Globe Telecom to invest $790M in network overhaul

Posted at 5:49 pm November 10, 2011

Tags: Internet, Telecommunications

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By Alexander Villafania

MAKATI CITY, METRO MANILA – In a bid to outpace its only competitor in the telecommunications industry, Globe Telecom announced that it will be investing approximately $790 million to overhaul its entire infrastructure, from its physical network, mobile infrastructure, to its broadband Internet services.

During a press conference on Wednesday, Globe Telecom President and CEO Ernest Cu revealed that the company will be modernizing its facilities to improve its entire service portfolio, from landline-based telecommunications services to mobile.

“This would be our most significant investment yet since the last two decades. We’re doing this because we’re expecting increased traffic in our network to in the coming years so we’re preparing ourselves for that,” Cu said.

He added: “We’re moving to an all-IP (Internet protocol). We’re replacing our cables with fiber optic to provide increased bandwidth and we’re also preparing for the transition to 4G that would improve voice calls, ensure SMS reception, and broadband Internet.”

Part of Globe’s infrastructure overhaul, which is set from 2012 to 2015, is to replace approximately $388 million worth of network equipment. The company also partnered with Chinese telecommunications equipment provider Huawei to install new equipment.

Cu said that the overhaul would also minimize certain service issues experienced by its subscribers, such as bad reception or dropped calls, SMS delays, and slow Internet browsing performance. He said service improvements will be seen starting in the next few months as they start their transformation, which should start in Mindanao.

Meanwhile such an undertaking would require Globe to acquire financial resources from outside.

According to Globe Chief Financial Officer Albert de Larrazabal the company would be borrowing approximately around $590 million for its overhaul, with the balance coming from internally generated funds.

He said the company is already in talks with a number of local and international institutions for the funding, with agreements to be finalized soon. “From a financial standpoint, we’d actually be saving more on operational and capital expenditures in the long run if we invest now,” de Larrazabal said.

Amid its overhaul programs, Globe announced that it posted P17 billion in consolidated service revenues for the third quarter of 2011, which is three percent higher than in the second quarter of the year.

The company also posted a record number of mobile service subscribers with 29.1 million. Meanwhile, broadband subscribers rose to 1.4 million for this quarter. Cu said that the company is seeing more revenues coming from their mobile Internet services in the future.