Globe ramps up 2019 capex to P63 billion

MANILA, Philippines — Globe Telecom Inc. is ramping up its capital spending by nearly half this year to support the continued expansion and enhancement of its data network after ending 2018 with strong topline and bottomline growth.

The Ayala-led telco announced yesterday that it has earmarked P63 billion or about $1.2 billion for capital expenditures this year, 45.5 percent higher than the P43.3 billion or about $821 million capex spent last year for its ramped-up LTE rollout and address data traffic growth.

Globe said about 77 percent of the total capex for 2018 was for data-related services which were all geared to meet the customer demand for more bandwidth-intensive content.

“The proportions will be very similar to what we’ve done in the past. Majority is mobile and the wireless network. We will be expanding the fixed line. We’ll also be expanding our enterprise network,” Globe president and CEO Ernest Cu said.

Cu said a ramped up capital spending every year is becoming a trend in the industry, with PLDT also announcing significantly higher capex budget for 2019.

“We’re both seeing increased demand from our consumers with respect to the data network and data consumption. Video streaming, for instance, has now become mainstream. The number of people who now watch videos and probably consume entertainment right out of their phones and tablets is increasing and increasing exponentially,” he said.

“You saw our numbers when it comes to data growth, 59 percent year-on-year in terms of volume. That has to be supported somehow. If not, the whole thing falls apart in terms of momentum. For us it’s a matter of supplying the capacity out there to sustain the momentum we’ve built, and we did have fantastic momentum in the fourth quarter,” Cu said.

Globe chief finance officer Rizza Maniego-Eala said this year’s capex would be funded through the company’s operating cash and additional debt.

“We are regrouping internally because we have stronger cash balance and that means any borrowing will be pushed toward the latter part of the second quarter. Again we continue to review the rates and availability of liquidity in the market. Bilaterals continue to be straightforward the cheapest so far, but we do have different instruments that are available. We will maximize the cheaper alternatives versus the more expensive ones, again, depending on how we see the cash flow and new timing of new borrowings for 2019,” she said.

Globe registered a net income of P18.6 billion in 2018, a 22 percent increase from the previous year’s P15.08 billion.

Core net income, which excludes the impact of non-recurring charges, foreign exchange and mark-to-market charges, ended at P18.6 billion, up 37.8 percent from P13.5 billion in 2017.

Total consolidated service revenues jumped by 10 percent year-on-year to P140.2 billion which was attributed to data-related services across all business segments, pervasive 4G/LTE network, and wide array of content offerings through partnerships with industry leaders and global content brands.

On a post-PFRS (Philippine Financial Reporting Standards) basis, Globe finished 2018 with a net income of P18.6 billion and a core net income at P18.7 billion.

“We are proud of what we have achieved in 2018 both in terms of financials and network expansion. With our unwavering commitment to bring the Philippines closer to first-world internet connectivity, we are happy to announce that we have successfully met our minimum broadband coverage commitment,” Cu said.