Manila's Globe Telecom sets $790 mln network, IT upgrade

Globe Telecom Inc, the Philippines' second-biggest telecommunication s 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. The 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 telecommunications market. '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 statement. 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. The new dividend policy, set to take effect in 2012, would ensure that dividends would remain sustainable and yields competitive, it said.