For the first time in over two decades, Globe Telecom is planning a stock rights offer (SRO) to rake in as much as P32 billion for the funding of its mobile and broadband network expansion and debt repayment.
The Ayala-led telecommunication firm said in a disclosure on Monday that its board of directors had approved the sale of new common shares to existing shareholders.
The shares will be issued out of the increase in the authorized capital stock. In April, both the directors and shareholders of Globe approved to hike the telecom company’s capitalization to P11.12 billion from P10.25 billion for “business purposes.” These transactions are subject to regulatory approvals.
“This marks the first time Globe will do a rights offer in the capital market in over two decades and shows the principal shareholders’ confidence in the company and its plans going forward,” Globe chief finance officer Rizza Maniego-Eala said.
Regina Capital Development Corp. head of sales Luis Gerardo Limlingan told the Inquirer this transaction would allow Globe to partially fund its P89-billion capital expenditure requirement for the year “without having to rely too much on new debt instruments, which are more than likely to be affected by [interest] rate hikes.”
Balance sheet strengthening
Recently, Fitch unit CreditSights warned that Globe’s debt metric might “worsen” given its massive capital expenditure needs without an equity injection in the near term.
Maniego-Eala said the fundraising activity would “further strengthen [Globe’s] balance sheet and empower [it] to further develop adjacent businesses that will enable the Filipino digital lifestyle.”
Expanding its network is deemed crucial as Globe has observed increased data traffic, which is supported by higher smartphone penetration. The Ayala-led telco player said it had spent close to P250 billion over the last four years to ramp up its network given the heightened demand.
Globe noted it had invested in adjacent sectors as well, including GCash, its financial technology platform which now has 60 million users. It is also involved in health-care application, advertising tech or adtech, e-commerce and entertainment, among others.
“We believe there is excitement in the market for Globe’s future prospects and potential amid the massive demand for data-related services as more Filipinos are now embracing the benefits of digitalization,” the official said. INQ