Globe curious on high cost of CURE’s PHP2bn valuation

13 Aug 2012

The Business Mirror in the Philippines writes that local telco Globe Telecom is asking rival Philippine Long Distance Telephone Company (PLDT) to justify how it arrived at the PHP2.125 billion (USD50.83 million) price tag for its former Connectivity Unlimited Resource Enterprises Inc (CURE) unit. In an SMS, Globe president Ernest Cu said that the PHP2 billion floor price set by PLDT is ‘too high’, and asks that the rival firm be made to ‘justify the costs that they are including’.

As previously reported by TeleGeography’s GlobalComms Update, PLDT’s PHP2 billion figure is more than double the figure it originally expected to recoup from the CURE investment. Enrico Espanol, head of legal affairs at PLDT subsidiary Smart Communications, is on record as telling the National Telecommunications Commission (NTC): ‘Please note that the cost recovery amount to which the PLDT Group is entitled, cannot be less than [PHP2.125 billion] to enable the PLDT Group to recover its investment in CURE.’ Espanol said the sum it is looking for includes the cost of its investments in the unit, as well as advances from Smart for operational costs and other funds received from stockholders and associated funding. Proceeds from the sale of CURE will be used by PLDT to partly bankroll operating expenses it added. The official also informed the watchdog that CURE has transferred its 1.1 million subscribers to Smart.

PLDT last month relinquished to the telecoms regulator the 3G licence owned by CURE as part of the conditions set down in its takeover of fellow Filipino operator Digital Telecommunications Inc (Digitel) from the Gokongwei group in 2011. The NTC now has until January 2013 to reallocate CURE’s 3G frequencies via a competitive auction process, with commissioner Gamaliel Cordoba on record as saying that the watchdog is already in the throes of drafting the terms and conditions for the tender, which will not ‘take long’. PLDT, which acquired CURE through its mobile arm Smart Communications from the Ongpin family in 2008, is barred from taking part in the auction.