MANILA, Philippines – Ayala-led Globe Telecom Inc. is set to borrow another P7 billion within the next two months to bankroll its capital expenditures, thus accelerating its network build-up program to just 18 months instead of three years.
Albert de Larrazabal, chief finance officer of Globe, said in an interview after the company’s Annual Stockholders’ Meeting that Globe would complete the borrowing program next month after closing a seven-year loan worth P7 billion obtained from the Philippine National Bank (PNB) last December.
“We are now getting into the market. We are getting proposals but we haven’t awarded yet. It is another P7 billion and we’ve asked people to give us all offers, but the one that is most compelling today is just a bilateral club deal,” he said.
According to De Larrazabal, a total of 13 banks have offered to raise the P7 billion required by Globe.
“Everybody has so much money and they are trying to move it,” he added.
De Larrazabal said the planned borrowing would be denominated in peso and would mature within a period of seven to 10 years.
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He explained that Globe prefers local borrowings with the ample liquidity in the system, as well as the absence of foreign exchange risks compared to foreign borrowings.
For this year, Globe has earmarked $850 million for its capital expenditures including the $200 million carry over from last year’s budget.
“The total capex this year is about $850 million, but $200 million of that was already funded last year. The incremental capex for the year is about $650 million,” de Larrazabal said.
Approximately 75 percent of the total amount would be related to data such as the deployment of long term evolution (LTE) mobile and LTE @Home, capacity and coverage augmentation of the 3G, HSPA+ and DSL network, as well as requirements for domestic transmission and international cable capacities, while 25 percent would be used for business support systems in line with product innovations, and other corporate capital expenditures.
He pointed out that Globe is accelerating its network build-up program to 18 months instead of three years due to the increasing penetration rate of smartphone users.
“We are trying to accelerate what was supposed to be a three year build-up into 18 months because the rate of growth has been significant. Clearly it should last us for the next two years,” de Larrazabal said.
According to him, the company expects smartphone penetration among its subscribers to hit 50 percent this year from only about 20 percent in 2013.
