Discussion
Under § 854, in determining whether to grant this application, the Commission must consider whether to approve the proposed transfer of control of AFN to Mobilepro is in the public interest.
Section 854 states in pertinent part:
No person or corporation...shall merge, acquire, or control either directly or indirectly any public utility organized and doing business in this state without first securing authorization to do so from the commission...Any merger, acquisition, or control without that prior authorization shall be void and of no effect.
The purpose of § 854 is to enable the Commission to review a proposed transaction, before it takes place, in order to take such action as the public interest may require. The Commission has broad discretion under § 854 to approve or reject a proposed transaction. Where necessary and appropriate, the Commission may attach conditions to a transaction in order to protect and promote the public interest.4
The Commission uses several criteria to decide whether to approve a proposed transaction that will result in an entity without a certificate of public convenience and necessity (CPCN) acquiring a telecommunications utility that has a CPCN to provide resold telecommunications services.5
First, the acquiring entity must have at least $25,000 of cash or cash equivalent. Here, Applicants provided audited financial statements under seal , which show that although Mobilepro has cash and cash equivalents that exceed $25,000, the company was operating at a loss as of the years ended on March 31, 2004 and March 31, 2005. However, Mobilepro's revenues grew from $311,000 to approximately $46 million from the end of fiscal year 2004 to the end of fiscal year 2005, as the result of a series of transactions. Mobilepro intends to reduce its operating expenses, particularly professional fees, in order to further improve its financial situation. Since Mobilepro has at least $25,000 available for the operations of AFN and is no longer operating at a loss, it appears that Mobilepro has met this requirement. Based on this information, we find that the first criterion has been satisfied.
Second, the acquiring entity must be able to operate the acquired utility competently. The Applicants represent that Mobilepro has extensive experience in managing telecommunications companies through the activities of its subsidiaries, Davel, Affinity, and CloseCall. Based on this information, we find that the second criterion has been satisfied.
Third, the Commission considers if any affiliate, officer, director, partner, or owner of more than 10% of the acquiring entity, or any person acting in that capacity, has (1) filed for bankruptcy; (2) been sanctioned by the Federal Communications Commission or state utility regulatory commissions for failure to comply with any statute, rule or order; or (3) been found civilly liable for a violation of § 1700 et seq. of the California Business and Professions Code or for any actions that involved misrepresentations to consumers, or is currently under investigation for similar violations. The Applicants represent that there is no such person or entity with respect to Items 1 and 3. Our search of Lexis did not find anything that contradicts the Applicants' representation.
We remind the Applicants that they must comply with all applicable California regulatory statutes, rules, and orders, and that the Commission may impose fines and other sanctions if they fail to do so.
In conclusion, we find that Mobilepro should be authorized to acquire AFN pursuant to § 854 for the following reasons. First, the transaction satisfies the applicable criteria as described previously. Second, there will be no changes to AFN's rates or services as a result of the transaction. Therefore, the public will not be harmed by the transaction. Third, the public may benefit from the transaction to the extent it enhances AFN's ability to compete in California. Fourth, there is no opposition to this application.
4 D.01-06-007, 2001 Cal. PUC LEXIS 390, *24.
5 D.03-06-079, mimeo., pp. 7 - 8.
