Globe taps DBP for P5-B term loan as it ramps up capital spending
GLOBE TELECOM, Inc. said it signed a P5-billion term loan with the state-run Development Bank of the Philippines (DBP), as it is set to continue ramping up capital spending to improve data infrastructure in the country.
“The loan shall be used to finance the company’s capital expenditures and general corporate requirements, and refinancing of maturing obligations,” the listed telco giant told the stock exchange on Tuesday.
Globe said its capital expenditures for 2019 is set to reach P63 billion, “largely for data-related capital expenditures (capex) that will enhance network data capacities and capabilities.”
As of end-September, the telco said its total cash capital expenditures stood at P32 billion, 2% lower than last year’s level of P32.5 billion. Around 75% of nine-month capex was used for data networks.
“To ensure these network improvements are sustained, the company continues to reinvest in the network and is currently on track to reach capital expenditure commitments of $1.2 billion by the end of 2019. This is consistent with the guidance provided earlier in the year; however, given the nature of these commitments, cash capital expenditures is expected to end the year at around $900 million, as some payment milestones for the commitments are expected to spill over to the following year,” Globe said in its third quarter financial report.
From January to September this year, Globe noted the consumer shift to digital has pushed mobile data traffic to 1,200 petabytes, exceeding the full-year consumption in 2018. This was driven by “strong growth in smartphone subscriptions and demand for data-intensive applications like video, online games and music apps.”
Globe reported that data currently accounts for 70% of its service revenues, with 47% from mobile data, 14% from home broadband and 9% from corporate data.
Mobile data generated P52.2 billion in nine-month revenues, up 44% from a year ago.
Globe Telecom President and Chief Executive Officer Ernest L. Cu has said that the company is gearing up for the roll of its “At Home Air Fiber 5G (fifth-generation) service.”
Fitch Ratings earlier said that the country’s telecommunications sector is expected to spend more than it can generate internally over the next 18 months as telco firms turn more to debt to fund their future capex.
Fitch also said that capex for 5G technology over the next 18 months will likely be limited due to “lack of applications and the absence of a robust ecosystem of customer devices.” — A.L.Balinbin