Biz Buzz: TTT: Third telco tug-of-war

Call it a precompetition of sorts. Before the aspiring players duke it out in the government’s third telco indicative, a different kind of contest needs to be resolved first.

We are, of course, referring to the two draft rules being championed by either the Department of Information and Communications Technology and Department of Finance. Their respective heads,

Eliseo Rio Jr. and Carlos Dominguez III, are chair and vice chair of the four-member oversight committee putting the terms of reference (TOR) together.

The TOR will determine how the government will award a valuable set of radio frequencies that a new player can use to provide mobile services and compete with PLDT Inc. and Globe Telecom.

As we have noted before, the DICT favors a process that rewards a group that promises better internet speed, coverage and investment while the DOF wants financial muscle.

The latter thinks the best way to ensure such is a landmark spectrum auction (a prospective P36.6 billion was mentioned in the TOR it favors).

How to break the deadlock? Why, just release both versions and the public will decide.

This early, it seems apparent that industry advocates and even potential bidders do not favor the auction model.

The concern is a new telco player will be burdened with heavy upfront costs even before it builds its first cell tower. (A new player will need to spend at least P200 billion to set up its network).

An auction could thus weaken a new player’s financial prospects in a business everyone can agree is challenging and where proper execution is just as valuable as the capital investment involved.

We understand the DOF’s desire for state revenue and for assurance that a new player had deep financial resources to succeed in this venture.

PLDT and Globe are together spending over P100 billion in 2018 alone. That’s no paltry sum by any means.

But it is unlikely that any new player would join this government initiative to merely hoard spectrum. That concern is addressed in both TORs. A new telco will be forced to return its frequencies to the government, without any conditions, if it merged with a dominant player.

The call for an auction at this stage also seems odd since we recall the administration’s early sentiments toward the Aquino administration-era practice of using bid premiums for Public-Private Partnership projects.

The context is different but the logic is similar. After all, in criticizing the premium, one of the reasons cited was the concern it would lead to more expensive services for the public.

How is an auction of spectrum assets different? And more importantly, between the DICT and DOF, whose model will prevail? Abangan. —MIGUEL R. CAMUS

New ‘business engineering’ doctorate

Having consistently topped the annual ranking of Jobstreet survey of “most desirable companies to work for” the last few years, San Miguel Corp. often gets first crack at the best students who graduate into the work force.

But SMC chief Ramon Ang wants to expand his hiring pool to way beyond the traditional preferences of employers to students from schools who may be inclined to work harder than their blue-, green- or maroon-blooded peers.

Speaking to the graduating class of the Far Eastern University last week, Ang invited the graduates to apply with the country’s largest conglomerate, saying that Tamaraws (after the school’s mascot) are particularly attractive to employers because they tend to stay in a company longer than, say, the more in-demand “blues” and “greens.”

Ang knows whence he speaks, of course. Amechanical engineering graduate of FEU in 1980, he is now a member of the Philippine and regional business elite, having engineered the transformation of SMC starting a decade ago from a traditional food and beverage giant to today’s multiindustry powerhouse: a true conglomerate whose total revenue accounts for 5 percent of the country’s economic output.

Because of this, Ang’s alma mater—owned by the Montinola family—conferred on him an honorary doctorate for “business engineering. ” Not bad, given that the school has produced some illustrious graduates like former Supreme Court Chief Justice Artemio

Panganiban, SM founder Henry Sy Sr., Philippine Airlines owner Lucio Tan, the late Alfonso Yuchengco of RCBC and Asia United Bank’s Ramon Sy.

While Ang breezed through his prepared speech, the audience was excited when he told them—off the cuff—about plans for San Miguel’s ongoing MRT 7 commuter train project, and its proposed international airport in Bulacan. The former is already being built, while the other is still bogged down in the regulatory approval mill because, apparently, there are some influential people who are out to derail it. But that’s another story. Watch this space. —DAXIM L. LUCAS

‘Endo’ versus outsourcing

Corporate Philippines has mostly veered away from illegal labor contractualization, a.k.a. “endo” (for “end of contact,” which means terminating a worker’s services before the sixth month of work to avoid having to make him or her a regular employee) amid President Duterte’s stern warning against this practice.

The issue now, according to Jollibee Foods Corp. chair and founder Tony Tancaktiong, is how much of a company’s operations would be outsourced.

In the case of Jollibee, Tancaktiong said all of its people were now regular employees of the company or of the service providers to which some staffing requirements were outsourced to.

“They are not allowed to use endo practices and we make sure we don’t allow that in the service provider,” he said.

From a cost perspective, Tancaktiong said there wasn’t much difference if certain functions were undertaken by regular staff or outsourced to a third party.

The advantage of outsourcing is the headroom it gives in terms of scheduling staff deployment given the seasonal peaks and troughs or even the volatility in intraday requirements, especially of a big service-oriented company like Jollibee.

“If you use outsource, [the service provider] can deploy their manpower anywhere. When we hire full time, we can’t deploy them [anytime, anywhere] anymore,” he said.

Similarly, staffing requirement is higher during the weekends than weekdays. On weekdays, Jollibee needs more people to serve during lunches and dinners than mornings and afternoons. “And when movies are showing blockbuster films, then you have more volume. So, it’s a science on how to schedule the ( people in the) store,” he said. —DORIS DUMLAOABADILLA

Historical MMYtribute

For the first time in history, the influential Management Association of the Philippines (MAP) paid tribute to all “MAP Management of the Year” (MMY) awardees. There are 41 of them since the now-annual MMYwas hatched 50 years ago (There were a few years when there was no awardee).

MMY recognizes outstanding achievements of any individual in the private sector or in government, who have exceptionally distinguished himself or herself in the practice of management.

Of the 41 MMY honorees, a dozen have passed away, including the very first MMY awardee, business icon Wash

ington Sycip (MMY 1967). The others are Geronimo Velasco, Henry Brimo, Jaime Ongpin, Vicente Paterno, Dante Santos, Roberto Villanueva, Ramon del Rosario Sr., Jose Fernandez Jr., Alfonso Yuchengco, David Consunji, Rizalino Navarro, Gabriel Singson and Rafael Buenaventura.

It’s worth mentioning that MMY has two notable women honorees: the SMgroup’s Tere

sita Sy-Coson (who won MMY in 2016 while her father Henry

Sy Sr. was MMY honoree in 1999) and former Philippine Economic Zone Authority chief

Lilia de Lima (MMY 2010), also a Ramon Magsaysay awardee.

Aside from the Sys, there were a few other fathers and offspring who became honorees in different years: Jaime

Zobel de Ayala (MMY 1987) and Jaime Augusto Zobel de Ayala

(MMY 2006); as well as Ramon del Rosario Sr. (MMY 1988) and Ramon del Rosario Jr. (MMY 2010). Then, there are siblings Rafael Buenaventura (MMY 2004) and Cesar Buenaventura (MMY 1985).

The following movers and shakers are likewise on the roster of MMY honorees: former Prime Minister Cesar Virata, Jose Soriano, Raul Concepcion, Oscar Hilado, Juan Santos, Delfin Lazaro, Oscar Lopez, Tony Tancaktiong, Jesus Tambunting, Manuel Pangilinan, George SK Ty, Jose Cuisia Jr., Antonino Aquino, Jesus Estanislao, Erramon Aboitiz, Aurelio Montinola III, Edgar Chua, Albert del Rosario, Amando Tetangco Jr. and John Gokongwei Jr.

In their honor, MAP Special Committee on Arts and Culture Eddie Yap organized a benefit concert with a flavor of Vienna on June 18, where the Manila Symphony Orchestra performed along with classically trained vocalists. The “MAP Ensemble Dancers”—consisting of gentlemen in black tie and ladies in long gowns and tiaras (mostly officers and members of MAP and their spouses)—also toasted the honorees and/or their representatives.

“The achievements of the 41 awardees we honor are as lofty as they are enduring,” Yap said.

“The MAP is pleased to gather for the very first time all the MMY awardees and their representatives as a fitting tribute for their accomplishments in leadership and management, and for serving as inspiration and role models for Filipino managers in their pursuit of excellence,” MAP president Ramoncito Fernandez said. —DORIS DUMLAO-ABADILLA INQ