Globe secures P5B loan anew to fund network expansion
Listed firm Globe Telecom is once again tapping funds from a local bank, taking advantage of low interest rates, to fund the expansion of its nationwide mobile network.
In a disclosure, the company said it had signed a seven-year floating-rate loan facility worth P5 billion with Banco De Oro Unibank Inc.
Globe’s long-term foreign and local currency debts were given an investment grade of BBB- with stable outlook by Fitch Ratings. The company said it would use the funds for its capital expenditure needs for 2012 and the refinancing of existing debts.
Globe chief financial officer Alberto de Larrazabal said the company’s capital expenditure program included the initial portion of its mobile network modernization program.
The said program, which would cost about $790 million over the next five years, was announced last month.
Its modernization plan aims to improve Globe’s network quality and customer experience, increase voice and data capacity, drive down costs and prepare the network to meet the future needs of customers, the company said.
The latest facility with BDO is the third bank loan availed of by Globe this year. In November, the telco tapped Rizal Commercial Banking Corp. for a similar P5-billion loan. In February, Globe closed a seven-year, P7-billion loan with another local bank to pre-pay debts and fund a portion of capital expenditure for 2011.
Aside from bank loans, Globe said it might tap funds from foreign export-import credit agencies. As of end-September 2011, Globe had a debt-to-equity ratio of 1:1.04.
Globe president Ernest Cu earlier said 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.
With close to 30 million subscribers on its network at the end of September, Globe is currently the country’s second-largest phone firm. Its market share, however, is less than half of its rival’s, Philippine Long Distance Telephone Co., which now has more than 60 million users on its network.
Globe shares fell 2.56 percent, or 25 points, on Friday, doing worse than the main index, which fell 0.47 percent.
