Globe to borrow $400 M this year

MANILA, Philippines - Listed Globe Telecom Inc., a joint venture between conglomerate Ayala Corp. and Singapore Telecommunications Ltd., is looking at borrowing about $400 million to finance about 60 percent of its capital expenditures this year.

Alberto de Larrazabal, chief financial officer of Globe, said the company is still finalizing details of the borrowing program for the year.

Globe could borrow from foreign and local banks or issue debt instruments both in the international and domestic market to raise much needed funds to bankroll this year’s expansion program.

Larrazabal said the company is spending between $600-million to $650-million for its capital expenditures this year for transformation initiatives for the company’s data network including long term evolution (LTE) and for fixed broadband.

The telecommunications provider said about a third of this year’s budget would be used for trailing capital expenditures payments related to Globe’s transformation initiatives.

Globe’s capital expenditures jumped 44 percent to P28.999 billion last year from P20.124 billion in 2012. About 32 percent of the cost went to one-time spending and investments in international cable systems while 25 percent went to transformation and modernization initiatives.

Furthermore, about 26 percent of the total budget last year was spend for its fourth generation (4G) as well as Tattoo Home broadband, while 16 percent went to traditional services including new sites and in-building solutions.

Globe is now embarking on building more sites, boosting capacity, and enhancing performance after rolling out 9,400 kilometers of additional fiber optic cable and firing up 700 4G LTE sites and almost 90 percent 3G coverage providing customers with faster mobile browsing experience.

Globe president and chief executive officer Ernest Cu earlier said 2013 was a transition year for Globe given the company’s $790 million network and information technology modernization projects.

Cu said Globe expects a mid to high single-digit increase in service revenues this year after a nine percent growth to P90.5 billion last year from P82.74 billion in 2012, driven by the continued growth in the demand for data connectivity across the mobile, broadband and fixed line data businesses.

Globe reported a 42 percent jump in mobile browsing and other data revenues to P11.6 billion, followed by broadband revenues that increased by 20 percent to P10.44 billion and fixed line data revenues that grew 13 percent to P4.69 billion.

Globe’s core net income that excludes the impact of non-recurring accelerated depreciation charges related to assets affected by the company’s network and IT transformation programs grew 13 percent to P11.6 billion last year from P10.3 billion in 2012.

Operating expenses including subsidy and other operating expenses, grew 13 percent to P54 billion from P47.7 billion to P54 billion, largely on increases in subsidy and re-contracting costs, trade and other provisions, and staff-and network-related expenses.

Globe’s subscriber base jumped 16 percent to 38.5 million last year from 33.1 million in 2012 as the number of prepaid subscribers increased 16 percent to 36.35 million while the number of postpaid subscribers jumped 17.3 percent to 2.03 million.