Globe’s 4Q, full year service revenues at all-time high

Friday, February 17, 2012

GLOBE Telecom Inc. closed the year with all-time high service revenues of P67.8 billion, nine percent higher than previous year's normalized level of P62 billion.

The mobile business delivered strong results across all postpaid and prepaid brands, while the broadband business continued to register double-digit revenue growth, riding on the strength of the Tattoo brand and the rising demand for fast and reliable internet connectivity.

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Full year mobile revenues exceeded market expectations to close the period at about P54 billion, up eight percent year-on-year underpinned by the record acquisitions for customizable postpaid plans, growth in unlimited services and all-network offers, and additional revenues from mobile browsing.

Broadband revenues rose to P7.5 billion, up 30 percent from previous year driven by a growth in subscriber base, and the introduction of new and enhanced services enabled by the expansion of sales channels and the company's 4G HSPA+ network.

In the fourth quarter, Globe also registered record high consolidated service revenues of P17.8 billion, marking the fifth quarter of sequential growth.

The mobile business sustained its growth momentum with service revenues up six percent from P13.5 billion in the third quarter to P14.3 billion in the closing period. This is on the back of strong subscriber acquisitions, improved top-ups for prepaid brands, and overall rise in usage with the seasonal lift.

The fixed line and broadband business also delivered incremental revenues, rising to P3.6 billion in the fourth quarter from P3.5 billion in the third period following sustained growth in Tattoo Broadband On-the-Go services.

Globe made significant headway in its mobile business during the year, anchored on personalized postpaid plans, revitalized prepaid brands offering unique, value-for-money services, and differentiated customer service.

The company's postpaid business delivered record net subscriber additions in 2011, enabling it to close the year with nearly 1.5 million subscribers, 360/o above previous year's level of about 1.1 million.

The brand refresh campaign that focuses on the aspirations of the Filipino youth together with the launch of innovative services that offer superior value in both the domestic and international fronts also generated renewed interest for Globe Prepaid and TM, which closed the year with total subscribers of 15.5 million and 13.1 million, 12o/o and 13o/o higher than 2010 levels, respectively.

The broadband business similarly continued to trend up with growth coming from the Company's nomadic broadband service, Tattoo Broadband.

With the continued rollout of its 4G network via HSPA+, Globe was also able to boost the speed performance of key broadband products. At year-end, the company's total broadband subscriber base stood at 1.4 million, up 31o/o from about 1.1 million in the previous year.

Consolidated EBITDA rose 60/o against previous year from P33 billion to P35.1 billion with the growth in revenues exceeding the 13 percent rise in operating expenses and subsidy.

Higher operating costs were driven by marketing and subsidy to support the aggressive subscriber acquisition campaigns, the launch of new products, services, and mobile devices, and the roll out of new concept Globe Stores that have now become the industry benchmark.

Network-related costs were also up against previous year resulting from an expanded mobile and broadband network.

With record high service revenues offsetting the rise in operating expenses and depreciation, core net income, which excludes foreign exchange, mark-to-market gains and losses, as well as non-recurring items, was at P10 billion, up 11o/o from about P9.1 billion in the previous year.

Meanwhile, reported net income was up 1 o/o to P9.8 billion as prior year's results included P526 million in non-recurring adjustments pertaining to prepaid load credits that have either expired or have been used up.

This period's operating expenses included certain professional, advisory, and legal fees associated with the company's IT and network transformation programs.

This year's results also included P350 million in accelerated depreciation expenses related to a pilot implementation of the network change-out in Davao City, a key market and focus area for Globe.

Excluding those transformation-related expenses, consolidated EBITDA would have expanded 7o/o compared to the reported six percent growth, while core net income would have grown an even stronger 15o/o as against the reported 11o/o growth.

On a sequential basis, the record high service revenues in the fourth period were offset by the 22o/o increase in operating expenses and subsidy, bringing consolidated EBITDA down from about P9 billion in the third quarter to P8.1 billion in the closing period.

Marketing and subsidy spend rose driven by investments in new acquisitions and recontracting of subscribers following the iPhone 45 launch coupled with the BlackBernl@ handset sale in the fourth period.

Marketing spend was also up to kick off the company's 2012 sales programs and to counter the increased marketing push of competition during the period.

The growth in operating expenses was also driven by a rise in network-related operating charges, as well as costs related to the company's network and IT transformation programs.

Core net income for the fourth quarter was thus at P1.8 billion, down 29o/o from third quarter level. Excluding the incremental services costs and depreciation charges related to the transformation projects, core net income would have declined by 15o/o against prior quarter.

"We are pleased with the over-all gains we have achieved in 2011, and the momentum that it provides us going into 2012. The investments we have made in acquiring quality subscribers, revitalizing our brands, and enhancing customer service, put us in a good position to sustain the growth of our businesses in the coming year," Ernest L. Cu, president and CEO of Globe Telecom Inc., said.

"The next two years will be a critical period for Globe as we execute on our network modernization programs, and as we improve our business support systems and processes, all towards our goal of making customer experience a key differentiator. Our network and IT transformation program is an ambitious and yet necessary undertaking which will provide the platform that will make us even more competitive in this fast-moving market," added Cu. (PR)