Globe unveils $790M network improvement plan

Ayala-led Globe Telecom has unveiled a $790-million network improvement program to address problem of frequent dropped calls, text message delays and slow Internet speeds as well as prepare the company for growing demand and fiercer market competition.

“The massive network upgrade is aimed at significantly improving network quality and customer experience, increase capacity, drive down costs [and] prepare the network to meet the needs of customers today and in the future,” Globe president Ernest Cu told reporters Wednesday.

The entire sum will be spent over the next five years, with $700 million going to the modernization of its network and the balance earmarked for its information technology (IT) systems transformation.

Bulk of the amount, or about $640 million, will be spent over the next three years to ensure that benefits are felt by the public as soon as possible.

“This will be the biggest and most significant investment that the company has undertaken in the past two decades,” Cu said. About 80 percent of the amount will be funded through debt while the balance will be through internal funds.

Next year, the company plans to borrow $590 million from foreign and local banks and from retail investors through a bond offer to fund the modernization.

The move comes at a time of changing industry dynamics in the country’s lucrative telecommunications sector.

Last month, Globe’s prime rival, Philippine Long Distance Telephone Co. (PLDT), completed its takeover of No. 3 player Digital Telecommunications Philippines Inc. (Digitel), creating an entity with a market share of about 70 percent.

PLDT also earlier this year unveiled its own massive expansion program: a plan to spend about P67 billion over two years to improve network capacity and strengthen its infrastructure.

Cu said Globe was confident that its own modernization program would prepare the company for the future, particularly for the expected increase in network traffic due to the pervasiveness of Internet-enabled smart phones.

“We are the only other player in the market and the gap between us and PLDT is wide. We don’t think we can overtake them just yet, but we will remain a strong number 2,” Cu said.

Globe said it had chosen China’s Huawei Group, one of the world’s leading telecom firms, as its technology partner for the modernization program.

Cu noted that the modernization program would have an impact on Globe’s finances, with an estimated $388 million worth of equipment to be decommissioned in five years on top of the $790 million to be spent.

But in a move to quell investors’ fears, he said Globe’s board had issued a resolution to increase the company’s minimum dividend payout policy to 90 percent from the current 75 percent.