Globe announced a recalibration of its cash capital expenditure (capex) this year, optimizing the spend to maximize network infrastructure investments. This streamlined spending is consistent with the company’s efforts to improve current and future network efficiency to sustain growth and enhance the digital experiences of Filipinos.
The company invested a total of PHP70.6 billion in cash capex for 2023, 30% lower than the previous year. This reduced level of spending reflects Globe’s commitment to capital efficiency and network maximization, following record-high network investments in the prior years.
For 2024, Globe aims to further lower its cash capex spend, setting a full year guidance of US$1 billion, lower than US$1.3 billion invested in 2023. These network investments are expected to further drop by 2025, decreasing to below US$1 billion by 2025 as part of Globe’s broader strategy to bring capex-to-revenue down to the level of its regional peers.
Globe’s capex-to-revenue ratio has decreased considerably from 64% in 2022 to 44% in 2023, illustrating its active effort to maximize its network investments and focus on capital efficiency. Cash capex spending in 2024 is expected to equate to approximately 30 to 35% of total gross service revenues for the year, and is targeted to be even lower in the subsequent year.
A total of 91% of the 2023 cash capex spending was dedicated to bolstering the data infrastructure of the company to provide better and more meaningful digital experiences for its customers, amid steadily rising demand for data connectivity.
With the heavy investments the past 3 years, Globe is now reaping the benefits of an expanded network. Due to the opportunistic investments of the past years, Globe was able to lower purchase order (PO) issuances in 2023, without sacrificing the quality of the network.
Total PO issuances in 2023 amounted to US$600 million, which is less than half of the actual cash capex spend for the year and approximately 36% of the average annual PO issuances of the company from 2018 to 2022. This conscious effort to lower PO issuances is a leading indicator of Globe’s future cash capex payment levels and is instrumental in its plan to return to positive free cash flow territory.
“For 2024, our focus is on optimizing the use of our network to be able to deliver topline growth of low to middle single digits as well as maintain our EBITDA margin at 50% for the year. Supported by the delivery of our 2024 guidance, the objective is for us to return to positive free cash flow by 2025,” said Rizza Maniego-Eala, Globe’s Chief Finance Officer.
Cash capex spending for the year will be financed by a combination of internally generated cash flows, debt financing, as well as proceeds from tower sales, which is expected to be completed by the first half of 2024.
Globe’s cash capex streamlining and its focus on optimization and efficiency demonstrate the company’s commitment to maintaining its leadership in the telecom industry, while ensuring the delivery of high-quality digital experiences to its customers across the country.
To learn more about Globe, visit https://www.globe.com.ph/.
