Telco, airlines, railways, airports no longer public utilities under amended PSA

Last week, the House of Representatives ratified the bicam report of a bill that will amend the Public Service Act (PSA). House Bill No. 78 and Senate Bill 2094 have now reclassified the definition of “public utility”.

The amendment has now excluded telecommunications, domestic shipping, airports, subways and railways, expressways and tollways under the classification of public utility.

What does this mean? Once signed by the President, the abovementioned sectors are no longer restricted to 40% foreign ownership as stated in the Constitution. Any foreign company can directly invest in the Philippines in any of these sectors and be able to control 100% of its operation.

With this, it is possible for a new foreign telco to enter and compete in the Philippines without the restriction previously imposed in this sector (i.e, that it should be at least 60% Filipino owned and controlled). In short, more competition especially from foreign players.

This opens up a lot of possible scenarios. Singtel can increase its minority stake in Globe Telecom by as much as 100% and they can rename it to Globe Singtel or even Singtel Philippines if they want. The same can be said of Japanese mobile phone operator NTT DoCoMo can now increase its shareholdings in PLDT.

And it does not end there. Foreign investors can build their own airports, railways, and skyways and then operate and own 100% of it all. Imagine a Changi Airport Philippines in Sangley Point, a high-speed railway like the Tokaido Shinkansen from Ilocos Norte to Sorsogon fully owned and operated by Central Japan Railway Company. We’re dreaming but, yes, that will be possible once this amendment to the Public Service Act is signed by the President.

A copy of the Senate Bill No. 2094 can be found here 16.