Subject: [NEXTEL-1] Consumer group: revoke Nextel franchise

From: Marcel <[email-masked]>
Date: Sun, 17 Nov 2002 01:00:47 -0500

from www.inq7.net
URL: http://www.inq7.net/inf/2002/mar/16/text/inf_3-1-p.htm

Consumer group: revoke Nextel franchise
Posted:10:00 PM (Manila Time) | Mar. 15, 2002
By Alcuin Papa
Inquirer News Service

A CIVIL consumer group Friday asked the National Telecommunications Commission to revoke
the franchise of cellular network company Nextel for violating the law on foreign
ownership of local companies.

The Citizens Movement for Protectionism and Reform (CMPR), in a complaint filed Friday
with the NTC, claimed that foreign equity in Nextel Communications Philippines Inc. (NCPI)
was 59.08 percent while local equity was only 40.92 percent.
This, the group said, violates the constitutional provision on foreign ownership of public
utilities.

Section 11, Article 12 of the Constitution states that “No franchise, certificate or any
other form of authorization for the operation of a public utility shall be granted except
to citizens of the Philippines or to corporations or associations organized under the laws
of the Philippines at least sixty percent of whose capital is owned by such citizens.”

The group’s complaint said that Nextel “is engaged in the telecommunications business
which is a public utility. In fact, it is a holder of a legislative franchise under RA
7301. Despite the constitutional mandate however, more than the 40 percent of the shares
of the Respondent Corporation is now being controlled by non-Filipinos.”

The group said 30 percent of Nextel Communications Phils. Inc. was owned by Top Mega
Enterprises Ltd., a Hong Kong-based corporation owned and controlled by Nextel
International Inc. (NII) based in the US.
Another 10 percent of NCPI is owned by Joyce Link Ltd., a foreign corporation based in the
British Virgin Islands likewise owned and controlled by NII.

According to records, local companies Jetcom Inc. owns 12.3 percent of NCPI; Gamboa
Holdings Inc.  has 20 percent; Emerald Investments Inc. has another 20 percent; while
Foodcamp Industries and Marketing Corp. owns the remaining 7.7 percent.

However, CMPR claimed that 40 percent of the stake held by Gamboa Holdings was actually
owned by Top Mega Enterprises Ltd. while the remaining 60 percent was owned by domestic
firm Accra Investments Corp.
It further alleged that 40 percent of the stake of Emerald Investments Inc. was owned by
Orient Holdings Ltd., a Hong Kong-based corporation owned by NII, while the balance was
controlled by ACCRAIN.

CPMR said Nextel International Inc. earlier admitted it had increased its foreign equity
in NCPI.
The CMPR said that NII made the admission in the company’s Form 10-K for the year 2000, a
requirement submitted to the United States Securities and Exchange Commission.

“On July 28, 2000, we increased our direct and indirect ownership interests in our
Philippine operating company from about 38 percent to about 51 percent by purchasing some
of the minority owners’ equity interests for about 9.8 million dollars. On Jan. 18, 2001,
we increased our direct and indirect ownership interest in our Philippine operating from
about 51 percent to about 59 percent by purchasing additional minority owners’ equity
interests for about 3.7 million dollars,” the NII report read.
“While it is certainly true that the corporate stockholders in the respondent corporation,
specifically Gamboa Holdings Inc., Emerald Investments Inc. and Foodcamp Industries and
Marketing Corp., are of Filipino nationality, with the majority of their respective shares
appearing to be in the hands of Filipinos, the manner by which these entities were
incorporated as well as the agreement with respect to the ownership of the stocks indicate
that the Filipino stockholders are but trustees of NII,” CMPR’s complaint added.

The group also said NCPI violated the Public Service Act when it did not report to the NTC
the transfer of its stock ownership.

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