Globe income surges 17% to P7.2 billion in first half

MANILA, Philippines - Globe Telecom ended the first semester of this year with a net income of P7.2 billion, a 17 percent improvement from P6.2 billion last year. Excluding foreign exchange, mark-to-market gains and losses, and non-recurring items, core net income grew three percent to P6.9 billion from P6.7 billion last year.

Consolidated service revenues for the first half were at P31.7 billion, two percent higher than last year’s P31.1 billion, driven by the robust growth from the wireline data and broadband businesses and the steady performance of the wireless segment.

The wireless business generated revenues of P27.6 billion, in line with last year’s level, while wireline and broadband revenues grew 16 percent to reach P4.1 billion at the end of the first half.

Earnings before interests, taxes, depreciation and amortization (EBITDA) were one percent lower at P19.09 billion as against P19.28 billion in the first half of last year, while EBITDA margin stood at 60 percent from 62 percent last year.

The wireless business closed the period with 25 million subscribers against last year’s level of 22.7 million and last quarter’s 25.6 million. Company officials explained that they recalibrated Globe’s acquisition efforts the past quarter, increased its focus on stimulating usage and strengthening brand loyalty, while churning out some of its marginal subscribers.

“While acquisition remains an important part of our wireless strategy, we believe that our focus should increasingly move towards promoting retention and stimulating usage, particularly in the face of a maturing market. We want to break the cycle of acquiring and reacquiring marginal subscribers, and are recalibrating our sales drives to deliver profitable growth and acquire better quality subscribers,” Globe president and CEO Ernest Cu said. 

Cu added that as for retention, they will continue to focus on ensuring 24/7 connectivity, strengthening their brand propositions, and developing unique and relevant product offerings. 

Capital expenditure totaled P12.8 billion for the first half of the year, 28 percent higher than the previous year, as Globe expanded its 2G, 3G and broadband networks. Capex for the period also included amounts needed for the expansion of corporate data networks and carryover spend related to its participation in the TGN-IA international submarine cable facility.

As of end-June 2009, Globe has 9,280 base stations and 6,052 cellsites to support its 2G, 3G, and WiMax services.

The company introduced its pioneering Duo service to its prepaid subscribers in Cebu and Metro Manila last June, following its launch to postpaid subscribers in those areas last April.

Globe prepaid subscribers can avail of this two-in-one mobile and landline service for as low as P25 for one day and in bulk for P125 for five days, P350 for 14 days and P450 for 30 days.

For its mass market brand TM, Globe undertook a brand refresh campaign and launched “Republika ng TM” supported by aggressive voice and SMS offerings. These efforts have translated to improved revenue performance of the brand despite the net reduction in its SIM base.

On the wireline front, the company’s broadband business continued to attain new highs, setting a new record in net subscriber additions this quarter. Globe ended the first half with about 379,000 subscribers, more than double year-ago levels. Revenues also continued to grow at a double-digit rate, rising 59 percent to close the first semester at P1.4 billion.

Globe’s fully mobile broadband service Tattoo continued to be the main driver of growth.

Complementing Tattoo’s growth is the expansion of Globe’s WiMAX coverage areas which now include parts of the National Capital Region, Western Visayas, Central and Northern Mindanao, in addition to its initial service areas in Cebu, South Luzon and Cagayan de Oro. Wireless broadband subscribers now comprise 54 percent of total customers, up from 19 percent a year ago.

“We are very pleased with the performance of our broadband business to date. We hope to sustain this momentum moving forward and further improve our position in this market,” Cu added.

Meanwhile, as part of its continuing commitment to generate superior returns for its shareholders, the company’s board of directors declared its second semi-annual cash dividend of P32 per share, payable to shareholders of record as of Aug. 19, 2009, in line with Globe’s policy of distributing 75 percent of prior year’s net income. A total of P4.2 billion in dividends will be paid on Sept. 15, bringing total dividends paid out this year to P8.4 billion.