Globe to spend up to $650M for network upgrade

MANILA, Philippines – Globe Telecom Inc. has earmarked between US$600 million to $650 million for capital expenditures this year.

Globe told the Philippine Stock Exchange (PSE) the amount was meant for its transformation initiative. It said a third of the year’s budget would be used for trailing capital expenditures payments related to Globe’s transformation initiatives. It would also be spent on the company data network, including long-term evolution (LTE) and fixed broadband services.

The company spent P28.99 billion in 2013, up 44% from P20.124 billion in 2012. Around 32% went to one-time spending and investments in international cable systems.

Globe noted that 25% went to transformation and modernization initiatives, while around 26% of the full budget last year was spent for 4th generation (4G) and Tattoo Home Broadband. Another 16% went into traditional services, such as the building of new sites and in-building solutions.

Globe’s president and chief executive officer, Ernest Cu, called 2013 a transition year for Globe due to the $790 million it spent on network and information technology modernatizaion projects. Cu added that the company was “happy and encouraged” with its achievements in 2013.

“Our sustained growth momentum is an evidence of the underlying strengths of our superior products and services and the differentiated customer experience we provide,” Cu noted.

Data sent to the PSE showed Globe had a 9% growth in consolidated service revenues. From P82.74 billion in 2012, Globe’s revenues rose to P90.5 billion in 2013, spurred by demand for data connectivity across mobile, broadband, and fixed-line businesses.

Globe also noted a 42% increase in mobile browsing and other data revenues to P11.6 billion. Broadband revenues also increased 20% to P10.44 billion, while fixed-line data revenues grew 13% to P4.69 billion.

The core net income – excluding the effects of non-recurring accelerated depreciation charges related to assets affected by the company’s network and IT transformation programs – increased 13% to P11.6 billion in 2013 from P10.3 billion in 2012.

Globe’s operating expenses rose 13% to P54 billion from P47.7 billion, based largely on subsidy increases and recontracting costs, trade provisions, staff- and network-related expenses, and other provisions.

While the operating expenses increased, Globe’s income actually decresed 28%. From P6.85 billion in 2012, Globe earned P4.96 billion last year. Accelerated depreciation charges related to assets affected by the company’s modernization program increased 78% to P9.06 billion, raising depreciation charges by 17% to P27.48 billion.

The company recorded a consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) of P36.5 billion in 2013 versus P35 billion in 2012, and expects a middle to high single-digit increase in service revenues. – Rappler.com