1.

Based on the gathered company information, describe the working capital policy of the 2
companies.
The following are the important ratios used by the group to measure the efficiency of working capital. The
following, easily calculated, ratios are important measures of working capital utilization:
Ratio:

Globe Telecom

PLDT

51 days

36 days

Current assets

35,631,202

67,663,000

Current
Liabilities

54,989,331

129,047,00
0

35,631,202.0
0

61,384,00
0

0.65

0.52

Inventory
Turnover
(In days)
Receivables ratio
(in days)
Payables Ratio
(In days)
Working
Cycle
Capital in days

Working Capital

Current Ratio

The working capital of

Globe telecom has higher current ratio which may indicate that

Table 1: Globe and Pldts ratios related to working capital

Globes Working Capital for 3 years

Major Findings why Globes Working Capital has been increasing: (NAKA GENERALIZE PA TO)
GUYS
* Existing cash reserves
* Profits (when you secure it as cash !)
* Payables (credit from suppliers)
* New equity or loans from shareholders
* Bank overdrafts or lines of credit
* Long-term loans

Overall Conclusion:
Globe is having a conservative working capital policy. Reviewing their ratios, Globe has
been very keen in terms of their investment compared to PLDT. Overall looking at their working capital,
more than half of Globes liability can be paid using their current assets which covers 64% of liability over
PLDT which can only cover 52% of their overall current liabilities that can be paid by their current assets.
Therefore we conclude that PLDT is having an aggressive working capital policy which was also proven
by PLDTs president Manny Pangilinan based on their 3.5B worth of cable expansion. Globes current
ratio implies a conservative working capital policy thats why it has greater liquidity and lower risk; while
PLDTs aggressive working capital policy indicates higher risk and poor liquidity. This is also the reason
why Globe has higher current ratio compared to PLDT despite of Globes system upgrade that had
started last 2012.

2. Gather 2 or 3 current articles about each of the three companies that the group believes will
have an effect on their working capital. Thoroughly discuss the identified impact together with
insights about the suitability of the company actions about their working capital (and
financing) to their nature of business. The group must be able to provide support in all their
answers.

Globe secures $120-M loan for operations

MANILA, Philippines - Ayala-led telecommunications firm Globe Telecom Inc. obtained a $120million loan from Metropolitan Bank and Trust Co. (Metrobank) to fund its operations. In a disclosure to
the Philippine Stock Exchange on Monday, March 25, the company said loan proceeds would be spent for
its capital expenditures in 2013. Globe's capital expenditures (capex) are estimated to reach $450 million
to $500 million.The capex would include expenses related to the firm's network modernization program,
and investments in fixed line, international cable facilities and information technology infrastructure.
On March 7, Globe received a $75 million loan facility from Bank of Tokyo - Mitsubishi UFJ, Ltd. to
partially cover its 2013 capex.The term loan facility with Metrobank brings to $195 million the total loans
signed by Globe for the first quarter of the year, the company said. Globe is expected to complete the
first phase of its $700-million network modernization and transformation program and its $90 million IT
upgrade this month. Globe's net income dropped 30% to P6.857 billion in 2012 from P9.832 billion in
2011. The company's 4th quarter earnings dropped 97% to P49 million from P1.8 billion.

Source:

http://www.rappler.com/business/industries/172-telecommunications-media/24715-globe-loan-

operations
Globe Telecom says capital investments slash first nine mo. net income
Telecommunications industry profits continued to fall in the second quarter as the countrys top
companies accelerated modernization efforts while struggling against competition from each other and
from Internet communication applications like Skype and Facebook.
In a statement released Tuesday, dominant carrier Philippine Long Distance Telephone Co.
(PLDT) reported a net income of P19.5 billion, down 8 percent year on year. These results reflect the
consolidation of the operating performance of Digital Telecommunications Philippines Inc. [Digitel] from its
acquisition, which closed last October, PLDT said.
Stripping out one-time gains, PLDTs core profits fell 11 percent to P18.7 billion. PLDT said higher service
revenues were offset by an increase in expenses due to manpower reduction programs at PLDT and
Digitel. The company also spent more on selling and promotions initiatives, the statement added. Core
net income was also affected by the recognition of a P2-billion deferred gain relating to the transfer of
shares of Manila Electric Co. (Meralco) from PLDT Communications and Energy Ventures to Beacon
Asset Holdings.
Beacon Asset is the Manuel V. Pangilinan groups holding company for its controlling stake in Meralco,
the countrys biggest power distributor.
It is noteworthy that, despite the earnings pressure from the competitive state of the local industry and
continuing pressure on our margins, our free cash flows remain strong, thus enabling us to sustain our
customary dividend levels, said Pangilinan, PLDTs chairman.
PLDTs earnings before income tax, depreciation and amortization (Ebitda) margin for the January-toJune period remained at a healthy 46 percent, although this was lower than the 55-percent level recorded
a year earlier. Consolidated free cash flow reached P24.4 billion, an increase of 1 percent over last year.
PLDT, which controls mobile carriers Smart Communications and Sun Cellular, ended the period with 67.4
million subscribers, or two thirds of the industry. This helped prop up consolidated service revenues by 12
percent year on year to P84.7 billion.
Meanwhile, Globe Telecom reported a similar earnings drop, with its net income settling at P5 billion for
the six-month period. This was down 10 percent from the same time last year.
Despite the lower profit, the company remained optimistic, saying the mobile business thrived against the
challenges posted by competition, notwithstanding peaking penetration levels driven in part by multi-SIM
usage and subscribers preference for services offering the best value for their money.
The company said total service revenues reached P40.8 billion, up 6 percent from the same period last
year. Excluding foreign exchange and mark-to-market gains and losses as well as nonrecurring items,
however, core net income was up 2 percent year on year from P5.6 billion to P5.7 billion, Globe said.
We are very satisfied with our performance this period, allowing us to further extend our growth
momentum for another quarter. This was achieved despite the challenges posed by competition that is
beginning to leverage its scale advantages of having a bigger combined subscriber base and network,
Globe president and CEO Ernest Cu said.
The company ended the first semester with 31.7 million subscribers, up 12 percent year on year. We
hope to build further on this momentum as we head into the second half of the year, Cu said.
Source: http://business.inquirer.net/75473/pldt-globe-telecom-post-lower-q2-profits#ixzz3FIKkY4FY

Smart signs P3.5-B loan deal with LandBank

Wireless services company Smart Communications Inc. has signed a P3.5 billion term loan facility
agreement with the LandBank of the Philippines (LBP) to finance its network upgrade and expansion
programs in response to growing demand for faster mobile broadband services in the country.
Smart said the loan facility came in two tranches of P3 billion and P500 million and that the
agreements were signed last January 29 and February 3, respectively. Both loans are payable over
seven years with an annual amortization rate of 1 percent of the principal amount on the first year up
to the sixth year, commencing on the first anniversary of the initial drawdown and the balance
payable upon maturity on February 5, 2021. The amount of P3 billion was fully drawn on February 5,
while the second loan of P300 million was fully drawn on February 7.
Smart, a unit of local telecom giant Philippine Long Distance Telephone Co. (PLDT), has set
a full-year capital expenditure of P29 billion. Meanwhile, PLDT announced the roll-out of its P1-billion
domestic fiber optic network (DFON) linking Palawan Province to PLDTs broader network
infrastructure.
The project consists of 620 kilometers of state-of-the-art fiber optic inland and submarine
cables that run from Puerto Princesa to Taytay in Palawan and San Jose de Buenavista to La Paz,
Iloilo City. The company said the DFON project was designed to support the increasing demand for
reliable telecom and data services in one of the most popular tourist destinations in the country.
It said DFON enables PLDT to provide fiber-to-the-home (FTTH) facilities that deliver multimedia
services and high-speed internet connectivity from the comfort of peoples homes in Palawan
With its huge capacity at 40 Gigabits that can easily be expanded to 100 GBPS (Gigabits per
second), Palawan DFON supports the rapidly growing demand for greater bandwidth by corporate
and individual subscribers, PLDT president and CEO Napoleon Nazareno said.

At the end of

September last year, PLDTs total fiber footprint stood at more than 75,000 kilometers, inclusive of
7,200 kilometers of international submarine fiber, and over 4,000 kilometers of domestic submarine
fiber.
Source:

Globe Telecom says capital investments slash first nine mo. net income

Globe Telecom Inc., a joint venture of Ayala Corp. and Singapore Telecom, reported Thursday a 19percent drop in net income in the first nine months of the year, saddled by expenses incurred by a $700million network modernization and transformation program. Net income totaled P6.808 billion, down
P1.186 billion from P7.994 billion a year earlier.
Consolidated net income after tax stood at P6.8 billion as of end-September this year, down 15
percent from almost P8 billion in the same period last year, driven by the continued investment in
subscriber acquisitions and network and IT infrastructures, the company noted in a statement.
Capital expenditures jumped 16 percent to P16 billion from P13.9 billion in the same comparable period.
Consolidated revenues rose by 6 percent to P61.3 billion from P57.7 billion, reflecting strong
performance of mobile, broadband, and fixed line data services. Globes mobile subscribers rose 10
percent to 32.1 million. Social networking boosted demand for Internet connectivity, driving growth in the
telcos broadband business that was supported by advanced technology for better Internet connection
speeds. Globe said broadband subscribers surged 20 percent to over 1.6 million from 1.4 million as of
end-September.
Despite the very challenging competitive environment, our business remains fundamentally
strong, said Globe president and CEO Ernest Cu.

The company is gearing for stiff competition. We are prepared for the challenge and will be in a much
better position to deliver overall enhanced value to our stakeholders upon completion of our network
upgrade and with the new capacities coming onstream, Cu noted. VS, GMA News
Source:
http://www.gmanetwork.com/news/story/281545/economy/companies/globe-telecom-sayscapital-investments-slash-first-nine-mo-net-income