Sunday, October 9, 2011

Biz Buzz: The ‘Cure’


The remedy to the deadlock on the PLDT-Digitel transaction—the prospective consolidation that brought back excitement to the telco industry, only to be indefinitely frozen—is now literally around the corner. In fact, all indicators suggest that the deal could finally be consummated, but at a certain cost.
What regulators are asking for, our sources intimated, is for the group of Manuel V. Pangilinan to give up the frequency of Smart Communication’s unit Connectivity Unlimited Resource Enterprise Inc. (CURE), which, in turn, owns the Red Mobile brand (which has about 1.5 million subscribers as of end-June). CURE, previously owned by the group of former Trade Minister Roberto V. Ongpin, bagged a much-coveted 3G frequency (10 megahertz in the 2100 MHz band) in 2006, but as soon as the company was flipped to Smart, there were recurring threats from telecom regulators to strip it of this frequency. In short, influential people have been hot on the trail of CURE long before the Gokongweis agreed to cede control of Digitel to MVP.
From what we gather, giving up CURE’s frequency is a trade-off that MVP’s group may be willing to take if this is all that’s needed to appease regulators’ (and a key competitor’s) concern on a virtual monopoly. Even if the group gives back to the state the hardly used CURE frequency, the PLDT group will still be left with Smart and Digitel’s combined 3G frequency of 25 mhz. This “cure” isn’t too bitter a pill to swallow, it seems.—Doris C. Dumlao
Go-to guy
The brother-in-law of a Metro Manila mayor has reportedly become the “go-to guy” for investors wanting to make it big in this city’s booming construction and real estate business.
Only in his 40s, this Porsche-driving “contractor” has allegedly replaced building officials when it comes to approving big-ticket projects in the city.
Biz Buzz sources say the young fellow has become so powerful that no developer can proceed with construction and land development projects in the city without first securing his approval. The trouble is, developers and contractors are compelled to enter into a partnership with the mayor’s brother-in-law—or cough up a rather hefty sum—as the price for entry.
The situation, some say, has turned from bad to worse in recent months. Even the biggest names in the industry are reportedly compelled to “negotiate” with the “go-to guy” if only to get their projects off the ground. As the situation reaches tipping point, developers have quietly begun their exodus, casting their eyes on other cities. Sadly, this city may lose its luster as one of the Metro’s boom capitals. For his sake, we hope the mayor is not part of his brother-in-law’s unsavory trade.—Daxim L. Lucas
‘Smart’ tribute
Smart paid a tasteful tribute to the late Apple co-founder Steve Jobs via the “iLive” ad that came out Friday. But wait, Smart isn’t an official carrier of the iPhone. The tribute was a brainchild of Orlando “Doy” Vea, one of Smart’s founders and now its chief wireless adviser, an industry source said.
Though sympathy knows no color or boundary, many found it ironic that it would be Smart, instead of the exclusive iPhone carrier Globe Telecom, seizing the day in paying tribute to Jobs. In its website, Smart had a different tribute saying “thank you to the great innovator of our time.”  In both ads, the leading wireless provider, however, took care to highlight only Job’s profile, not incorporating the iconic Apple logo.
Is there a subtle message behind all this? With the end of iPhone’s monogamy among carriers in one key market after another including the United Kingdom, the United States, Canada and Germany, will thePhilippines be far behind?—Doris C. Dumlao
Unfit for FIT

For former Finance Secretary Ernest Leung, it’s bad enough that power rates will rise once the feed-in tariff (FIT) rates for renewable energy are approved. Adding insult to injury was the granting of a FIT to an already existing player in the industry.
“Why do we have to give them a bailout? The feed-in tariff is for entities that are not yet there, to encourage them to come in. But they’re already there,” he said, referring to wind power producer Northwind Power Development Corp.
The Energy Regulatory Commission approved a few months ago a FIT of P9.30 a kilowatt-hour (kWh) to the owner and operator of the 33-megawatt wind power facility in Bangui, Ilocos Norte.
Members of the Joint Congressional Power Commission also questioned the granting of the FIT to Northwind, saying this went against the purpose of the scheme, which was to encourage new players to enter the capital-intensive renewable energy market.
The Foundation for Economic Freedom (FEF), of which Leung is treasurer, is staunchly opposing the FIT scheme as a whole as this scheme would “subsidize the profits of renewable energy developers” and “is irregular, oppressive and not in accordance with the law.”
Indeed, the future of the FIT scheme looks bleak if the number of those opposed to it—and, more importantly, their large spheres of influence—was any indication. The Philippine Chamber of Commerce and Industry, the Philippine Exporters Confederation and the Philippine Steelmakers Association are all against it, and so are the Trade Union Congress of the Philippines and the Associated Labor Unions.
Now if management and labor see eye to eye and even join hands to fight a common battle, who knows where the object of their opposition will end up? (The word “kangkungan” comes to mind.) —Abigail L. Ho

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