DITO Telecommunity - Philippines Narrative

2HH1NH1 Smartphone with logo of Philippine company Dito Telecommunity Corporation on screen in front of business website. Focus on center of phone display.

DITO Telecommunity - Philippines Narrative

This research reflects information available up until June 2021, it may not reflect developments after the date of assessment.

As of September 2021, DITO Telecommunity is the third (and newest) telco operator in the Philippines, breaking the ‘duopoly’ of Globe and Philippines Long Distance Telephone Company (PLDT). San Miguel Corporation, one of the largest corporations in the Philippines, was initially interested in partnering with Telstra Corp., Ltd. to become the third telco, but negotiations fell through. DITO aims to improve the Philippines’ connectivity with faster and more secure high value 4G and 5G technologies.

Project Background

By 2012, given the continuous rise in demand for mobile browsing internet connectivity, complaints shifted to internet connectivity availability and quality. One high-profile complaint emanated from the Commission on Elections when it claimed that the delay in the transmission of results was caused by the weak signals of the telecommunication companies. This issue remained a sore point for the two operators and turned into a campaign promise of then-presidential candidate Rodrigo Duterte in 2016, stating that, if he won, the public could expect better competition in the industry with the entry of a third telco player.

Reportedly, Malacañang Palace announced in November 2017 that President Duterte offered China the opportunity to become the third telecommunications operator in the country. Opening the industry to a third telecommunications player was a welcome development and the fulfillment of a campaign promise, but the preferential treatment afforded to China created a collateral issue. Complicating it further is what telecommunications industry experts fear to be the potential compromise of the Philippines’ national security.

Shortly after his announcement, Duterte directed related government agencies to ensure that the new industry player would be “up and about” by the first quarter of 2018. After a complicated process, he awarded the Certificate of Public Convenience and Necessity (CPCN) to Dito Telecommunity Corporation (DITO)—originally Mislatel consortium—on 8 July 2019 to become the third telco operator in the country.

Following its target commercial launch, DITO launched in Philippine provinces in the Visayas and Mindanao region last March 2021. As of September 2021, DITO is reportedly available in 233 areas in the country, aiming to expand to 53 more areas by the end of the same month.

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.”

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Project & Contract Phase Project Information Score Response Link to Information
Project Identification Project owner National Telecommunications Commission https://ntc.gov.ph/wp-content/uploads/2018/MC/NTC-NMP-ITP-with-annexes-and-PCC-PDF-Format-for-website-20181008-2200.pdf
Sector, subsector ICT, Telecommunication https://ntc.gov.ph/wp-content/uploads/2018/MC/NTC-NMP-ITP-with-annexes-and-PCC-PDF-Format-for-website-20181008-2200.pdf
Project name New Major Player (NMP) Selection Process https://ntc.gov.ph/wp-content/uploads/2018/MC/NTC-NMP-ITP-with-annexes-and-PCC-PDF-Format-for-website-20181008-2200.pdf
Project Location Pre-selection information session venue: NTC Multi-Purpose Hall https://ntc.gov.ph/wp-content/uploads/2018/MC/NTC-NMP-ITP-with-annexes-and-PCC-PDF-Format-for-website-20181008-2200.pdf
Purpose The entry of a new major player in the telecommunications market is a matter of paramount national interest which shall redound to the benefit of the public by ensuring genuine competition in the country’s telecommunications industry. https://ntc.gov.ph/wp-content/uploads/2018/MC/NTC-NMP-ITP-with-annexes-and-PCC-PDF-Format-for-website-20181008-2200.pdf
Project description On 06 April 2018, President Rodrigo R. Duterte issued Administrative Order No. (AO) I l, creating an Oversight Committee for the entry of an NMP in the Philippine Telecommunications Market; WHEREAS, the Oversight Committee and the NTC decided that the best way to select the NMP would be through a public, open, and competitive selection process among qualified congressional franchise holders that are not, or related parties to, the dominant telecommunications players as defined in this Memorandum Circular (MC). https://ntc.gov.ph/wp-content/uploads/2018/MC/MC-09-09-2018.pdf
Project Preparation Project Scope (main output)

“DITO has pledged to deliver internet services with a speed of 27 Mbps and provide network coverage to 37 percent of the population in its first year of operation.

By the fifth year, Dito is expected to supply an internet speed of 55 Mbps and cover 84 percent of the population.”

Environmental impact Not available
Land and settlement impact Not available
Contact details NTC Building, BIR Road, East Triangle, Diliman Quezon City. Email: [email protected]; website: http://www.ntc.gov.ph https://ntc.gov.ph/wp-content/uploads/2018/MC/MC-09-09-2018.pdf
Funding sources Mindanao Islamic Telephone (MISLATEL) Company, Inc. https://dict.gov.ph/president-duterte-awards-cpcn-to-mislatel-consortium/
Project Budget They [Mislatel] also intend to spend 257 Billion pesos in infrastructure and service rollout during said period. https://dict.gov.ph/president-duterte-awards-cpcn-to-mislatel-consortium/
Project budget approval date Not available
Project Completion Project status (current) DITO, which was launched commercially last March 8 [2021] in various areas in Visayas and Mindanao, was selected as the new major player in the Philippine telecommunications market. https://www.pna.gov.ph/articles/1140666
Completion cost (projected) Not available
Completion date (projected) DITO aims to begin commercial operations in March 2021. https://www.pna.gov.ph/articles/1113235
Scope at completion  The winning consortium of the third telco bid, comprised of Mislatel, Udenna Corporation, China Telecom, and Chelsea Logistics, promised to offer 55 Mbps of Internet speed that covers 84.01% of the population in five years. https://dict.gov.ph/president-duterte-awards-cpcn-to-mislatel-consortium/
Reasons for project changes Not available
Reference to audit and evaluation reports The National Telecommunications Commission (NTC) declared DITO Telecommunity Corp. compliant with its requirement to cover 37.03% of the country’s population and provide a minimum average broadband speed of 27 megabits per second (Mbps) in its first year of service. https://www.bworldonline.com/ntc-declares-dito-compliant-with-speeds-coverage-commitments/
Procurement Procuring entity National Telecommunications Commission https://ntc.gov.ph/wp-content/uploads/2018/MC/NTC-NMP-ITP-with-annexes-and-PCC-PDF-Format-for-website-20181008-2200.pdf
Procuring entity contact details NTC Building, BIR Road, East Triangle, Diliman Quezon City. Email: [email protected]; website: http://www.ntc.gov.ph https://ntc.gov.ph/wp-content/uploads/2018/MC/NTC-NMP-ITP-with-annexes-and-PCC-PDF-Format-for-website-20181008-2200.pdf
Procurement process The OC decided that the best way to select the NMP would be through a public, open, and competitive selection process among qualified CF holders that are not, or related parties to, the dominant telecommunications players as will be defined in the memorandum circular. https://ntc.gov.ph/wp-content/uploads/2018/MC/NTC-NMP-ITP-with-annexes-and-PCC-PDF-Format-for-website-20181008-2200.pdf
Contract type Construction, installation, and operation of its telecommunications systems or facilities. https://www.pna.gov.ph/articles/1140666
Contract status (current) Led by the Department of Information and Communications Technology (DICT) and National Telecommunications Commission (NTC), the awarding of the CPCN officially greenlights the third telco’s operation in the country. https://dict.gov.ph/president-duterte-awards-cpcn-to-mislatel-consortium/
Number of firms tendering 3: PT&T, Sear Consortium, Mislatel https://www.rappler.com/business/disqualified-3rd-telco-players-philippines-slam-rules
Cost estimate Not available
Contract administration entity Not available
Contract title The Certificate of Public Convenience and Necessity https://dict.gov.ph/president-duterte-awards-cpcn-to-mislatel-consortium/
Contract firm(s) Mindanao Islamic Telephone Company, Inc https://dict.gov.ph/president-duterte-awards-cpcn-to-mislatel-consortium/
Contract price Not available
Contract scope of work The winning consortium of the third telco bid, comprised of Mislatel, Udenna Corporation, China Telecom, and Chelsea Logistics, promised to offer 55 Mbps of Internet speed that covers 84.01% of the population in five years. https://dict.gov.ph/president-duterte-awards-cpcn-to-mislatel-consortium/
Contract start date and duration July 8, 2019-2024 https://dict.gov.ph/president-duterte-awards-cpcn-to-mislatel-consortium/
Implementation Variation to contract price Not available
Escalation of contract price Not available
Variation to contract duration Not available
Variation to contract scope Not available
Reasons for price changes Not available
Reasons for scope & duration changes Not available


DITO Telecommunity – Philippines Narrative