NTC begins examination of CURE’s accounts prior to auction

4 Sep 2012

Filipino telecoms watchdog the National Telecommunications Commission (NTC) has begun examining the financial accounts of Connectivity Unlimited Resource Enterprise Inc (CURE), a former operating unit of Philippine Long Distance Telephone Company (PLDT), ahead of the sale of CURE’s 3G mobile frequency licence. The NTC intends to auction off the 10MHz spectrum licence held by CURE, which is being divested as part of the agreement surrounding PLDT’s acquisition of fellow Filipino operator Digital Telecommunications Inc (Digitel) from the Gokongwei group in 2011. According to Dennis R Babaran, director of NTC’s legal department, the auction process will kick off ‘in the next three months’. The official is on record as saying that the watchdog began gathering together CURE’s financial reports last week and will assess them this week to ‘determine if the amount that they [PLDT] are saying is right’.

PLDT hopes to recoup PHP2.125 billion (USD50.83 million) from its investment in CURE, more than double the figure it originally expected, prompting the NTC’s review. In a letter to the NTC in July, Enrico Espanol, head of legal affairs at PLDT subsidiary Smart Communications, said: ‘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.

Earlier in July, PLDT 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.