TRANSPACIFIC BROADBAND GROUP INTERNATIONAL INC

TRANSPACIFIC BROADBAND GROUP INTERNATIONAL INC

Previous company name
TRANSPACIFIC BROADCAST GROUP INTERNATIONAL, INC.
Name change date
11/28/2003
Company Overview
Transpacific Broadband Group International Inc. (TBGI) is engaged in the provision of public commercial radio, terrestrial, cable and satellite broadcast services. The company was incorporated in 1995 and has its registered office in Mandaluyong City, Philippines. It is listed on the Philippine Stock Exchange under the trading symbol TBGI.
The company offers data services to subscriber schools for Internet connectivity and virtual private network connectivity, and video uplink services to local and foreign television channels. Its data and video services are delivered from TBGI earth station in Clark, Pampanga transmitted via Mabuhay satellite to receiving equipment units of clients.
The company aims to contribute to national development by providing services in Information and communication technology and Internet connectivity to rural communities for the delivery of education and health care services as well as wireless means of connecting government agencies, multi-lateral and other concerned institutions. It has facilities for transmitter and power generators, including the CDC Broadcast Operations Center, with approximately 20 studios for media production and post-production services.
The company has service experience with local channels four, nine and 13, and international cable television program providers, including an Egyptian channel and a Korean television shopping network. In addition, the company has formed strategic partnerships with CBCP World Corporation, Datacast Technology Corporation, Palladian Land Development, Inc., Managed Care Philippines, Inc., Hambrecht & Quist Philippine Ventures 2, Inc., Unipage Management, Inc. and Avion Integrated Media, Inc.
The company is a subsidiary of Unipage Management, Inc. and globally owned by ATN Holdings, Inc. ATN Holdings provides broadcast media, global communications, and electronic commerce and services. It holds a 25-year Congressional Telecom Franchise for commercial telecommunications and television broadcasting operations under RA 8657.
Business Summary
The Company is a duly registered Clark Special Economic Zone (CSEZ) corporation which aims to contribute for national development through information and communication technology and internet connectivity delivered in rural areas.
Description and history
The Comapny is a domestic corporation which was registered with the SEC on 14 July 1995 and started commercial operation in the first half of 1996 with an authorized capital stock of Twenty-Five Million Pesos (Php 25,000,000.00), divided into Two Hundred Fifty Thousand shares (250,000) with a par value of One Hundred Pesos (Php 100.00) each. The amount of capital stock that had been subcribed was Six Million Two Hundred Fifty Thousand Pesos (Php 6,250,000.00) and One Million Five Hundred Sixty-Two Thousand Five Hundred Pesos (Php 1,562,500.00) was paid-up. Its primary purpose is to engage in the business of public commercial radio, terrestial, cable and satellite broadcast. TBGI does not have any subsidiary under it.

The Company is a duly registered Clark Special Economic Zone (CSEZ) enterprise with Registration Certificate No. 95-53 dated 29 November 1995 and has a 25-year Lease Agreement to build, maintain, and manage a satellite earth station within the CSEZ. TBGI holds a 25-year Congressional Telecom Franchise for commercial telecommunications operations under RA 8657, which the legislative body passed into law on 22 June 1998. It also has an approved Provisional Authority to transmit radio signals to satellites granted by National Telecommunication Commission (NTC) on 7 April 1999.

TBGI defines as its corporate mission to contribute to national development by providing services in (1) information and communication technology and (2) Internet connectivity to rural communities for the enhancement of delivery of education, health care and livelihood programs of government agencies, multilateral and other concerned institutions. For the delivery of its services, TBGI owns and operates satellite facilities having separate buildings for transmitter and power generators at the 1.1-hectare area of former US Air Force Satellite Communication facility in CSEZ in Pampanga. TBGI’s integral facility, the Clark Development Corp. (CDC) Broadcast Operations Center, houses 20 studios for media production and post-production services inside 277 square meter area of industrial-grade raised flooring, with an enclosed soundproof broadcast studio.

The Company uses digital technology, combining satellite facilities with Internet Protocol (IP) for data transmission technology. TBGI utilizes state-of-the-art multi-channel digital compression technology provided by General Instrument (the Digicipher II MPEG Dual Mode MCPC Encoder), and Harmonics. The Digicipher and Harmonics systems are complemented by a fully redundant system consisting of C-Band MX 9000 Klystron highpower amplifier from MCL, steerable 9.3 meter Andrew Earth Station antenna, 65 KVA Uninterruptible Power Supply, and 250 KVA standby power generator. TBGI maximizes satellite transponder bandwidth utilization in the streaming of digital audio, video and data content across the Agila II satellite footprint of Mabuhay Philippines Satellite Corporation.

On 07 November 2002, the SEC approved the increase in authorized capital stock of TBGI from Twenty-Five Million Pesos (Php 25,000,000.00) divided into Two Hundred Fifty Thousand shares with par value of One Hundred Pesos (Php 100.00) each, to One Hundred Fifty Million Pesos (Php 150,000,000.00) divided into One Hundred Fifty Million (150,000,000) shares with par value of One Peso (Php 1.00) each. Of the increase in capital stock of One Hundred Twenty-Five Million Pesos (Php 125,000,000.00), the amount of Fifty-Six Million Pesos (Php 56,000,000.00) has been subscribed and paid-up.

On 27 December 2002, the Company’s Board of Directors and stockholders approved the following resolution, among others:
– The conversion of additional paid-in capital amounting to Php 58,341,330.00 into 58,341,330 shares of stock to be paid, as and by way of stock dividends, to all stockholders of the Company as of 31 December 2002 in proportion to the number of shares held by each stockholder and which will be issued out of the proposed increase in the authorized capital stock from One Hundred Fifty Million Pesos (Php 150,000,000.00) to Three Hundred Eighty Million Pesos (Php 380,000,000.00);

– The increase in authorized capital stock from One Hundred Fifty Million Pesos (Php 150,000,000.00) divided into One Hundred Fifty Million (150,000,000) shares with par value of One Peso (Php 1.00) per share to Three Hundred Eighty Million Pesos (Php 380,000,000.00) divided into Three Hundred Eighty Million (380,000,000) shares with par value of One Peso (Php 1.00) per share; and

– The amendment of Article Seventh of the Amended Articles of Incorporation in relation to the proposed increase in authorized capital stock.

The Company?s subscribed and paid-up capital as of 31 December 2002, after incorporating the effect of stock dividends in 2002, amounts to Php 139,341,330.00.

On April 15, 2003, the SEC approved the aforesaid increase and amendments.

Revenues from data services are expected to reach 98% in 2003 from 7% in 2002. Revenues from video uplink services are expected to be reduced to 2% in 2003 from 93% in 2002. The shift in TBGI revenue mix in favor of data services results from the expansion of the VSAT network. There is no single customer accounting for 10% or more of revenues.

TBGI connection to the Internet features the Mabuhay space segment to link the Philippines to Hawaii, and UUNet fiber optic line to complete the link from Hawaii to mainland US. TBGI uses a cache system at its hub in Clark to reduce bandwidth requirement for inbound data. As a back-up connectivity, a fiber optic line is terminated at TBGI data hub.

TBGI provides digital uplink services for the audio/video media. It has service experience with international cable television program providers, Korea-based TV shopping network, and five other foreign and local TV channels. TBGI uses reputable firms to sell service to institutional users for the use of its available channels.

TBGI has recently installed a main hub of satellite transmitter-receiver to link the interactive broadband infrastructure for data transmission requirements of its educational and healthcare institutional customers. The main hub is linked to remote units installed in rural site locations of schools through satellite communications.

TBGI further provides real-time nationwide satellite-based video/data feeds with ad insertions, broadband pointto-point delivery, multi-media services, video conferencing, newswires, and remote data center co-location and management. The Company has not spent a significant amount for research and development. This results from TBGI’s strategy of using existing technologies and forming alliances or supply arrangements with providers of applicable technology that come in the way to serve market opportunities better.

TBGI operations do not generate waste or toxic emissions. Hence, environmental liability may be limited to possible adverse effects of radio waves. Nevertheless, TBGI ensures that all equipment suppliers comply with standards set by the International Radio Consultative Committee (IRCC) of the International Telecommunications Union (ITU). As such, the cost of environmental compliance is embedded in the price of telecommunications equipment.

Description of Company

(i) TBGI generates revenues mainly from Internet, Intranet, and local loop services subscriptions of schools, corporate private sector and government agencies. The Company sells (1) data services to subscriber schools (at present the Company only provides services to schools) for Internet connectivity and virtual private network connectivity, and (2) video uplink services to local and foreign TV channels. Data and video services are delivered from TBGI earth station in Clark, Pampanga transmitted via Mabuhay satellite to receiving equipment units of clients. It proposes to sell to hospitals. The Company has service experience with local Channels 4, 9, and 13, and international cable television program providers including an Egyptian channel and a Korea-based TV shopping network. With the exception of the Egyptian channel, the service contracts of these clients for video services expired as of end 2002.

(ii) The company business activities serve mainly the Philippine market. However, its uplink facility can also be used to serve customers in Asian countries covered by Mabuhay’s Agila 2 satellite footprint.

(iii) As part of its subscription services, TBGI provides equipment to be installed on subscriber’s site. The equipment is not owned or purchased by the subscriber. Substantially all its current sales of Internet connectivity to subscriber schools are being undertaken through a sole marketing agent under a nonexclusive arrangement, pursuant to which a commission is paid to the marketing agent based on revenues collected by Transpacific from such schools.

(iv) TBGI is a participant of the information and communications industry. New entrants to this industry are benefiting from declining prices of equipment and declining prices of bandwidth, which result from development of new wireless technologies. TBGI, Domsat, and Philcomsat are the only existing commercial operators of satellite earth stations with broadcasting franchise granted by the government.

On data transmission services, Transpacific believes that it is at par with other service providers of the educational institutions market. The Company enjoys similar market share vis-a-vis competitors, each normally serving around 52 educational institutions. As of September 2003, TBGI is servicing 52 educational institutions.

The market for data services needed by the healthcare industry is essentially untapped by the data service providers due to the complexity of medical data applications.

On video uplink services, TBGI is one of very few active industry participants of the video broadcasting market, each serving one or two clients at a time. The clients move around the same industry participants-TBGI has served eight video clients during a span of five years before 2001.

The Company is particularly competitive in remote areas where landlines are not available or are simply too costly to serve an uneconomic number of customers. Aside from serving remote areas, TBGI pricing policy provides for a 10% discount against leading competitors, and better performance of equipment that can connect at least double the number of computers for each client site.

Transpacific provisions for equipment spares ensure higher availability and quality of service. TBGI expects competition from new entrants to the industry. It has the competitive edge from its use of the C-band of satellite signal that is not affected by weather conditions compared to the cheaper but less reliable Ku-band used by the competitors.

Television channel operators are potential competitors but their respective broadcast franchise frequencies are limited to ‘own-use’ video broadcasting. Cable TV operators currently bundle Internet and cable TV services but their areas of coverage and broadband capabilities are geographically limited.

Business Line
Engaged in the provision of public commercial radio, terrestrial, cable and satellite broadcast services
Subsidiary

Advisor
R.R. TAN & ASSOCIATES, CPAS
IPO date
12/12/2003
US SIC Code
4899
Company Address
9/F, Summit One Tower
530, Shaw Boulevard
City province or state postal code
MANDALUYONG CITY
Phone: +63 2 718 3720
Fax:
Country address: PHILIPPINES
Website url: