SUMMARY
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MANILA, Philippines – Globe Telecom Inc wants rival Philippine Long Distance Telephone Co (PLDT) to justify the price it is asking for a subsidiary it turned over to government, saying it is “too high.”
PLDT surrendered the 3G (third generation) license of Connectivity Unlimited Resource Enterprises Inc (Cure) to the National Telecommunications Commission (NTC) for public bidding. It told the regulator it expects to be paid at least P2.125 billion to recoup its investments in Cure.
“They should be able to justify the costs that they are including,” said Globe President Ernest Cu.
The amount is more than double the P1 billion that PLDT originally indicated. This means bidding for Cure will be more expensive for Globe and other companies that want to buy it.
PLDT turned over Cure’s 3G license, frequency and other related permits to the NTC as part of conditions for the approval of its acquisition of third-liner Digital Telecommunications Philippines Inc last year.
The NTC will sell Cure to prospective buyers via a competitive auction within 6 months from the date of turnover or until January 2013.
Bidders
Globe and San Miguel Corp have expressed their interest to participate in the bidding.
However, with the over P2-billion price tag, Cu could not say whether Globe will still go for it. “I don’t have a specific amount. They should be able to justify the costs. We will review our stance once the numbers are out.”
On the other hand, San Miguel President Ramon Ang confirmed they will join the bidding. “Yes, we will bid.”
It is not certain which of San Miguel’s telco units will make the bid.
San Miguel owns stakes in Bell Telecommunications Philippines Inc and Liberty Telecoms Holdings Inc. It also plans to invest in Express Telecommunications Inc.
Subject to review
NTC Commissioner Gamaliel Cordoba said PLDT’s floor price for Cure will be reviewed.
“The proposed recovery amount for CURE will still be reviewed based on their audited financial statement,” he said.
He said the NTC will conduct the review “when we get hold of the necessary papers to back their quoted price tag.”
In the meantime, the agency is preparing the terms of reference (TOR) for the auction. Cordoba said he sees no delay in Cure’s bidding. “The period of 6 months by which we should craft the TOR and consequently successfully sell CURE is sufficient.”
Smart Communications Inc legal and regulatory department head Enrico Español said the price they are asking for Cure will cover PLDT’s investments, including the $10-million acquisition price of the company and P65 million annual spectrum user fees.
Smart, PLDT’s mobile phone unit, acquired Cure from the Ongpin family in 2008.
Aside from the bid price, Español said, “It is our position that it is only just and reasonable for the winning bidder to bear the costs of any and all taxes due on the transaction and its incidents, including capital gains tax, documentary stamp tax, value-added tax and withholding tax, considering that the sale is in compliance with the order of [the NTC].”
PLDT will use proceeds of the sale to fund its operating expenses. – Rappler.com
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