Globe Telecom posts P5.1 billion net income in first six months

CEBU, Philippines – Ayala-led Globe Telecom Inc., posted a slight decline of its net income in the first six months of this year to P5.1 billion, from P7.2 billion of the same period last year.

Core net income, which excludes foreign exchange and market-to-market charges as well as non-recurring items, recorded P5.2 billion this year, versus P6.9 billion in the same period of 2009.

"Our first half results are reflective of the challenges facing the industry - traffic is growing, but revenues are declining with the market's increasing preference for unlimited services.   

Competition is becoming more intense, and will likely further intensify as the market slows," said Ernest L. Cu, President and chief executive officer (CEO).

"We have strong brands with good value propositions, a large and loyal retail and corporate subscriber base, and an extensive and robust network. To protect our gains and grow our business, the key is to differentiate ourselves from competition by providing superior end-to-end customer service," Cu added.

The mobile business sustained positive net additions of 732,000 in the second quarter to close the period with 24.6 million SIMs. This is three percent higher than last quarter's base, but two percent lower than last year when the Company deliberately churned out marginal subscribers and recalibrated its acquisition efforts.

Globe Prepaid and TM (TouchMobile) led this quarter's growth, contributing more than 90 percent of this period's net additions.

For the broadband business, Globe added almost 90,000 subscribers this quarter to end the period with over 930,000 subscribers, up almost three-fold from last year's 379,000 customers.

The expansion was led by Globe Broadband Tattoo, the Company's internet-on-the-go service, as well as Globe WiMAX for at-home internet use.

Consolidated service revenues for the first six months was at P30.7 billion, down three percent from P31.7 billion last year, but in line with second semester 2009 performance when mobile industry revenues started to contract.

Broadband and fixed line data revenues were up by a robust 89 percent and 18 percent respectively, offsetting some of the declines in mobile revenues which were lower by nine percent.

With lower revenues and rising operating expenses to support an expanded broadband network and subscriber base, EBITDA for the first half of the year was 11 percent lower at P17.0 billion.

While mobile EBITDA margins remained rich at 65 percent of service revenues, consolidated EBITDA margin was at 55 percent from 60 percent last year given the increasing contribution of the lower-margin broadband and fixed line businesses.

Compared to the first quarter, consolidated service revenues in the second quarter rose two percent to P15.5 billion. The Company's fixed line and broadband businesses remained the key growth drivers while mobile revenues were steady. Net income was at P2.1 billion from P2.9 billion in the first quarter. Meanwhile, core net income was at P2.4 billion from P2.8 billion in the prior quarter. (THE FREEMAN)