A 34 Billion Investment by Globe Telecom for an IT Renovation

MANILA, Philippines - Globe Telecom, the second laregst telecoomunications company, on Wednesday said it will put some $790 million (about 34 billion pesos) for a overhaul of the  network and a modernization program including the IT re-engineering proposals.

In a press release, Globe Telecom said it will invest about $700 million for its network modernization program in the coming 5 years, and another $90 million for the IT upgrade. Both projects will be made within 2 to 3 years.


The Ayala Corp. and Singapre Telecommunications Ltd.-owned company, dubbed it as the "biggest" and "most significant" investment in the past 20 years.

Globe Telecom president and CEO Ernest L. Cu. added that "Our network and IT modernization programs are key initiatives in transforming Globe into a customer-centric company, differentiated by superior customer experience."

He added, "As we execute our programs, we will aim for a seamless transition in order to extend our gains and strengthen our position in this intensely competitive market."

The network modernization program is foreseen to improve its quality, enlarge its voice and data capacity, bring down cost of ownership and "future-proof" the network.

"Given the growing demand for bandwidth-heavy services, the modernization program will bring significant improvements to network capacity leading to improved reliability, ease of access and pervasive coverage," according to Globe officials.

Globe has gave the modernization project to Huawei, a Chinese telecommunications equipment giant, "given its technical expertise and strong track record of success."

Globe is also establishing a Joint Innovation Center with Huawei, where it will learn the best practices in networking and the latest developments of 17 Huawei research centers around the world.

As for the IT re-engineering project, Globe's aim is to streamline and integrate the company's systems  over the next 2 years.

The company tapped Amdocs, a market leader in customer experience systems innovation, as its technology  partner. A definitive agreement between Globe and Amdocs is expected to be completed by the first quarter of 2012.

According to Eli Gelman, Amdocs chief executive officer, "this strategic transformation project significantly expands Amdocs and Globe Telecom’s relationship to support the mission critical operations of Globe. Our ability to deliver innovative and partner technology will be key to enable Globe to deliver service innovation to their nearly 30 million customers and establish operations that can support rapid growth."

With these two projects, Globe is expecting to create savings in operating expenses and capital expenditures totaling $180 million and $210 million respectively over the next 5 years. Included with this is the higher revenues driven by quality network upgrades and increased capabality.

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.

Globe also announced it was changing its dividend pay-out policy to 75-90% 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.- with Reuters