Globe Telecom signs $75-million credit facility

MANILA, Philippines - Globe Telecom has recently signed a $75-million credit facility arranged by Citibank NA with Citibank NA, Deutsche Investitions — Und Entwicklungsgesellschaft MBH and Nederlandse Financierings — Maatschappij Voor Ontwikkelingslanden NV as lenders.

Company officials said proceeds of the facility will be used for capital expenditure.

Just last May, Globe secured a P5-billion fixed and floating rate notes facility due 2014 and 2016. The loan is a five-year and seven-year facility and was arranged by First Metro Investment Corp.

Globe officials earlier disclosed that the company is tapping at least P3 billion in funds from external sources this year to finance part of its capex requirement.

They said the amount will also be used, together with internally generated funds, to prepay about P1 billion in peso-denominated loans.

The P5-billion notes facility brings to P14 billion the total amount of external funding secured by Globe this year.

Globe was also earlier authorized to issue P10 billion worth of bonds, of which only P5 billion has been tapped so far. Officials said that the company still has until next year to utilize the remainder.

Of Globe’s $350 to $400 million capex for 2009, about $150 million has been earmarked to expand the coverage and capacity of its broadband network for the residential and consumer markets while another $130 million will be spent to grow and sustain the mobile business, including amounts needed to ensure the continued robustness of the network. This year’s capex also includes $25 million for Globe’s corporate and enterprise data business, as well as $25 million for additional investments in international cable facilities.

For the first quarter of 2009, consolidated capex was at P5.024 billion, or 17 percent higher than last year’s level of P4.3 billion.

Globe expects a double-digit revenue growth for its fast-growing broadband business and a low to mid single-digit level for its wireless business, even as company officials announced that a $350-to $400-million annual capital expenditure budget level will be maintained in the next few years.

Globe officials also said they expect to maintain an earnings before interests, taxes, depreciation and amortization (EBITDA) margin of 59 percent or same as last year. The company is also committed to a dividend policy of 75 percent of prior year’s income, in addition to special dividends which still have to be determined.

Company president Ernest Cu earlier noted that the first quarter 2009 performance is tracking well against the guidance numbers, with a three percent growth in revenues to P16 billion, an EBITDA of P9.8 billion for a 61 percent increase, a capex of P5 billion, and first half regular dividend of P32 per share paid last March.

Cu remains hopeful that Globe’s business will be robust this year, as he pointed out that they have been able to reverse last year’s trends and recovered some share of industry revenue. “The recovery is still small but we hope to continue with it,” he said.