The operating franchise of Smart, the mobile unit of Philippines-based PLDT, was finally approved after languishing with the country’s government for more than a year.
President Rodrigo Duterte signed the law renewing the franchise for 25 years after the Senate of the Philippines – the upper house of the country’s government – passed a bill extending the contract, which expired 27 March.
The Senate adjourned the process in June 2016 without approving the extension of the franchise, which was first introduced in October 2015. In August 2016 the Philippines House of Representatives – the lower house – requested Smart and rival Globe Telecom explain why their broadband service is so poor and why their franchises should not be revoked.
Operators have long faced complaints from the government regarding the speed of the country’s 3G and 4G networks. While the two operators ramped up mobile data speeds in late 2016, their LTE speed scores fall far short of the global average of 17.4Mb/s, according to OpenSignal. The average LTE download speed in the country rose to 8.65Mb/s in the period from 1 November 2016 to 31 January 2017 from 7.27Mb/s in Q3 2016.
Under the new franchise law, Smart is no longer required to sell 30 per cent of its shares via an initial public offering, BusinessWorld reported. PLDT argued there is no need for a Smart IPO since it is already a listed company, with more than 50 per cent of its shares publicly listed. Smart is 100 per cent owned by PLTD.
A new clause was added to Smart’s franchise ensuring it receives equal access to any future incentives granted to new players. Smart will also be exempt from paying customs duties, tariffs and taxes on radio and electronic communications equipment.
Rival Globe would likely receive similar benefits when it renews its franchise, which expires in 2030.
Both players face a possible third entrant in the market. The National Telecommunications Commission said in October 2016 it will sell unused 3G and 4G spectrum by the middle of this year in an auction open only to new mobile players.