Globe Telecom nets P9B in H1, up 3%

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AYALA-LED Globe Telecom Inc. closed the first six months of the year with net income of P9 billion, up 3 percent from last year’s P8.7 billion despite the higher depreciation expense and non-operating charges during the period.

Excluding non-recurring expenses and net foreign exchange gains, core net income reached P8.8 billion for the first six months, up 2 percent from the P8.6 billion recorded in the same period last year, Globe said in a disclosure to the Philippine Stock Exchange.

Consolidated EBITDA for the first half of 2016 remained strong at P25.6 billion, up 13 percent from the P22.7 billion reported a year ago. EBITDA margin for the first half stood at 43 percent from 42 percent a year earlier.

Service revenues reached P59.6 billion in January-June, up by 11 percent from P53.8 billion last year, on robust performance across all key business segments.


“We are proud that Globe’s overall results in the first half remained robust amidst the heightened competitive intensity and the unique challenges and opportunities posed by increasing levels of smartphone penetration and mobile postpaid ownership in the market,” said Ernest Cu, president and chief executive officer of Globe.

Mobile revenues posted a 3 percent increase year-on-year, with improvements coming mostly from its prepaid segments (Globe Prepaid +3 percent; TM +5 percent). Total mobile subscriber base rose to 61.3 million as of the end of June this year.

The growth in mobile revenues was spurred by a sustained rise in mobile data service revenues, which grew 46 percent from a year ago to P17.8 billion in the first half.

The robust revenue growth was driven by the rise in smartphone penetration on the back of increasing affordability and range of devices, and the popularity of Globe’s data-driven products and applications as more customers shift toward digital lifestyles.

The growth in mobile data services offset the declines in mobile voice (-11 percent) and mobile SMS revenues (-16 percent), which Globe said was consistent with the trends in other telecom companies in the region and worldwide.

Mobile data services comprised 39 percent of total mobile revenues, up from 27 percent in the first six months of 2015.

“We believe that with the aid of the additional frequencies that we have recently acquired, Globe’s leadership as the preferred brand for Filipinos’ digital lifestyle choices will be strengthened moving forward,” Cu added

Capital spending
Capital expenditures in the six months reached P17 billion to support Globe’s growing subscriber base and its increasing appetite for data.

To date, Globe has a total of 28,992 base stations, with close to 19,000 base stations for 4G, to support the service requirements of its customers.

Meanwhile, the home broadband and corporate data segments continued to post year-on-year double-digit growth rates of 49 percent and 55 percent, respectively, as demand for data connectivity continue to rise for both consumers and corporates.

The strong revenue performance was also aided by the consolidation of Bayan in the second half of 2015.

Even without Bayan’s results, Globe would have posted gross service revenues of P56.9 billion, up by 6 percent from a year ago.

Meanwhile, Globe’s operating expenses and subsidy for the first six months grew 9 percent year-on-year to P34 billion.

The increase in network-related expenses as well growth in services costs, re-contracting expenses and staff costs supported Globe’s data network expansion and overall service enhancements.

On the other hand, depreciation expenses in the first half increased by 26 percent from a year ago to P11.5 billion.

The increase was mainly due to the one-time depreciation impact arising from the end of useful life of certain corporate assets, the depreciation expenses of incremental asset builds related to Globe’s capital expenditure programs completed in 2015 and the first half of 2016, as well as Bayan’s depreciation charges during the first half of the year.

On Tuesday, Globe announced that it will undertake a consent solicitation exercise relating to its bond to amend the Trust Indenture of said bonds to allow the company to maintain a higher consolidated debt-to-equity ratio of 2.5:1 from the current 2:1.

“The proposed amendment aims to align Globe’s debt-to-equity covenant ratio with the covenants of regional telecom peers,” the company said.

The consent solicitation exercise – which covers Globe’s 5-year and 3-month 5.75 percent fixed rate bonds due in 2017; and its 7-year 6-percent fixed rate bonds due in 2019; its 7-year 4.8875 percent fixed rate bonds due in 2020; and its 10-year 5.2792 percent fixed rate bonds due in 2023 – will commence on August 8, 2016 and will expire on September 5, 2016.

Meanwhile, the company’s board of directors approved the third quarterly distribution of cash dividends of P2.9 billion or P22 per share, payable on September 1, 2016 to stockholders on record as of August 16, 2016.

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