BayanTel fails to meet target due to Extelcom performance

Bayan Telecommunications Holdings Corp. (BayanTel) failed to achieve a break even in revenues last year due to the poor performance of Express Telecommunications Co. (Extelcom) where it has a 46.6 percent stake.

Rodolfo Salazar, BayanTel president, pointed out that without the estimated P6 billion losses it incurred in the operations of Express Telecom during the past three years, the company would have achieved its goal as early as mid-1999.

"Express Telecom took a lot. The money placed there could have been used for BayanTel's expansion or even for other more profitable businesses. If we didn't get into Express Telecom, we would be enjoying profits now," he said.

In 1998, BayanTel reported a net loss of P1.34 billion, an amount which almost doubled last year due to the provisioning for Express Telecom.

As a result, the company could not hold an initial public offering despite a requirement by the National Telecommunications Commission (NTC) for all local exchange carriers (LECs) to go public within three years of operations.

The Philippine Stock Exchange (PSE), on the other hand, has a provision that a firm should have three years of profitability before it can be listed.

Despite Bayantel's huge investments in Express Telecom, it is barred by its Hong Kong-based strategic partner Millicom Asia from sharing in the cellular firm's management.

Salazar said that they have already talked to the new officials of Millicom Asia who are more open to a cooperation with BayanTel.

Although Millicom merely has a 40 percent stake in Express Telecom, it has formed an alliance with other shareholders, particularly the GMA Network group, thereby, allowing it to remove BayanTel from the picture.

BayanTel, Salazar said, is willing to take over Millicom's share but the latter is not budging for reasons unknown to the Lopez-owned company.

According to Salazar, the Philippines used to be very important to Millicom's worldwide operations, but the scenario has changed as the latter's business in other countries become more profitable.

"We don't understand why they are not willing to sell. We already made an offer several times but they refused to accept them. We then asked them to allow us to help in managing Express Telecom but they insist that they do it alone. They keep on asking us for money but they have not given us anything in return he explained.

Likewise, although BayanTel wanted to dispose off its shares in Express Telecom, nobody is interested to buy due to difficulties in dealing with Millicom.