WITH its mission to deliver “#1stWorldNetwork” connectivity to Filipinos, Globe invested an all-time high P92.8 billion in capital expenditure (capex) in 2021, besting 2020’s record level spending by 54 percent. Total capex for 2021 represented 61 percent of gross service revenues and 124 percent of Ebitda. About 86 percent of the capex went to data-related requirements in order to serve the rising demands of Filipinos consumers who access the internet to carry on with their daily activities, maintain business operations and deliver critical services.
For 2022, the company is committing capex of P89 billion to continue its aggressive network expansion that includes new cell site builds, upgrading more existing sites to 4G/LTE, accelerating rollout of 5G connectivity and fast-tracking the fiberization of Filipino homes nationwide and further boosting the internet quality and coverage in the Philippines. Globe’s massive network investments attest to its strong support of the United Nations Sustainable Development Goals, particularly UN SDG No. 9, which aims to build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation. More importantly, Globe continues to champion the United Nations Global Compact principles.
Furthermore, Globe built 1,407 new cell sites nationwide in 2021 including both 4G LTE and 5G, upgraded over 22,300 mobile sites and installed over 2,000 5G outdoor sites and in building solutions (IBS) as of end-December of 2021. While on the fixed line front, Globe installed over 1.4 million FTTH lines, even surpassing its revised target for the year. Globe’s aggressive network expansion and upgrade across the country have shown significant improvements based on the latest report of global internet speed monitor Ookla®1. The report showed that the Philippines logged better internet speeds in December, improving in both mobile and fixed broadband rankings as it sustained a steady climb. The country rose nine places to 63 out of 178 in median fixed broadband connectivity, recording a median download speed of 50.26 Mbps, up from 46.44 in November. Mobile connectivity also improved to 19.20 Mbps median download speed, up from 18.68 the month prior. This pushed the Philippines up a notch to 89th out of 138 countries. Specific to Globe alone, Ookla’s Q4 2021 data showed that Globe registered a 51 percent improvement on download speeds and 24 percent on upload speeds, versus its Q1 2021 performance. Globe’s consistency score also steadily rose, significantly improving from 70.59 in Q1 2021 to 78.82 in Q4 2021, at par with global benchmarks. As for Speed ScoreTM, Globe markedly improved from 12.27 in Q1 2021 to 18.51 in Q4 2021.
In addition, as of end-December 2021, Globe logged over 1.62 million devices in its 5G network, as it now reaches 96 percent of Metro Manila and 84 percentof key cities in the Visayas and Mindanao in terms of 5G outdoor coverage. Globe is continuously migrating its customers to 5G-enabled devices with 5G-specific data offers and budget-friendly 5G devices so that customers can experience the full power of the new technology. Globe also added 5G roaming services in more countries in Europe, making it the only Philippine telco with the widest 5G coverage in the continent. Globe continues to partner with more 5G-ready telcos around the world to allow customers to enjoy a high-speed data roaming experience that’s convenient and easy to use.
Financial Highlights: Home Broadband and Corporate Data business sustained its growth momentum
Globe closed the year with record consolidated service revenues of P151.5 billion, up four percent from P146.4 billion reported in 2020 and surpassing 2019’s pre-pandemic level by two percent. Home Broadband and Corporate Data drove the topline expansion given the increased data consumption among the Filipinos for work, education, health care, business, entertainment and essential social interactions. Total data revenues across mobile, broadband and corporate data accounted for 80 percent of total service revenues from 76 percent in 2020.
On a sequential basis, Globe’s fourth quarter gross service revenues were relatively flat versus the strong third quarter. In December 2021, Typhoon Odette caused unprecedented damage in the southern and central parts of the Philippines and hampered the revenue momentum in the fourth quarter, directly through its impact on subscribers, businesses and infrastructure in the affected areas.
Mobile business revenues as of end-December of 2021 improved by one percent from 2020’s P103.7 billion mostly coming from the prepaid brands. Total mobile revenues comprised 69 percent of the total service revenues, with total mobile subscriber base now reaching P86.8 million, or 13 percent higher from the year earlier.
From a product view, mobile data revenues posted a record P77.8 billion in 2021 from P72.4 billion in 2020, as more and more Filipinos accelerated their use of digital applications and services amid the Covid-19 pandemic. Mobile data now accounts for 75 percent of mobile revenues from 70 percent in 2020. Mobile data traffic also soared to 3,733 petabytes in 2021 from 2,517 petabytes the previous year, which translates to a 48 perent growth year-on-year. Meanwhile, mobile voice and mobile SMS revenues ended at P17.2 billion and P9.4 billion, lower year-on-year by 15 percent and 16 percent, respectively.
Home Broadband business sustained its double-digit growth, posting a 10 percent year-on-year increase from the P26.8 billion generated in 2020 to a new record-high of P29.4 billion as of end-December of 2021. This even surpassed 2019 pre-pandemic revenues by 35 percent. This was achieved despite the fact that the fourth quarter performance was partly muted by the impact of rebates given to affected customers in the Visayas and Mindanao regions due to Typhoon Odette, coupled with lower spending on telco products in these areas as customers reserved their money for contingencies. The aggressive fiber rollout in 2021 also resulted in an increased take up of FTTH lines of 208 percent and fiber revenues growing by 183 percent against a year ago. With Globe’s sustained massive fiber rollout, making it available and more affordable to Filipino homes and businesses nationwide, Globe’s Home Broadband is now poised to transform the market landscape with its great value proposition to attract more customers moving forward. Total home broadband subscriber base now stands at 3.7 million. As of end-December of 2021, HPW data traffic surged to 808 petabytes from 545 petabytes in 2020.
Likewise, Corporate Data’s business’ full-year 2021 revenues posted a 12 percent increase from P12.6 billion as of end-December 2020 to a record P14.2 billion. This was largely attributed to the growth from domestic services and information and communication technology (ICT). Improvement in ICT revenues came mostly from business application services and cloud solutions.
Meanwhile, total operating expenses including subsidy posted P76.6 billion for the period, or five percent higher a year ago. This period’s higher spending was mainly to support its aggressive network upgrades and site builds, as well as to improve the customer experience. Part of the increase in expenses particularly in the fourth quarter was also for the restoration and repair as well as services costs resulting from Typhoon Odette. Combined with the rebates given to broadband customers and the impairment costs from network-related damages, Typhoon Odette’s impact on fourth quarter operations totaled P2.2 billion.
Full-year 2021 total consolidated Ebitda stood at P74.9 billion, up two percent versus 2020 due to the four percent improvement in the topline. Ebitda margin for the period slightly contracted to 49 percent from last year’s 50 percent. However, adjusted for the effects of Typhoon Odette on revenues and operating expenses, Ebitda margin would have remained at 50 percent. With higher Ebitda and lower non-operating expenses and taxes which fully offset the increase in depreciation charges, net income reached a record P23.7 billion or 27 percent higher than the P18.6 billion reported last year. Lower non-operating expenses this period was mainly due to the gain of P4.3 billion from the deemed sale of investment in Mynt and partly offset by the impairment costs amounting to P1.2 billion from the network-related damages caused by Typhoon Odette, coupled with the upside impact of Create law in Vega and higher equity share in affiliates. Excluding the effects of the extraordinary items, including the Create normalize net income would have been 19.4 billion, or down by 15 percent year-on-year. Accordingly, core net income, which excludes the impact of non-recurring charges and foreign exchange and mark-to-market charges, posted P21.2 billion, a nine percent increase from a year ago.
Globe’s balance sheet remained strong and gearing comfortably within bank covenants despite the increase in debt from P167.6 billion in 2020 to P210.1 billion in 2021. Globe’s gross debt to equity is at 1.84x while gross debt to Ebitda is at 2.65x; Net debt to equity ratio is at 1.62x while net debt to Ebitda is 2.35x; and debt service coverage ratio is at 4.54x.
“Globe showed admirable resilience in 2021 despite the pandemic and the devastation of Typhoon Odette in the country. We have emerged to be an outstanding digital services enabler by rapidly adapting our strategies to address both the challenges and the opportunities created by the global health crisis and natural disasters. As a result, our financial performance remained stable and posted healthy growth, enabling us to reinvest back into our network as customer data demands grow larger each year. We invested ₱92.8 billion in capex for 2021 and have earmarked ₱89 billion for 2022, to give Filipinos better, more meaningful digital experiences,” Ernest Cu, president and CEO of Globe Telecom Inc., said.
“We are optimistic that our strategy to focus on innovation to serve our customers better and to address their needs and concerns through various digital platforms, backed by our strong network, will solidify our leading position in the market. Rest assured that we will continue to revamp and upscale our services in order to secure the future of a digitally transformed Philippines,” Cu added.
Going beyond Telco to help empower the Filipino digital lifestyle
Globe is doubling down on its shift to become a digital solutions platform using the core telco business and spurred by rapid consumer digital adoption. The company currently offers several diverse high-growth enterprises in healthtech, fintech, adtech and e-commerce, among others. GCash, the undisputed leader in fintech platform operated by Mynt, is committed to maintain its status by introducing innovative products boosting its engagement with users. As of end-December 2021, GCash now has 55 million registered users, 4.5 million merchants and social sellers, 290 GLife merchant partners and around 174,000 cash-in, cash-out agents. GCash also more than tripled its gross transactions handled to P3.8 trillion in 2021 from the record P1.2 trillion reported in 2020. GCash now reached positive full-year Ebitda and already achieved profitability three years ahead of its target. As of 2021, GCash is the only double unicorn in the Philippines.
Other portfolio companies under Globe’s corporate builder 917Ventures include telehealth service platforms KonsultaMD and HealthNow. KonsultaMD and HealthNow both reported significant growth in consultations. HealthNow is also leading the CovidVaccination Program for the Ayala Group and its partners. 917Ventures also has adtech company AdSpark, loyalty and e-commerce solutions provider Rush and online grocery shopping platform PureGo.