Globe says no plan to borrow from international market

MANILA, Philippines - Globe Telecom said yesterday it has no immediate plans of raising funds through the international capital markets, given the liquidity of the domestic debt markets and the availability of competitively priced funds from domestic and overseas banks as well as export credit agencies.

The company made this announcement following its decision not to renew its credit review agreement with Standard and Poor’s (S&P).

Prior to the withdrawal, Globe said S&P affirmed its BB+ corporate credit rating on the company with a stable outlook. It also affirmed its BBB+ ASEAN scale rating on Globe.

Globe currently has a PRS Aaa rating from local credit rating agency Philratings. This is the highest possible rating, signifying the smallest degree of investment risk, according to Globe chief financial officer Delfin Gonzalez Jr.

The company earlier signed a P3-billion five-year term loan facility with Union Bank of the Philippines, proceeds of which will be used to finance capital expenditures and general corporate requirements.

“We continue to invest in enhancing our mobile service and expanding our broadband footprint. These efforts are in support of our strategies to further improve our competitive position in the market, as well as provide our subscribers with the best customer experience,” Globe treasury division head Albert de Larrazabal said.

As of end September 2009, Globe has spent P19.6 billion in capital expenditures as it sustained the expansion and upgrade of its mobile, broadband and corporate data networks, as well as investments in a second fiber optic backbone network and participation in the TGN-IA international submarine cable facility.

Globe reported a 12 percent growth in its net income to P9.9 billion during the first nine months of the year from P8.8 billion in the same period last year. This is mainly due to an after tax gain of approximately P398 million arising from an equipment exchange transaction with an equipment supplier coupled with the lower corporate tax rate of 30 percent starting 2009 compared to last year’s 35 percent.

Core net income, which excludes foreign exchange and mark-to-market gains and losses and non-recurring items, was steady at P9.4 billion.

Company officials reported that consolidated service revenues during the period was at P46.9 billion, up one percent from last year’s P46.6 billion, Sustained top line growth was underpinned by the strong performance of the broadband and fixed-line data businesses which grew 69 percent and 22 percent, respectively, from last year, compensating for the lower revenues from the mobile and traditional landline segments.

The mobile business ended the period with 23.1 million subscribers.

Officials said Globe continues to churn out marginal subscribers acquired in earlier quarters and focused its acquisition drives towards better quality subscribers. This shift in acquisition focus has translated to some early gains, with its mass market brand TM demonstrating higher revenues and average revenue per user (ARPU) quarter-on-quarter despite a contraction in its SIM base.

“While competition remains intense, we believe that we have the right strategies to further improve the competitive position of our mobile business. We will strengthen our brand portfolio through innovative and affordable product offerings, resume the growth of our subscriber base through quality acquisitions, while continuing to upgrade and improve the robustness of our network,” Globe president and CEO Ernest Cu said.

Meanwhile, Globe’s  broadband business continued to gain momentum as subscriber base grew almost three-fold to over half a million subscribers, beating full-year expectations.

“We are very pleased with the significant headway we have made in the broadband space. We will accelerate our broadband capacity build to capture the growing demand for the service, and to solidify the gains we have attained so far,” Cu added.

Meanwhile, mobile service revenues, which comprise 86 percent of total service revenues, declined two percent from last year’s level. Intense competition, growing multi-SIM usage, and the market’s increasing preference for bucket and unlimited offerings continued to put pressure on top line performance.

The mobile voice segment, which accounts for 49 percent of total wireless service revenues, remained flat against last year at P19.769 billion. While subscriptions to unlimited and bulk voice packages posted significant growth, this was offset by the decline in regular voice usage, as well as lower IDD voice revenues, officials explained.

On the other hand, mobile data revenues, which accounts for the remaining 51 percent of total revenues, decreased three percent year on year. While bulk and unlimited SMS sustained revenue growth, this was offset by the decline in regular SMS revenues.