GARAPAN Saipan — While the ink is hardly dry on Pacific Telecom Inc.’s purchase of Verizon Pacifica from Micronesian Telecommunications Corp. its chief executive confirmed to the Journal that the company would soon offer cellular service in Guam.
Jose Ricardo P.R. Delgado president and chief executive officer of PTI met with the Journal on Nov. 3 in Saipan.
He said the goal was to use the CNMI purchase “As a base to expand regionally.”
He already began discussions with companies on Guam Delgado said.
PTI would consider buying its way into the market he said.
“We are open to purchasing assets in Guam … as long as they are reasonably priced.”
“We’ve met almost all the players on a friendly basis and discussed opportunities to work together — we would rather partner with people than start from scratch. We’re very much open to different ways to work with different companies. We might work with two different competitors in two different businesses.”
Delgado who met in Manila with Robert Taylor chief executive and president of GTA; said that one partnership might also include GTA.
“Decisions on cellular should be made in the next few months as far as Guam is concerned. Implementation will depend on whether we decide to partner with somebody — the situation is still very fluid.
“We’re at the point where we say what is the best way to enter this market? Is it by building our own network since we have our own frequency or is it tying up with somebody or buying minutes from somebody? There are many choices. We want to be prudent in making the right choice.”
PTI’s entry into the Guam market would be carefully planned Delgado said.
“We’re not going to be doing this in a haphazard fashion — we’d like to make whatever moves we do in Guam well thought-out and well-studied and really look for markets where we have a competitive advantage. We feel that the Guam market is something we will look at seriously and hope to participate in it in the near future.”
Delgado said he was familiar with the Guam market and that its competitiveness would only increase with the introduction of new GSM networks on the island.
IT&E Overseas Inc. and GTA are both understood to be planning the introduction of new GSM networks for Guam.
Joseph J. Perez vice president and general manager said “I’m not going to comment on that at this point.”
Perez told the Journal that IT&E had met with PTI. “We did sit down and had some interesting discussions. I wouldn’t say we came to any conclusions.”
He did understand he said that PTI was interested in purchasing assets. “The headaches and time and money involved in starting up a company is not as appealing to them as purchasing a company that’s established.”
Guamcell Communications and PTI also have had contact. Mark W. Chamberlin president of Guamcell said “I’ve met with Ricky for a number of years. We’ve known each other since he started to do the acquisition. Guamcell is always exploring oportunities to expand and improve services. At this time we don’t have any plans to do anything with PTI. We like them and we think they will do a good job with the assets in Saipan. I expect we will see them on Guam at some point as well.”
John Wu vice president of operations for HafaTel said he had met Delgado and his father Ricardo Delgado. “It was more of a get-to-know each other. That was a few months back and a lot of things were still open because their purchase of Verizon was still pending at that time. We understand that they did express interest that they will be coming on to Guam. They have the resources and the licenses from FCC already to come into Guam.We congratulate them on the final transaction and welcome them into this area.”
Wu said PTI’s entry would only increase competition. “Guam’s market has been very competitive already. GTA’s GSM network should be ready for service by the end of this year — it’s just going to get more competitive.”
What PTI product offerings became available would depend on consumer demand Delgado said.
“They say the U.S. cell phone market is behind that of Europe Korea and Japan and places like the Philippines. I think with competition settling in people have to be much more responsive to what the customers demand. If people in Guam demand more we’ll have to serve it; if people in Guam are happy with basic voice and SMS then there is no need to try to make things too fancy.”
Delgado recognized GTA’s aggressiveness in the market and said PTI would have a similar profile. “They have to be and we have to be. In a world where borders are falling if you are not aggressive — if you don’t have a sound strategy — that could spell disaster.”
PTI’s offerings would be appropriate for the market Delgado said.
“For a big company like Verizon to spend a huge amount of time on probably their smallest investment was always a challenge. The difference is going to be we will make every effort to understand the market there and tailor products and services and price points this market can afford. It’s going to be a micro-strategy rather than macro in nature. I also think response time to questions and decisions are not going to be kicked around for months at a time but decided in days or hours.”
However he said the increase in competition in Guam could lead some companies to cease business or sell assets.
“What will happen in that market — which happens in every market — is that at some point there’s going to be consolidation. People will realize they’re not making adequate returns on their capital; maybe selling their company will be a better idea than losing the inherent value of their company by being part of a protracted war with GTA. Obviously that’s a decision that every owner has to make.”
Delgado reiterated his commitment to the telecom industry in Micronesia.
“One of the things that makes us different is we really have a long-term view in this region. It took us four years to complete the transaction — many people thought we would have quit a long time ago — and that’s a pretty good sign that we’re not going to be exiting this market anytime soon. We have no interest in selling this asset.”
The CNMI purchase might also be a springboard to the rest of Micronesia he said.
“Any growth or expansion we do — apart from Guam — would definitely be on an opportunistic basis. I’m not going to insist on doing business in other places simply for the sake of doing business.” Aside from Guam and Saipan Delgado has visited Tinian Rota and Palau he said and would like to visit other Micronesian islands. “But I’m also running our business in the Philippines today.”
Delgado said the sale was also attractive because of the proximity of the Northern Mariana Islands with the Philippines. “If you presented me the same opportunity to run a company in the British Virgin Islands while I’d love to go there and spend time there there’d be no way from a management point of view I could pay as much attention to the asset as this one.
“Here there are three non-stop flights a week English is the language of choice there is a huge Filipino population and I feel very much at home culturally. I see very little difference in culture between the Chamorros and the Filipinos.”
He expected to be in Guam and Saipan monthly he said.
On Sept. 21 Delgado met with Verizon employees at the company’s Susupe office to announce the takeover and confirm there would be no management changes. The company will retain Anthony S. Mosley as chief operating officer and Lawrence P. Knecht as chief financial officer.
PTI purchased Verizon Pacifica for about $60 million. MTC and PTI jointly filed with the Commonwealth Telecommunications Commission on Sept. 5 2003 the application for the transfer of common stock. PTI is a subsidiary of Prospector Investment Holdings Inc. a company set up in the Cayman Islands — a thriving offshore financial center — by the Delgado family. The Delgados are understood to be campaign contributors and supporters of President Gloria Macapagal Arroyo. The Delgados used to own Islacom which was contracted to roll out 300 000 landlines in the Visayas one of three major regions in the Philippines and operated a cellular phone system. It was eventually sold to the Ayala Groups Globe Telecoms in 1999 due to financial difficulties and the Delgados’ problems with the German investors Deutsche Telekom
The Commonwealth Telecommunica-tions Commission required PTI to spend $20 million over the next four years for improvements on its system and retain Verizon as a technical consultant. Part of the CTC-imposed agreement is the lifting of inter-island toll which cost 14c a minute. When the commission voted on Feb. 8 to conditionally approve the sale it declared that Verizon’s fiber optic cable was a monopoly service.
Verizon provides Internet and long-distance services in both Guam and the CNMI and cellular services in Saipan.
Verizon laid a fiber optic cable called a “daisy chain” in 1997 between Guam Rota and Tinian ending in Saipan and has been the sole provider there ever since. As first reported in the Journal (See “Governor invites competitors to take on Verizon ” in the Aug. 9 issue of the Journal.) Gov. Juan N. Babauta hosted a July 22 meeting with a variety of telecom players — excluding Verizon — to discuss another cable to service CNMI.
Delgado said “I am open to competition. Anyone who wants to build a cable is welcome to do so. With the downturn in business I don’t think it would make economic sense for anybody to try and build a second cable.”
To date PTI and the Marianas Public Land Authority are embroiled in legal action following subpoenas to PTI over $2.1 million in alleged unpaid lease and easement payments. Mosley told the Journal “We have been attempting to work a suitable arrangement for PTI and MPLA.” Jose Dela Cruz former chief justice is a board member and part of the negotiating team for PTI. MBJ
