Globe cuts capex by 30% to $1.3 billion

MANILA, Philippines — With inflation staying elevated worldwide, Ayala-led Globe Telecom Inc. plans to spend less this year to keep its financial standing healthy.

Globe said that it decided to slash its budget for capital expenditures (capex) by 30 percent this year to sustain its free cash flow generation in the long run.

For the year, Globe trimmed its capex to $1.3 billion in line with efforts to maximize the use of existing assets and realign the focus of its funding deployment.

Globe chief finance officer Rizza Maniego-Eala said the mobile giant seeks to cut its capex to $1 billion by 2024 to complete its return to pre-pandemic level of spending. However, she said despite lower spending, the telco would not compromise the quality of its customer experience.

“We’re proud to have spent record-high levels of capex in the past few years toward our network expansion and enhancement and that has allowed us to provide our customers with a first-world connectivity experience. At the same time, Globe recognizes the importance of a healthy balance sheet and sustainable operations,” Eala said.

“As such, we are shifting our focus into strengthening our free cash flow position,” he said.

In 2022, Globe raised its spending by nine percent to a record P101.4 billion from P92.8 billion in 2021, mainly for the expansion of its infrastructure assets.

In particular, the telco spent 86 percent for data requirements to provide its subscribers access to the internet wherever they go.

Moving forward, Globe plans to adhere to the same financial principles that it pursued in the past years to keep its balance sheet healthy. In spite of this, the firm aims to explore further expansion of its network backbone to improve connectivity.

For one, Globe intends to use low earth orbit (LEO) satellites – the same technology that powers Starlink – to improve mobile services in remote areas. As LEO satellites are launched into space, they can deliver uninterrupted connectivity even in areas that are difficult to reach by terrestrial infrastructure.

Globe’s decision to lower its capex comes at a period when inflation is projected to stay elevated here and abroad, as supply fails to keep up with demand in the pandemic aftermath.