Globe Telecom says it's ready to compete in fierce environment

MANILA, Philippines - Ayala-owned Globe Telecom is well positioned and ready to compete amid fierce competition and cut-throat pricing that are threatening to temper growth in the mobile and broadband sectors, its top executive said.

Globe president and CEO Ernest Cu said they expect gradual economic recovery in 2010 with continued growth in OFW remittances, exports and the business process outsourcing (BPO) sector.

He added that they anticipate pressure on margins from more unlimited mobile services offers to continue this year.

For his part, Globe chairman Jaime Augusto Zobel de Ayala noted that while the company is creating new sources of growth, it is moving forward with its social mission.

He pointed out that BPI Globe Banko Inc., the country’s first mobile microfinance bank created in August 2009 in which Globe has a 40 percent equity share, intends to reach the base of the economic pyramid through a low-cost and far-reaching network and infrastructure.

Zobel added that initial focus will be on wholesale lending to other microfinance institutions, but will expand soon into retail banking products.

He said Globe continues to invest to grow its broadband business and defend its market position in the mobile sector.

In 2009, the company spent P24.7 billion for capital expenditures. Last year, it launched its WiMax service, the first in the country and with one of the largest deployments in the region. Globe has also joined the consortium that will build the Southeast Asia-Japan cable system, with Globe as the exclusive landing party in the Philippines, Zobel noted.

He added that the second fiber optic backbone network (FOBN2) which spans Luzon, Visayas and Mindanao has become fully operational last November, and that Globe has completed its second landing station in Cagayan and started carrying live traffic in the TGN-Intra Asia cable system in March last year.

Zobel pointed out that Globe sustained gains despite the difficult market environment, noting that the mobile industry slowed down sharply last year, mirroring the overall performance of the economy.

He also said competition remained intense as the mobile telephony industry nears maturity.

However, the broadband industry segment is still growing very rapidly, with industry subscribers last year of 2.5 million almost double the 2008 levels of 1.4 million.

Zobel stressed that while Globe’s consolidated revenues were down one percent last year with growth in broadband and fixed line data offsetting weakness in mobile revenues, consolidated net income after tax was up 11 percent - the second best ever net income performance for the company.

He added that Globe posted record highs for return on equity last year, with total shareholder return (TSR) outperforming its regional peers. Globe reported a TSR of 30.2 percent in 2009, next only to Taiwan Mobile with 42.9 percent, Softbank Corp. with 35.4 percent, and Telekomunikasi Indonesia with 33.9 percent. PLDT recorded a TSR of 27.3 percent last year, while Globe shareholder Singapore Telecom had 21.4 percent.