Globe borrows P2B to finance spending

Globe Telecom, Inc. has closed a deal to borrow P2 billion from Allied Banking Corp., which it will use to finance capital expenditures, the company told the Philippine Stock Exchange on Tuesday. The Ayala-led firm, the country's second-largest mobile phone company, earlier said it would add 2,000 more sites for its 3G (third-generation) and Wi-Max (Worldwide Interoperability for Microwave Access) networks this year. Globe is promising faster speeds by investing in a new regional cable system. At the end of last year, Globe had 3,000 3G and 900 Wi-Max sites, apart from 60,000 regular cellular sites. Globe closed 2009 with net profits of P12.6 billion, more than a tenth higher that the prior year. The company’s broadband and corporate data business sustained double-digit growth, cushioning the poor performance of its mobile business. In the fourth quarter of last year, Globe launched its second fiber optic backbone network to boost the quality of its network service. The $70-million network is a high capacity transmission system that spans over 1,900 kilometers of inland and submarine cable, covering most areas of Luzon, the Visayas and Mindanao. Globe also signed deal in December to be the exclusive landing party in the Philippines to the Southeast Asia Japan cable system, an international cable system that will link the Philippines to Singapore, Hong Kong, Indonesia and Japan. Standard & Poor’s Ratings Services earlier said it expected Globe to remain a strong contender in the Philippine mobile telecommunications market, even as the industry's subscriber base continues slowing down and competition intensifies. The global debt watcher affirmed its ‘BB+’ long-term corporate credit rating on Globe, with a stable outlook, citing its large customer base and nationwide network coverage. A ‘BB+’ credit rating is considered the highest speculative grade by market participants. Speculative grade means a company’s ability to pay debt is only moderate. S&P said the stable outlook reflected the company’s steady market position, favorable financial situation, and higher operating efficiency. S&P noted that after a period of industry-wide intense promotion to attract customers and increase traffic, Globe cleaned disconnected, inactive and marginal consumers from its user base, most of them prepaid users. Globe, which S&P said has a market share of slightly more than 30 percent, ended last year with a wireless subscriber base of 23.2 million, 6% lower than the prior year’s 24.6 million. Its main rival is Smart Communications, owned by dominant carrier Philippine Long Distance Telephone Co. — Norman P. Aquino, GMANews.TV