3G applications of ‘Tonyboy’ firm, 4 others bucked

Existing cellular operators are opposing the application of AZ Communications, a company identified with businessman Antonio ‘Tonyboy’ Cojuangco, for a 3G (third generation of mobile communications technology) license, as well as four other applicants.

Globe Telecom, Smart Communications, and Digitel Mobile have also filed their respective oppositions before the National Telecommunications Commission (NTC) against the grant of 3G licenses to the five applicants, namely AZ Communications, Multi-Media Systems, Next Mobile, Cure, and Pacific, citing the lack of financial and technical qualifications to support their applications.

AZ Communications Network, a joint venture between a group associated with businessman Antonio Cojuangco and Lucent Technologies, had told the NTC that it will invest close to P30 billion ($553 million) to provide 3G mobile services in the Philippines within five years.

In its application before the NTC, the telco said it would spend P6 billion ($110 million) for capital investments in the first year, P11 billion ($ 203 million) and P8 billion ($147 million) on the second and third years and P1 billion ($18 million) more on the fourth and fifth years.

AZ Communications projects that on the first year alone, it would book P1.6 billion ($29 million) in revenue, which would jump to P9.9 billion ($182 million) on the second year. It plans to serve at least 200,000 subscribers by the end of its first year of commercial operations and then hit two million by the end of the fifth year.

However, Globe lawyers had said that it was not enough that AZ alleges that it has funds to go into 3G that will be sourced through borrowings from different sources. "The rules require that if the funding for the 3G rollout will be sourced from creditors, they will have to disclose who these sources are," Globe counsel Manuel Casino said.

AZ officials told The STAR that American firm Lucent is also putting in money into the 3G venture.

Casino disclosed that Globe is also opposing the applications of Multi-Media, Next Mobile, Cure, and Pacific for lack of financial and technical qualifications, since the rules require that the applicants must have experience in either 2G or 3G.

Next Mobile, a trunk-radio operator affiliated with Cashrounds, has said that it allotting P20 billion ($370 million) for the five-year rollout and operation of its planned 3G wireless network in the Philippines. The company would borrow P6.37 billion ($117 million) in the first three years of operation. It likewise plans to secure about P3 billion ($55.4 million) in supplier credit over five years while about P7.7 billion ($142 million) of expected revenue from operations starting the third year would be plowed back into operations.

The NTC said it would award five licenses to operate a 3G network next year. Existing cellular operators namely Globe, Smart, and Digitel Mobile are prequalified to apply for the 3G licenses while the non-CMTS (cellular mobile telephone system) license holders first have to prove their technical, financial, and legal qualifications during hearings to be conducted by the NTC to be qualified. If there are more five qualified applicants, NTC will have to bid out the frequencies.

Lopez-owned Bayan Telecommunications, which for many years has failed to put into commercial use its CMTS license for lack of funds, has also applied for a 3G license, prompting regulators to say they will no longer confiscate the firm’s unused 2G frequencies. According to BayanTel chief consultant Tunde Fafunwa, they will no longer roll out 2G but will instead leap to 3G services, and that the company will fund its 3G venture internally.