PRT asks for ‘transparency’ in Liberty-OneLink deal
Puerto Rico Telephone, which does business as Claro Puerto Rico, has drawn the line in the sand with regards to Liberty Puerto Rico’s proposed acquisition of OneLink Communications, asking the Telecommunications Regulatory Board for transparency in the process.
In a motion filed at the agency, Claro Puerto Rico asked the board to give it and the general public access to the application Liberty filed last week requesting the approval of the $585 million transaction announced about a month ago.
“As of today, the Board has not made the document public, even when that’s essential to understanding, evaluating and making comments about the transaction,” the company said in a statement sent to reporters Tuesday.
The carrier also asked the agency to address the fact that, “contrary to what Liberty has presented to the media” if the transaction is approved OneLink would be the surviving entity and would continue providing cable service in Puerto Rico.
“Although both the Board and Liberty have sold this transaction as one that would result in Liberty controlling OneLink’s operations in Puerto Rico, OneLink and Liberty filed several documents with the FCC stating that as a result of the transaction Liberty will cease to exist as a corporate entity and OneLink would survive the transaction and would continue providing cable service in Puerto Rico in Liberty’s and OneLink’s territories,” PRT said in its statement.
“That fact that OneLink would survive as a result of the transaction raises serious issues that the Board must address and require public and binding commitments by OneLink and Liberty before any application is approved,” the carrier further stated.
When the transaction was announced, Liberty Global — the local company’s parent — explained that upon completion it would own 60 percent of the company and investment fund company Searchlight Capital Partners L.P would own the remaining 40 percent. The company would continue doing business in Puerto Rico as Liberty, it said.
“Today, PRT/Claro sent a press statement in which they claim that the entity that would survive the purchase transaction between Liberty Cablevision of Puerto Rico and OneLink Communications would be OneLink and that the latter would be the one that would continue providing cable TV services,” said Naji Khoury, General Manager of Liberty Cablevision of Puerto Rico. “This statement is completely false.”
“Regardless of which corporate entity registered in Puerto Rico survives the transaction, be it San Juan Cable, LLC [OneLink], or Liberty Cablevision of Puerto Rico, the resulting company’s assets will be managed by Liberty as the majority partner and Searchlight Capital Partners, L.P. as the minority partner, and myself as general manager of the newly formed company; just as it was reported from the beginning in press releases disseminated in Puerto Rico and the United States,” he said. “In addition, the resulting brand will also be Liberty’s.”
What goes around…
Perhaps none too coincidentally, in its arguments PRT raised similar issues to the ones Liberty brought up while opposing the carrier’s plans to launch its Internet Protocol-based paid television service.
“In the past, Liberty adopted the position that competition was bad for the Puerto Rican consumer. OneLink has a proven record of anti-competitive conduct and to this day continues to oppose PRT’s efforts to provide IPTV service. If the transaction is approved, will OneLink continue its opposition while at the same time asking permission to expand its market dominance? How do they defend their transaction as pro-competition when at the same time they’re plotting to push PRT out of the video market?”
Another issue PRT brought up is OneLink’s track record of shying away from providing cable services to underprivileged communities in the San Juan metropolitan area. PRT questioned whether the company will uphold its policy if the transaction is approved.
On another front, PRT also raised the contentious issue of “cross-subsidies,” or when a company uses revenue from one line of service to cover the costs of providing another. In its motion, PRT questioned whether the carriers have mechanisms in place to prevent cross-subsidization between its telephone and cable services.
Over the past three years, both Liberty and OneLink have used the cross-subsidies issue in their arguments against PRT’s incursion into the paid television market.
PRT asked the Board to hold off from considering approving the request until the aforementioned issues are addressed in detail.