Minimum price for Cure is P2.1-B, says PLDT

MANILA, Philippines – If 3G frequency holder Connectivity Unlimited Resource Enterprises, Inc. (Cure) is sold below P2.125 billion, the government stands to lose significant revenue, said a top official of Cure’s previous owner Philippine Long Distance Telephone Co. (PLDT).  

PLDT president Napoleon Nazareno said that their quoted P2.125 billion recovery cost — which is part of the total floor price for the regulator will set — is final.  

“Why would we undersell ourselves? Even the government stands to make money,” Nazareno told reporters during a company event on August 25.

PLDT turned over Cure, which holds one of the limited 10MHz 3G frequency the government grants, to the National Telecommunications Commission (NTC) after the telco industry leader acquired another 10MHz 3G holder, Digitel, in October 2011.

The NTC will auction off Cure and its 3G frequency to interested buyers. The sale proceeds will be shared by NTC and PLDT.

PLDT wants to recover its investments in CURE, including, the $10 million acquisition price for CURE, the P65 million annual spectrum users’ fee, the advances from PLDT’s mobile arm, Smart Communications Inc., for operating requirements, and advances from stockholders and associated funding costs.

Thailand model

Nazareno said the NTC may want to look at Thailand’s style when it auctioned off licenses to operate the frequency spectrum used for 3G mobile phone service.
 
“When converted to Peso, the price of each frequency that will be auctioned off in Thailand costs P1.2 billion. So 10MHz frequency will costs P12 billion versus our P2.1 billion recovery cost,” said Nazareno.
 
“At least there is a basis now for the market price and it’s current. Anyone can check it out,” he added. ““They are both from the 2.1 gigahertz frequency spectrum used for 3G. So, it’s as close as apples to apples.”
 
The NTC said PLDT’s proposals are under review. “The proposed recovery amount for CURE will still be reviewed based on their audited financial statement,” said Gamaliel Codoba, the agency’s commissioner.
 
In the meantime the agency is preparing the terms of reference (TOR) for the auction. The timetable for the sale runs until January 2013.
 
Too high

Two groups have expressed interest in bidding for Cure’s 3G: PLDT’s rivals, Globe Telecom and the telecom units of conglomerate San Miguel Corp.

Ernest Cu, president of Ayala-led Globe Telecom Inc, had questioned PLDT’s P2.125 billion recovery price, stressing that this is “too high.”
 
“They should be able to justify the costs that they are including,” said Cu.
 
San Miguel’s président Ramon Ang has also said the group is considering participating in bidding for Cure.

San Miguel directly and indirectly owns Bell Telecommunications Philippines Inc. and Liberty Telecoms Holdings Inc. It planned to also invest in Express Telecommunications Inc.
 
PLDT, which is barred from the participating in the auction, is left with 25MHz of 3G frequency. Rival Globe has 10MHz. – Rappler.com