Lawmakers question possible security issues with Mislatel

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Metro Manila (CNN Philippines, November 27) — Some senators raised concern on the possible cybersecurity risks posed by the provisional new major telecommunications player Mislatel Consortium.

The ownership structure of the Mislatel Consortium is 35 percent Udenna Corporation, 25 percent Chelsea Logistics Holdings Corporation and 40 percent China Telecom. Chelsea Logistics Holdings Corporation is a subsidiary of Udenna Corporation. China Telecom is owned by the Chinese government.

In the consortium, Mindanao Islamic Telephone Company (MISLATEL) holds the Congressional franchise to operate a telecommunications business.

"Are we allowing a substantial control of a portion of our internet traffic for the purpose of furthering their interests? Do we believe that they will not obtain valuable information to stir up insurrection, or to prejudice the Filipino consumer," Senator Grace Poe, chair of the Senate committee on public services, said in a legislative hearing Tuesday.

Poe cited reports on how China Telecom was able to reroute internet traffic from other countries, which could have compromised the security of the United States and Canada.


Based on the Terms of Reference used in the selection process for the provisional new major player (NMP) in the telecommunications market, Mislatel has to undergo a 90-day evaluation period that includes a background check with the National Intelligence Coordinating Agency.

National Security Adviser Hermogenes Esperon, however, was ambiguous on how proof of traffic rerouting may affect rewarding Mislatel with the frequencies it needs to operate.

"It may or it may not. There are technical ways of countering that," Esperon said during the hearing.

Acting Secretary of the Department of Information and Communications Technology (DICT) Eliseo Rio said they would ask Mislatel to get a third party to conduct a cybersecurity audit on its network.

He added that Mislatel is also required to come up with a rollout plan that assures the government that it will not compromise national security.

"As part of their roll out plan, 90 days after being awarded as provisional NMP, they [have to] come up with a rollout plan that will assure the government that their network will not be a source of risk to our national security," Rio said.

A new bidding would be conducted if Mislatel is found to have violated any requirement in its application. It will be disqualified in the bidding and it will forfeit its billion-peso bond to the government.

READ: Mislatel: No compromise on national security in China Telecom partnership

CNN Philippines' Joyce Ilas and Luchi de Guzman contributed to this story.