Globe Telecom nets P11.3 billion in 2008

Globe Telecom’s consolidated net income reached P11.3 billion in 2008, boosted by a record revenue performance in the fourth quarter with service revenues of P16.3 billion, up five percent quarter-on-quarter and surpassing the previous best of P16.1 billion in 2007.

Globe president and CEO Gerardo C. Ablaza Jr. said the record performance was driven by strong holiday demand, spurred by compelling mobile and broadband offers launched in the quarter.

“Our strong topline performance in the fourth quarter enabled us to regain some of the ground that we lost in the early part of the year. This also gives us momentum going into 2009, even as we brace ourselves for a more challenging year ahead,” Ablaza said. “We are encouraged by the resilient growth of both our mobile and broadband subscriber base, and remain committed to delivering products and services that serve the needs of our subscribers at affordable prices.”

Last year’s net income, however, was 15 percent lower than the P13.3 billion registered in 2007 due to higher net foreign exchange and mark-to-market losses arising from the revaluation of the company’s dollar-denominated debt. 

Core net income, which excludes exceptional as well as the on-time bond redemption costs, was also down 14 percent to P11.8 billion from P13.7 billion.

Meanwhile, company officials announced that for 2009, Globe is allocating $350 to $400 million for capital expenditures. They said the amount is lower than the 2008 level spending, but it is still in excess of the annual capex reinvested in the business since 2005.

The 2009 capex plan includes sustained investments in wired and wireless broadband capacities for the residential markets, network enhancements and maintenance spend for its core 2G business, as well as amounts to support Globe’s enterprise and corporate wireline data business.

Consolidated service revenues for 2008 were relatively flat at P62.9 billion as against P63.2 billion in 2007. Wireless service revenues were down one percent from P56.4 billion to P55.6 billion driven by lower activity levels due to the weaker consumer environment and increasing incidence of multi-SIM use, while those of the wireline business grew seven percent to P7.2 billion from P6.8 billion brought about by the continued expansion of the broadband and corporate data businesses.

Total earnings before interests, taxes, depreciation and amortization (EBITDA) was lower at P37.4 billion from P40.2 billion in the previous year, given the flat revenue performance and the added costs related to maintaining a larger broadband and cellular network and subscriber base. Consolidated margins were also down 59 percent from 64 percent although wireless margins remained healthy at 65 percent of service revenues.

Ablaza pointed out that demand for both their fixed and mobile broadband services has been very positive and has exceeded their expectations, adding that they expect broadband growth to continue into 2009 with the increasing affordability of the service and the data devices.

For 2009, he said their objective is to build on the learnings of 2008, sustain their fourth quarter gains and step up growth for all their businesses. While we will adapt to changes in near-term demand with the slowing economy, we will continue to invest and set our sights on the long-term,” Ablaza added.

Globe reaffirmed its commitment to its dividend policy of distributing 75 percent of prior year’s net income and to achieving an optimum capital structure. In its meeting yesterday, its board of directors declared the first semi-annual cash dividend of P32 per common share, payable to shareholders of record as of Feb. 17, 2009. A total of P4.2 billion in dividends will be paid on March 10, 2009.

Capital expenditures, excluding capitalized borrowing costs, totaled P19.9 billion for the year, a 44 percent increase from the 2007 level of P13.8 billion. 

Capex for 2008 include amounts to expand the company’s wireline (DSL) and wireless broadband networks, additional investments in its 2G service to enhance network overage in selected areas, as well as redundancy investments and amounts related to Globe’s participation in the TGN-Intra Asia international cable system.

By the end of 2008, Globe increased its 2G cellsites by four percent to 6,446 from 6,217 in 2007. Geographical coverage stood at 97 percent while population coverage was at 99 percent.

During the fourth quarter of 2008, Globe maintained its momentum in wireless subscriber acquisitions by adding one million SIMs, ending the year with a total subscriber base of 24.7 million, up 22 percent from a year ago. The company’s mass market brand, TM, led the growth, accounting for 70 percent of the 4.4 million net additions in 2008, bringing in more than three million incremental SIMs.

The company also registered its strongest broadband subscriber take-up during the October to December 2008 period, driven by healthy demand for its wireless broadband offer. This period’s net additions of about 55,000 exceeded the performance of the first three quarters of the year, enabling Globe to close the year with a broadband subscriber base of 234,000, almost double that of 2007.