Globe Telecom gears up for competition with much bigger rival PLDT

MANILA, Philippines—Mobile carrier Globe Telecom Inc. is spending a substantial chunk of the cash allotted for its five-year network modernization plan within the next 24 months as it competes with a rival more than twice its size.

Globe said it would spend $640 million for the improvement of its network facilities and transformation of its IT systems up to 2013, or about 81 percent of the company’s total $790-million five-year expansion program.

The company made the announcement on Monday after it signed a 10-year floating rate term loan facility worth $90 million from China Banking Corp., owned by the group of retail magnate Henry Sy.

The company said the hike in spending was being made in “anticipation of the growing demand for broadband and mobile data use” in the Philippines.

“With the rapid penetration of social media and availability of more affordable smartphones among Filipino mobile phone users, Globe looks at its broadband and data business as key focus areas that will sustain its growth momentum for the year,” Globe said in a statement Monday.

The increase in its network capacity aims to sustain the quality of services as the company launches a “stronger line-up of mobile and at-home broadband plans with faster speeds.”

Globe’s long-term foreign currency loans are rated at BB+, or above the Philippines’ own credit score, by global debt watcher Fitch Ratings.

In late 2011, following the announcement of its five-year expansion plan, Globe secured P10 billion worth of peso-denominated debts from two local banks. The company said the proceeds from those loans would be used mainly to refinance maturing obligations to take advantage of today’s low interest rates.

Globe posted a net income of P7.99 billion for the January-September period in 2010, up 7 percent year on year following a 9-percent surge in service revenues to P49.98 billion.

Globe is the country’s second-largest mobile network, serving about 30 million mobile phone subscribers. This is less than half of the subscriber base of its chief rival, Philippine Long Distance Telephone Co. which, after acquiring mobile brand Sun Cellular, has 65 million users.