Globe's wider customer base delivers bigger Q1 profits

MANILA, Philippines — Ayala-led Globe Telecom Inc. registered a double-digit growth in profits in the first quarter on the back of a bigger client base that sought to install broadband networks to facilitate work-from-home arrangements.

In a disclosure on Friday, Globe reported a net income of P7.3 billion, an improvement of 11% year-on-year. Excluding non-recurring charges, core net income improved a bigger 13% to P7.4 billion. 

Investors responded favorably to the news. The company’s listed shares closed the week up 1.16% at P1,830 each.

Broken down, profits benefited from a 3% uptick in service revenues to P37.8 billion propelled by a whopping 81% increase in subscribers. That said, consolidated earnings before interest, taxes, depreciation and amortization— another gauge of financial strength— yielded an 11% year-on-year drop to P18.3 billion.

Nearly 70% of service revenues, or those coming from Globe’s direct offerings, came from its wireless business.

Ernest Cu, president and chief executive, stayed positive on the prospects of the telco firm facing not only a dragging pandemic, but also new and revitalized competitors in Dennis Uy’s Dito Telecommunity Corp. and Pangilinan-led PLDT Inc., the latter experiencing a 2% decline in profits last quarter. Dito, which has just pilot last March 8, remains a private firm and has not reported on its financial status.

“Looking ahead, we believe that Globe is well positioned to provide more digital solutions and innovative offers to make our services more relevant to our valued customers, especially during this time of crisis,” Cu was quoted as saying in a statement.

Expectedly, broadband subscribers carried Globe through the hard times as students taking online classes and employees working from home pushed up revenues on this segment to P7.4 billion. More customers mean a data traffic more than doubled from last year when lockdowns triggered by the pandemic were just starting.

Apart from broadband, revenues from mobile data services of Globe’s 79.8 million mobile subscribers also grew 3.73% year-on-year to P19.2 billion. Data traffic rose 60% from year-ago levels.

Reliance on web services, meanwhile, hurt Globe’s legacy call and text services. Revenues from these streams sank 11% and 22%, respectively. Finally, big corporate accounts of the telco delivered data revenues of P3.4 billion, financial results showed. 

The massive gains in subscribers kept the impact of larger operating expenses controlled at P19.5 billion in the first quarter. With demand for better net services on the rise, and following President Rodrigo Duterte’s tirades, Globe hiked capital investments by 79% year-on-year to P19.1 billion as of March— thanks in part of the easing of restrictions that allowed the building of new telco towers.

From January to March, Globe has built 318 new cell towers, 152% up from same period a year ago, while ramping up 4G LTE and 5G connections by 106% to 4,210 sites. 

“Our 5G and fiber rollout as well as the continuous upgrading of our network will remain our utmost priority,” Cu said.