Modernization program pushes Globe capex to P11.7B in first 6 months

Ayala-led Globe Telecom said aggressive expansion efforts pushed its first-half capital expenditure (capex) to P11.7 billion, or about $273 million, the highest for the company in any six-month period, as its network modernization and IT transformation program went into full swing.

Globe expects spending in the second half to bring its full-year capex to somewhere between $750 million and $800 million.

Of the amount, $530 million was earmarked for network and IT modernization while as much as $270 million was set aside for various business-as-usual (BAU) activities such as investments in submarine cable and fixed line data, and broadband capacity upgrades.

“Our network modernization program remains on track and is being rolled out throughout the country,” Globe president Ernest Cu said. “In the last six months, we have progressively transformed almost half of our network, with improvements in service quality already being felt by customers in Davao, Cebu, South Luzon and some parts of Metro Manila.”

The massive network modernization program entails a cost of $700 million while the IT transformation program is placed at $90 million.

Spending for next year, however, would be lower with all major components of the expansion program being completed in 2012.

Albert de Larrazabal, Globe chief financial officer, said that based on initial estimates, full year 2013 capex would be around $400 million.

“To fund the capex requirements, we will first scan the market to determine whether we should do a bilateral agreement with the banks, go for syndicated loans, or apply for more commercial paper issuance. The market is so liquid, placing us in a very nice position to choose which instrument is the most competitive,” De Larrazabal said.

For the funding of this year’s capex, Globe Telecom obtained loans from China Bank, Banco de Oro and Rizal Commercial Banking Corp. and also undertook a P10-billion bond offer.

Globe’s network transformation program is designed to reduce the costs of operating, maintaining and upgrading the network as the company shifts toward more power-efficient equipment and adopts more green solutions that will further reduce its carbon footprint and energy consumption.

This week, Globe announced that it would make long-term evolution (LTE) high-speed wireless broadband services, also referred to as 4G, commercially available to its customers next month. Smart Communications, Globe’s bigger rival, launched LTE services during the weekend.—Paolo G. Montecillo