Nextel brands NTC probe ‘old hat’

Trunk radio and paging company Nextel Communications Philippines, Inc. recently defended itself against the ongoing probe by the National Telecommunications Commission (NTC) on alleged violations committed by its parent firm, US-based Nextel International, Inc. (NII) against the Philippine constitutional limit on foreign ownership of vital utilities.

In a press statement, Nextel vice president for legal affairs Rudolph Jularbal said "the attack on the equity structure of Nextel is an old issue that our stockholders are prepared to confront."

The NTC probe stemmed from an earlier request from the Department of Transportation and Communications (DOTC) that the regulatory agency look into complaints that NII acquired more than 40-percent limit set by the Constitution on foreign ownership of local utilities. In its disclosure to the United States Securities and Exchange Commission, NII admitted it had acquired close to 60 percent of Nextel Philippines.

Following the NTC probe, NII also disclosed to the US SEC that it has discontinued funding for the local Nextel after its "most recent review of economic conditions, operating performance and other relevant factors relating to our (NII’s) Philippine operating company."

Jularbal confirmed the write-off saying NII now only provides Nextel Philippines "with technical and operational support." He also said Motorola provides the same to the local Nextel.

The write-off also caused the postponement of Nextel’s expansion program. Jularbal said the company has shelved plans to set up 12 additional cellular sites in various areas. Jularbal also announced that Nextel has cut its manpower by 30 percent and has reduced its office space.

The probe endorsed by the DOTC to the NTC stemmed from allegations that US-based Nextel International, which overtly owns 40 percent of Nextel Philippines, may have used two local companies to up their stake in the company, Gamboa Holdings and Emerald Investments Inc.

Gamboa holds about 20 percent of the outstanding shares of Nextel Philippines while Emerald accounts for 28 percent.

In the same disclosure to the US SEC, NII said 1,495 out of the 1,500 common shares of Emerald Holding are held by ACCRAIN Holdings Corp.; 983 out of its 985 preferred shares are held by a Hong Kong-registered company, Orient Holdings Corp. The latter, in turn, is owned by Nextel International (Delaware) Ltd. and NII.

According to the same report, NII said ACCRA Investments Corp. owns 60 percent of Gamboa Holdings; most of the balance of 40 percent is owned by another Hong Kong-based company called Top Mega of which NII is the majority owner.