Corporate News

By Daphne J. Magturo, Reporter

Globe: Bayantel subscribers to have faster, stable broadband connection by Q4 2016

Posted on December 14, 2015

GLOBE Telecom, Inc. has fully integrated its newly-acquired Bayan Telecommunications, Inc. (Bayantel) into its operations, and the latter’s subscribers will have faster and more stable broadband connection by the fourth quarter of 2016.

THE Walt Disney Co. Southeast Asia’s General Manager for Studio Entertainment and International Distribution Amit Maholtra (left), Globe Telecom President and CEO Ernest L. Cu, and Globe Senior Advisor for Consumer Business Dan Horan raise their lightsabers at the opening of the Globe and Star Wars Galactic Weekend in Bonifacio Global City on Dec. 11.
“We’re going to take whatever assets we’ve gotten from them (Bayantel) in terms of the network, we’re gonna take their customers, and provide additional services because those customers have been starved of these services,” Globe President and Chief Executive Officer (CEO) Ernest L. Cu told reporters after the launch of the Globe and Star Wars Galactic Weekend at Bonifacio Global City.

Bayantel entered court-assisted corporate rehabilitation in 2003 as it reportedly failed to generate sufficient revenue to pay its debts. In 2013, Globe began to take over the ailing Lopez-led firm through a debt-to-equity scheme.

Mr. Cu said Bayantel subscribers will start to feel the changes “towards the tail end of next year,” mainly on “higher broadband speeds, better stability on the service, and an added slew of new offers.”

A Sept. 17 pilot test by the National Telecommunications Commission in Quezon City showed that Bayantel had the slowest Internet connection for fixed broadband. Its off net measurement is 563 kbps (kilobytes per second), lagging behind Philippine Long Distance Telephone Co.’s (PLDT’s) 3,367 kbps, SKY Broadband’s 2,818 kbps, and Globe’s 2,785 kbps.

“Our objective is to offer everybody [speeds] as high as possible, up to 200 mbps (megabits per second). Right now we [charge] P2,499 for 50 [mbps] and P3,599 for 100 [mbps],” Mr. Cu said.

He added that Bayantel will no longer have a new mobile brand of its own because “it’s too expensive to start a mobile brand.”

However, the group will retain the Bayantel brand “for now.”

Asked about plans to dissolve the brand eventually, he replied: “We don’t know, it depends on the market because Globe is a much stronger brand than Bayan. So we’ll decide on that.”

“Right now they’re still being called Bayan, but we’ll make an announcement as soon as we know,” he added.

Globe already spent $172 million for initial investments in Bayantel, including the debt-to-equity conversion. It will also inject around $200 to $300 million in fresh capital to modernize Bayantel’s network, part of which is already included in its planned $850 million capital expenditure next year, Mr. Cu said.

“We don’t separate them anymore. The networks and billing systems are already integrated and the people are already with Globe,” he said. “We operate as one already, so the modernization of their network is hand-in-hand with the additional expansion that Globe is doing.”

Bayantel had originally planned to exit rehabilitation in 2023, but the process was cut short when Globe took over.

Globe first acquired a 38% interest in Bayantel in October 2013 after the Pasig City Regional Trial Court Branch 158 approved the amended rehabilitation plan jointly filed by the companies, where Globe converted Bayantel’s unsustainable debt into common shares, according to the listed telecommunication firm’s 2014 annual report.
Globe, as principal creditor, was authorized to convert a portion of the debt into a controlling interest of at least 54% in Bayantel’s outstanding shares.

It then reached a purchase agreement with Bayan Telecommunications Holdings, Corp. and Lopez Holdings, Corp. in July for their entire equity holdings in Bayantel.

The debt-to-equity conversion scheme, involving up to 70.76 million shares, jacked up Globe’s control to 98.57% from 56.87%.

“Bayantel is well integrated with Globe. The Globe plan is the Bayantel plan,” Mr. Cu said.

For the first nine months of 2015, Globe’s net income after tax jumped by an annual 34.35% to P14.14 billion, while consolidated service revenues hit a record level of P83.4 billion.

Mr. Cu said the company is “on track” to end the year with at least P100 billion in service revenues.

Globe shares ended last week’s trading at P1,790 apiece, down by P51 or 2.77%.