13 Apr 2010
The Philippines’ second largest telecoms operator by revenues, Globe Telecom, says it intends to raise between USD100 million and USD150 million through a debt issue or bank loan to pay for its CAPEX programme in 2011. Globe CFO Alberto de Larrazabal is quoted as saying the telco will look to secure the monies in the second half of this year. ‘Interest rates may climb so we are taking a look already and will probably lock it in in the second half,’ he said. The SingTel and Ayala Corp-backed operator has not confirmed its full spending budget for next year, but is investing USD500 million in 2010 to develop its business – including around USD250 million on broadband.
Despite the operator’s bullishness, it also sounded a word of caution that fierce competition in the local market will most likely combine with a price war to temper growth in its mobile and broadband businesses this year. In a stock market filing Globe noted its concerns that profit margins will be impacted by the introduction of more and more ‘unlimited’ service package options, although it feels ‘well-positioned and ready to compete’ – particularly in the key mobile and broadband sectors. In its presentation for annual stockholders, the operator noted that in fiscal 2009 the Filipino mobile market slowed dramatically, reflecting a general downturn in the economy. Mobile revenue growth notched just a 1.1% gain last year, compared to growth of 5.7% in 2008. As at 31 December 2009, the Philippines was home to 74.8 million SIM cards, of which Globe controlled 23.2 million – down from 24.6 million a year earlier.
Globe said the relatively weak performance for mobile last year resulted in a decline in group revenue last year, to PHP62.4 billon (USD1.4 billion) from PHP62.9 billion in 2008. Sales derived from mobile operations slipped 4% year-on-year due to intense competition and the increasing preference of subscribers for value offers on the back of weak consumer economy. On a more positive note, the drop in mobile revenues was partially offset by a 22% improvement in fixed line and broadband sales, buoyed by strong subscriber uptake and growth in its fixed line data business. The operator’s mobile arm contributed 85% of total group revenues in FY2009, down from 88% in FY2008, while fixed line and broadband increased their share from 12% to 15%.
The country’s overall broadband user base is flourishing. Growth reached 70% last year, or 2.5 million subscribers, from 1.4 million in 2008. By the end of 2010 the operator confidently predicts the total will have climbed strongly to between four and five million broadband users. It hopes to claim a significant share of new sign-ups, and highlights strong take-up for its nomadic on-the-go broadband service, to achieve this. Globe closed out 2009 with 715,000 high speed internet connections, a threefold increase on the 230,000 it had at end-2008.