Globe Telecom hikes public float to 20%

Globe Telecom has increased its public float from 14 percent to 20 percent, following major shareholder Deutsche Telekom’s exit late last year, addressing the limited trading liquidity of Globe’s common shares which was a previous concern among investors.

During the company’s stockholders’ meeting, Globe chairman Jaime Augusto Zobel de Ayala II noted that Deutsche’s difficult decision to exit from its Asian investments, including Globe provided an opportunity for the latter to benefit from certain crucial developments.

First, he pointed out that Ayala Corp. and Singapore Telecom both showed the strength of their commitment to Globe by increasing their respective stakes, signaling their confidence in the long-term prospects of the company.

Secondly, Globe was also provided with an avenue to optimize its capital structure through the buyback of 12 million of its common shares, effectively increasing shareholder returns through the resulting earnings per share accretion and brought the company’s financial leverage to optimal levels, he added.

Thirdly, he noted that the transaction provided an opportunity for Ayala and Singtel to offer additional common shares to the market, increasing Globe’s public float.

Zobel also stressed that Globe can continue to gain from Singtel’s growing presence in the region to further elevate its own competitiveness beyond local boundaries.

He explained that increasingly, a model of multi-level cooperation is the only way to deal with and navigate through these tumultuous times and build strong competitive positions whether on a regional or local level. "Thus, within our industry and in Southeast Asia as a whole, we are all under challenge to strive for greater regional collaboration as a key to future success," he said.

Zobel noted that in the three years since Singtel launched a collaborative effort among its associate companies in the region (including Globe, Optus of Australia, AIS of Thailand, Telkomsel of Indonesia, and Bharti of India), meaningful progress has been made. "We will continue to build on the headstart we have made, by now drawing on our combined experience in different markets and focusing our regional collaboration on key initiatives that can make an even more significant impact on our businesses," he stressed.

Also last Monday, Zobel revealed that Globe now intends to pay out cash dividends on a regular basis. Last year, Globe declared its first cash dividend in over 10 years. At P14 per share, shareholders collectively received about 31 percent of 2002 net income. Beginning this year, the Globe board of directors adopted a dividend policy to declare cash dividends at a dividend payout rate of around 50 percent of prior year’s net income payable semi-annually in March and September of each year.

In accordance with this policy, Globe declared its first semi-annual cash dividend in 2004 of P18 per common share with record date of Feb. 18, 2004 and a payment date of March 15, 2004.