Globe Telecom lowers capital spending to $750M for 2017
MANILA, Philippines – Ayala-led Globe Telecom Incorporated lowered its capital spending budget this year to $750 million to balance its expenses and revenues.
"We said $750 million," Globe president and CEO Ernest Cu replied on the sidelines of a media night in Makati City on Wednesday, January 18, when asked how much was his firm's capital expenditures (capex) for the year.
This is lower than Globe's capital spending budget in 2016, which was at a high of $1.050 billion.
"Funding has all been set. Whatever we have, internally generated cash flow. We also borrowed some money last year for the higher-than-usual capex because of San Miguel Corporation. I think we are okay with this year already," Cu told reporters.
Last year, Globe hiked its capital spending budget to $1.050 billion, from an initial allocation of $750 million, to finance the rollout of San Miguel Corporation's frequencies nationwide.
Under the National Telecommunications Commission-approved co-use agreement, Globe committed to deploy about 4,500 multiband, multimode software defined radio base station equipment to 95% of the total municipalities and cities in the Philippines.
This co-use agreement came after Globe and PLDT Incorporated bought all of San Miguel's telecommunications assets for P69.1 billion.
Cu said they lowered Globe's capital spending budget for 2017 to balance their finances.
"We are trying to balance everything out – the revenues, EBITDA (earnings before income tax, depreciation, and amortization) margin, the cash generation, and capex. All that is going to be balanced," he explained.
Globe's net income halved to P2.74 billion in the 3rd quarter of 2016, weighed down by the expenses from the P69.1-billion deal to buy out San Miguel's telecommunications business.
The Ayala-led telco announced that it saw its net income after tax dropping by 50% to P2.74 billion in the July to September 2016 period, from P5.43 billion in the same period in 2015.
This year, Cu hopes Globe's financial performance will be better than that of 2016.
"With the better network, I think it will be. With more subscribers coming to us, [there will be] more revenues," he added. – Rappler.com