No to boom and bust

I had an interesting talk with Federal Land president Alfred Ty, younger son of banking, real estate, and automobile tycoon George Ty, who shared with us valuable insights about the state of the real property sector in the country.

Alfred, who is just slightly older than the 35-year-old company which he now heads (Federal Homes started in July 1972 and became Federal Land in 2002), disagrees with the notion that the property sector has a 10-year cycle and since the current boom started eight years ago, then we should be at the tail end.

Don’t be fooled by Alfred’s youth though. As corporate secretary of Metrobank, vice-chairman of Toyota Motors Philippines, and president of the Metrobank Group’s property arm, Alfred definitely knows what he’s talking about. His wearing several hats gives him the distinct advantage of seeing the business from different perspectives.

We can’t help but commiserate with pessimists who believe that the good times are about to end. After all, these are people who lost their shirts in the ‘90s when the real estate bubble burst.

But Alfred thinks otherwise. After all, he wouldn’t be investing P8 billion (initial investment in at least 10 new projects) over the next 12 months, and much more in the next few years (one of his projects is estimated to cost at least P20 billion) if he doesn’t believe that the fundamentals are strong and sound.

Assuming that there indeed is a 10-year cycle, he believes that this can definitely be extended for a longer period by government putting into place the needed policy environment.

Of course, the pessimists (victims of the ‘90s real estate disaster) may have failed to take into account the fact that the banks are healthier, more liquid, and are focusing on consumer lending, that developers are becoming more resourceful in tapping new markets here and abroad, that the Philippines is becoming a call center and BPO haven, and of course the phenomenon that is OFW remittances. Many of these were not present in the ‘90s.

There are more sectors (banking for one) that are investing in the real estate sector. More than 10 percent of OFW remittances is spent for buying real property. Almost all the big names in business have joined the property bandwagon. These are people who are not going to risk their names, reputation, and capital. Without doubt, the local property sector will be here for the long run.

Frequency matters

Raymond Moreno of publicly listed Liberty Telecoms Holdings called me up yesterday and wanted to clarify certain items that came out in this column last Sunday about alleged anomalous transfers by him of certain frequencies in cahoots with National Telecommunications Commission chief Abraham Abesamis.

For the sake of fairplay, I promised Raymond that his views will be taken up by me in today’s column.

First, Raymond says that any transfers of frequencies from Liberty to other telecom carriers were not made by the company but rather by the NTC which he said is within the commission’s authority if it believes that these frequencies are better used for other more promising applications.

He emphasizes that the frequencies are awarded to companies and not to individuals so he could not have possibly claimed these frequencies as personally belonging to him. 

One of the oldest telcos in the country, subsidiary Liberty Broadcasting Network (LBNI) established in 1964 with a congressional franchise to provide telecommunication and broadcasting services, has been accumulating radio frequencies for the past decades, giving it the largest number and some of the best performing frequencies for last mile connnection in the country.

Unfortunately, because frequencies are a limited resource and required for all wireless services, the NTC has opted to evaluate the use of these frequencies by all allocatees and in the past few years has transferred frequencies from the original allocatees who have either not utilized these or have not adopted new and better technology which would benefit from these bandwidth. (Note: The holdings company was established much later in 1994 to engage in real and personal property businesses and to offer voice and data communications through LBNI).

As part of this frequency accumulation, Liberty had a lot of 3G frequencies awarded by the NTC, which were later removed from the company and transferred to certain telcos some of which Moreno said up to now have not compensated Liberty for investments made to utilize these frequencies in the past.

Some of the frequencies held by Liberty were also converted from telecom use to television use, according to Moreno , as a result of which frequencies used to be held by Liberty were transferred by NTC to recipients like Iglesia ni Cristo for its UHF television channel.

(ePLDT president Ray Espinosa said in a text message that the group’s mobile television service MyTV is utilizing the UHF frequency of NBC Channel 41 which was used to broadcast MTV Philippines before.)

But Raymond emphasizes that the transfer of certain Liberty frequencies were not made during the time of NTC commissioner Abesamis and that not one frequency has been transferred since he took over the post.

The insinuation that Liberty may be engaged in some anomaly, he said, came at a time when the company is in talks with new investors who want to put in money into the company. Raymond insists that inspite of the court-approved rehabilitation, the company’s debts are still considerably smaller than its assets consisting of licenses and equipment.

He believes that Liberty has so much potential, which hopefully will be harnessed to the full when the new investors come in.

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