Globe sustains lead, pays out dividends

CEBU, Philippines – Despite the crisis-laden economic environment, Globe Telecom sustains a leading market position marked by a payout of regular and special cash dividends of P125 per common share, which is among the highest in the Philippine stock market and among the telecom companies in the region.

Globe Telecom chairman Jaime Augusto Zobel de Ayala, in his speech during the company’s annual stockholders meeting held at the InterContinental Hotel in Makati yesterday, expressed optimism that Globe remains fundamentally strong and well-positioned to weather the current global financial meltdown.

In 2008, Globe paid out regular and special cash dividends of P125 per common share, an 8% improvement over the P116 per share paid out in 2007, which translates to a total of P16.5 billion representing 125% of 2007 net income.

JAZA said the intense competition and the dwindling consumer market made 2008 very challenging for Globe Telecom with the crisis abating both business and consumer confidence.

Skyrocketing food and fuel prices during the first half of 2008, which drove inflation to a record 12.4% in August and the stock index down by 48%, constricted the purchasing power of most consumers, which resulted to reduced spending for telecom.

Wireless industry growth dropped by 5% in revenue terms from 11% a year ago.

Nevertheless, Zobel de Ayala noted that Globe posted an after-tax net income of P11.3 billion last year, which is15 percent lower than 2007.

Despite the tough economic environment, Globe’s services revenues remained stable in 2008 at P62.9 billion, which nearly equaled the peak reached in 2007 bolstered by the rapid growth of consumer broadband and corporate wireline data business.

Wireless SIM base continued to grow at double digit pace reaching 24.7 million SIMS or 22% above last year, however usage and activity levels were noticeably lower that resulted to flattish revenues.

Despite the decline, Globe Telecom consistently generated strong cash flows that enhanced shareholder value.

Zobel de Ayala likewise said that Globe continued to provide attractive returns to its shareholders, with a 55-percent compounded annual growth rate on dividends from 2003 to 2008.

Moreover, Globe continues to invest in strengthening its infrastructure and technology base to support its core businesses with capital expenditure amounting to P20.4 billion, one of the highest in five years.

Capex accounted for investments in wired and wireless broadband technologies such as WiMAX and 3G with HSPDA, additional capacities to support enterprise data business   as well as enhancements of 2G infrastructure to ensure resiliency of network and improve coverage in areas where demand is still growing.

Capex also included investments in the TGN-Intra Asia International submarine fiber system, which landed in the Philippines in 2008 and is expected to be in full service this year.

Globe also took steps towards creating new sources of growth through penetrating adjacent sectors. One of these is the recent acquisition of Entertainment Gateway Group (EGG), one of the leading content providers in the country.

Through EGG, Globe also aims to expand in the lucrative US and Asia Pacific markets. In the fourth quarter of 2008, EGG’s mobile content portal, Pinoy mobile, was launched in the United States making popular Filipino mobile content available to US based Pinoys.

Meanwhile, JAZA announced in the same meeting the appointment or Ernest Cu as the Globe Telecom president and chief executive officer as outgoing Globe president Gerardo Ablaza moves back to Ayala Corporation to help oversee the group’s business interests in telecommunications, banking and other allied fields.

Ernest Cu, who joined Globe Telecom as deputy chief executive in October of last year, said his predecessor and mentor Gerardo Ablaza left him with a very healthy and solid company, which leaves him to focus more on augmenting the execution skills of the company.

Backed by his very hands-on experience in the Business Process Outsourcing (BPO) industry, Cu said given Globe’s platform, he is focused on taking the company from a challenger’s status to a dominant status.