Globe Telecom sets capex at $500M

CEBU, Philippines - Telecommunication giant, Globe Telecom is allocating US$500 million capital expenditures (capex) for this year, large part of this budget will be allocated to expand its broadband business.

The Ayala-controlled company reported that US$230 million of the total capex for this year will be spent to augment its existing capacities of its broadband business, including the expansion of coverage and footprint of the Company’s DSL, WiMax, and 3G broadband services.

The company will also spend about US$170 million is also allocated for its mobile telephone business.

The 2010 capex plan also includes about US$50 million for Globe’s fixed line data networks which primarily caters to the corporate and enterprise sector.

It also includes the investment of about US$50 million in additional one-time investments. This covers costs related to Globe’s participation in the new Southeast Asia Japan Cable (SJC) System which will link Singapore, Hong Kong, Indonesia, Philippines and Japan, and which will further increase the capacity and boost the resiliency of Globe’s international network. The SJC is expected to be operational by 2012.

In 2009, Globe Telecom allocated a total of P24.7 billion capex, included carry-over spend related to the Company’s participation in the TGN-A international cable system, FOBN2 or Globe’s second fiber optic backbone network, domestic transmission loops, as well as the expansion and upgrades of the Company’s broadband and mobile networks.

As of the end of 2009, Globe increased its base stations by 22 percent to 10,333 and cell-sites by seven percent to 6,226 to support its 2G, 3G and WiMax services.

Geographical coverage of service revenues stood at 97 percent while population coverage was at 99 percent.

Total capex as a percentage of service revenues registered 40 percent compared to 2008’s 32 percent, the report indicated.

Excluding the one-time investments, mobile capex as a percentage of mobile revenues was at 13 percent, within regional benchmarks for similarly mature markets.

The company closed the year 2009 with net income after tax of P12.6 billion, 11 percent higher than 2008. Excluding foreign exchange, and mark-to-market gains and losses and non-recurring items, the Company’s core net income closed at P12 billion or two percent higher than the previous year.

Mobile revenues on the other hand, declined by four percent due to intense competition and increase preference of subscribers for value offers on the back of weak consumer economy.

However, the decline was partially offset by a 22 percent improvement in fixed line and broadband revenues on the back of robust subscriber growth in broadband, and the continued growth of the Company’s fixed line data business for the corporate sector.

Mobile revenues of the company accounted for 85 percent of total service revenues, down from 88 percent in 2008. Meanwhile, fixed line and broadband increased its share of consolidated revenues from 12 percent to 15 percent in 2009.