Globe Telecom to trim capex over next two years

Ayala-owned Globe Telecom projects its capital expenditures to go down in the next couple of years to 15-20 percent of service revenues. The current level is 31 percent.

The company expects more and more Filipinos to own mobile phones, with the cellular penetration rate likely to be higher than 25 percent by 2005 as earlier projected.

"We were earlier forecasting the rate to be at 25 percent by 2005. However, we have to review this because as of the end of March 2003, the penetration rate is already at 20.5 percent. There is some reason to believe that the outlook will be better," according to Globe president and chief executive officer Gerardo Ablaza.

He said that subscriber growth will remain significant even if the industry is moving to a maturing phase.

For his part, Globe chief finance officer Delfin Gonzales Jr. said there is potential that the penetration rate will be higher than 25 percent by 2005. "In many of the provincial areas, the take up is strong and new traffic is being generated," he explained.

During the first three months of the year, Globe’s capital expenditure stood at P3.7 billion, or 19 percent of the total 2003 budget of P20 billion. The company currently has 2,214 cellsites and according to Gonzales, this is where most of the future capex will be spent, especially as Globe expands to the provinces.

Meanwhile, Globe reported yesterday a consolidated net income of P2.004 billion for the first quarter of 2003 compared to P1.439 billion in the same period last year, or a 39-percent increase.

The net income would have reached P2.72 billion had it not been for a P716- million provision recognized by subsidiary Islacom related to its investments in a submarine cable project.

Net operating revenues grew by nine percent, at P11.734 billion for the first three months of the year compared to P10.765 billion last year while service revenues increased 24 percent, from P9.492 billion to P11.737 billion in the same period. Earnings before interest, taxes, depreciation and amortization (EBITDA) went up by 32 percent, from P5.289 billion during the first quarter last year to P6.957 billion this year.

During the first quarter, Islacom recognized a provision for its 4.25-percent equity investment in C2C Holdings amounting to P716 million. C2C Holdings is the holding company for the equity investments of all the cable landing parties in C2C Pte Ltd., the company that owns the C2C cable network. Aside from Islacom’s equity stake, Globe Telecom has separately purchased capacity on the C2C cable network and has invested in a cable landing station in Nasugbu, Batangas.

According to officials, notwithstanding Islacom’s provisioning, Globe recognizes the long-term benefits of its purchased capacity in C2C and its investments in the cable landing station

Company officials reported that wireless service revenues accounted for 90 percent of net operating service revenues in the first quarter, while the remaining 10 percent was contributed by the wireline business.

Consolidated prepaid subscribers (Globe Prepaid Plus and Touch Mobile) totalled 6.568 million as of March 31 compared to 4.519 million last year, or a 45-percent increase. Globe Prepaid accounted for 5.607 million while Touch Mobile contributed 960,784 subscribers. On the one hand, Globe Handyphone postpaid subscribers reached 541,763 as of March 31.

Globe likewise revealed that international long distance (ILD) revenues stood at P3.125 billion for the first quarter of 2003, compared to P2.3 billion last year. Meanwhile, national long distance (NLD) revenues declined 38 percent, from P831 million during the first quarter of 2002 to P519 million this year.