Globe Telecom to borrow P7-billion from BDO

Ayala-led Globe Telecom Inc. is borrowing P7 billion from Banco de Oro Unibank (BDO) to refinance maturing obligations and fund expansion projects this year, taking advantage of low interest rates. “We intend to use the BDO facility to fund our capital expenditure (capex) requirements this year and prepay up to P3 Billion in loans that originally mature in 2012," said Albert de Larrazabal, Globe Telecom’s chief financial officer, in a disclosure to the Philippine Stock Exchange. “The current low interest rate environment allows us to replace these loans with cheaper debt, generating savings for the company," he said. This is the first loan facility Globe has signed this year. In 2010, the company said its capital expenditure was about $500 million. Globe president and CEO Ernest Cu has said the firm plans to spend a similar amount, or even less, for 2011. In January-September 2010, Globe said it made P7.4 billion in net income, down 24 percent from P9.9 billion in the same 2009 period. In third quarter 2010, profits reached P1.95 billion, down 25 percent from P2.6 billion in July-September 2009. Because of stiff competition with other telcos, the company has said it does not expect profits in 2010 to match what it made in 2009. Globe is a joint venture of local conglomerate Ayala Corp. and Singapore’s SingTel. As the second largest phone company in the country, Globe with over 25 million subscribers trails Philippine Long Distance Telephone Co. with 44 million subscribers. — VS, GMA News