MANILA – Globe Telecom reported a sustained growth momentum in the first half of the year, with a core net profit increase of 18 percent from the previous year.
According to Globe, revenues from January to June totaled P47.7 billion, 7 percent higher than the P44.5 billion reported in the same period last year, leading to core net profit of P7.6 billion compared with P6.4 billion a year earlier. Net profit stood at P6.8 billion, almost a four-fold increase from P1.4 billion a year earlier.
“Our transformation initiatives are starting to bear fruit, given the solid revenue momentum we sustained this quarter. We approach the second semester of 2014 with confidence that, with our modernized network and our commitment to innovation and customer service excellence, we can maintain the growth momentum for the balance of the year,” Globe President & CEO Ernest L. Cu said.
“With the growth in data services we have seen in the past couple of months and the pervasiveness of data in new technologies and applications, we envision keeping in step both in terms of the infrastructure necessary to support data services and the product and service innovations to provide the most seamless experience to our mobile and broadband customers,” he added.
Globe’s mobile telephony segment posted revenues of P37.8 billion, a 5 percent improvement from the P35.8 billion during the same period last year, on the back of strong contributions from the Globe Postpaid and TM segments. Globe Postpaid continued to lead the pace in growth, with revenues reaching P14.6 billion in the first half of the year, up 11 percent from the same period last year, backed by strong subscriber year-on-year growth of 10 percent.
TM, Globe’s mass-market brand, likewise contributed to the mobile revenue growth, increasing in revenue terms by 9 percent year-on-year to bring total revenues to P9.1 billion, from P8.4 billion in the same period last year. At the end of June 2014, the company’s mobile subscriber base reached 42.7 million, up 18 percent from 36.1 million a year ago and 5 percent higher from the end of the first quarter of 2014.
With the sustained demand for internet connectivity and the pervasiveness of data in new technologies and applications, Globe Telecom’s broadband business maintained its contributions to revenue growth, posting 14 percent and 24 percent year-on-year growth in revenues and subscribers, respectively. Broadband revenues reached P5.9 billion in the first half of 2014, with total subscriber base now reaching 2.2 million. The solid growth in revenues and subscribers was driven by subscriber expansion in the wireless broadband (+30 percent), fixed broadband (+12 percent) and LTE solutions.
The company’s fixed line data segment grew by 17 percent to P2.6 billion for the first six months of 2014 from P2.3 billion during the same period last year. The continuous growth in fixed line data revenues was driven largely by domestic and internet services, resulting to an expansion in circuit usage. Cloud services and other business applications services have likewise contributed to the growth in revenues. To complement the growth in fixed line data and broadband, traditional fixed line voice services bucked the global trend in the first half of 2014, posting a 10 percent year-on-year and 12 percent quarter-on-quarter improvement.
Globe recorded consolidated EBITDA of P19.1 billion in the first semester of 2014, 1 percent higher than the EBITDA reported in the same period last year. As Globe continued to re-invest its gains in acquiring and retaining high quality subscribers and the expansion of its data network, subsidy and operating expenses grew 12 percent year-on-year to P28.6 billion from P25.6 billion last year. EBITDA margin stood at 40 percent for the first six months of 2014, down against 43 percent the same period in 2013.
However, on a quarterly basis, EBITDA margin in the second quarter of 42 percent improved from last quarter’s 38 percent.
Globe Telecom’s net income of P6.8 billion in the first six months of the year is higher by 385 percent from the net income reported in the same period last year. The growth in net income was driven by the improvement in EBITDA, lower depreciation charges, gains from foreign exchange movements and lower interest expenses recognized during the period. Core net income, which excludes the impact of the nonrecurring items, such as the accelerated depreciation charges related to the change-out of equipment under the modernization initiatives and mark-to-market charges, improved to P7.6 billion from P6.4 billion in the first semester of 2013, an 18 percent increase year-on-year.
As of the first six months of the year, Globe spent approximately P11.0 billion in capital expenditures to support the growing subscriber base and its demand for data. Approximately 54 percent were spent on data-related access and transport infrastructure, including transmission capacities and international cable facilities. Data-related access investments included deployments in Globe’s wireless 3G broadband, HSPA+ and LTE access and roll-outs for fixed broadband and LTE @Home solutions while 16 percent of the CAPEX was made for core-related services, including payments for the network transformation program, and coverage solutions.
On a quarterly basis, Globe recorded a new all-time high in quarterly revenues with P24.5 billion, up 5 percent from the first quarter of 2014 and 6 percent from the same quarter last year. The revenue expansion was again fueled by growth across all business segments, due to the increase in the mobile telephony and broadband subscriber bases and the popularity of the company’s offerings and promotions.
Mobile revenues in the second quarter peaked at P19.3 billion, a new quarterly high, up by 5 percent from the P18.5 billion registered in the first quarter of the year. The growth in mobile revenues was driven by growth in mobile data services, which grew 23 percent quarter-on-quarter to P3.4 billion from P2.8 billion in the first quarter of the year. The growth in mobile data services coincided with the conclusion of the Free Facebook promotion Globe offered starting November last year. The promotion, which aimed to seed the habit of mobile browsing on the company’s expanded 3G and 4G networks, resulted in a step increase in mobile data users, boosting registered mobile data users to 8.91 million monthly average post-Facebook promo from 5.4 million pre-Facebook promotion, and a substantial uplift in revenues after the promotion.
Also, the Free Facebook promotion provided additional strategic benefits in terms of improved brand equity, new customer insights, particularly for prepaid subscribers, and the ability to integrate below-the-line activities and promotions. Notwithstanding the rise of mobile data services, the company’s mobile voice and SMS services remained strong in the quarter, with voice revenues at first quarter levels and SMS revenues up 3 percent quarter-on-quarter.
