Who’s really behind Mislatel Consortium, the Philippines third telco firm?

November 8, 2018 - 2:43 PM
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Signs of China Telecom and China Mobile and China Unicom
Signs of China Telecom and China Mobile and China Unicom are seen during the China International Import Expo (CIIE), at the National Exhibition and Convention Center in Shanghai, China November 5, 2018. (REUTERS/Aly Song)

Mislatel Consortium being granted a license as the Philippines’ third telecommunications company is being criticized online because it is comprised of businesses that are allied with the President Rodrigo Duterte.

Mislatel is a consortium of Davao tycoon Dennis Uy’s companies (Udenna Corporation and  Chelsea Logistics Holdings Corporation), local firm Mindanao Islamic Telephone Corporation and China’s own provider, the China Telecom.

The search for a third company to challenge the duopoloy of Globe Telecom and PLDT-Smart to improve the country’s internet connectivity has been one of the priorities of the Duterte administration.

Questions and controversies

Mislatel bested three groups in NTC’s selection process on Wednesday and garnered 456.80 points out of 500 points based on the highest committed level of service selection model.

Before it was formed, the provisional bid was only from Uy’s companies.

Then, Udenna and Chelsea announced that they have teamed up with China Telecom and the Mindanao-based franchise holder.

One Twitter user observed that of the businesses in the consortium, it seemed that only the state-owned carrier from China has experience in the telecommunications industry.

Others brought up China Telecom’s controversial past that involves supposed hacking of internet networks in many parts of the world.

There were originally 10 bidders aspiring to be the country’s third telecom provider, but only three submitted formal offers to the government.

The other two—Philippine Telegraph and Telephone Corporation and the SEAR Telecom Consortium led by former Ilocos Sur Governor Luis “Chavit” Singson—were disqualified due to alleged incomplete documents.

Both parties were allowed to file their respective motion for consideration to NTC within three days. NTC also has three days to act on it.

New telco player

In a statement, Mislatel vowed that the companies it comprises will be effective in providing the much-needed improvement of the internet system in the country.

China Telecom

Among them, China Telecom is the only foreign partner and the only telecommunications firm, which is considered as one of the largest in the world.

However, it has also been plagued with many cyber security allegations since 2010.

In April 2010, a report from the US-China Economic and Security Review revealed that China Telecom hijacked and rerouted 15 percent of the world’s web traffic into its own servers for 18 minutes.

It affected many government websites in the United States, including the Senate and the Department of Defense.

Such incident posed a cyber security risk and fear that China may have done this to harvest sensitive information online.

Tech website Ars Technica described it as “IP hijacking” or a routing glitch in the worldwide system of IP addresses.

This year, China Telecom was accused anew of usurping “the internet backbone” of many western countries, according to findings of another research paper.

The study conducted by the US Naval War College and Tel Aviv University found that the state-owned provider had been detouring or misdirecting internet traffic into its own web infrastructure for years.

These findings were confirmed by think tank Oracle last October.

The Davao businessman

Uy, the man behind the country’s third telco player, was introduced as a businessman from Davao city, Duterte’s home turf, and the president’s staunch supporter as well.

A graduate of De La Salle University in Manila, he was an entrepreneur with numerous business deals, such as with FamilyMart, Petronas Energy and Enderun Colleges.

During the campaign period on May 2016, Uy had reportedly donated P30 million for Duterte’s presidency.

Uy’s Udenna is a Davao-based holding company that trades and distributes petroleum products.

Meanwhile, Chelsea is its logistics and transport arm.

The local franchise holder

Mindanao Islamic Telephone Company had been granted a franchise to construct and operate a telecommunications system by virtue of Republic Act No. 8627 back in April 1998. This franchise is set to expire in 2023.

It was also supposed to be part of Tier One Communications, a rising Mindanao-based internet carrier, as potential bidders. As it turned out, Tier One joined forces with Singson’s group.