Globe bares 12% income growth to P9.9 billion in January-September

MANILA, Philippines - Globe Telecom reported a 12 percent growth in its net income to P9.9 billion for the first nine months of 2009 from P8.8 billion in the same period last year mainly due to an after tax gain of P398 million arising from an equipment exchange transaction coupled with the lower corporate tax rate of 30 percent starting 2009 compared to last year’s 35 percent.

Core net income, which excludes foreign exchange and mark-to-market gains and losses and non-recurring items, was steady at P9.4 billion.

Company officials reported that consolidated service revenues during the period was at P46.9 billion up one percent from last year’s P46.6 billion. Sustained topline growth was underpinned by the strong performance of the broadband and fixed-line data businesses which grew 69 percent and 22 percent, respectively, from last year, compensating for the lower revenues from the mobile and traditional landline segments.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first nine months stood at P27.6 billion, three percent below last year’s level, with EBITDA margin at 59 percent from 61 percent in 2008 as operating expenses and subsidy grew faster than revenues.

The mobile business ended the period with 23.1 million subscribers from 23.7 million last year.

Officials said Globe continues to churn out marginal subscribers acquired in earlier quarters and focused its acquisition drives towards better quality subscribers. This shift in acquisition focus has translated to some early gains, with its mass market brand TM demonstrating higher revenues and average revenue per user (ARPU) quarter-on-quarter despite a contraction in its SIM base.

“While competition remains intense, we believe that we have the right strategies to further improve the competitive position of our mobile business. We will strengthen our brand portfolio through innovative and affordable product offerings, resume the growth of our subscriber base through quality acquisitions, while continuing to upgrade and improve the robustness of our network,” Globe president and CEO Ernest Cu said.

Meanwhile, Globe’s broadband business continued to gain momentum as subscriber base grew almost three-fold to over half a million subscribers, beating full-year expectations.

All broadband products posted record quarterly net additions, with fully mobile Internet service Globe Broadband Tattoo leading the way.

The robust subscriber growth has translated to a revenue improvement of about P907 million or 69 percent from last year, closing the period with P2.2 billion in revenues.

“We are very pleased with the significant headway we have made in the broadband space. We will accelerate our broadband capacity build to capture the growing demand for the service, and to solidify the gains we have attained so far,” Cu added.

In line with its thrust to generate superior value for its shareholders and consistent with its goal of optimizing its capital structure, the company’s board of directors declared a special dividend of P50 per common share. A total of P6.6 billion in dividends will be paid out on Dec. 15, 2009 to stockholders of record on Nov. 20, 2009.

This would bring total dividends paid out this year to over P15 billion.

In addition, the board resolved to amend the company’s dividend policy by increasing the payout of regular dividends from 75 percent of net income to a range of 75 to 90 percent of prior year’s net income starting in 2010.

The special dividend and increase in regular payout are expected to bring the company’s capital structure to a more optimum level, in line with previously stated targets.

Capital expenditures stood at P19.6 billion as of the third quarter, 38 percent higher than the previous year as Globe sustained the expansion and upgrading of its broadband and mobile networks. Capex for the period also included amounts needed to expand the company’s corporate data networks, and carryover spend related to Globe’s participation in the TGN-IA international submarine cable facility.

Meanwhile, mobile service revenues, which comprise 86 percent of total service revenues, declined by two percent from last year’s level. Intense competition, growing multi-SIM usage, and the market’s increasing preference for bucket and unlimited offerings continued to put pressure on top-line performance.