NTC urged to deny new player's broadband bid

MANILA, Philippines - Express Telecommunications (Extelcom) has asked the National Telecommunications Commission (NTC) to deny the application of newcomer Schutzengel Telecom for a license to offer a nationwide broadband service.

In a filing with the NTC, Extelcom said Schutzengel is not financially and technically capable to provide broadband services, adding it has no experience in undertaking the proposed service.

Extelcom cited Schutzengel’s low capitalization of P531.25 million, and its personnel’s lack of technical expertise.

The firm added that the market for broadband service is already saturated and that current service providers can fully cover the demand.

“The country’s broadband market may marginally expand in the succeeding years but this increase in demand will be adequately met by the current broadband service providers. They have sufficient resources and ability to offer innovative broadband services and low-cost packages,” Extelcom said.

Based on its submissions to the NTC, Schutzengel said it is spending P4.37 billion over a five-year rollout period. For the first year, the company plans to spend P2.3 billion. Funding requirements of the project will be sourced from equity infusion, suppliers’ credit, loans and other forms of financing.

The initial capitalization was at P31.25 million during the company’s incorporation and was recently increased to P531.25 million with a commitment from the management to further increase the same to P2 billion before the end of the first year of operations.

Schutzengel officials said the project is economically and financially feasible and is expected to generate a total net income of P9 billion in five years.

They added that the profit potential of the company will be evident by the second year of operations, when deployment of base stations covers the target market.

The company expects about 912,000 Wimax subscriptions by end of year five with a total of P22 billion in gross revenues.

It said it intends to focus its services on a growing individual market hungry for fast service solutions. Meanwhile, its Wimax service will be available in major businesses and industrial centers as well as to individuals subscribers, the company added.