BayanTel in tie-up talks with groups

The Lopez-owned Bayan Telecommunications Inc. (BayanTel) is currently in talks with some foreign groups in Asia involved in telecommunications over the possibility of a partnership in the mobile telephone service business in the Philippines.

BayanTel also expects to enter into a restructuring agreement with its creditors (banks and bondholders) involving half a billion dollars in debts by early next year. Officials said a substantial agreement may be reached by the end of this year.

This as company officials emphasized that contrary to rumors, BayanTel is still very much alive and is, in fact, looking at over $100 million in net revenues and $50 million in earnings before interest, taxes, amortization and depreciation (EBITDA) this year. The company, which is still saddled with about $477 million in debts due to massive telecommunications infrastructure investments in the mid-90s, also plans to invest about a billion pesos this year and more next year for data products and services.

BayanTel chief executive officer Eugenio Lopez III said rumors of the company’s demise are grossly exaggerated, even as he emphasized that their partner Verizon, the largest telecom company in the US, is still every much with BayanTel. "Verizon is based in New York and New Yorkers are very much like Filipinos. They are street-savvy, fast, and they don’t like to lose," he stressed.

Lopez’s assurance about Verizon’s continued support for BayanTel came on the heels of the move by BayanTel investors JP Morgan Partners LP and Chase Manhattan International Finance Ltd., as well as the Asian Infrastructure Fund of the American Insurance Group (Asia), to pull out their investments by exercising their put option for the repurchase of their shares by BayanTel parent Benpres. They are also exercising their option to require Benpres to acquire Class A shares in BayanTel.

Company chief consultant Tunde Fafunwa told The STAR that Benpres has already take this (exercise of option into account) as far as the balance sheet management and restructuring that the latter is doing. "We are working on it and exploring all our options," he said.

It will be recalled that the Supreme Court has lifted any prohibition for BayanTel to finally use its provisional authority to engage in the cellular mobile telephone system (CMTS) business, but officials admit that it does not have the funds to go into the capital-intensive business, nor is parent company Benpres Holdings interested to put in additional funds.

BayanTel chief finance officer Gary Olivar said that since they consider this provisional authority an asset, the company is now in talks with ‘people in Asia involved in telecommunications’ who are willing to put in not only money but also expertise if ever BayanTel decides to go into the CMTS business.

He said that rumors about BayanTel’s demise are quite premature and that "unfortunately for our competition, BayanTel is very much alive and kicking."

Olivar emphasized that the company already spent several million dollars last year to replace the back-up batteries that power their outside cabinets so that a BayanTel landline phone will not longer be going dead when sister company Meralco does. "Because of our network upgrades, we launched a money-back guarantee program among our local exchange subscribers so that if your phone service requires technical repairs, we promise to respond within 24 hours or else we will pay you one P100 for every day of delay," he said.