One of the Philippines’ major telecoms providers Globe Telecom is planning to raise up to 32 billion pesos (US$593 million) through a stock rights offering to fund the expansion of its mobile and broadband network as well as to repay debt.
In an announcement made on the Philippine Stock Exchange (PSE) on June 20, the company says the offering was approved by its board of directors on June 17 for Globe’s eligible common shareholders. The company says the fund raising will enable Globe to further expand its digital ecosystem and further differentiate itself in the market as it capitalizes on opportunities in and beyond telco.
The common shares for this offer will be issued out of the increase in the company’s authorized capital stock, which has been approved by the board and the shareholders in April this year.
This will be the first time Globe will conduct a rights offering in the capital market in over two decades. “We believe there is excitement in the market for Globe's future prospects and potential amid the massive demand for data-related services as more Filipinos are now embracing the benefits of digitalization,” says Rizza Maniego-Eala, Globe's CFO. “This capital raising will also provide Globe added flexibility to properly compete as we aim to continue delivering quality services to our customers and keep our leadership position in the country. This effort will also further strengthen our balance sheet and empower us to further develop adjacent businesses that will enable the Filipino digital lifestyle."
Singapore Telecom International, a wholly owned subsidiary of Singtel, and Ayala Corporation, Globe’s principal shareholders, have both indicated their support for the stock rights offer.
In raising fresh funds for expansion, Globe has seen data traffic in its network grow significantly, with the first quarter of 2022 reporting a 27% increase against the same period last year. This growth was driven by the increased smartphone penetration in the network, which rose from 81% in 2020 to 85% in 2021 and led to a higher per person data usage of 22%.
But despite this increase, Filipino data usage still lags behind its neighboring countries, notes Globe in its PSE announcement, and there is still latent demand in the market today. To support this fast-growing demand, Globe has been investing in its network, spending close to 250 billion pesos in capital over the past four years and committing to spend another 89 billion pesos in 2022.
Globe has mandated BPI Capital Corporation as sole global coordinator, domestic lead underwriter and a joint bookrunner for the transaction, while UBS was named as sole international underwriter and a joint bookrunner. PNB Capital and Investment Corporation will be the domestic co-lead underwriter for the rights offer.