Globe sees further growth amid competition

MANILA, Philippines -  Ayala-led Globe Telecom has expressed optimism it will continue to grow this year even as it stressed that it is unwavering in its resolve to face the challenges brought about the recent acquisition by industry leader Philippine Long Distance Telephone Co. (PLDT) of Digitel and the entry of San Miguel Corp. (SMC) into the highly competitive telecom business.

Globe president and chief executive Ernest Cu said the telecom company will continue to focus on its own strategy and will be aggressive in expanding its network capacities to meet the increasing usage in both Internet and voice services.

He said Globe will not be challenged by the recent developments in the telecom industry, which include the acquisition of Digitel by PLDT and the entry of SMC.

“Merging [of PLDT and Digitel] will take time. We will look at how they will act,” Cu said.

In his speech at the company’s annual stockholders meeting, he said moving forward, tougher competition looms in the horizon as a result of the recently announced PLDT-Digitel merger.

“Their consolidation undeniably gives them considerable scale. But Globe has always been a strong challenger to a dominant incumbent, and even in the face of larger opposition, our strategy to differentiate ourselves by providing superior customer experience remains a sound and highly competitive one. With the best possible customer service, we shall remain focused on developing relevant products for our retail and corporate customers while enhancing our network to deliver that differentiating superior customer experience. As our transformation to serve customers better accelerates, rest assured that Globe stands strong and ready to compete now and in the future,” he emphasized.

He said superior customer experience is a function of how well Globe responds to customer needs and concerns.

“To this end, transformation for the customer means the continued improvement of our customer-facing channels… Certainly, the network on which our services are delivered also play a pivotal role in a superior customer experience. In this area, transformation for the customer means the continued enhancement of network facilities and operations to yield better quality and greater reliability for calls, text messaging, and data services that will be palpable to our customers,” he added.

Cu said that of the 2011 capital expenditure of about $500 million, a sizable portion will be devoted to improving network quality. “We will also strengthen our backend systems and delivery platforms to support even more aggressive offers, and further improve the customer experience,” he said.

He also stressed that reflecting on the successes of 2010, and rising to the challenges of 2011, they will continue transforming Globe with even greater customer focus going forward. “We remain committed to delivering sustainable profitability and attractive returns to our shareholders. Rooted in the Globe way, we will step up our competitive advantage as the challenger brand, and be the preferred choice differentiated by superior customer experience,” he added.

Meanwhile, Cu noted that while the telecom industry is still attractive considering its profitability, a new player in any maturing market will face challenges especially in the early part of its operations, referring to the entry of SMC.

SMC owns about 41 percent of Liberty Telecom, 100 percent of Bell Telecom, and 40 percent of Eastern Telecom.

“The worrisome part with any new operator is that there will be some irrationality in pricing that is meant to generate immediate take up in subscribers. Rationality in pricing, or the absence of it, is our main concern,” he said.

Globe consumer business head Peter Bithos stressed they are back to growth, particularly in mobile.

He said growth will be coming from the company’s mobile postpaid, prepaid TM brand, and broadband businesses.

“The market here is maturing and becoming a lot more competitive but we are optimistic about the first quarter,” Bithos said.

Globe reported a 22-percent dip in net income to P9.75 billion last year from P12.57 billion in 2009.

Revenues for the period likewise decreased to P62 billion from P62.4 billion the previous year as a result of a six percent drop in mobile revenues to P49.98 billion, which comprised 81 percent of total income.

But officials said Globe ended 2010 on a high note, with consolidated fourth quarter revenues of P 16.7 billion, one of the highest in its history.

Core mobile business led the fourth quarter surge with service revenues 13 percent higher versus the last quarter. “Our broadband and fixed line business continued to gain scale contributing nine percent of our consolidated results, as service revenues grew two percent over the previous quarter, and resulted in full year revenues 32 percent higher compared to 2009. With our improved fourth quarter performance, we ended the year with service revenues of P 62.6 billion pesos, slightly higher than 2009’s P 62.4 billion,” Cu noted.

He added that subscriber growth was clearly on the upswing in 2010. “In the last quarter, our mobile business posted its fifth consecutive quarter of growth at the heels of compelling service offers. Also in the last quarter, the mobile business delivered a net of 1.1 million SIM additions, the highest since the second quarter of 2008. Gross additions increased while churn rates steadily declined, resulting in total net additions of 3.2 million SIMs in 2010 compared to the previous year’s net reduction of 1.4 million. We thus ended the year with a mobile SIM base of 26.5 million, an increase of 14 percent against last year,” he added.