Globe is on track to finalize its landmark tower sale and leaseback deal by the end of 2024. As of July, 88% of the towers in the portfolio have been officially transferred to tower companies, generating approximately Php 85.2 billion in gross proceeds. This significant financial inflow is expected to support Globe’s strategic initiatives and strengthen its financial position.
As part of Globe’s strategy to optimize capital deployment, the company reduced its capital expenditures (capex) by 25% in the first half of the year, aligning with its goal to achieve positive cash flow by 2025.
Progress and Financial Impact
Rizza Maniego-Eala, Globe’s Chief Finance Officer, expressed confidence in the timeline for the completion of the sale. “We are aiming to complete 100% of our tower sale by this year. However, even if we only reach about 92% by December, we will still be on track, considering that the fourth tranche of our tower sale came six months after the first three transactions,” she said.
The tower sale, which began in 2022, has seen significant progress throughout 2024. Globe successfully transferred an additional 48 towers to Phil-Tower Consortium, Inc. (PhilTower) on June 21, for approximately Php 710 million. On June 28, Globe handed over 140 towers to Miescor Infrastructure Development Corporation (MIDC) for Php 1.68 billion. Simultaneously, 187 towers were transferred to Frontier Towers for approximately Php 2.38 billion. By July 23, Globe completed the transfer of the last batch of 1,037 sites to Frontier Towers for Php 13.17 billion, marking the full completion of its Tower Sale and Leaseback Deal with the company.
Support from National Leadership
In his recent State of the Nation Address, President Ferdinand Marcos, Jr. emphasized the importance of common towers for national connectivity, a strategy that Globe President and CEO Ernest Cu fully supports. “This reinforced Globe’s strategy of using common towers,” Cu said. “We believe in the concept that shared tower cost and shared tower build reduces the capex requirements for the telcos. We hope that with the reduced Capex requirement, we’ll be able to collectively put up more towers between the towercos and us."
Positive Financial Outlook
With the tower sale nearing completion, Globe’s financial outlook remains optimistic. "Our free cash flow after interest payments for the second quarter of 2024 already entered positive territory, which included proceeds from our tower sale initiative,” said Maniego-Eala. She added, “We expect the momentum coming from strong operating cash flows to continue through to next year, driven by both top-line growth and our efforts on cost and investment optimization. This positions us to continue posting free cash flow positive results in 2025, even without one-offs.”
To achieve sustainable free cash flow, Globe invested Php 23.8 billion in capex in the first half of 2024, a 25% drop from 2023, consistent with its capex guidance of USD 1 billion this year as part of its sustainable capex spending strategy. This capex investment, equivalent to just 34% of Globe’s topline, marks a significant decrease from the 44% Capex-to-revenue ratio recorded in 2023. Globe aims to return to the industry’s average levels, targeting a Capex-to-revenue ratio of 30-35% for the year.
As Globe continues to optimize its investments, the company is poised to maintain its leadership in the telecom sector while ensuring sustainable growth and profitability in the years ahead.
To learn more about Globe, visit www.globe.com.ph.
FAQs
1. What is the status of Globe’s tower sale and leaseback deal? As of July 2024, 88% of the towers have been transferred, with the deal expected to be finalized by the end of the year.
2. How much has Globe generated from the tower sale? Globe has generated approximately Php 85.2 billion in gross proceeds from the tower sale.
3. What is Globe’s capex reduction strategy? Globe reduced its capital expenditures by 25% in the first half of 2024 to align with its goal of achieving positive cash flow by 2025.
4. How does the tower sale impact Globe’s financial outlook? The tower sale has positively impacted Globe’s financial outlook, with free cash flow entering positive territory in the second quarter of 2024.
5. What are Globe’s future capex plans? Globe aims to maintain a Capex-to-revenue ratio of 30-35% for the year, targeting sustainable growth and profitability.
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