Globe borrows $90M from China Bank to fund capex

MANILA, Philippines - Globe Telecom has signed a 10-year, $90-million floating rate term loan facility with China Banking Corp. as lender, the first loan facility to be availed by the company this year.

The loan proceeds will be used to finance capital expenditures for 2012, which include the company’s $790-million investment for its five-year massive network modernization and IT transformation program to boost voice and data capacity in anticipation of the growing demand for broadband and mobile data use. Of this amount, $640 million will be spent this year and in 2013.

With the rapid penetration of social media and availability of more affordable smartphones among Filipino mobile phone owners, Globe said it looks at its broadband and data businesses as key focus areas that will sustain its growth momentum for the year. Just recently, Globe unveiled its new and stronger line-up of mobile and at-home broadband plans with faster speeds to give its growing subscriber base better surfing experience anytime of the day.

In November 2011, international credit rating firm Fitch Ratings upgraded the company’s long-term foreign and local currency issuer default ratings (IDRs) to BBB- from BB+ with a stable outlook.

As of end-September 2011, Globe had a debt-to-equity ratio of 1.04.

For the first nine months ending Sept. 30, 2011, the company’s service revenues reached P49.98 billion, with a net income of P7.99 billion, which were nine percent and seven percent higher, respectively, than the 2010 comparable figures.

Just last month, the company said it signed a seven-year floating-rate loan facility worth P5 billion with Banco De Oro Unibank Inc.

Globe chief financial officer Alberto de Larrazabal said the company’s capital expenditure program included the initial portion of its mobile network modernization program.

The program, which would cost about $790 million over the next five years, was announced in November 2011.

Its modernization plan aims to improve Globe’s network quality and customer experience, increase voice and data capacity, drive down costs and prepare the network to meet the future needs of customers, the company said.

In November 2011, the company tapped Rizal Commercial Banking Corp. for a similar P5-billion loan.