Extelcom accuses MTI, Bayantel of ‘collusion’ re: 3G licence

19 Jul 2010

Express Telecommunications Company (Express Telecom, or Extelcom) of the Philippines alleges that rival telcos Multimedia Telephony Inc (MTI) and Bayan Telecommunications (Bayantel) have a ‘mutual understanding’ in place to sidestep their creditors, as they look to seek an advantage in the race to acquire the last remaining 3G mobile frequencies being auctioned off by the government. Local newspaper the Business Mirror writes that Extelcom claims that in July 2009 MTI and Bayantel entered into a network co-sharing agreement which allows them to offer services over each other’s network infrastructure in areas not covered by themselves. For its part Bayantel confirmed there is an agreement in place, but argues that it only covers CDMA fixed-wireless landline services and not cellular. However, Extelcom disagrees and says the agreement goes much deeper and that MTI has a ‘mutual understanding’ with Bayantel vis a vis a ‘proposed series of transactions for a wide-area voice, video, data and content mobile service using available technologies, such as but not limited to 3G.’

In short, Extelcom argues the situation is in effect ‘a joint-venture agreement, as the parties thereto actually anticipate capital infusion in a separate and distinct entity that would be exited via listing [at the Philippine Stock Exchange].’ As such, even Bayantel’s creditors — all of which are waiting for the payment of their credit under Bayantel’s rehabilitation plan — would have difficulty executing upon the assets of Bayantel, and in the event of that happening, under its agreement with MTI, they would all be consolidated in ‘an entity separate and distinct from Bayantel.’ The newly merged entity could then move forward with a contiguous spectrum allocation which Extelcom claims would be underhand and would amount to a ‘pernicious and deceptive strategy to capture the last remaining frequency through separate petitions for review with the Court of Appeals brought by each of their dual personalities which had been existing since 2007’ since ‘such actions, deliberate and in bad faith because of the Bayantel-MTI union since 2007, hew dangerously close to forum shopping.’

Philippines