Globe sees no major hit from Pogo exit

GLOBE anticipates that the exit of Philippine Offshore Gaming Operators (POGOs) will have no significant impact on the company’s earnings.

In a media briefing on Wednesday, Aug. 7, 2024, Ayala-backed Globe said they are supportive of President Ferdinand “Bongbong” Marcos’ directive to stop Pogo operations in the country, which the president described as a threat to the nation’s safety and security.

“We have a certain percentage of our revenues on the business-to-business side of the business that’s actually getting revenues from the Pogos but it’s not so significant, and at the end of the day we support the direction or directive of the President,” said Darius Delgado, head of Consumer Mobile Business at Globe.

Globe president and chief executive officer Ernest Cu said the first exit of Pogos years back, during the Covid-19 pandemic, has already reduced the revenues from this segment.

“So it will have a minimal impact on Globe at this stage,” Cu said.

During his recent State of the Nation Address, Marcos instructed Philippine Amusement and Gaming Corp. to wind down and cease the operations of Pogos by the end of the year.

The president said Pogos were disguised as legitimate entities while operating in “illicit areas furthest from gaming” such as financial scamming, money laundering, prostitution, human trafficking. Kidnapping, brutal torture and even murder.

1st half performance

Globe closed the first half of 2024 with P82.2 billion consolidated gross service revenues, or up two percent from a year ago, despite the decline in home broadband and non-telco services.

Mobile and corporate data businesses were the primary contributors to this performance, jointly accounting for 83 percent of the total consolidated gross service revenues, up from 79 percent in the same period last year.

Mobile revenues increased by seven percent, while corporate data revenues showed an eight percent improvement from the year earlier. Notably, data revenues sustained its robust momentum, contributing 85 percent to consolidated gross service revenues compared to 82 percent in the previous year.

Globe’s non-telco revenues, on the other hand, posted a significant decline, dropping by 58 percent year-on-year compared to the P2.8 billion reported at the end of June 2023.

Globe’s share in Mynt’s equity earnings for the first half of 2024, surged to P2.1 billion, representing a 12 percent contribution to Globe’s pre-tax net income, compared to five percent in the previous year. Mynt’s equity earnings also witnessed a 120 percent increase versus the same period last year.

Net income posted a modest year-on-year growth of one percent at P14.5 billion from P14.4 billion the preceding year. During the first half, Globe invested P28.3 billion in capital expenditure reflecting a 25 percent decrease compared to the same period of 2023.

Impact to other businesses

While it will not affect the telecom business, Pogo’s exit is expected to impact Metro Manila’s office market, according to property advisory firm Colliers Philippines.

Joey Roi Bondoc, director for Research, said Pogo exodus will likely elevate office market vacancy rate to 22 percent higher than their initial forecast of 19.1 percent.

He said that the ban poses a challenge for property owners with high exposure to Pogos to face difficulties in finding new tenants to fill the vacated space.

However, the firm said the effect of the Pogo ban will only be temporary and may not have a lasting effect on office demand activity as traditional firms and outsourcing companies continue to take up space.

According to the Police Regional Office-Central Visayas there is no active Pogo in Cebu. / KOC