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Business

Globe unloads 7,000 towers from portfolio; 1st half earnings mixed

Ramon Royandoyan - Philstar.com
globe
The Ayala-led telco said 75% of proceeds from the sale will be used for capital expenditures while the rest will be used for debt payments.
Globe / Released

MANILA, Philippines — Globe Telecom Inc. announced on Friday the sale of 7,000 towers in its portfolio as the company is eyeing to pivot into a digital platform.

The telco giant will net proceeds totalling P71 billion from the sale of the towers and other passive infrastructure, according to a disclosure sent on Friday. Globe noted that the deal will help them reallocate capital from passive assets. 

“It’s very clear our strategy is to monetize on our passive assets, make sure balance sheet is healthy…to support pivot to a digital platform,” Rizza Maniego-Eala, Globe’s chief finance officer, said in a media briefing on Friday. 

The Ayala-led telco said 75% of proceeds from the sale will be used for capital expenditures while the rest will be used for debt payments. 

Globe noted it signed two sale and leaseback agreements for the sale, wherein 66% of towers included in the sale are located in Luzon. 

The first part of the sale will be executed with MIESCOR Infrastructure Development Corp., a tower company created under a joint venture between Meralco subsidiary MIESCOR and Stonepeak, an alternative investment firm. MIDC will purchase 2,180 towers from Globe, mostly located in Luzon, for P26 billion. It will be leased back to Globe initially for 15 years. 

The second portion of the sale is with Frontier Tower Associates Philippines Inc. The company will buy 3,529 towers from the Ayala-led firm for P45 billion for the same leaseback agreement. 

Terry Ridon, convenor of local think tank Infrawatch PH, said Globe’s sale will help the company focus on its core business. 

“The unloading of tower assets by the country's leading telcos allows them to focus on improving their core business, which is to deliver the best wireless services at competitive prices,” he said. 

Once the deals are completed, Globe estimated it would have 4-5,000 telco towers left in its portfolio.

“The fresh cash from the sale can be used to further improve other aspects of the business, expedite the rollout of 5G, and raise service levels,” Ridon added.

However, Globe kept mum on details of its deal with another tower company for the sale of their tower assets. The deal, already in advanced discussion, could potentially see Globe unloading 1,350 telco towers located in Visayas and Mindanao. 

Mixed earnings 

The telco giant reported in a disclosure on Friday that its core net income faded 17% year-on-year to P11.02 billion in the first six months of the year. On a quarterly basis, it surged 16% on-year.

Earnings narrowed operating expenses rose 6% on-year to P60.6 billion in the first half of 2022 as costs across the company shot up in the past year. 

Financial data broken down showed the Ayala-led company’s service revenues in the first half inched up 4% year-on-year to P78.9 billion. Mobile and corporate data segment are seen as main drivers for growth. Revenues from its mobile data business grew 8% annually to P41.84 billion in the first half of 2022 as pandemic restrictions eased.

Globe’s prepaid segment grew 2%, while its postpaid business narrowed 7% in the second quarter.

Revenues from its home broadband segment pared 5% year-on-year to P13.8 billion in the first six months, retreating 4% quarterly, due to an ongoing transition of consumers to fiber internet lines.

Earnings before interest, taxes, depreciation, and amortization expanded 8% yearly to P40.55 billion in the first half of 2022. 

Shares at Globe rose 2.37% at P2,242 apiece on trading on Friday.

GLOBE TELECOM INC.

MERALCO

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