THE Philippine Long Distance Telephone Co. (PLDT) group expects to be paid at least P2.125 billion, more than double the earlier estimate amount of P1 billion provided by the company, to recoup its investment in Connectivity Unlimited Resource Enterprises Inc. (CURE).
“Please note that the cost recovery amount to which the PLDT Group is entitled, cannot be less than [P2.125 million] to enable the PLDT Group to recover its investment in CURE,” said Smart Communications Inc. legal and regulatory department head Enrico Español in a letter to the National Telecommunications Commission (NTC).
This amount, he said, includes the total cost of equity investments in CURE, advances from Smart for operating requirements as well as advances from stockholders and associated funding costs.
Proceeds from the sale will be used by the phone giant to partly bankroll operating expenses.
Smart, a unit of PLDT, bought CURE from the Ongpin family in 2008. The PLDT group surrendered the company last week in compliance to conditions set by the regulators when it approved PLDT’s acquisition of Digital Telecommunications Philippines Inc. in October last year.
CURE’s franchise, third-generation frequency and other related permits are no longer owned by the PLDT group. CURE will soon be sold to prospective buyers via a competitive auction. The NTC has until January 2013 to bid it out.
Español said CURE should fetch a minimum bid price that would allow the PLDT group to recover its investment in acquiring, developing and operating CURE including, among others, the $10 million-acquisition price for CURE and the P65-million annual spectrum users’ fee.
In preparation for the divestment sale that will be supervised by the NTC, Español said the divestment shall be undertaken through a sale of shares of stock to the winning bidder.
“It is our position that it is only just and reasonable for the winning bidder to bear the costs of any and all taxes due on the transaction and its incidents, including capital gains tax, documentary stamp tax, value-added tax and withholding tax, considering that the sale is in compliance with the order of [NTC]. Concomitant hereto, and in accordance with the condition of [NTC], CURE undertakes to submit its audited financial statements as soon as it is available,” added the Smart executive.
Español informed the NTC that CURE has transferred its 1.1 million subscribers to Smart.