Globe Telecom allots $400 million for capital expenditures this year

Globe Telecom is setting aside $350 million to $400 million for capital expenditures this year, as it continues to be cautiously optimistic about the prospects of the telecommunications industry.

Around $150 million will be spent for consumer broadband including the third generation of mobile communications technology (3G), $130 million for core cellular 2G (second generation mobile technology), $25 million for corporate data, $20 million for support capex, and $25 million as carry-over spend for international cable facilities and other non-recurring capex.

The 2009 capex budget of around P16.5 billion is 23 percent of 2008 revenues. In 2008, capex was at P19.9 billion for a capex to revenue ratio of 30 percent.  

Globe chief finance officer Delfin Gonzalez said the 2008 figure included non-recurring capex for Globe’s participation in the international cable project, landing station, and backhaul.

Aside from $66 million in borrowings earlier drawn, Gonzalez said Globe is looking at sourcing another P5 billion in the near term from the proceeds of a company retail bond offer. Globe was recently authorized to offer up to P10 billion in retail bonds to finance both capex and maturing debts this year of around $250 million.

Earlier, Globe president and CEO Gerardo Ablaza said he expects a better year for the company in 2009, with modest growths in terms of revenues and bottom line.

Ablaza said the company started 2009 on a higher ledge, with the fourth quarter of 2008 posting record revenues. “2009 will be better from a revenue view point. But of course, everything will depend on how the economy will perform and how the consumer purchasing power will develop this year,” Ablaza stressed.

Based on the January 2009 top-ups, he said “the numbers are encouraging vis-à-vis our expectations.”

Ablaza expects multi-SIM use among subscribers to continue to impact average revenue per user (ARPUs) for the industry. Globe estimates multi-SIM usage to be at an average of 16 to 17 percent.

During yesterday’s investors’ briefing, Ablaza said they expect industry churn rates to remain elevated with increasing propensity for one-time or short-term use of SIMs.

“We continue to be cautiously optimistic about the prospects for the wireless sector, which will be slower compared to last year. But there will be some resiliency in mobile usage,” he pointed out.

Globe estimates that the mobile penetration rate as of end-2008 has already hit 75 percent.

In the case of the broadband sector, Ablaza said they project the growth momentum to continue into this year, offsetting declines in the traditional landline service. For wireline and corporate data, he said there will still be growth opportunities as corporate demand remains resilient, particularly for mission-critical services including those of the business process outsourcing (BPO) sector.

Ablaza said the company will deploy leapfrog technologies such as Wi-Max and 3G, improve network quality and coverage, and introduce affordable products and bundles that will drive adoption in broader markets.

Ablaza also said Globe remains committed to a dividend policy of 75 percent of prior year’s net income.