Eastern Telecommunications Philippines Inc.

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Eastern Telecommunications Philippines, Inc. (ETPI) began in 1878 as a company that offered telex and telegram services. ETPI was awarded a provisional license to operate an international gateway facility in 1992. As a part of its international gateway facility operation license, ETPI committed to install 300,000 local exchange lines in Metro Manila (Manila, Caloocan, Malabon and Navotas) and in Region II (Cagayan Valley), areas within the first five years of operations. ETPI signed its 300,000 fixed lines commitment and obtained its license for the local network in October 1996. The build-out requirements were established for new entrants in mobile phone services (400,000 fixed lines) and international phone services operators (300,000 fixed lines) by Executive Order 109 enacted in 1993. In order to assign the areas to new entrants with buildout requirements, the country was divided into 11 equally viable areas combining profitable urban and costly rural areas. Eastern Telecommunications Philippines was initially owned by UK-based Cable and Wireless Plc (40%), Smart Communications (9.8%) and Philippino investors (50%). However, in May 1998, the government sequestered a 40% stake allegedly held by former Philippine president Marcos in (ETPI) after his allies sought a shareholders meeting in a bid to gain control. The sequestration was ordered by the Presidential Commission on Good Government (PCGG), a special agency responsible for recovering worldwide assets allegedly amassed illegally by the former president during his 20-year rule. The state-sponsored Presidential Commission on Good Government then held a 40% share in ETPI. Cable & Wireless sold its 40% stake in ETPI in 2000 to the local business group Aerocom Investors & Managers Inc. In March of 2001, the Philippine unit of Australian Gigahertz Network Pty. Ltd. (AGN Philippines) bought that stake for US$20 million. In October of 2005, information technology firm ISM Communications Corp (ISM) of the Philippines purchased AGN's stake for US$8.21 million, giving it a total 57.7% share in the company. ETPI became the second largest international gateway facility (IGF) operator in the Philippines, next to the historically private and national incumbent Philippine Long Distance Telephone Co (PLDT). The company bought its existing System X international gateway facility from GPT for US$9.5 million in 1994. The company invested US$15 million to expand its IGF capacity by 18,000 in 1996. Eastern Telecommunications Philippines completed a US$6.3 million contract with GPT (UK) which covered the supply of SDH products to Manila in 1997. Eastern Telecoms had about 20,500 IDD lines activated in its international gateway network by 1998. ETPI created a wholly owned subsidiary, Telecommunications Technologies Philippines (Teletech), to deploy and operate lines in Batanes, Cagayan, Isabela, Kalinga Apayao, Nueva Vizcaya, Ifugao, Quirino, Caloocan, and Navotas beginning in 1996 when the NTC expanded ETPI's license area. The company signed a US$338 million contract with Alcatel for the supply and installation of the lines on a turnkey basis in 1997. Teletech was to handle the land line project which had to be completed by 1999 under the terms of Eastern's license. Alcatel used wireless local loop (WLL) technology. In 1999, Telecommunication Technologies said ETPI had invested a total of US$120 million to allow the former to lay out 90,000 additional telephone lines in Manila, Caloocan, and Cagayan Valley Region. However, the company had installed only 71,000 fixed lines by the end of 1998, which accounted for just 23% of its original obligation. The company indicated that the main reason for the delay in the network development was the lack of an interconnection agreement between the company and the PLDT. However, the company completed installation of 129,000 lines for the fourth quarter of 1998 and 112,000 lines by end-1999. Teletech was planning to expand its coverage in 2006. By 2004, Eastern Telecom was mainly providing integrated communications services for small & growing businesses, larger enterprises and carriers, but was becoming more focused on its Internet Service Provider (ISP) sector. It owned only a very small capacity on the National Digital Transmission Network (NDTN). In 2005, ETPI, the country's oldest telco, said it recorded losses for a second straight year on higher expenses and weak operating revenues. Eastern Telecom subsidiary to expand coverage Kerlyn G. Bautista 333 words 21 March 2006 In a filing with the National Telecommunications Commission (NTC), the company said it will add 56,000 telephone lines to its existing telephone capacity of 74,000 lines between 2006 and 2008. The company's paid-up capital of P882 million will be used to fund expansion in Manila, Caloocan, and Navotas.