Globe net income jumps 33% to P1.421B in 1st quarter

Ayala-owned Globe Telecom (Globe) posted strong growth during the first quarter of 2002 at it reported a 33-percent increase in net income to P1.421 billion from a year ago.

The result was in line with analyst forecasts the firm would see earnings rise, but that it would not be able to replicate the three-fold annual growth it posted in the first quarter of 2001.

Globe last year reported a P4.305-billion net income as against P1.55 billion in 2000. Capital expenditure in 2001 reached $577 million, of which 78 percent was allocated for the wireless business. Globe said it posted net operating revenues of P10.76 billion in the first quarter after consolidating the performance of Isla Communications.

Edser Trinidad, an analyst at BPI Paribas, said the first quarter numbers were in fact slightly above his estimates.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of 2002 reached P5.3 billion from P3 billion recorded in the same period last year. EBITDA margin improved to 56 percent compared to 50 percent in the same period last year.

Globe, a partnership between Ayala Corp., Singapore Telecom, and Deutsche Telekom, supported the continued growth of its subscriber base with additional infrastructure investments. The company spent a total of P5.2 billion in capital expenditures for the first quarter of 2002, 70 percent of which was allocated to its wireless business.

It recently concluded a successful $200-million bond offering to fund its network expansion and working capital requirements. Globe originally said it was raising only $150 million, but upsized the offering to $200 million due to huge investor interest.

Officials earlier said Globe is spending around $258 million this year for new projects under Phase 8B of its expansion program which was implemented starting the second quarter of this year. In addition, it still has $350 to $400 million that will be carried over from last year for projects that have been started.

Company president and chief executive officer Gerardo C. Ablaza said Globe is committed to the objective of balancing growth with profitability, "so that we can sustain service excellence in the network quality and customer service experience of our subscribers."

He added that they will aspire to build on the success of the first quarter towards achieving the goals we have set for full-year 2002.

The consolidated asset base of Globe stood at P122.5 billion by end-March 2002. Gross debt totalled P48.1 billion while stockholders’ equity stood at P45.7 billion.

As of end-March this year, the group’s total subscribers reached nearly five million, a huge jump from Globe’s total subscriber base of only three million a year ago.

Of the number of subscribers, pre-paid phone users are the most dominant, accounting for 4.532 million of total – more than 90 percent of whom are Globe users. While there are still some 12,000 Islacom prepaid phone users as of the period, a sizeable portion of the prepaid users have switched to Touch Mobile, which offers lower call rates per minute on top of new service features, reaching an estimated 251,000 by end-March.

As a telecom company, Globe offers postpaid wireless phone services under the parent Globe and Islacom platforms while its pre-paid infrastructure handles Globe, Islacom and Touch Mobile. –With reports from Conrado Diaz