‘Investors watching how Verizon sale will turn out’

Citing reports that the Philippine government is closely monitoring developments in the pending application to approve the sale of Verizon, House Speaker Benigno Fitial urged the Commonwealth Telecommunications Commission to approve the telecom deal, saying that its decision would have great impact on foreign investors.

Fitial, who attended yesterday’s CTC board meeting at the governor’s conference room in Capitol Hill, also said the House would address the commission’s funding problem when it convenes next Wednesday to possibly pass the government’s Fiscal Year 2005 budget.

“The public interest is well served and that’s the main line,” Fitial said. Besides the requested budget allotment of $400,000 by the CTC, Fitial also noted Verizon’s willingness to increase its franchise fee payments from 0.5 percent to 2.5 percent of its annual earnings.

The pending application for approval of the sale inched closer to a determination by the CTC, after Economics.com completed its financial analysis that run projections for best case, worst case, and baseline scenarios.

Within 14 days, CTC executive director Adam Turner said Delloitte and Touche would complete the full audit report that would detail Pacific Telecom Inc.’s financial capability to respond to these scenarios once the company takes over Verizon’s operations.

“We’ve taken too long,” Turner said, adding that the process has served the public interest well. “We’re getting to a point where we have a good settlement.”

The issue on Verizon’s sole ownership of the only fiber optic cable in the CNMI remains pending, with the CTC deciding to address written questions to Micronesian Telecommunications Corp. and PTI, as well to intervenors Gov. Juan N. Babauta and CNMI consumer counsel Brian Caldwell.

One of the questions relate to CTC’s jurisdiction over the cable, amid a request by the governor and Caldwell to divest Verizon of part-ownership of the facility.

The intervenors have proposed that all the assets of the submarine network, including the submerged and terrestial fiber optic cable, be placed in a trust during the closing of the transaction between MTC and PTI. They asked that the CTC appoint a trustee, who should hold a public auction for ownership interests in the trust within 90 days.

Under the proposal, the trustee will have the power to sell the assets or ownership interest of the trust, up to 33 percent of the total capacity currently available on the interisland cable. No party or combination of parties may acquire more than 33 percent of the total ownership interests or assets of the trust. Unsold portions of the trust will devolve back to Verizon’s ownership.

Babauta’s lawyer, James Livingstone, said the parties in the pending application for approval should be given time to prepare and argue their respective points in connection with CTC’s questions.

MTC and PTI’s lawyers insisted that the matter be discussed in yesterday’s meeting. “We came prepared to answer questions if you have some,” said Marcia Schultz, one of the companies’ attorneys.

A tentative deadline of Dec. 15 has been set to answer CTC’s questions.

PTI vice chair Jovino G. Lorenzo also attended yesterday’s board meeting and pushed for the approval of the sale.

During the period for public comments, Lorenzo said the sale would also pave the way for additional investments in the CNMI, such as call centers.

Lorenzo said PTI also plans to expand Verizon’s broadband capacities and enhance e-health, which allows live medical consultation from off-island doctors online. “These are just examples of what we’re looking at,” he said.

Meanwhile, Fitial also congratulated the CTC, as the telecom deal nears the commission’s approval or disapproval.

CTC chair Norman Tenorio stressed that, whatever decision the commission would arrive at, “I want to make sure it’s the correct one.”

“The general public will be the big winner. The goal of the CTC is to protect the public,” Tenorio said.