Globe projects completing its tower sale and leaseback deal by the end of this year, the fourth such transaction coming off only six months from when the first three tower sales were first initiated.
Its completion, the telecommunications company said, will help it achieve positive free cash flows in 2025 and further strengthen its financial position.
According to the telco, it has transferred 88 percent of the towers as of end-July this year and generated P85.2 billion in gross proceeds that helped it underwrite various strategic initiatives.
Also, as part of the strategy to optimize capital deployment, Globe slowed down its capital expenditures (capex) investment by 25 percent in the first six months this year in keeping with the goal to achieve positive cash flow next year.
Rizza Maniego-Eala, Globe chief finance officer, expressed confidence in the timeline for the completion of the sale.
“We are aiming to complete 100 percent of our tower sale by this year. However, even if we only reach about 92 percent 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 started in 2022, has seen significant progress throughout 2024. Globe successfully transferred an additional 48 towers to Phil-Tower Consortium, Inc. (PhilTower) in June for approximately P710 million.
In the same month, Globe handed over 140 towers to Miescor Infrastructure Development Corporation (MIDC) for P1.68 billion. Simultaneously, 187 towers were transferred to Frontier Towers for approximately P2.38 billion.
By July, Globe completed the transfer of the last batch of 1,037 sites to Frontier Towers for P13.17 billion, marking the full completion of its tower sale and leaseback deal with the company.
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 (the President’s statement) reinforced Globe’s strategy of using common towers. 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,” Cu said.
With the tower sale almost completed, 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 P23.8 billion in capex in the first half of 2024, a 25 percent 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 percent of Globe’s topline, marks a significant decrease from the 44 percent capex-to-revenue ratio in 2023. Globe aims to return to the industry’s average levels, targeting a capex-to-revenue ratio of 30-35 percent 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.