Senate OK’s Smart, GMA franchise extension

THE SENATE on Monday approved on third and final reading the bills extending the franchises granted to Smart Communications, Inc. and GMA Network, Inc.

Fifteen senators voted in favor of HB No. 4637, which extends by 25 years Smart’s legislative franchise, while Senators Ana Theresia Hontiveros- Baraquel and Panfilo M. Lacson voted against.

Smart’s current legislative franchise expires on March 27.

The Senate version introduced several amendments to the House-approved measure, including requiring Smart to make a public offering of at least 30% of its authorized capital stock in any securities exchange in the country within two years from its effectivity. The IPO requirement was dropped by the House.

PLDT, Inc. has maintained there is no need for its wireless subsidiary to conduct an initial public offering, saying “the listing obligation has been complied with when PLDT, a listed company with a public float of over 50%, acquired 100% of Smart Communications in March 2000.”

The Senate- approved bill also deleted the term “co- use” in the application of the franchise so that the word would not be invoked in anti- competition practices, recognizing the duopoly of Smart and rival Globe Telecom, Inc.

The requirement for Congressional consent “on the sale, lease, transfer, usufruct or assignment” of the franchise was also retained in the Senate version.

In explaining her negative vote, Ms. Hontiveros said she hoped the Senate could have passed a higher penalty in case of Smart fails to conduct an IPO.

“Considering that Smart has continuously failed to comply with this (IPO) requirement, we need a mechanism to guarantee compliance,” said Ms. Hontiveros. “In this case, what we proposed was for the franchise to be ipso facto revoked should Smart fail to list within two years.”

She also questioned the need for tax exemptions, particularly the substitution of value added tax ( VAT) for the 3% franchise tax.

“Given the nature of the VAT, this is a tax that can and will be passed directly to consumers, possibly making service even more expensive… Congress should consider every additional exemptions and privileges very carefully,” Ms. Hontiveros said.

Meanwhile, the Senate approved the measure renewing the legislative franchise of Republic Broadcasting System, Inc., which is now known as GMA Network, for another 25 years. Seventeen senators voted in favor of the bill, with no negative votes or abstentions.

The Senate version of the bill extending the franchise of GMA would require the network to provide free public service time — consisting of 10% of all its ad time — to the government to relay important public announcements and warnings.

The network was also required to make closed captioning available for its programs to assist in the functions of public information and education.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls. —