Globe Telecom expects to sustain high capital spending until 2020

MANILA, Philippines – Globe Telecom Incorporated expects to allot $850 million to $900 million every year until 2020 as capital spending budget, in a bid to continuously upgrade its network for the fast-growing data business.

Back in January, the telco’s board of directors approved its capital expenditure (capex) budget of $850 million for 2018, the same budget it earmarked last year.

“We are projecting over $850 million to $900 million in 2018. For the next two years, it will also be around that ballpark. There are many factors to consider,” Globe president and chief executive officer Ernest Cu said in a press briefing in Taguig City on Tuesday, February 6.

It was in 2016 when Globe logged its highest capex so far, which amounted to about $1 billion.

The listed Ayala-led telecommunications firm said it will continue to expand its data network and respond to the popularity of on-demand video content.

Cu’s remarks came after Globe’s announcement of its 2017 financial performance, booking P13.5 billion in core net income, down by 15% from P16 billion in 2016.

The firm attributed the drop to the effects of the P69.1-billion deal to buy the telco assets of San Miguel Corporation (SMC) as well as continued investments in mobile data infrastructure.

Globe ended 2017, however, with revenues of P127.9 billion, up 6% from 2016, while its consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) hit P53.3 billion, up by 7%.

Total operating expenses and subsidy also grew by 6% year-on-year to P74.6 billion from P70.6 billion. The EBITDA margin was at 42% in 2017, higher than the margin of 41% in 2016.

For 2018, Globe chief financial officer Rizza Maniego-Eala said her firm expects “low single digit” growth for service revenues.

During the 4th quarter of 2017, Maniego-Eala said, the telco saw a 45% drop in its core net income, dragged by expenses and depreciation also related to the SMC telco acquisition.

Its core net income declined to P2.339 billion during the 4th quarter of 2017 alone, down by 45% from the P4.265 billion in the same quarter in 2016.

Globe ended 2017 with a cumulative mobile subscriber base of 60.7 million, down 3% from the 62.8 million subscribers reported in 2016. The telco said this was due to the change in reporting of its prepaid subscribers beginning 2017. – with a report from Chris Schnabel / Rappler.com