DBP approves P5 billion term loan for Globe Telecom

CEBU, Philippines – The Development Bank of the Philippines (DBP) has approved a P5-billion term loan facility to telecom giant Globe Telecom to support the company's financial requirements for 2010.

Alberto De Larrazabal, Globe chief financial officer (CFO) announced that the proceeds of the loan will be used to finance the company's capital expenditures, which includes the buildup of additional mobile, wireline data, broadband and international submarine facilities.

He said this is to support the company's increasing subscriber base to realize Globe's goal of spending US$500 million capex for 2010.

The DBP loan is the second loan facility signed by Globe this year. In the first quarter of this year, the Ayala-led telecom firm inked a P2 billion loan with Allied Bank.

As of end June this year, Globe's debt-to-equity ratio was at 1:01.

Globe, whose principals are conglomerates Ayala Corporation and Singapore Telecommunications, posted a net income of P5.1-Billion in the first half of 2010.

The company's subscriber base reached 24.62-Million by end of June, up three percent from the previous quarter's 23.89-Million subscribers, on the back of 732,000 net addi-tions in the second quarter of the year.

Its broadband subscriber base is also up almost three-fold from last year's 379,000 customers, to 930,000 subscribers, driven by growth in its users of its broadband service brand "Tattoo" as well as Globe WiMAX for at-home internet.

Earlier, company announced 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 expan-sion of coverage and footprint of the Company's DSL, WiMax, and 3G broadband services.

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

The 2010 capex 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 an earlier interview with Globe Telecom president and chief executive officer (CEO) Ernest Cu, he said that the company will strengthen its bid to provide Internet connec-tion to the mainstream market, via WiMax technology.

Cu said that the company is rolling-out soon the WiMax technology, to areas which can't be reached by fixed line infrastructure.

WiMAX (Worldwide Interoperability for Microwave Access) is wireless broadband access that presents a cost-efficient alternative to deploying internet access via cable and DSL. It has improved reach versus other wireless technologies as WiMAX covers greater distances than WI-FI, CDMA or even 3G and HSPA.

Globe tested WiMAX as early as 2005 and began the rollout in 2008. The WIMAX network was launched in February 2009 in Cebu City, the first in the Philippines to experi-ence the WiMAX service of Globe. Upon launch, Globe had the first 2.5 Ghz WiMAX (802.16 e) broadband network in Southeast Asia. (FREEMAN)