Globe to loan additional P7B for capital spending

MANILA, Philippines – Ayala-led Globe Telecom Incorporated is set to borrow another P7 billion ($157.85 million) within the next two months to bankroll its capital expenditures (capex).

The additional loan will be used to accelerate its network build-up program to 18 months instead of 3 years due to the increasing penetration rate of smartphone users.

Globe would complete the borrowing program in May after closing a 7-year loan worth P7 billion ($157.85 million) from the Philippine National Bank (PNB) in December 2014.

A total of 13 banks have offered to raise the P7 billion ($157.85 million) required by Globe,  Albert De Larrazabal, said its chief financial officer, at the sidelines of the Globe annual stockholders meeting on Tuesday, April 7.

“Everybody has so much money and they are trying to move it,” he added.

The planned borrowing would be peso-denominated  and would mature within a period of 7 to 10 years, De Larrazabal said.

Globe also prefers local borrowing with the ample liquidity in the system, as well as the absence of foreign exchange risks compared to foreign borrowings.

Accelerating network build-up

The company expects smartphone penetration among its subscribers to hit 50% this year from only about 20% in 2013.

For this year, Globe earmarked $850 million for its capex, including the $200 million carry-over from its 2014 budget.

“The total capex this year is about $850 million but $200 million of that was already funded last year.  The incremental capex for the year is about $650 million,” De Larrazabal said.

About 75% of the total amount would be related to data such as the deployment of long term evolution (LTE) mobile and LTE@Home; capacity and coverage augmentation of the 3G, HSPA+, and DSL network: and requirements for domestic transmission and international cable capacities.

The remaining 25% would be used for business support systems in line with product innovations and other corporate capital expenditures. – Rappler.com

$1 = P44.50