Globe to raise $350M for capex

MANILA, Philippines - Ayala-led Globe Telecom Inc. is set to raise as much as $350 million to bankroll its capital expenditures this year to sustain its record-breaking financial performance last year.

Albert de Larrazabal, chief financial officer of Globe, said the company is looking at raising between $300 million and $350 million to finance its capital expenditures this year.

“We are looking at raising between $300 million and $350 million,” de Larrazabal said.

Globe has earmarked $850 million for its capital spending this year including the unused $200 million budget for capital expenditures last year.

According to Larrazabal, the company is raising funds for the $650 million portion of the budget as the $200 million carry over from last year’s capital expenditures has already been funded.

Of the total amount, approximately 75 percent would be related to data including spend for deployments of long term evolution (LTE) mobile and LTE @Home, capacity and coverage augmentation of the 3G, HSPA+ and DSL network, as well as requirements for domestic transmission and international cable capacities.

The balance of 25 percent would be used for business support systems in line with product innovations, and other corporate capital expenditures.

De Larrazabal explained that Globe is looking at raising the amount in two tranches.

 “We will probably do that in two tranches. One in the first half and as we see the actual pace of spending then we will do the next tranche in the second half,” he said.

He pointed out that the company is studying the possible sources of funds including bank loans or tapping the capital markets through the issuance of bonds or notes.

“Typically what we do is we go out to the market and try to figure out what is the most cost effective. There is a lot of appetite for direct lending and the capital markets continue to be very vibrant. Just look at the deposits at the central bank to understand how much liquidity there is in the market. There is no clear decision at this point in time on which instrument to use,” he said.

Data showed that Globe’s gross debt declined by 5.8 percent to P65.3 billion last year from P69.3 billion in 2013. Likewise, the company’s debt to equity ratio improved to 1.2 percent from 1.66 percent.

Globe president and chief executive officer Ernest Cu reported on Thursday that 2014 for was another banner year for the company despite intensifying competition.

The company’s core net income, which excludes the impact of accelerated depreciation and other non-recurring charges, reached P14.49 billion last year or P2.87 billion higher compared to P11.62 billion in 2013 driven by solid performance of its mobile, broadband, and fixed line data businesses.