Globe is set to complete its major tower sale and leaseback deal by the end of 2024.
By July, 88 percent of its towers have already been transferred to tower companies, generating P85.2 billion. This inflow is crucial for Globe’s ongoing projects and will strengthen its financial stability.
“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,” Globe chief finance officer Rizza Maniego-Eala said in a statement.
What this means
This boosts Globe’s free cash flow, a leading indicator of a company’s financial health because it tracks cash generation versus spending.
“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,” Maniego-Eala said.
“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,” she added.
Shared towers
Globe Telecom also hopes to make operations more efficient by selling its telco towers to third-party operators, which are then leased back to the telco operators.
“We believe in the concept that shared tower cost and shared tower build reduces the capex [capital spending] requirements for the telcos,” said Globe CEO Ernest Cu.
“We hope that with the reduced capex requirement, we’ll be able to collectively put up more towers between the towercos and us,” he added.
Streamlining expenses
Globe Telecom slashed its capital spending by 25 percent in the first half of 2024, investing P23.8 billion as part of a plan to boost free cash flow.
This move aligns with the company’s goal to limit its capital spending to $1 billion for the year.
The reduced spending now accounts for 34 percent of Globe’s revenue, down from the 44 percent capex-to-revenue ratio in 2023. Globe aims to reach an industry-standard ratio of 30-35 percent this year to support sustainable financial growth.
