PTI offers new commitments to end dispute

Posted on Dec 19 2004

The long-standing dispute regarding the proposed purchase of Verizon may be nearing an end, as prospective purchaser Pacific Telecom Inc. disclosed that it is willing to bind itself to new commitments in addition to the 27-point agreement it reached with the CNMI government.

PTI vice president for business development Jose Ricardo P. R. Delgado said his company would lay out new commitments, which would be memorialized in a letter being drafted by the company’s vice chairman, Jovino Lorenzo.

Recently, Gov. Juan N. Babauta’s lawyer, Assistant Attorney General James Livingstone, said that the dispute arising from the government’s request to divest Verizon of cable ownership would end if PTI makes a written commitment to voluntarily lower cable rates.

Livingstone also lauded Lorenzo’s statement that disclosed PTI’s plan to expand Verizon’s broadband capacities, enhance e-health, which allows live medical consultation from off-island doctors online, and e-learning.

“We at PTI are conscious of our social responsibility and will do all possible to help schools and hospitals by providing them broadband access and other forms of assistance. We understand its importance and will be the CNMI’s partner in education and health,” Delgado said.

“We view this relationship with the CNMI and its people as one for the long term. Anybody who has had this kind of relationship in business or in his or her personal life understands that to make it successful requires give and take. I don’t believe any strong relationship exists where only one party is on the receiving end,” he added.

Delgado urged Babauta and CNMI consumer counsel Brian Caldwell to ease their opposition to PTI’s proposed purchase of Verizon from Micronesian Telecommunications Corp.

He expressed confidence, however, that PTI and MTC would get CTC approval on their joint application for sale approval based on the meritorious grounds.

The only remaining hurdles that need to be resolved in the pending application include Verizon’s monopoly of the CNMI’s only submarine inter-island cable facility and PTI’s financial capability to respond to worst-, baseline- and best-case scenarios in the coming years.

On Sept. 21, 2004, Babauta and Caldwell asked the CTC to divest Verizon of 100-percent ownership of the cable, contending that the monopoly has resulted in higher telecommunication costs in the CNMI. They proposed that all the assets of the submarine network, including the submerged and terrestial fiber optic cable, be placed in a trust during the closing of the transaction between MTC and PTI.

They also asked that the CTC appoint a trustee, who should hold a public auction for ownership interests in the trust within 90 days. The government proposed that the possible bidding be held open for one week.

Under the proposal, the trustee will have the power to sell the assets or ownership interest of the trust, up to 33 percent of the total capacity currently available on the interisland cable. No party or combination of parties may acquire more than 33 percent of the total ownership interests or assets of the trust. Unsold portions of the trust will devolve back to Verizon’s ownership.

PTI and MTC filed the application for sale approval on Sept. 5, 2003. Despite the strong opposition by Babauta and Caldwell to the sale, the parties reached a 27-point settlement agreement in May 2004.

PTI agreed to invest a minimum of $20 million in capital expenditures during the five-year period immediately following the closing of the telecom deal. PTI also assured that there would be no local rate hike for two years from the transaction’s closing and that a trust fund would be established for the benefit of all Verizon employees. It also agreed to retain all existing Verizon employees in their respective positions.

The parties also agreed to put an end to inter-island long distance charges between Saipan, Tinian, and Rota—meaning the end of tolls for inter- and intra-island calls, including all phone calls and phones to ISP services.

The parties agreed on the separation of wholesale and retail portion of Verizon’s marketing operations and on the submission of an annual audit of financial statements to the CTC as well.

PTI also vowed to join the National Exchange Carrier Association as soon as possible upon closing the agreement.

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