Senate wants Smart to conduct IPO

By Lucia Edna P. de Guzman Posted on March 02, 2017 http://www.bworldonline.com/content.php?section=Corporate&title=senate-wants-smart-to-conduct-ipo&id=141524 THE SENATE public services committee wants Smart Communications, Inc. to conduct an initial public offering (IPO), as it included this requirement in the measure extending the company’s legislative franchise for another 25 years. Senator Grace Poe, chairman of the public services committee, endorsed the measure for plenary approval on Wednesday afternoon, less than three weeks before Smart’s franchise is set to expire on March 27. “It would have been expedient for the legislature to roll over Smart’s franchise by simply extending it. But we know that obsolescence does not only plague technology but regulatory frameworks as well… This is why in addition to endorsing its approval, we are also proposing amendments to House Bill 4637,” she said in her sponsorship speech, referring to the House measure approved last Jan. 17. One of the changes is the retention of the provision under Smart’s original franchise that required the company 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. HB 4637 had exempted Smart from the IPO requirement since it is wholly owned by a publicly listed company, PLDT, Inc. “During the hearings, we have emphatically conveyed to the Securities and Exchange Commission the sense of the Senate that it must enforce this provision of the law and that any failure on the part of the grantee to comply must be penalized,” Ms. Poe said. The Senate version also deleted the term “co-use” in the application of the franchise, “so that this seemingly innocuous word cannot be invoked in employing anti-competition practices,” Ms. Poe said. Also, a provision was added in the legislative franchise requiring Smart to install facilities and expand its coverage in areas not yet served, particularly calamity-prone areas. The Senate version also required Smart to upgrade and program its entire infrastructure to enable it to send free mobile disaster alerts. “We are requiring congressional consent on the sale, lease, transfer, usufruct or assignment of the franchise, except in certain cases,” Ms. Poe said. Ms. Poe acknowledged the committee report, which was signed by 15 senators, did not include any provisions requiring Smart to improve its performance and service, as well as impose penalties for “lousy service.” “But unfortunately these do not fall within the ambit of a legislative franchise. It is a function of regulation,” she said. Majority Floor Leader Vicente C. Sotto suspended consideration of Smart’s legislative franchise to give time to other members of the Senate to study the amendments. The 25-year franchise of Smart is set to expire on March 27. Congress will adjourn its current session on March 17. Smart failed to have its franchise extended in the previous Congress as the Senate deferred the adoption of the bill from the House of Representatives due to questions from some lawmakers, particularly the “standing objection” of Mr. Sotto, who was Deputy Minority Leader at that time. 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.