ABS-CBN allots P4 B for capex

MANILA, Philippines - Multimedia conglomerate ABS-CBN Corp. has earmarked P4 billion for its capital expenditures this year as it expects a flat growth in earnings due to the absence of non-recurring political advertisements.

ABS-CBN chief financial officer Aldrin Cerrado told reporters on the sidelines of the listing of the company’s seven-year fixed rate bonds at the Philippine Dealing and Exchange Corp. (PDEX) this year’s budget for capital expenditures is the same level as last year.

Cerrado said the company is spending P1 billion for the ongoing shift to the Japanese standard digital terrestrial television, P1 billion for the regular capital expenditures of ABS-CBN, P1 billion for its pay TV business through SkyCable, and P1 billion for program rights.

ABS-CBN, he said, intends to invest in forward planning for its production process including the construction of sound stages to deliver improvements to operations by increasing production quality and reducing costs associated with on-location shoots.

He added that the company also intends to use part of the proceeds of the fundraising activity for the roll out of digital terrestrial TV and the expansion of its pay-TV business through SkyCable.

ABS-CBN is on track for the Philippines’ switch to Digital Terrestrial Television. Test broadcasts are being conducted in different parts of the country. It has also successfully expanded its business into print, licensing, music, TV shopping, telecommunications and theme parks.

Cerrado said the company is currently not keen on another fundraising activity as it has already raised P6 billion from the issuance of fixed-rate bonds due 2021 as well as P4 billion late last year from

ABS-CBN chairman Eugenio Lopez III said in his speech that the company could have opted to raise the entire P10 billion authorized by the Securities and Exchange Commission (SEC) as the bond issuance was oversubscribed.

“Through this transaction, we were able to raise P6 billion, but I think the importance of this bond goes beyond simply raising the target amount. The issue was oversubscribed and we could have probably raised the authorized amount of P10 billion if we opted to,” he added.

He pointed out that banks are also willing to extend loans to ABS-CBN.

“Clearly, we borrowed what we considered to be the optimal amount for our current requirements. I believe that the significance of this for our company is that we have set a benchmark for this issue and successfully access the market that could become an important source of financing for future endeavors,” Lopez said.

ABS-CBN expects flat growth in net income this year after delivering the promised P2 billion earnings last year on the back of the P1.2 billion windfall from political advertisements.