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Corporate layering: Calida says ABS-CBN used defunct paging firm’s franchise to go into broadband without Congress OK

Solicitor General Jose Calida accused media giant ABS-CBN of using a defunct paging firm’s franchise, Multimedia Telephony Inc., without Congress approval to branch into the wireless business.

Solicitor General Jose Calida accused media giant ABS-CBN of using a defunct paging firm’s franchise, Multimedia Telephony Inc., without Congress approval to branch into the wireless business.

In his 63-page quo warranto case filed with the Supreme Court, Calida sought to revoke ABS-CBN Convergence Inc.’s 25-year franchise (which expires in 2022) for usurping Multimedia Telephony’s telecommunication franchise through an elaborate corporate layering scheme to avoid
mandatory approval from Congress.

ABS-CBN rode on Multimedia Telephony’s franchise to run ABS-CBN Mobile and a digital terrestrial television service under ABS-CBN TV Plus. (This was the Lopez family’s, majority owner of ABS-CBN, sort of comeback into telecommunication after its Bayantel venture went bankrupt in 2012).

“Not only are the circumstances surrounding the transfers of controlling interest of Multimedia Telephony suspicious, the transfers were made without the approval and authorization of Congress,” said Calida.

Multimedia Telephony was formed in 1995 to compete with paging firms Easycall, Pocketbell, and Beeper 150 (beepers faded with the emergence of text messaging). Multimedia Telephony was also given a license in 2005 to start a mobile phone service.

Calida said the corporate layering scheme started rolling with ABS-CBN’s purchase of Sapientis Holdings Corp. from PCCI Equities in 2010.

ABS-CBN then used Sapientis to buy Columbus Technology Inc. which owned 95 percent of Multimedia Telephony.

In 2011, the TV giant took control of Mutimedia Telephony after ABS-CBN/Sapientis raised its stake in Columbia to 70 percent.

In 2015, Calida said ABS-CBN “reincorporated” Multimedia Telephony into ABS-CBN Convergence to go into the wireless business. (ABS-CBN signed a five-year, network sharing deal with Globe Telecom to allow the TV giant to offer text, call and data services using Ayalas’ network. The deal was a bust and cut after three years). Calida said while this move could be perceived as “innocent”, he said this was patently ” illegal”

“The use by ABS CBN Convergence of the name of Multimedia Telephony is contrary to public policy, as it will only result in confusion and open the door to frauds and evasions and difficulties of administration and supervision. A corporation cannot use another corporation’s name to transact business,” Said Calida.

By violating the terms of its franchise, Calida said the SC should revoke ABS-CBN Convergence’s right to operate.

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