Deadline bears down on PTI deal

If Verizon fails to get the consent of the Marianas Public Lands Authority in the transfer of leases from Micronesian Telecommunications Corp. to Pacific Telecom Inc. by today, the companies will have no choice but to defer the closing of the multi-million-dollar telecom deal.

The Commonwealth Telecommunications Commission had set tomorrow, Aug. 31, as the deadline for the companies to close the sale.

“I think that, if it becomes clear that there’s going to be no agreement between Verizon and the MPLA in the next 24 hours, I think we will have to ask for a deadline extension,” said PTI president Jose Ricardo P.R. Delgado in a telephone interview yesterday. “Until Verizon is able to get that consent, we can’t close.”

Delgado did not elaborate, saying that the parties are negotiating for a fair settlement among all concerned. “Both parties know the urgency of the matter. They are now negotiating in good faith to come up with a fair and equitable and swift solution.”

Until last night, though, no party involved in the negotiations has publicly announced a settlement. Reportedly, the MPLA wants to increase lease rates as a condition of its approval to the transfer of lease from MTC to PTI. Verizon has several leases involving public lands, including the site of its main office.

The parties’ failure to reach a settlement in a timely manner will again stall the consummation of the Verizon deal, which has been lagging on for about two years since MTC and PTI jointly applied for CTC approval for the transfer of all common stock between the companies.

Delgado said that the longer it takes to finalize the deal, the longer will people on the islands continue to pay inter-island tolls. “Look, the people of Tinian and Rota are still paying inter-island tolls; it is the local people who are suffering,” he said.

PTI executives earlier said their company wanted to take over Verizon’s management on or before Sept. 1, 2005, after the CTC issued its final order on the companies’ joint application last July 11. In a media statement days later, Gov. Juan N. Babauta said he would not contest the CTC’s final order, an apparent change of stance after raising vehement objections on various issues related to the sale.

On Saturday, though, the Governor’s Office released information to the media that the CNMI government has signed a two-year contract with Guam-based IT&E Overseas, Inc. for long distance services. The contract takes effect on Sept. 1, the day when PTI is supposed to take over Verizon’s operations.

Delgado gave no comment when asked about the government’s switch from Verizon for long distance services, but said he would like to know the facts surrounding government contract first.

“If MTC lost on a fair-and-square basis, so be it. If it did not lose on a fair-and-square basis, I’m sure MTC will seek a reconsideration,” Delgado said.

Once PTI takes over Verizon’s operations, there will be an end to interisland long distance charges for calls within the CNMI, pursuant to the 27-point settlement agreement that the companies reached in May 2004 with the intervenors in the CTC proceeding, the governor and CNMI consumer counsel Brian Caldwell.

The agreement also provided that there would be no local rate hike for two years from the transaction’s closing and that PTI would invest a minimum of $20 million in capital expenditures during the next five years.

PTI recently disclosed that there would be no change in Verizon’s management and employees, except for the board’s membership. PTI has also disclosed its interest to become a regional player in the Pacific islands, and that it would join the National Exchange Carrier Association.