Smart says 3G frequency price is fair

Dominant carrier Smart Communications Inc. said it could have asked for more money in giving up the third-generation (3G) mobile frequency held by unit Connectivity Unlimited Resource Enterprises (Cure).

But the company that corners two-thirds of industry revenues said it chose to let go of the 3G frequency at a steep discount as a sign of goodwill to the government, which aims to maintain competition in the country’s deregulated telecom sector.

Smart, the mobile unit of Philippine Long Distance Telephone Co. (PLDT), is seeking a cost-recovery fee (CRF) of P2.12 billion for its Cure frequency. The amount represents the investments the company made to allow Cure to offer 3G services.

“If I can compare that price with Thailand, where there is a 3G frequency bidding going on, the floor price there is equivalent to P1.2 billion per megahertz (MHZ),” Smart president and CEO Napoleon Nazareno said in an interview.

“We are giving up 10 MHZ so if we use Thailand prices, our floor price should be P12 billion,” he said. “Our price is really very low.”

Nazareno said the P2.12-billion price tag was “fully supported” by information from PLDT’s audited financial statements over the past five years, covering the entire duration that the company has been using the frequency.

The move to give up the frequency was to comply with a condition set by the government when PLDT’s acquisition of the Sun Cellular mobile brand was approved by regulators. Including the Cure license, the PLDT group owns three of four 3G frequencies in the country.

Nazareno said he was confident that the company’s CRF would not be contested by the National Telecommunications Commission, saying that the company had been fair in coming up with the price for the valuable 3G asset. A 3G frequency allows a mobile service provider to offer high-value wireless broadband Internet service.

The NTC is expected to come out with a floor bid price for the 3G frequency, or the minimum amount interested parties should be willing to pay if they wanted to be awarded the license.

The floor price will include Smart’s CRF, if approved, and an amount the government thinks it should get for allowing the use of state-owned radio frequencies.

Given their deep pockets, PLDT rivals Globe Telecom and industry newcomer Wi-Tribe, controlled by San Miguel Corp., are the early favorites to win the Cure frequency. Both firms have expressed their desire to bid for the frequency. Smaller players like Lopez-led Bayantel and MTI are also expected to bid for the franchise.