Globe Telecom signs P5-B term loan

Ayala-owned Globe Telecom has signed a P5-billion term loan facility with Citicorp Capital Phils. Inc. as lead arranger and various institutions as lenders.

The facility is being made available under the wholesale lending program of the Development Bank of the Philippines (DBP), funded by the Japan Bank for International Cooperation (JBIC). Proceeds will be used to finance capital expenditures related to Globe’s Phase 10 network expansion.

Earlier, Globe was able to raise $100 million in the international capital markets through the reopening of its 9.75 percent notes due 2012, proceeds of which will also be used to finance the company’s capital expenditure program.

Capital expenditures for the first quarter of the year already amounted to P4.3 billion, equivalent to 33 percent of service revenues. This year, the company has earmarked around P19.7 billion for its capex program, primarily for the expansion of its wireless business.

The company, which also has among its major stockholders Ayala Corp. and Singapore Telecom, posted a net income of P3.1 billion during the first three months of 2004 or 55 percent more than the earnings in the same period last year on the back of combined top-line growth and increased operating efficiency.

Earnings per share increased to P21.70 or 66 percent higher than the P13.08 posted in the same period in 2003 which also reflects lower shares outstanding following the 12-million share buyback late last year.

Globe’s service revenues in the first quarter amounted to P12.8 billion, a 16-percent increase from the same period in 2003, driven by the growth in subscriber take-up.

Through effective optimization of company resources, operating costs and expenses grew by only 12 percent to P5.2 billion. As a result, earnings before interest, taxes, depreciation and amortization (EBITDA) rose to P8.3 billion and EBITDA margin improved to 65 percent.

Globe reported record gross additions of 2.2 million during the quarter. However, net additions only totaled 277,197, resulting from the high churn rate earlier anticipated. This churn level reflects the subscribers who left the Globe network from June to October last year when the competitive over-the air reload service was unchallenged.

The company’s total wireless subscriber base registered at 9.1 million in March this year, a 29 percent increase from a year ago. As of June this year, the figure already exceeded 10 million subscribers.

Its first half 2004 financial and operational highlights will be announced during an investors’ briefing scheduled on Aug. 4.

It is expected that Globe’s net profit for the whole year will grow 46 percent, driven by strong mobile phone revenues. Company officials also aim to increase subscriber base to 16 million by end-2004.

Officials project 2004 net income to reach P15 billion this year, compared with P10.3 billion in 2003.