Globe secures $75-M loan to fund growth

Ayala-led Globe Telecom has tapped a Japanese bank to fund part of its nationwide network modernization for 2013, the company said on Thursday.

In a disclosure, the country’s second largest telecommunications firm said it would borrow $75 million from the Singapore branch of Japan’s Bank of Tokyo-Mitsubishi UFJ Ltd. under a term loan facility that was signed this week.

“Proceeds of the loan will be used to finance 2013 capital expenditures,” Globe told the Philippine Stock Exchange.

Of its total capital expenditure (capex) program for 2013, $450 million to $500 million has been earmarked for the company’s ongoing network modernization and transformation program, and investments in fixed line, international cable facilities, and IT infrastructure.

Last month, Globe said its total capex would be around $600 million.

For 2012, Globe Telecom reported record consolidated service revenues of P 82.7 billion, 6 percent above previous year’s level of P77.8 billion, as the mobile and broadband segments delivered service revenues of P67.2 billion and P 8.7 billion, respectively.

Net profit, however, fell 30 percent to P6.9 billion for 2012 from P9.8 billion in 2011 due to higher costs related to the company’s modernization efforts last year.

The impact of the modernization-related spending was felt most acutely in the final quarter of the year when its quarterly net income dropped to only P49 million from P1.84 billion in the same quarter of 2011.

The sharp decline was due to the accelerated depreciation costs associated with retiring old network equipment as well as to higher subsidies the company had to pay for the large demand for new iPhone 5 units acquired by subscribers.

Stripping out extraordinary gains, Globe’s income was up 2 percent to P10.3 billion from P10 billion the year before.

Globe had over 33 million mobile phone subscribers in its network split between the Globe and TM brands at the end of 2012. This was up by a tenth year-on-year.