Bayan assets to be consolidated under MTI

MANILA, Philippines - Lopez-owned Bayan Communications and Multi-Media Telephony Inc. (MTI) have entered into an agreement under which all assets and operations of Bayan will be eventually consolidated under MTI.

In its filing with the Court of Appeals, Express Telecommunications (Extelcom) revealed a July 2009 agreement between the two companies covering a “proposed series of transactions for a wide-area voice, video, data and content mobile service using available technologies, such as but not limited to 3G (third generation of mobile communications).”

Extelcom said that under this “co-branding and revenue sharing arrangement,” all assets and operations of Bayan would be consolidated under MTI.

It likewise disclosed that ownership is also consolidated under the agreement, with Bayan owning 65 percent and MTI owning 35 percent of the shareholdings, “subject to dilution.”

Bayan spokesperson John Rojo confirmed that there is a network co-sharing agreement entered into with MTI, but that as far as he knows, it only covers the wireless area network (WAN) since both Bayan and MTI use CDMA technology.

“The sharing of network on CDMA is ongoing but Bayan last year also started rolling out its own network. So our network includes that of Bayan and MTI,” he said.

But Rojo said he is not aware if the agreement covers ownership and transfer of assets to MTI.

MTI legal counsel Jorenz Tanada, in a telephone interview, also said he is not aware of any document submitted by them to the court disclosing such agreement. “I will have to check with the court dockets but I am not aware of a 2009 agreement,” he added.

 Extelcom has accused MTI of forging an alliance with Bayan to put the latter’s creditors as well as other bidders of the last 3G frequency at a disadvantage.

 The strategy employed by MTI and Bayan was revealed by Extelcom in its opposition to a petition filed by MTI before the CA to force regulators, particularly the National Telecommunications Commission (NTC) to grant it the last 3G frequency.

 Extelcom pointed out that there is more than meets the eye in MTI’s obstinate insistence to stick to the old 3G award process. It added that MTI, “in confabulation with a ‘respondent’ in this case, Bayantel, has not thought twice of employing underhanded tactics in its earnest desire to gain headway in the telecommunications market.”

 Were this “new and improved” merged personalities of MTI and Bayantel to apply for frequency assignment under the 2005 3G rules, Extelcom said they would have been disqualified as “associated applicants.” They would likewise not qualify under the new 3G rules, which also imposes the same disqualification clause.

 It noted that MTI’s court filing showed that it had entered into a “mutual understanding” with Bayantel, which is also asking the court to grant it the last 3G frequency.

 “This constitutes, at the very least, a joint venture agreement, as the parties thereto actually anticipate capital infusion in a separate and distinct entity that would be exited via PSE listing,’” Extelcom said.

 Extelcom pointed out that even Bayantel’s creditors, all of which are waiting for the satisfaction of their credit under Bayantel’s rehabilitation plan, would have difficulty executing upon the assets of Bayantel, if necessary, because, under its agreement with MTI, they would all be consolidated in “an entity separate and distinct from BTI.”

 Under this agreement MTI and Bayantel would have merged networks and expanded coverage, and enjoy the perfect fit of a contiguous spectrum allocation.

“Evidently, petitioner had to resort to excess verbiage in describing the agreement in its attempt to hide the real nature of its relationship with Bayantel, which is actually one of consolidation resulting in one telecommunications entity with a dual personality, both of which angling for the last remaining 3G frequency in two separate judicial proceedings,” Extelcom said.

 It added that MTI and Bayan employed a “pernicious and deceptive strategy to capture the last remaining frequency through separate petitions for review with the Court of Appeals brought by each of their dual personalities which had been existing since 2007... since such actions, deliberate and in bad faith because of the Bayan-MTI union since 2007, hew dangerously close to forum shopping.”

Extelcom said MTI and Bayan may not hide behind their separate juridical personalities because they had been acting as one merged or consolidated telecommunications entity.

In its petition, MTI wanted the NTC to use its old awarding rules to grant MTI the last 3G frequency instead of the new memorandum circular issued by the NTC to govern the awarding of the last 3G bandwidth.

MTI claimed that its recent partnerships with other telcos has boosted its technical and financial capabilities and it is now entitled to the last 3G frequency under the qualifications listed in the old MC.

However, Extelcom said “to so allow would be violative of the rudiments of due process and fair play.”

Aside from being a tacit admission that it was less qualified for the grant of a 3G frequency in 2005, Extelcom said “these beefing up activities of MTI runs afoul with the rule that judicial review of an administrative action should be the administrative record already in existence, not some new record made initially in the reviewing court.”