Globe Telecom is moving forward its most aggressive spending plan as demand for bandwidth-hungry services such as internet TV continues to explode and with new competition on the horizon coming from state-run China Telecom.
In its full-year briefing yesterday, Globe’s management team led by CEO Ernest Cu unveiled a P63-billion capital spending plan for the year— which was 45 percent higher than what the Ayala and Singapore Telecommunications venture spent last year.
“Historically, we haven’t seen this kind of growth,” Cu said of the record spending needed to support strong demand.
Globe, which saw core profit jump 22 percent to P18.4 billion in 2018, announced that income from data services last year accounted for 61 percent of all service revenue, which rose 10 percent to P140.2 billion. Mobile data traffic alone surged almost 60 percent in 2018.
Adrian Yu, analyst at COL Financial Group, said the higher spending was partly attributable to the carryover from Globe’s unspent budget in 2018.
“Regarding the third telco, it’s another reason why [Globe] can’t afford to be complacent but that’s not the main reason why they are increasing spending. It’s really to keep up with growing demand,” Yu said.
The announcement came as rival PLDT Inc. disclosed a record P70 billion spending plan for 2019.
New mobile player Mislatel Consortium, backed by Filipino company Udenna Corp. and China Telecom, is expected to launch commercial services in the latter part of 2020 after lawmakers last week approved the transfer of its telco franchise.
Cu said Globe, which ended 2018 with over 74 million mobile subscribers, was ready to compete.
“Certainly we will not give up our space easily. We’re not going to roll out the red carpet,” Cu said.
The Globe chief executive also said they would proceed with the rollout of 5G in the second quarter using equipment from Chinese technology giant Huawei, a longtime supplier.
This was despite national security concerns raised by some lawmakers and ICT advocates and lawsuits filed in the United States that were seen as an offshoot of trade tensions between the United States and China.
Cu said Huawei’s technical capabilities were “more than a year” ahead of its rivals. Globe, which also uses equipment from Finland’s Nokia, had tapped Huawei for most of its 4G rollout. The Chinese supplier is also expected to play a major role as Globe deploys its 5G infrastructure.
Globe chief technology and information officer Gil Genio said that Globe would ensure that its network was secure.
“The operator is responsible for security protocols. It’s not the responsibility of the vendor to assure security, it’s our responsibility,” he said.