Globe inks P2-B loan

MANILA, Philippines - Ayala-controlled Globe Telecom Inc. has inked a P2-billion loan facility with three leading insurance companies to bankroll the company’s capital expenditures next year and at the same time refinance its existing debt.

Albert De Larrazabal, chief finance officer of Globe, said in a statement that the 10-year, fixed rate term loan facility arranged by Insular Investment Corp. was signed with the Philippine American Life and General Insurance Co., the Insular Life Assurance Co. Ltd., and Sunlife of Canada (Philippines) Inc.

“We want to take advantage of the current low interest rate environment to fund capital expenditure requirements for next year and refinance our loans, allowing us to generate savings for the company,’’ he stressed.

He pointed out that proceeds of the loan would be used to refinance a portion of the company’s debts as well as to fund capital expenditure requirements for 2013.

Globe, a joint venture between diversified conglomerate Ayala Corp. and Singapore Telecom, earlier said it is pouring in $400 million worth of investments next year to further modernize and upgrade its network as well as its information technology (IT) system.

About a fourth of the total capital expenditures or $110 million would be used for network modernization and IT transformation programs. 

Next year’s capital expenditures would be on top of the ongoing $790-million network modernization and IT transformation project that is more than 50-percent complete. The network modernization program entails a cost of $700 million while the IT transformation program is placed at $90 million.

Once completed, the new network would have an all-lP architecture as well as 12,000 additional kilometers of fiber optic cable capacity to handle the expected increase in voice and data traffic and the capability to upgrade to more advanced technologies.

The new network is also designed to reduce the costs of operating, maintaining, and upgrading as the company shifts towards more power-efficient equipment and adopts more green solutions that would further reduce its carbon footprint and energy consumption.

Globe has so far spent $273 million in the first half of the year while the rest of the amount would be spent in the second half bringing this year’s capital expenditures to between $750 million and $800 million.

Of the amount, about $530 million was earmarked for network and IT modernization while about $220 million to $270 million was set aside for various business-as-usual activities such as investments in submarine cable and fixed line data, and broadband capacity upgrades.