’t even make a beachhead in the country’s most lucrative industry.
The Charter-change move to lift the restrictions is entirely a project to entrench the dominance by the Indonesian Salim, the Japanese firms, and Singtel of our telecom sector.
Perhaps the incoming Rodrigo Duterte presidency, with its declared anti-oligarch stance, will find the wisdom and audacity to uphold the Constitution and end the foreigners’ exploitative dominance of our local telecom industry.
On Friday: How PLDT and Globe conceal their majority foreign ownership, and how President Aquino has criminally allowed it.
This Post Has 14 Comments
Mr. Tiglao only exposed what’s reality on our laws being blatantly overruled by the elite capitalist…he’s challenging the new generations to examine well what’s inside the beaurucracy…Mr.Bobby maybe forgot the buy-out of DIGITEL of the gokongweis where in fact it have a congressional act RA.9180 which is being VIOLATED..and congress remains in silent..Filipinos will still suffer more in the service of giant doupolies which are profit centered (not for better services)..If you want to validate the reality,,ask someone who visits you for technical services or after sales services if he/she is a regular employee of these giant telco’s? Rest assured you’ve got a reply of being a KONTRAKWAL personnel…
Ito nanaman tayo. naghihilaan nanaman pababa. Kala ko ba gusto natin ng better internet? hintayin muna natin at tska tayo magreact.
Ito nanaman po tayong mga pilipino. hilaan nanaman pababa. kala ko ko ba gusto natin ng better internet? give them a chance muna. hindi ang dami nanaman anting nasasabi.
This has been brought up multiple times and it’s really getting annoying, even if it’s true the fact will not change that this telco have provided comfort to tons of people. They’ve been doing this over the years and did not cause any ill will to our country.
Invite all Internationa telcom comapnies with government as a join venture…..Like BT, Vodafone,Virgin, etc…Than it was own by Monopolistic Oligarch that suck filipino blood with high charges and bills….
Invite Internatiola comapnies to Invest in the Philippine Telecom as part of the Philippine Government joint venture to avoid the monopolistic control of the two big philippine comapanies own by few oligarch who made heavy profits due to high telecom charges and good services like interrnet that was so slow…
LGBT Chairman MVP…soon to be or not to be RP Pres…ay naku day bendita yatits bilang tatlo (count 3) pag si ‘day MVP na ang pres natin..tsugi.
Duterte should form a telecom company owned by the GSIS, SSS, Land Bank and DBP in partnership with taipans like Henry Sy, Andrew Tan, Ramon Ang and DM Consunji. Then he should get a foreign partner like ZTE to provide the technical aspects. It would be very satisfying to see the faces of Pangilinan and that Ayala whose face by the way you cannot tell if he is grimacing or smiling- when the government announces this. I will bet that Globe and MVP stocks in the market will dive in no time, while all internet users will be singing hosannas to him and demanding that he be guaranteed a second term.
what if that lady senator won
what if this conglomerate had not piled up so much depth
yes .. iniipit nang both pldt & globe .. but smc could have made it had it not been in such a financial bind .. just look at the timing within a month after elections ang press release – early may ..
banks are knocking and that lady senator cannot win
lets dissemenate these informations! Thank you Sir Tiglao for always leading the way to truth!
Thank-you Po for the series you have written about these foreign dollar-grabbers..i admire your thorough research and endorse your concern and sincerity..as well as your bravery! Du30 will protect you,I hope??
I have shared your articles on my FB account..but unsure if anyone can be bothered reading anything more than four word sound bites!!
I would like DU30 to blast the faces of these idiots.
I wonder why it takes one like you to expose inconsistent practices of big businesses in the country. The members of Congress should be the first one to expose these ‘anomalies’ in the Philippines. Perhaps, the members of Congress are either ignorant of the Constitutional provisions, or are just turning their heads the other way. We talk of corruption and this institution must be a bedrock of corruption in the country. I know for a fact that certain legislations are being sponsored to curve usncrupulous practices of businesses, only to to be ‘piled’ after representatives of these businesses come forward to do the ‘damage control’.
There’s a need to expose ‘economic sabotage’ by giant corporations which drain billions of possible income for the government. Right on, sir.
Gising mga kababayan. Iginigisa tayo ng mga banyaga sa sarili nating mantika. This is made possible by people like Pangilinan. Sila naman ang gisahin natin. Wala dapat patawad sa mga traydor.
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