PLDT to recoup up to PHP1bn from sale of CURE 3G frequencies

1 Dec 2011

Malaya Business Insight writes that dominant operator Philippine Long Distance Telephone Company (PLDT) says it expects to recoup up to PHP1 billion (USD23 million) from the sale of its unit, Connectivity Unlimited Resources Enterprise’s (CURE’s), 3G mobile frequencies. PLDT president Napoleon Nazareno is quoted as saying: ‘That’s still being studied … most likely it should be within a billion peso in that neighbourhood, that is the cost. That’s the earlier estimate but we need to really look at it very carefully.’ The Filipino telecoms watchdog, the National Telecommunications Commission (NTC), has told PLDT it has nine months in which to transfer all of CURE’s assets and customer base to sister firm Smart Communications, following which within six months it will launch a tender for the sale of the 3G frequencies to allow PLDT to recover the investment.

On 27 October this year the NTC rubber-stamped the takeover of Digital Telecommunication Inc (Digitel) by PLDT, but imposed a strict condition on the deal to ensure that a monopoly situation should not develop. The condition that PLDT offload CURE’s 10MHz of 3G spectrum was one condition of the deal, and the sale will now be supervised by the NTC through a competitive bidding process open to ‘duly enfranchised and qualified public telecommunication entities’.

The NTC aims to hold the auction by 2013, with PLDT barred from taking part. ‘A minimum price will be prescribed to allow Smart to recover its investment in acquiring, developing and operating CURE. In the event that the actual proceeds from the Divestment Sale exceed the Cost Recovery Amount, PLDT will pay the NTC as fee for supervising the Divestment Sale, at least 50% of such excess less government fees and taxes payable as a consequence of the Divestment Sale, the regulator said in a statement.

CURE launched commercial operations in the Philippines in June 2007. Smart Communications, a subsidiary of PLDT, paid PHP419.54 million to buy the unit from PH Communications Holdings Corp (which held a 96.57% stake) and Francom Holdings (3.43%). CURE, which offers services under the brand name Red Mobile, counted 1.608 million subscribers at 30 September 2011. The paper also notes that, aside from the stipulation that PLDT sell the 3G spectrum, the dominant operator will be required to ensure that its new Digitel acquisition continues to deliver nationwide ‘unlimited’ offerings and that PLDT keeps separate Digitel’s mobile brand Sun Cellular and ‘continue serving specific market segments specially those who preferred unlimited type of services’.