Verizon to become Pacific Telecom

Pacific Telecom Inc. disclosed yesterday that it would soon consummate the multi-million-dollar acquisition of Verizon Pacifica from Micronesian Telecommunications Corp., following the Commonwealth Telecommunications Com-mission’s decision to grant the investor a license to operate the telecom firm.

PTI executive vice president for business development Jose Ri-cardo P.R. Del-gado welcomed CTC’s decision and lauded its commissioners, saying the com-mission’s integrity and independence would project a positive investment climate for the CNMI.

“I’m happy that the [commission], despite tremendous pressure, rendered an independent decision based on the merits of our application,” Delgado said. “The [commission] should be congratulated for making an objective decision on the transfer.”

“I did expect that the CTC would come up with that decision based on the compelling evidence that has been presented to them. I did not know exactly when we would get to this day, but I am pleased that we finally did,” he added.

The commission’s three-man board composed of chair Norman Tenorio and commissioners Mike Fitzgerald and Josephine Mesta unanimously voted Tuesday night to conditionally approve the sale of Verizon from MTC to Pacific Telecom Inc. The commission declared, though, that Verizon Pacifica’s fiber optic cable is a monopoly service, and ruled to look further into the issue in a separate proceeding.

MTC is selling Verizon Pacifica to Pacific Telecom for about $60 million. Pacific Telecom, a direct, wholly owned subsidiary of Prospector Investment Holdings Inc., is a registered corporation in the Cayman Islands owned by father-and-son Ricardo and Jose Ricardo P.R. Delgado.

Jose Ricardo P.R. Delgado said Verizon Pacifica would be renamed “Pacific Telecom” once his company takes over the firm’s operations.

The takeover will result in an end to interisland long distance charges for calls within the CNMI, pursuant to the settlement agreement reached between MTC and Pacific Telecom and the intervenors in the commission proceeding, Gov. Juan N. Babauta and CNMI consumer counsel Brian Caldwell.

Pacific Telecom had also assured that there would be no local rate hike for two years from the transaction’s closing and that it would invest a minimum of $20 million in capital expenditures during the next five years.

“As the [commission] chairman said, ‘Why force someone to stay when his heart is no longer there?’ Despite all the trouble [Pacific Telecom] has been forced to go through, the fact that we have persevered shows we have the heart and commitment to the CNMI,” Delgado said.

He said, though, that he was surprised with the decision to have a separate “contested case” proceeding on the issue of cable monopoly. However, he expressed optimism that Verizon would prevail in that proceeding.

“We are open to any proposal on the cable that is not adverse to MTC, and does not place the company in an unfavorable competitive position vis-à-vis its Guam-based competitors. Why should Guam-based competitors benefit from this sale when MTC is the taxpayer of record in the CNMI and employs over 140 taxpayers?” he asked.

The CNMI government has expressed interest in purchasing a portion of the fiber optic cable, the only such facility in the CNMI.

The commission included conditions in the Pacific Telecom license, ruling that it has the power to regulate the cable facility, and saying that it is mandated by law to encourage open markets and competition between telecom carriers and ensure that holders of franchises do not use their market power to the prejudice of service users.

Babauta’s camp views the CTC decision as a victory, with assistant attorney general James Livingstone noting the commission’s findings that high cable prices have had a detrimental effect on the CNMI’s economy. Caldwell said the public would benefit from the conduct of the contested case proceeding that would provide access to information.

The CTC’s decision came more than a year and five months after MTC and Pacific Telecom jointly filed with the commission on Sept. 5, 2003 an application for the transfer of all common stock.