Globe allots $500M for data network for rich media content

MANILA, Philippines - Ayala-led Globe Telecom Inc. is spending about $500 million to beef up its data network over the next two years as the company expects rich media content to define the use of mobile starting this year.

Globe chief financial officer Albert de Larrazabal said the amount would be spent for data-related investments this year and next year.

“We want to make sure that we will continue to be relevant to our subscribers,” Larrazabal told reporters.

For this year, Globe has earmarked $850 million for its capital expenditures including the $200 million carry over from last year’s budget.

Approximately 75 percent of the total amount would be related to data such as the deployment 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 while 25 percent would be used for business support systems in line with product innovations, and other corporate capital expenditures.

The telecom provider is set to raise between $300 million and $350 million via the debt or capital markets to finance the capital expenditures.

Larrazabal said 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,” Larrazabal said.

Globe president and chief executive officer Ernest Cu said data and content are some of the major trends that would define mobile usage in 2015.

“Content through on-demand services will be king. Rich media content such as video and music streaming will define the use of mobile, either through smartphones or tablets, toward a “multi-channel experience” as they are accessed simultaneously through multiple devices,” Cu said.

Amid intensified competition in the telecom industry, 2014 was another banner year for Globe as its core net income surged 250 percent to P14.49 billion from P11.62 billion in 2013 while its net income jumped 170 percent to an all-time high of P13.4 billion from P5 billion.

On the other hand, revenues increased nine percent to P99.02 billion last year from P90.5 billion in 2013. This after mobile browsing and other data revenues grew 23 percent to P14.3 billion from P11.6 billion amid the continuous demand for data services, popularity of data-driven products and applications, and the continuing shift among consumers to a digital lifestyle.

“The Internet of Things will also dominate the lifestyle of many. This encompasses multiple aspects of everyday living, such as mobile commerce, mobile advertising, health monitoring through wearables, GPS-controlled mobility, and machine-to-machine connectivity, among others,” he said.

As part of its digital roadmap to provide customers a differentiated content experience, Globe has partnered with video-on-demand service provider HOOQ to boost its solid partnerships with Facebook, Google, Spotify, NBA and Viber.