Subject: [NEXTEL-1] House Committee on Transportation and Communications, set to file a resolution seeking an investigation of Nextel’s equity.

From: Marcel <[email-masked]>
Date: Wed, 26 Mar 2003 13:30:20 -0500

House Committee on Transportation and Communications,
set to file a resolution seeking an investigation of Nextel’s equity.

Thursday, March 27, 2003

Nextel says ownership issue settled by DOJ, SEC

TRUNK radio operator Next Mobile Philippines Inc., formerly known as Nextel
Communications Philippines, is disputing reports of an impending congressional
inquiry on the company’s real ownership.

In a statement, Nextel’s legal counsel Justinian Adviento said the issue had
already been settled after the Department of Justice (DOJ) and the Securities and
Exchange Commission (SEC) ruled on the matter.

The SEC has consistently and categorically declared in numerous opinions that, on
the basis of Opinion No. 18, series of 1989 of the DOJ, “shares belonging to
corporations or partnerships at least 60 percent of the capital of which is owned
by Filipino citizens shall be considered as of Philippine nationality.” Thus, as long
as the percentage of Filipino ownership of the capital stock of the corporation is at
least 60 percent thereof, the corporation shall be considered as a Filipino
corporation, Adviento said.

Adviento was referring to allegations that Gamboa Shareholdings, one of several
stakeholders at Nextel, has more foreign equity, thus making it a foreign
corporation. Davao Rep. Prospero Nograles and Northen Samar Rep. Harlin
Abayon, members of the House Committee on transportation and communications,
are reportedly set to file a resolution seeking an investigation of Nextel’s equity
structure.

The law limits to 40 percent the maximum equity stake of foreigners in Philippine
corporations. Nograles and Abayon charged Nextel of deceiving the government
by using dummies and intricate corporate layering to circumvent Philippine laws
and making it appear that they have complied with the constitutional limitations
on foreign ownership.

Adviento clarified that Gamboa is considered a Filipino corporation since the DOJ
and the SEC resolved to do away with the strict application of the “grandfather
rule” and adopted the “control test” method for determining corporate nationality
for purposes of investment in another corporation.

Under the control test, if the corporate stockholder is at least 60 percent
Filipino-owned, its holdings in a company are also considered Filipino-owned.

Nextel was launched in 1996 after Nextel International Inc., a US-based firm
entered the country’s telecommunications industry by purchasing a company
called Top Mega, a Hong Kong-registered company holding 30 percent interest of
Infocom Network Inc. (ICNI), a Philippine telecommunications carrier.

Another foreign-registered company called Joyce Link owned 10 percent of
Nextel’s equity while the remaining 60 percent belonged to Gotesco Group owned
by Jose Go (20 percent), Jetcom Inc. owned by Bernard Asperin and Food Camp
Industries represented by Johnny Wong.

The company which prides itself as the only carrier in the country that
incorporates in one handset a two-way radio service, a mobile telephone service
and SMS (Short Messaging Service), however, failed to break through the
telecommunications market which has been dominated by Globe Telecoms and
Smart Communications.

According to Abayon and Nograles, they would file a resolution next week to seek
an inquiry on Nextel’s real ownership status after they discovered that when the
company underwent a reorganization almost three year ago, the
telecommunications company used dummy corporations to acquire all of Nextel’s
Filipino shareholdings.

Gamboa Shareholdings Inc. and Emerald Investments Inc acquired the 60 percent
equity, which was supposed to be exclusive for Filipino corporations.
-- Sheryll B. Casanova

http://www.manilatimes.net/national/2003/mar/27/business/20030327bus14.html

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