Globe Telecom may pay more debt ahead of time

Globe Telecom Inc. said yesterday it may sell bonds or take on more loans to pay off existing debt and take advantage of lower interest rates this year.

Globe, the partnership between Ayala Corp. and Singapore Telecommunications Ltd., may pay about $100 million more in peso and foreign currency debt before their due date, chief financial officer Delfin Gonzalez said. The company will complete the buyback of $300 million of bonds due 2012 by next month.

"There may be other prepayment opportunities," Gonzalez said at the company’s annual stockholders’ meeting yesterday.

Yields on Philippine peso bonds fell to a record last month as the government narrowed its budget deficit and reduced debt. Globe rival Smart Communications Inc. sold peso bonds in February after five-year debt yield fell to its lowest since October 1998, when Bloomberg started tracking the securities.

Globe may sell peso bonds or borrow in local currencies in the second half as local interest rates remain favorable, Gonzalez said. The company estimates it would save P2.3 billion in interest expenses in the next five years by replacing the $300 million in bonds with lower-cost debt.

The savings would also help fund plans to boost its network, including $45 million this year to expand its third-generation mobile services that enable faster Internet access, Globe president Gerardo Ablaza said.

"We like to break new ground and seek new sources of growth,’’ Ablaza told stockholders. It will use more than half of a planned $350-million capital spending this year to build high-speed Internet technologies.

Globe may invest in the media content business, which may support mobile TV, Ablaza said. It may also invest in new cable systems, Ablaza said, without elaborating.

The company’s foreign exchange gains will probably drop this year, Gonzalez said. A strong peso makes Globe’s overseas debt cheaper in local currency terms. After completing the buyback of debt next month, Globe’s foreign currency obligations will drop to between $100 and $130 million, he said. —Mary Ann Reyes