GLOBE TELECOM, Inc. is open to a tie-up with rival PLDT Inc. to create a company specializing in cellular tower construction, one of the businesses that has been proposed for the telecom industry “third player.”
Globe President and CEO Ernest L. Cu on Monday said that while no direct approach to PLDT has been made over a possible tower venture, he said that working with PLDT and other entrants has the potential to reduce capital outlays.
Globe said in February that it was in talks with certain parties to form an independent tower company and divest some or all of its tower assets, to help speed up the building and deployment of cellular towers in the Philippines, and as part of its network expansion and optimization plan.
“We don’t want to approach because of the competitive issue, collusion. So, we’ve always been open to sharing. We are not into exclusivity. We like the open market. We think it benefits both of us. Costs will be lower,” Mr. Cu told reporters on the sidelines of the Globe financial results briefing on May 7.
One of the business models being considered for the “third player” is to build towers for cell sites, due to obstacles in awarding it sufficient frequency to compete with the incumbents.
Mr. Cu has said that divestment of their tower assets will free up capital and help it maintain dividend levels. The towers to be constructed will be open for lease to new and existing players.
Globe tapped UBS Group AG as its financial adviser at the end of February. Chief financial officer Rosemarie Maniego-Eala said that the company is reviewing its strategic options in regard to a tower divestment.
“At the moment we do not have estimates for anything around the transaction. We’re still in the process of scoping a lot of the items needed to go through with structuring the deal,” Ms. Eala said in the news conference.
General counsel Vicente Froilan M. Castelo said the company is still deciding on which tower assets to retain or to divest.
He added that an independent tower company will help reduce the difficulties in getting permits for the construction of cell towers, which range from 23 to 26, including social acceptability permits required by some local government units (LGUs), as well as charges based on income earned from a tower.
Both Globe and PLDT have cited the difficulties in obtaining permits as the main problem hindering the construction of more cell sites which will improve coverage. The country only has 16,000 cell sites, with Globe controlling 8,000.
Mr. Castelo added that a leasing structure would do away with franchise taxes that some LGUs charge “on our supposed income generated by the towers.”
PLDT was asked for comment but has not replied as of deadline time.
Globe reported a net profit of P4.6 billion in the first quarter of 2018, up 23.69% from a year earlier, due to higher services revenue from increasing data demand.
Consolidated service revenue amounted to P33.2 billion, mainly from data-related products across all segments. The company said this is due to the increase in consumption of video streaming and on-demand entertainment.
Mobile revenue hit P25.5 billion because of the growing demand for data.
“From a product perspective, mobile data remains the top contributor to total mobile revenue, accounting for 48%,” Globe said in a statement.
Mobile data service revenue amounted to P12.3 billion in the first quarter. Mobile data traffic increased by 37% year on year to 180 petabytes.
Mobile SMS and mobile voice revenue came in at P5.6 billion and P7.6 billion, respectively.
For the home broadband business, Globe booked P4.3 billion in revenue.
The home subscriber base was 1.4 million at the end of March, up 17% year on year.
“The results were driven by subscriber expansion in fixed wireless solutions (+30%), the introduction of new broadband bundles and GoUnli plans which provide customers value for money, fast and reliable connections and world class entertainment,” Globe said.
Globe capital spending was P6.6 billion in the first quarter, with 64% going to data services. The company has a capex budget of $850 million or around P50 billion this year.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.
Globe shares rose P105 or 7.12% to P1,580. — Patrizia Paola C. Marcelo