Saturday, January 08, 2005

Globe Telecom OK’s plan to invest $60M in Subic

Globe Telecom Inc. had approved plans to invest $60 million in Subic Bay that involves the roll out of fixed line services in the industrial zone.

Globe assistant vice president Froilan Castelo said Innove Communications Inc., which continue to market and sell the Globelines and Globequest services, has applied at the Subic Bay Metropolitan Authority (SBMA) to provide lease line and local exchange services to residential and commercial customers of Subic Bay.

Subic Telecommunications Co. Inc. used to be the sole provider of wireline-based services in Subic Bay until its contract expired last year.

This development, Castelo said, provided an opportunity for other operators like Innove to come in and offer their services.

“Subic Bay is now open to other players. Innove and Liberty Telecom are those that applied to provide telecom services there,” he said.

Liberty also intends to provide wireless and radio communication facilities to the area, he added.

Castelo said they expect SBMA to come up with a decision on Innove’s proposal within the first quarter of this year.

If Innove’s application is approved, Castelo said it will take six months to one year to roll out the entire infrastructure.

SBMA, he said, will also have to decide how long Innove can operate there.

“The duration of the contract depends entirely on SBMA. We don’t have the exact figures as to the total number of customers we can serve there, but it’s a lot like the Ortigas business district in terms of size. So it’s quite lucrative. It will involve an investment of bout $60 million,” he said.

Subic Telecom, a wholly owned company of Philippine Long Distance Telephone Co. (PLDT) that offered telecommunications services and products to corporate and residential customers in the Subic Bay Free Port Zone, reportedly failed to cope up with the latest technology, that’s why the SBMA wanted other players to come in.

“The SBMA felt the service they [Subic Telecom] offer has not been enough,” Castelo said.

Subic Telecom started as a joint venture of PLDT, SBMA and American Telegraph & Telephone.

PLDT bought 40 percent of AT&T’s stake in Subic Telecom in 2001 for $8 million.

PLDT is also the parent firm of mobile-phone giant Smart Communications Inc., the fierce rival of Globe in the cellular-phone industry.On the other hand, SBMA is currently chaired by Francisco Licuanan III, the former president of Ayala Land Inc. (ALI).

Both ALI and Globe are publicly listed companies majority owned by the Ayala group.

Globe planned new investments proved that the firm is unfazed by the last Fitch rating agency’s negative outlook on the two company and the PLDT.

Globe Telecom chief finance officer Delfin Gonzalez said he sees “no impact on our borrowing next year as we have no plans to raise new bonds.”

The London-based credit-rating agency has revised its outlook on Globe’s long-term foreign currency rating to negative from stable, while affirming the rating at “BB.”

Meanwhile, Globe’s debts stood at $926 million as of end-September, of which 80 percent are foreign-denominated, Gonzalez said.

The debts of the country’s second-largest phone firm include P58.6 billion worth of long-term borrowings that will mature between 2003 and 2012 and a P7.4-billion short-term debt that will mature 180 to 360 days from drawdown.

“The rating does not reflect any adverse changes in the stand alone credit profile of Globe. This merely follows the same action they took with the sovereign rating outlook,” the Globe official said.

Globe is expected to incur P2.3 billion in foreign exchange losses as a result of the new international accounting standards. Gonzalez said the P2.3 billion in exchange loss will not going to affect the company’s bottomline.

“There will be P2.3 billion in capitalized foreign exchange losses to be charged to retained earnings. We will adopt this in January next year but it won’t affect the company’s bottomline,” he said

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