Globe sees low-cost as next growth area

MANILA, Philippines — Telco giant Globe Telecom Inc. is shifting its focus toward the low-cost segment to build up its customer base as the broadband market in the Philippines is close to becoming overcrowded.

Globe said it is doubling down on its strategy to expand presence among low-income families, offering them prepaid internet to support their growing need for connectivity services.

Globe vice president and head of brand management for the broadband business Abigail Cardino said the postpaid market is close to saturation, and telcos should consider further expansion in underserved sectors.

In 2023, Globe cornered 23 percent of the market in the broadband space, trailing behind PLDT Inc.’s 49 percent and Converge ICT Solutions Inc.’s 28 percent. PLDT, Converge and Globe combined for a subscriber base of 7.6 million, down by 13 percent from 2022.

“We believe that the broadband market is nearing saturation as far as the postpaid fiber segment is concerned. Room for future expansion in the broadband market lies in households belonging to the [socioeconomic class] D segment, whose broadband needs have yet to be fully addressed,” Cardino told The STAR,

Globe’s broadband revenues went down by seven percent to P25.11 billion in 2023, from P27.09 billion in 2022, due to the decline in its customer count.

The telco suffered a 32 percent drop in broadband subscribers to 1.75 million, from 2.56 million, during the period, but is confident that it can recover its lost base from 2024 onward.

Globe increased its customer acquisition by 53 percent in the first quarter for GFiber Prepaid, its low-cost service offering unlimited internet for just P699 per month.

“The positive feedback [for GFiber Prepaid] highlights the service’s strengths, including its fully digital experience, affordability, reliable network connectivity and convenient loading. This also demonstrates Globe’s understanding of the prepaid consumer market’s needs and has resulted in 53 percent growth in acquisitions in the first quarter of this year,” Cardino said.

Apart from this, Globe is cutting its capital expenditures for broadband buildup moving forward to maximize first its existing assets. This means that its P55 billion capex for 2024 will be spent primarily for the upgrade of mobile infrastructure.

“The capex guidance of P55 billion for 2024 would be invested mostly on the mobile network, as we shift our focus on the fiber front from rollout and expansion to port utilization as we have an ample capacity from fiber rollouts over the past three years,” Cardino said.

Even though Globe believes that the broadband market is saturating, it expects consumer demand to remain strong, especially as gadgets like computers and tablets are becoming cheaper.