NTC approaches audit commission concerning valuation of 3G licence

15 Dec 2015

Local press reports say that the Philippines’ industry regulator, the National Telecommunications Commission (NTC), has approached the Commission on Audit (COA) as it seeks to determine the appropriate value of the 3G licence it is seeking to auction off. The frequencies in question relate to the 3G concession relinquished by Philippine Long Distance Telephone Company (PLDT) three years ago – at the time they were assigned to its Connectivity Unlimited Resources Enterprise (CURE) unit and being used by sister company Smart Communications – as a precondition of the telco’s acquisition of Sun Cellular from the Gokongwei Group.

According to TeleGeography’s GlobalComms Database, CURE originally secured one of four 3G licences in January 2006. However, in 2008 the PLDT Group acquired CURE from a consortium helmed by former trade minister Roberto Ongpin for PHP419.54 million (USD9.1 million). In October 2011 the NTC ordered PLDT to relinquish CURE’s surplus 3G frequencies as part of its approval for PLDT’s takeover of Digitel and its Sun Cellular arm. PLDT has previously stated that it hopes to recoup as much as PHP1 billion of its CURE investment, but the process has dragged on interminably.

In July 2014 the regulator began the process of drawing up the bidding criteria for the auction of the surplus licence, confirming at the time that the watchdog and PLDT would each nominate a representative to assume a position on the bidding committee, with a third nominee selected between them to act as an auditor. The committee was to be tasked with deciding on the compensation owed to PLDT for its PHP2.125 billion investment in CURE, which briefly operated under the Red Mobile brand.

In the latest twist, however, NTC commissioner Gamaliel Cordoba has confirmed that the watchdog has approached the COA seeking its help to determine an accurate cost recovery amount (CRA) for the licence, that can be used as a basis for the auction’s asking price. The NTC hopes to have an answer by January 2016 which, as Cordoba points out, will be used as the compensation value to PLDT for its investment in CURE. The NTC is adamant that the 3G licence can still be auctioned off before the end of President Aquino’s term of office (May 2016).