The Filipino telecoms regulator the National Telecommunications Commission (NTC) has asked the country’s leading mobile operator by subscribers, Smart Communications, to explain its reasons for not complying with the part of the Public Telecommunications Policy Act that requires telcos to sell shares to the public. According to reports from INQ7.net, Smart, a wholly owned unit of incumbent fixed line operator Philippine Long Distance Telephone (PLDT), was meant to launch an initial public offering (IPO) by August 2004. The regulator, which sent a letter on the matter to the company in August, is growing impatient. NTC Commissioner Ronald Solis said: ‘We have brought this matter several times to attention of Smart, even Congress has brought it up’. He added that he has advised his legal team to study Smart’s response to see ‘what course of action we will take’.
Earlier this month Napoleon Nazareno, the president of PLDT, already ruled out any likelihood of the company listing Smart Communications to raise funds. Nazareno said that the unit’s market value was ‘fully reflected’ in the parent company, which is already listed on the Manila and New York stock exchanges. The PLDT supremo added that his company has a solid balance sheet with USD800 million in free cash and a net debt gearing of less than one. Nazareno said that he was committed to raising shareholders’ dividends and was looking at paying out 60% of its core earnings as dividends this year, up from 50% last year.
Smart’s head of legal affairs Rogelio Quevedo has added that the franchise provision on IPOs contained within the Act was not mandatory. ‘No penalty is imposed under for any failure to conduct offering of shares within the stated period,’ he said. Smart officials argue that the company’s decision to defer its IPO is based mainly on ‘generally accepted business considerations’.