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Pacific Islands Development Program, East-West Center

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Japanese Acquisition Of Guam Telecom LLC Approved
FCC must give final approval before merger can be made

By Louella Losinio

HAGTA, Guam (Marianas Variety Guam, Dec. 19, 2012) – The Public Utilities Commission (PUC) yesterday granted conditional approval on the joint application for the acquisition of Guam Telecom LLC (GT), which does business as MCV Broadband, by Docomo Guam Holdings Inc.

Before PUC issues a final approval, both parties must first comply with the regulatory requirements set forth by the Federal Communications Commission (FCC).

"They can proceed with the merger process but before everything is final, of course, they have to obtain FCC approval. They have to let the PUC know and then the PUC will indicate that they have finally complied with the order," said Fred Horecky, PUC legal counsel.

After both companies complete all FCC requirements and acquire final certification from PUC, GT will become a wholly owned, indirect subsidiary of Docomo Guam.

Last October, the U.S. Department of Justice (USDOJ) urged the FCC to defer action on the petition for the proposed acquisition pending completion of federal review of the agreement.

At that time, USDOJ along with the Federal Bureau of Investigation and the Department of Homeland Security had initiated a review of the transaction to look for any national security, law enforcement, or public safety issues.

The FCC also posted an Oct. 17 deadline for interested parties to submit their inputs on the proposed merger. The deadline lapsed without opposition.

Public interest

Horecky said the PUC made its decision based on whether the applicant possesses "sufficient technical, financial and managerial resources and abilities to provide telecommunications services in Guam" and whether approval of the transfer of control is contrary to public interest.

"Today, based on the information and evidence that they have submitted – which is basically that Guam Telecom as it is today, with its similar operations and at least, for the time being, there are no plans to discontinue or change the management – the commission found that Guam Telecom, even after the sale, will still have sufficient financial and managerial resources to provide telecom services," he said.

To satisfy the requirements of the PUC, both applicants filed balance sheets and financial statements indicating substantial and significant financial resources which should enable them to continue to provide telecommunication service in Guam after the acquisition.

In addition, the parent company of Docomo Guam is a large and financially secure company with market capitalization of approximately $73 billion.

In terms of sufficient technical and managerial resources to provide telecommunication services in Guam, GT's existing senior management team, according to a PUC document, has demonstrated the requisite technical and managerial services in Guam.

Commitment

Moreover, Docomo Guam also expressed its commitment to hiring and retaining the most knowledgeable managers. The company also stated in an earlier PUC meeting that they have no plans to replace current members of GT’s senior management team.

Horecky also said the PUC found that the acquisition is not contrary to the public interest since GT will continue to provide customers with the same telecom services, Internet, and VoIP technology. Moreover, the company will resell wireless services under the same rates, terms and conditions as before the transaction.

In addition, Horecky said the PUC determined that the transfer of control of GT to Docomo Guam will not result in any competitive harm to the telecommunications market on-island. Currently, Guam has four mobile service providers, including Docomo Pacific Inc.

"GT and Docomo basically provide different kinds of services right now. Docomo is wireless, GT provides Internet and VoIP technology. On the MCV side, they provide cable television. So the commission concluded that the two coming together with the sale transaction will not provide any competitive harm to the Guam market," Horecky stressed.

Marianas Variety Guam: www.mvguam.com
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