NOW raising fresh funds to finance broadband plans
Listed IT company NOW Corp. is in talks with two local investment banks to raise $50 million over the next two years to fund plans to shift its revenue stream to the fast-growing corporate broadband market.
In an interview yesterday, NOW president and CEO Mel Velarde said the company would decide in the next few months on its fundraising options, which include a combination of debt and a follow-on offering.
He declined to name the banks, but said the initial tranche would involve $30 million this year while subsequent amounts could be raised through 2017.
The plan was in line with a five-year strategy that covers this year until 2021, Velarde said. The fresh funds would be used for the company’s broadband and wireless cable TV businesses, he said.
NOW expects revenue by the end of the five-year period to hit $346 million, while net income would be at $120 million. NOW has yet to disclose its 2015 results.
Broadband services should account for 80 percent of revenue by the end of the five-year period, from under 5 percent today. At present, the company mainly earns from IT resource management, software collaborations and cloud services.
Velarde said NOW could stay profitable by focusing on the needs of corporate clients. He added that their requirements were not being met by big players like Philippine Long Distance Telephone Co. and Globe Telecom.
Both have also announced aggressive spending plans to win over customers. PLDT is spending P43 billion in 2016 alone while Globe said it would spend $750 million (P34.7 billion).
“They [PLDT and Globe] are after mass marketing. Once you are married to that strategy, there is no divorce,” Velarde said. “That is not my game. I’m happy being a small player, but also one of the most profitable.”
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