Investments pare Globe profit to P2.7 billion in Q1

MANILA, Philippines - Globe Telecom posted a 10-percent decline in its consolidated net income for the first quarter of 2012 to P2.7 billion, from P3 billion in the same period last year, the company said in a statement.

Company officials attributed the drop partly to its continued investments in subscriber acquisitions and network and IT infrastructure to boost customer experience.

Stripping out foreign exchange and mark-to-market gains and losses as well as non-recurring items, Globe’s core net income stood at P2.7 billion, seven percent below last year’s P2.96 billion.

Compared to the fourth quarter of 2011, net income and core net income went up 47 percent and 48 percent, respectively, following the decline in operating expenses and depreciation charges.

For the first quarter of 2012, consolidated service revenues rose to an all-time high of P20.2 billion, six percent higher than last year’s level of P19.1 billion, following the sustained strong performance of the company’s mobile, broadband and fixed line data segments.

Mobile revenues increased six percent despite a very challenging market underscored by subscribers’ continued preference for value offers, intense competition, and increased multi-SIM incidence.

Broadband and fixed line data revenues were also up 13 percent and five percent, respectively, driven by an expanded subscriber base and the sustained demand for data services from the corporate sector.

Consolidated service revenues for the period also bested the previous quarter’s record of about P20.1 billion. Mobile revenues were up one percent against the fourth quarter, driven by the continued robust take-up for postpaid plans.

Meanwhile, fixed line and broadband revenues were up two percent against the prior quarter, with an acceleration in broadband subscriber net additions following the aggressive marketing and sales campaign for the Tattoo Broadband brand.

Total capital expenditure at the end of the first quarter reached P4.8 billion, driven by the continued investments in Globe’s broadband and mobile networks, and were 12 percent lower than last year’s spending of about P5.5 billion.

Globe has earmarked up to $800 million in capital expenditures for 2012. This includes $530 million for transformation initiatives and as much as $270 million for business-as-usual investments for the company’s fixed line data network, submarine cable facilities, IT infrastructure, as well other selling and general capital expenditures.

As of end-March, Globe has a total of 12,714 base stations and 7,060 cell sites to support its 2G, 3G, 4G and WiMAX services.

Cumulative mobile subscriber base as of end-March stood at over 31 million, up 14 percent from the same period last year.

“We are pleased with our results this period, and the way we have built on and sustained the momentum of the last six quarters. Despite intense competition, we continue to make gains in our mobile and broadband businesses. This reinforces our commitment to our transformation agenda to better serve our customers,” Globe president and CEO Ernest Cu said.

He added that the industry is entering a new phase. “We see 2012 as a year of investments in our customers, in our networks, and in our systems and processes. We expect to emerge from this investment period with significantly improved capabilities, well-positioned to grow and deliver enhanced value to all our stakeholders,” Cu pointed out.