Globe secures P7-B Landbank loan to fund 2014 capex

MANILA, Philippines - Ayala-led Globe Telecom Inc. has borrowed P7 billion from Land Bank of the Philippines (Landbank) to fund its capital expenditures for next year, a company official informed the Philippine Stock Exchange (PSE) yesterday.

Alberto de Larrazabal, chief financial officer of Globe, told the exchange that the company has inked a seven-year term loan with Landbank to finance its general and corporate requirements for 2014.

 â€œThe proceeds of the loan will be used to finance Globe’s general and corporate requirements for capital expenditures for 2014,” he said.

Globe is still finalizing its capital expenditures budget for next year but has allocated between $450 million and $500 million for this year. It has completed its $700-million network transformation program in the first quarter and is in the midst of completing its $90-million upgrade of its information technology infrastructure.

Globe, a joint venture between conglomerate Ayala Corp. and Singapore Telecommunications Ltd., has so far borrowed $235 million from several foreign and local banks to finance its capital expenditures and restructure the company’s debt profile.

The company tapped Metropolitan Bank and Trust Co. (Metrobank) of taipan George SK Ty for a $120-million loan facility last March 25, another $75-million loan facility with the Bank of Tokyo – Mitsubishi UFJ last March 6, and $40 million through a three-year loan term facility with Mizuho Bank Ltd. last July 30.

Proceeds of the loans obtained were used to prepay and refinance the company’s debt and at the same time finance capital expenditures including the ongoing network modernization and transformation program as well as investments in fixed line, international cable facilities, and information technology infrastructure.

Globe also got the green light from the Securities and Exchange Commission (SEC) last June to issue up to P7 billion worth of seven-year fixed rate bonds due 2020 and 10-year fixed rate bonds due 2023 to finance its capital expenditures and at the same time pare down its debt this year.

For the first nine months of the year, the consolidated revenues of Globe grew 10 percent to P67.26 billion from January to September this year compared to P61.32 billion booked in the same period last year.

Globe’s core net income rose nine percent to P9.5 billion in the first nine months of the year despite the complexity of an ongoing network and information technology (IT) modernization initiative amid a highly competitive environment.

The company’s subscriber base increased 14 percent to 36.5 million as of end-September. Prepaid subscribers of Globe inched up by five percent to 16.96 million followed by TM subscribers with 23 percent to 17.57 million, and postpaid subscribers rose 19 percent to 1.98 million.

Globe is set to take over cash-strapped Bayan Telecommunications Holdings Inc. of the Lopez family through a debt-to-equity conversion now subject to the approval of a rehabilitation court.