SMC seen 'serious' in telecom venture

Lenie Lectura, Business Mirror

Posted at Feb 19 2009 12:40 AM | Updated as of Feb 19 2009 08:40 AM

San Miguel Corp. (SMC) president and chief operating officer Ramon Ang joined Express Telecommunication Co. (Extelcom) officials in a meeting with commissioners of the National Telecommunications Commission (NTC) on Monday to show to the agency that the venture is serious in its reentry into the highly competitive cellular market.

Ang's presence, according to sources privy to the meeting, was a clear signal that the conglomerate intends to pursue plans to acquire Extelcom. The talks, said the sources, are nearing its final stages.

Perhaps the SMC management will decide in a few weeks the best approach on how to acquire the debt-ridden cellular firm.

"The options are to either buy out existing Extelcom shareholders or to purchase debts held by creditors. A management decision may be finalized in about two weeks," said a source privy to the deal.

Ang earlier confirmed that SMC was in talks to acquire Extelcom. He was, however, quick to add that nothing has been finalized yet.

Extelcom asked for a meeting with the NTC officials to discuss in detail its request for additional frequency assignment in line with its reentry into the market.

The company's request to be awarded with 10 megahertz (MHz) in the 925-935 bandwidth is crucial to its plan to upgrade the cellular network, which currently runs on an analog platform. This is needed so that Extelcom can offer mobile phone services on the GSM (global system for mobile communications) platform. The GSM technology is the platform being used by mobile giants Smart Communications Inc. and Globe Telecom Inc.

Extelcom plans to utilize its current frequency assignment, in particular the 880-890 MHz spectrum, and pair this with the 825-935 bandwidth so it can offer cellular mobile telephone system (CMTS) services on the GSM platform. Incidentally, the frequency band which Extelcom is eyeing has been identified by the International Telecommunications Union as suitable for offering CMTS services on the GSM platform. These two frequency bands, if combined, are known as extended GSM frequencies.

"Extelcom is shifting from the defunct AMPS [advanced mobile phone system] technology platform to digital GSM platform," said the people privy to the meeting.

The company also assured the NTC it can further lower the rates of telecommunications services with its comeback. "Extelcom's reactivated presence will introduce to the market the much needed and awaited healthy competition needed in the Philippine telecommunications industry," said Extelcom officer-in-charge Luisito Sapiera.

Sources said Extelcom's reentry will once again trigger another round of price war in the market, similar to one that happened when Sun Cellular entered the fray. Sun Cellular, the mobile brand of the Gokongwei group's Digital Telecommunications, initiated unlimited call and text price offerings in the market. Smart and Globe eventually followed suit.

"The reentry of a reorganized Extelcom into the CMTS business can only further foster healthy competition in the telecommunications market and help trigger the next wave of much-needed changes in the Philippine market," said Sapiera.

Extelcom is undergoing restructuring. The company stated in its rehab report that it is need of a "white knight" that can put in the needed capital to modernize its facilities.

The company also said that it now has the resources to pay for the fees for the frequency use.

"A rehabilitation plan has already been approved and the financial restructuring has been successfully completed. Extelcom strongly believes and can show the NTC that its current proposals will allow it to make the best use of the relevant frequencies at this time, and can even bring the company out of rehabilitation within a shorter period than contemplated," the company said.