Reuters – Tue, Nov 8, 2011 9:52 PM EST
MANILA, Nov 9 (Reuters) - Globe Telecom Inc , the Philippines'
second-biggest telecommunications firm, said on Wednesday it will spend
$790 million in a network upgrade and IT re-engineering programme as it
seeks to bolster its position in a highly competitive market.
company, owned by local conglomerate Ayala Corp and Singapore
Telecommunications Ltd , said in a statement the project -- its biggest
investment in the last two decades -- would be undertaken in the next
two to three years.
Globe's announcement comes after rival
Philippine Long Distance Telephone Co's (PLDT) $1.6-billion takeover of
third-ranked Digital Telecommunications Philippines Inc (Digitel) , a
move that solidified PLDT's leading position in the local
"Given the growing demand for
bandwidth-heavy services, the modernisation programme will bring
significant improvements to network capacity leading to improved
reliability, ease of access and pervasive coverage," Globe said in a
Telecoms firms are looking at data and broadband
services to spur future profit growth, with the traditional mobile phone
business reaching saturated levels.
The modernisation programme
would also generate savings in operating expenses and capital
expenditures totaling $180 million and $210 million, respectively, over
the next five years, the company said.
Globe said it expects to
decommission assets with estimated net book value of $388 million after
the upgrade, with rising depreciation charges over the remaining life of
the assets likely to impact its profitability.
The company would
contract the world's No.2 network equipment maker Huawei for the
network upgrade and Amdocs , a phone-billing and customer-management
software maker, for the IT system upgrade.
Globe also announced
it was changing its dividend pay-out policy to 75-90 percent of prior
year's core net income instead of reported net income.
dividend policy, set to take effect in 2012, would ensure that dividends
would remain sustainable and yields competitive, it said.
(Reporting by Erik dela Cruz; Editing by Rosemarie Francisco)