Globe's net income falls in 2012

MANILA, Philippines -- Globe Telecom announced Wednesday the company's consolidated net income after tax was down 30 percent from P9.8 billion in 2011 to P6.9 billion in 2012. 

Globe cited accelerated depreciation charges related to its $700 million network modernization program as the reason for the profit decline.

The company's full year consolidated EBITDA was at P35.0 billion, or down by about P93 million from P35.1 billion in 2011.

Globe said incremental revenues were re-invested in additional marketing and subsidy expenses to acquire new postpaid subscribers as well as defend market position through various brand-building initiatives. 

Operating expenses also included charges for continued investments in network infrastructure, costs to maintain an expanded 2G, 3G, and broadband networks, and charges incurred as the Company undergoes its network and IT modernization programs. 

Ernest L. Cu, President and CEO of Globe Telecom Inc., said  that given the increasingly competitive environment, Globe is hopeful that the gains it has made in terms of brand building and differentiation through customer experience will tide the company through what it describes as "most critical period" completing the network and IT modernization program and undertaking related transition efforts.

"These initiatives will enable us to reinforce our industry position as a formidable challenger and allow us to continue delivering superior value to our stakeholders as well as ensuring sustained growth for our overall business," he said.

Cu added Globe expects to realize the full benefits of its initiative over the typical 24-month contract period associated with a new subscription.

The increase in fourth quarter costs was likewise driven by network-related charges in support of the larger base, and transformation-related expenses.

Depreciation charges in the fourth quarter were also up by 14 percent with the increase in both regular and accelerated depreciation as the first phase of the network modernization is now 84 percent complete following the ramp-up in activities.

The combined effects of the overall increase in operating costs and depreciation charges correspondingly squeezed margins further to bring net income after tax to P49 million in the fourth quarter compared to P1.8 billion in the third period. Excluding accelerated depreciation, foreign exchange and mark-to-market gains and losses as well as non-recurring items, core net income was likewise down to P1.5 billion from P3.1 billion in the earlier quarter.

Yet Globe said its consolidated service revenues soared to an all-time high of P82.7 billion, 6 percent above previous year’s level of P77.8 billion. Fourth quarter revenues went a quarterly-high of P21.4 billion which drew significant contributions from both the mobile and fixed line and broadband segments, as well as additional uplift from the seasonal holiday spending.