Smart, GMA Network get 25-year franchise renewal By Jovee Marie de la Cruz - JANUARY 16, 2017

The House of Representatives on Monday approved on third and final reading two measures renewing for another 25 years the franchises granted to Smart Communications and GMA Network.
The franchises of Smart Communications and GMA Network will respectively expire on March 27 and 20.
House Bill 4637 seeks to amend Republic Act (RA) 7294, or “an act granting Smart Information Technologies Inc. a franchise to establish, install, maintain, lease and operate integrated telecommunications/computer/electronics services and stations throughout the Philippines for public domestic and international telecommunications, and for other purposes.”
Under the bill, Smart Communications and its successors or assignees shall be liable to pay the same taxes on their real estate, buildings and personal property, exclusive of this franchise, as other persons or corporations that are now or hereafter may be required by law to pay, except radio telecommunications and electronic communications equipment, machinery and spare parts needed in connection with the business of the grantee, which shall be exempt from customs duties, tariffs and other taxes, as well as those declared exempt in this section.
It added that the grantee, its successors or assignees shall pay a value-added tax on all gross receipts of the business transacted under this franchise by the grantee, its successors or assignees in the Philippines in lieu of any and all taxes of any kind, nature or description levied, established or collected by an authority whatsoever, including, but not limited to, city, municipal, provincial or national, from which the grantee is hereby expressly exempted effective from the date of the approval of this act.
The bill said failure of Smart to submit requisite annual report to Congress shall be penalized by a fine in the amount of P500 per working day of noncompliance. The fine shall be collected by the National Telecommunications Commission (NTC) from the delinquent franchise grantee separate from the reportorial penalties imposed by the NTC.
Meanwhile, House Bill 4631 said subject to the provisions of the Constitution and applicable laws, rules and regulation the franchise granted to GMA Network, its successors or assignees under RA 7252 to construct, install, establish, operate and maintain for commercial purposes and in the public interest radio and television broadcasting stations in the Philippines, including digital television system, operation of any station or facility in the interest of public safety, security and public welfare or to authorize the temporary use and operation thereof by any agency of the government, upon due compensation to the grantee, for the use of the stations or facilities during the period when they shall be so operated.
“This franchise shall be in effect for 25 years from the effectivity of this act, unless sooner revoked or canceled. In the event the grantee fails to operate continuously for two years, this franchise shall be deemed ipso facto revoked,” the bill added.
The two bills will be submitted to the Senate for its own deliberations.

House passes Smart franchise extension

THE House of Representatives on Monday approved on third and final reading the measure seeking to extend the franchise of Smart Communications, Inc., which expires this year, by another 25 years.
During Monday’s session, 221 solons voted in favor of House Bill (HB) 4637, which extends Smart’s franchise for another 25 years, while 10 voted against.

The bill introduced several amendments to Republic Act 7294, which originally granted Smart a 25-year legislative franchise in 1992.

Under the original franchise, Smart was required 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 effectivity of the act.

However, this was changed under HB 4637 with the addition of the phrase: “unless the grantee is wholly owned by a publicly listed company.” This effectively exempts Smart, a unit of listed PLDT, Inc., from the initial public offering requirement.

A new “equality clause” was also added to Smart’s legislative franchise bill.

“If any franchise for telecommunications services awarded or granted by Congress of the Philippines or any amendment or revision to any franchise for telecommunications services, subsequent to the approval of this Act, provide terms, privileges, exemptions, exceptions and conditions that are more favorable and beneficial than those contained in or otherwise granted under this Act, then the same terms, privileges, exemptions, exceptions, or conditions, shall, ipso facto, accrue to the herein grantee and be deemed part of this act,” the equality clause read.

The measure also exempts Smart from paying Customs duties, tariffs and taxes on radio telecommunications and electronic communications equipment.

“(Smart) shall be liable to pay the same taxes on their real estate, buildings and personal property, exclusive of this franchise, as other persons or corporations which are now or hereafter may be required by law to pay, except radio telecommunications and electronic communications equipment, machinery and spare parts needed in connection with the business of the grantee which shall be exempt from customs duties, tariffs and other taxes,” the amended Section 9 read.

HB 4367 also requires Smart to inform Congress of “any sale, lease, transfer, grant of usufruct, or assignment of franchise or the rights or privileges, acquired thereunder or the merger or transfer of the controlling interest of the grantee, within 60 days after the completion of the transaction.” Smart’s failure to report the change of ownership to Congress “renders the franchise ipso facto revoked,” the bill stated.

The House of Representatives had approved Smart’s franchise extension on third and final reading during the 16th Congress, but the Senate did not pass the counterpart measure.

Meanwhile, the House also approved on third and final reading the measure extending GMA Network, Inc.’s franchise by another 25 years.

Smart and GMA’s legislative franchise bills will now be sent to the Senate.

Smart is the mobile unit of PLDT, Inc. 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. -- Raynan F. Javil