Verizon sale up by early February

The Babauta administration believes that an agreement on the Verizon sale to Pacific Telecommunication Inc. will soon be reached in early February.

“The governor is optimistic that the agreement can be reached with PTI that will seal the deal between Verizon and PTI,” said governor press secretary Peter A. Callaghan yesterday.

He said such agreement would also be “beneficial to the costumers in the CNMI.”

The Commonwealth Telecommunications Commission is scheduled to hear the final arguments from both parties on Jan. 31 or the first week of February.

“February is the deadline to hear arguments from both parties and consummate the sale between Verizon and PTI,” said Callaghan.

The administration official also said that an independent report was recently released guaranteeing that “whoever buys Verizon is inheriting a very healthy company.”

He declined to provide details, except to say that the study’s cost was jointly shouldered by PTI and CTC.

Assistant attorney general Jay Livingstone, who represents the governor on the issue, said yesterday that the report cannot be made public at this time. He indicated, though, that a summary of the report may be released eventually by PTI.

CTC chair Norman Tenorio earlier said that resolution on the Verizon sale has been delayed due to the lack of a financial audit by Deloitte Touche and Tohmatsu on PTI. The audit would show whether Pacific Telecom Inc. is capable to operate Verizon in the Commonwealth. The report was due for submission last week.

A source close to the negotiations said that CTC may be inclined to make the decision “with or without the audit.”

“That [audit] may be tackled separately from the sale,” said the source.

Likewise, the CTC may also opt to separately treat the issue on the divestiture of Verizon’s cable ownership. “That is crucial but it may be done after the sale,” said the source.

The CTC is expected to issue a ruling on the issue on Feb. 3.

The commission has asked lawyers from both parties—Marsha Schultz for PTI, Livingstone for Gov. Juan N. Babauta, and CNMI consumer counsel Brian R. Caldwell—to give their oral arguments on the divestiture of the cable asset on Jan. 31.

The governor has demanded that PTI divest 33 percent of Micronesia Telecommunications Corp.’s 100 percent ownership of the CNMI’s only fiber optic cable facility. MTC operates Verizon in the CNMI.

Caldwell said he and the governor maintain their position in favor of divestiture. They believe that Verizon’s sole ownership of the cable has led to increased prices of telecommunications services in the Commonwealth.

Caldwell and Livingstone 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 asked that the CTC appoint a trustee, who should hold a public auction for ownership interests in the trust within 90 days.

Verizon/ Micronesian Telecommunications Corp. and its buyer, PTI, have opposed the divestiture request, citing, among other grounds, that such a move would infringe on property rights.

Some authorities, however, expressed belief that the cable is a public utility that should not be controlled by one company.

“It’s like a public road. You can’t own it. When the public demands for it, you can’t say, ‘No way, it’s only for my use,’” said a business executive who spoke on condition of anonymity.

The same business person cited that federal regulations exist that would compel Verizon to sell some of its cable strands.

Authorities said Verizon, which set up the cable for at least $10 million in mid 90s, has six pairs of fiber optic cable. Only three pairs of them are currently in use, leaving three pairs—called “dark cables”—practically idle.

PTI has proposed to buy Verizon from MTC in 2001 for $60 million. The sale has not yet been consummated pending the decision of CTC.