Globe signs R5-B loan with Union Bank

Globe Telecom, Inc. just signed a 15-year R5-billion term loan with Union Bank of the Philippines to fund its purchase of a fifty percent (50%) equity interest in Vega Telecom, Inc., Bow Arken Holdings Company, Inc. and Brightshare Holdings Corporation - all meant to boost its Internet speeds for both mobile and home broadband users.

Globe needs the added resources and capabilities of the acquired assets for the data needs of existing and new subscribers, the telco yesterday disclosed.

Needless to say, Globe has to continue investing in network improvement and quality of service.

Without its strategic purchase of SMC’s Vega Telecom, Inc., Globe’s normal net income for the first nine months of 2016 would only be down 2% year-on-year.

After borrowing R641 million to buy San Miguel Corporation (SMC)'s telco assets and coughing out more depreciation charges for its sprawling network, Globe's net earnings plunged 17% to R11.7 billion and core net income went down 8% even as data-related products boosted its consolidated service revenues 7% to R89.1 billion for the first nine months of 2016.

The company's R37.5-billion consolidated Earnings Before Income Tax Depreciation and Amortization (EBITDA), up 8 percent, failed to offset the increase in depreciation, given the higher investments the telco made.

However, EBITDA margin stood at 42%, which is at par with last year’s margin and on track with the earlier full-year guidance of 40%.

In terms of capex, Globe spent R26.6 billion in capital expenditures through the first nine months of the year to support the growing subscriber base and its aggressive data network expansion, in which 64% was spent for data-related initiatives. This also include spends on the deployments for LTE on 700MHz.

The telco has also announced additional capital expenditures of US$300 million for network expansion, for its mobile data (US$160 million), corporate data (US$50 million) and home broadband (US$90 million).