Now Telecom allots P2 B for capex over two years

MANILA, Philippines - Now Telecom Co. Inc., a unit of listed Now Corp., has earmarked a little over P2 billion for its capital expenditures over the next two years.

Now Corp. president and CEO Mel Velarde said in a press conference that the company is set to finalize how to fund the capital expenditures within the next 60 days.

“We are looking at various options one is raising shares in the market and the other one is through borrowing. We are looking at raising P1 billion or the entire amount immediately,” Velarde said.

He said the company has been approached by three investment bank that offered to raise the amount.

According to him, the company is looking at borrowing 50 percent of the entire amount from borrowings and the other 50 percent from equity contributions.

Velarde said the company is spending P1.26 billion ($28 million) over the next two years to activate the all text GSM network of Now Telecom and another P900 million ($20 million) to build its broadband access.

The company expects revenues of P1.6 billion and an EBITDA of P1.1 billion for its all text mobile network and P8.4 billion and an EBITDA of P3.45 billion for its broadband service on the fifth of operation.

He pointed out that Now Telecom is looking at attracting 2.9 million subscribers over the next five years.

According to him, the company is set to offer unlimited text within the network of Now Telecom at P3 per day compared to the P7 per day being offered by Ayala-led Globe Telecom Inc. and P6.66 per day of Smart Communications Inc. as well as P5 per day of Sun Cellular both owned by dominant carrier Philippine Long Distance Telephone Co. (PLDT).

He explained that the company hopes to corner between two and five percent of the market for text messages in the country.

On the other hand, Velarde said the company is hoping to capture 85,000 subscribers and intends to bring to the home broadband internet access at twice the speed but at the same price users are currently paying.

He said Now Telecom is initially venturing into the text as well as broadband markets and would leave the capital intensive voice business to industry giants such as PLDT and Globe.

“But the market is growing so fast there is so much demand, we think of a legitimate third or fourth player should come in,” he added.

The company is hopeful that it would be able to lure a foreign partner to put in the much needed capital and technology once the ASEAN integration is put in place by 2015.

“We think if we do this right there will be a foreign player that will come in,” he said.

According to him, Now Corp. is set to jack up its 19-percent interest in Now Telecoms to at least 33 percent prior to the launch of the text as well as broadband services.

“We hope to raise the money by this year and start rolling our 2015,” he said.

With the new business ventures, Now Corp. expects to be back on the black on the back of a 46-percent increase in revenues this year.

The company’s revenues jumped 59 percent to P79.31 million last year from P50.01 million in 2012 as service revenues more than doubled to P53.32 million from P25.91 million. The company’s net loss was reduced by 37 percent to P87.23 million from P137.9 million.