MTA buyout is a crooked piece of pieJim Sykes / The Frontiersman / August 24, 2000

There are many facts that havent been publicized that member-owners of MTA deserve to know so they can make an informed decision whether to end the 45-year MTA co-op.

ACS is using the standard takeover tools of blue-sky promises and dark threats of future uncertainty to persuade MTA members to sell.

It is ironic that the MTA co-op is considering selling at the same time people in the Lower 48 are forming member co-ops to buy chunks of such giants as US West, because their rates went up and service went down.

ACS ads say, An independent investment banking firm determined MTAs value is between $160 and 190 million and that it is a good deal. Actually, there were higher estimates. The independent investment banking firm, Legg Mason, stands to make $1.5 million MORE if the sale is approved than if MTA members reject the sale. Does a $1.5 million yes vote bonus seem like Legg Masons opinion was really independent?

ACS claims, Financial experts expect MTA to lose one-third of its value with just light to moderate competition. That means MTA could lose up to $85 million. This only a scare tactic and the claim is pure speculation.

Value is not important to the 45-year-old MTA co-op unless it is sold. Everyone agrees MTA is in excellent financial health, unlike ACS.

ACS has lost nearly half its stock value in the past 6 months, amounting to an approximate loss in the range of $200 million. The 2-year-old company is already $612 in debt with a poor debt equity ratio compared to MTA.

Selling MTA to a company with a poor financial picture invites cost-cutting and degrading of service. It also increases the prospect that California-controlled ACS will sell out to an even larger company.

MTA is financially healthy and the co-op is designed to provide quality service at a reasonable price. ACS, as a for-profit corporation, has only one mission to enrich the wealth of its shareholders. However, ACS is deeply in debt.

In terms of service, MTA members are now at the top of the priority list. Since profit is greatest in high-density cities, former MTA subscribers would immediately go to the bottom of the priority list as part of a larger for-profit company.

ACS has claimed that MTA will end up like ATU selling for a fraction of value at a later date. This is extremely unlikely. When ATU first went on the auction block the industry was not deregulated. By the time it actually sold deregulation had entirely changed the telephone business environment.

The latest 8th Circuit Court ruling, telling the FCC that its allowance of telephone monopolies scheme is wrong, will probably help MTA compete more effectively than previously imagined.

ACS holds out the sugar-coated promise of eliminating long-distance calls between Anchorage and the Valley. The promise is implausible because it would cause a major regulatory rate case with enormous opposition.

It also does not tell people that lost revenue from long-distance charges would undoubtedly be made up with higher local rates. A current single residential line costing $17 could easily rise to $30.

High-volume commercial callers would benefit the most, while the average, residential phone user would be stuck with higher local rates. One of the most serious problems with the ACS takeover of MTA is the sleazy process. The sale was born in secret.

A last-minute back-door legislative loophole was created to eliminate two hurdles ACS did not want to cross requirements for independent appraisals and a reasonable opportunity for competing bids. MTA also faces a poison pill provision that could force it to pay ACS up to $7 million if it even seeks another bid. The lack of honest open process has inspired protest music, which can be found at www.mtayes.com.

The sale is akin to an out-of-state buyer making an offer on ones home without an independent appraisal or competitive bid, then having the former homeowner agree to rent the house back without knowing the cost. The true value of the home would be unknown and control over the house would be lost, just as local control of this phone utility would be lost if people vote to sell out.

The MTA board has agreed to do everything commercially reasonable to consummate the sale. While MTA is muzzled, ACS is free to spend a million dollars to convince members to sell. Independent information is hard to get, but it is available at www.mtayes.com.

If MTA members really want to sell, a normal business process needs to be followed that includes competitive bids and honest, independent appraisals. This isnt that kind of sale.

MTA, and the local jobs it provides, is extremely valuable. Think carefully before casting your vote.

Jim Sykes is a consumer advocate and member of Just Say No to ACS. Its Web site address is www.mtayes.com.