Globe profit up; plans to hike spending

GLOBE Telecom is seeking to amend certain agreements for its bonds maturing through 2023, a move it said would free up its balance sheet as it anticipates higher spending at a time when demand for internet services is rapidly growing.

Globe said it would launch a solicitation drive from holders of its bonds maturing in 2017, 2019, 2020 and 2023 starting today until Sept. 5. Globe will pay bondholders P1.25 per P1,000 of the principal amount of the bonds.
Specifically, Globe wanted to amend the so-called Trust Indentures and revise certain debt and equity definitions to align these to terms followed by regional telecom peers. Globe wanted to maintain a higher consolidated debt-to-equity ratio of 2.5:1 from the current 2:1.
“There will be more leeway to borrow funds needed to spend on infrastructure and other vital projects of the company,” Yoly Crisanto, head of corporate communications at Globe, said in a text message. “The urgency is on the ‘build and build more, more cell sites, more fiber rollouts.’”

Globe earlier signaled that it might increase the $750-million capital spending budget for 2016.

The plan comes as Globe said profit rose in the first half of 2016 as the telco giant highlighted increased exposure in the data business and its acquisition of Bayan Telecommunications.

Globe said in a regulatory filing that core profit was up 2 percent to P8.8 billion while its reported net income stood at P9 billion, up 3 percent, as gains in Ebitda were offset by increases in depreciation and nonoperated expenses.

It said total service revenue rose 11 percent to P59.6 billion. Data-related revenue now comprise half of the total, Globe said. It added that mobile subscribers hit 61.3 million in the first six months, up 20 percent.

“We are proud that Globe’s overall results in the first half remained robust amid the heightened competitive intensity and the unique challenges and opportunities posed by increasing levels of smart phone penetration and mobile postpaid ownership in the market,” Globe president Ernest Cu said in a statement. Miguel R. Camus