Globe to reduce debt using tower sale gains

MANILA, Philippines — Mobile giant Globe Telecom Inc. expects to cut its outstanding debt to pre-pandemic levels once it receives the proceeds amounting to more than P96 billion from the sale of its towers.

Globe will received P96.32 billion from the agreements it signed with four tower operators for the sale and leaseback of over 7,500 assets.

Once all of the payments are made, Globe expects its debt as a ratio of earnings before interest, taxes, depreciation and amortization (EBITDA) to decline to the pre-pandemic level of 2.2 times.

Globe widened its debt to EBITDA ratio to 2.54 times in the first quarter from 2.35 times in the fourth quarter of 2022. The debt to EBITDA ratio measures the ability of a firm to settle its obligations prior to covering interest, taxes, depreciation and amortization.

Globe chief finance officer Rizza Maniego-Eala said the Ayala-led telco has surpassed its tower sale targets with the latest deal signed with Unity Digital Infrastructure.

“We will see if there are any more opportunistic transactions for the balance year, but the fact that we are at 7,509 is already over our target,” Eala said.

Globe has sold a fresh batch of towers worth P5.4 billion to Unity to boost its finances for capital expenditures and debt payments, as well as to weather the cost hikes triggered by inflation.

On top of this, Globe has entered into a P91 billion agreement for the sale and leaseback of 7,059 assets to tower operators MIESCOR Infrastructure Development Corp. (MIDC), Frontier Tower Associates Philippines and PhilTower Consortium Inc.

To date, MIDC has received 39 percent of the 2,180 towers it procured from Globe. On the other hand, Frontier has obtained 44 percent of its portfolio made up of 3,259 assets, while PhilTower has taken in 53 percent of its tranche comprising 1,350 units.

Down the line, Globe will start turning over the 447 towers it sold to Unity. By the end of it, the wireless giant will keep a strategic number of towers crucial for operations and expansion.

Fitch Group unit CreditSights believes that Globe will receive P52.4 billion in proceeds from its tower sale for the rest of the year, a capital boost that should improve the firm’s credit outlook in the medium term.

With fewer towers in hand, Globe seeks to raise its operational efficiency without compromising the reliability of its telco services.