Globe sets 2018 capex at $850M

Ayala-led Globe Telecom has budgeted $850 million for capital spending this year, mostly to boost internet services and support its commitment to provide fast internet service to two million households by 2020.

In a disclosure to the Philippine Stock Exchange on Friday, Globe said the capital expenditure (capex) for 2018 was in line with the company’s level of spending last year.

Globe president and chief executive officer Ernest Cu said the capital outlays would fund the telco’s data network and address the surge in customer demand for on-demand video content.

“The majority of the company’s capex for 2018 is geared to meet customer demand for more bandwidth-intensive content which, in turn, will support the revenue momentum of our data-related services,” Cu said.

Globe’s vision is to transform internet services in the Philippines so that it would enjoy first-world quality of internet connectivity.

Cu reported that Globe had progressively increased its capex spending since 2015. For every peso booked as revenue, the company earmarked 31 centavos for capital outlays.

On the $850-million capex budget for 2018, full-year capex-to-revenue ratio is estimated at nearly 34 percent.

“We continue to be efficient in our network build, evidenced by the superiority of our mobile network, in terms of higher 3G and LTE availability both on a regional and nationwide basis,” Cu said.

For the first nine months of 2016 and 2017, Globe reported that its mobile data network carried more than 2.4 times the traffic of competition.

Apart from providing fast internet service to more households, a good portion of this year’s capex will be used to deploy massive Mimo (multiple input, multiple output) technology, thereby expanding and enhancing its LTE network.

Mimo enables a mobile network to multiply the capacity of a wireless connection without requiring more antennas. It also increases wireless throughput, accommodating more users at higher data rates with better reliability while consuming less power. In the case of home broadband, speed and range benefits of Mimo allow customers to have reliable data connection especially for video streaming.

Globe now derives the bulk of its revenue from data services. In the first nine months of 2017, data-related revenue accounted for over 53 percent of the total revenue for the period. Data-related revenue amounted to nearly P51 billion, up by 6 percent year-on-year.