Globe to tap local bond market as global meltdown impact trad'l funding sources
abs-cbnNEWS.com | 11/11/2008 12:49 AM
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With traditional funding sources expected to be less accessible or more costly as the full effect of the global crisis take root, Globe Telecom is planning to tap the retail bond market in the coming months to help fund capital expenditures and operational expenses in 2009.
Delfin Gonzales, Globe's chief financial officer, told reporters last week that in an effort to diversify funding sources, the company will undertake a P10 billion retail bond program, of which P5 billion is will be raised in the first three months.
"In an environment like this, there are many uncertainties on how much credit will be available. Even if there is no problem in the Philippines, the overall global difficulties tend to make banks conservative as well," explained Gerardo Ablaza, the company's chief executive.
The country's second largest telecommunications provider will soon be filing necessary paper works with the Securities and Exchange Commission.
Ablaza also said they will look at export-credit agencies to fund the balance of the P10-billion bond program next year.
"We will also use part of our free cash for capex (capital expenditures), but the reason we decided to tap funding sources early is to give us a better picture of how much we can plan in terms of capex," Ablaza said.
Trimmed capex
Globe is trimming its capital expenditure next year to between $400 million to $420 million. This year, its capex budget is around $450 million.
Ablaza said the amount will be invested in existing technologies and new ones such as high speed downlink packet access and Wimax service.
Globe saw its consolidated net income tumble 9 percent to P8.8 billion in the January-September period this year from P9.7 billion a year ago, as its service revenues softened 1 percent to P46.6 billion during the nine-month period.
This was despite the 24 percent increase in subscriber base to 23.7 million as of September, helped by the revitalized campaign for the Touch Mobile brand which brought in more than 800,000 new subscribers in the third quarter alone.
Remittances
Ablaza explained that how much they will invest in existing and new technologies will be dependent on consumer spending.
"One of the indicators we're looking at is the performance of OFW remittances becasue more than anything else, the single macro-economic measure of consumer spending is how remittances perform," Ablaza stressed.
