Duterte threatens to take over Philippine telecos if they don't buck up

28, Jul. 2020

President Rodrigo Duterte gives his fifth State of the Nation Address on July 27, 2020 at the House of Representatives. (Photo courtesy of Presidential Communications Operations Office)
President Rodrigo Duterte gives his fifth State of the Nation Address on July 27, 2020 at the House of Representatives. (Photo courtesy of Presidential Communications Operations Office)

By Darlene Basingan

MANILA, NNA – Philippine President Rodrigo Duterte has warned that he would take over the only two telecommunications operators in the country if they continue to provide “less-than-ideal service” to the public.

In his fifth State of the Nation Address laden with the usual tirades against critics and oligarchs on Monday, the president threatened to expropriate PLDT Inc.’s wireless subsidiary Smart Communications Inc., and Globe Telecom Inc. if they fail to improve their services by December, claiming that the patience of the public was wearing thin.

“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. Kindly improve the services before December. I want to call Jesus Christ (in) Bethlehem. Better have that line cleared,” he ordered, giving them four months to shape up before Christmas.

Duterte made it clear that he would take drastic steps to improve telecommunication infrastructure in the Philippines before his presidential term ends in 2022 if the telcos fail to do so.

In response, Globe said in a statement that it will heed the president’s call while reiterating that it has already been making “substantial investments” to improve services for millions of its customers.

The telco said the bulk of its $1.2 billion capital expenditure this year goes to enhancing network and capacity. It has already launched 5G internet broadband service, and will soon roll out 5G mobile service.

“Service performance and increased consumer demand for data are the key reasons why we have been investing billions of dollars to upgrade and improve our network,” Globe said, adding that more telecom towers would boost internet speed.

However, the company said it has faced challenges such as bureaucratic red tape preventing it from building more cell sites and laying fibre-optic cable.

Smart’s parent company, PLDT Inc., a fixed broadband services provider, declined to comment on Duterte's latest threat.

Globe is owned by the Ayala Corp., the oldest conglomerate in the Philippines run by the Zobel family, while PLDT and Smart are led by tycoon Manuel V. Pangilinan.

Last year, Duterte threatened to arrest both their leaders who also run water distribution companies in capital Metro Manila and its vicinity over unfair water contracts that were "disadvantageous to the people" – only to “forgive them” this year after they contributed to the country’s response to the coronavirus pandemic.

Duterte's warning to the telcos came at a time when the third operator in the industry, Dito Telecommunity, is preparing to launch its services next year.

It is a consortium led by Davao businessman Dennis Uy's Udenna Corp. and its subsidiary Chelsea Logistics Corp., and Chinese state-owned China Telecommunications Corp., the parent company of China Telecom. Uy, who has built a vast business empire, is a Duterte loyalist.

Duterte's latest threat to Globe and Smart also highlighted the urgent need for good telecom services as people, businesses, schools and government offices are depending heavily on digital connection in the face of disruptions brought about by movement restrictions to fight the coronavirus pandemic. At the same time, the government is also pushing for the country's transition to a digital economy.

In his address on Monday, President Duterte also lashed out at the Lopez family who owns media giant ABS-CBN which was flatly refused a license by Philippine House of Representatives recently to run their television and radio services after decades of operation.

Political analyst Edmund Tayao told NNA that the latest pronouncement of the president was a warning to the two telcos as “there has to be some ultimatum so to speak."

Sonny Africa, who heads research firm IBON Foundation, believes Duterte was only making empty warnings against oligarchs since his administration was fostering “its own oligarchs.”

He cited Dennis Uy, the president’s friend, as an example. In 2019, Uy debuted on Forbes’ list of the 50 richest in the Philippines.

“For the Duterte administration though, its tough talk is just a facade for using the vast powers of government to favor its allies and against perceived unfriendly competition in business and in politics,” Africa told NNA.