Globe revenues flat at P72.4 B, profit down 5% to P11.5 billion

Published August 4, 2020, 10:00 PM

by Emmie V. Abadilla

Globe Telecom Inc. hauled in P72.4 billion consolidated service revenues in the first half of the year, down 1% from a year ago, netting P11.5 billion earnings, down 5%  due to higher depreciation costs from the telco’s continued network investments.

Similarly, core net income declined year-on-year by 8% to P11.1 billion.

“While we expect revenues for full year 2020 to decline by a low single digit against last year, given the impact of community quarantine restrictions, we do see growth opportunities on the home broadband front and ICT space,’ according to Ernest L. Cu, President and CEO.

On a quarterly basis, Globe’s revenues dropped  4%, given the full impact of the extended lockdown on its operations. 

Data consumption surged as  Filipinos stayed at home and shifted into online activities (work/learn from home, video and teleconferencing, online shopping, online/mobile banking, video entertainment), making data revenues the telco’s top revenue earner.

Overall  data accounted for 75% of  total service revenues, versus 70% last year.

Consolidated EBITDA stood at P38.4 billion with EBITDA margin reaching 53%. 

“Higher demand for internet connectivity and cloud solutions are expected as companies have been forced to embrace remote working for employees and to fast-track their digitalization efforts. Mobile data and digital solutions will also increase traction with more customers adopting a digital lifestyle in the new normal,” he pointed out.

“Despite the challenges, we are confident in our effective cost management efforts, to keep our EBITDA at around the 50% level, ensuring the sustainability of our operations and services,” Cu underscored.

Mobile business revenues for the second quarter declined by 7% from the P26.8 billion reported in the first quarter bringing total revenues for the first half of the year at P51.8 billion, 5% lower than same period last year. 

This was mainly driven by the decline in prepaid top ups and postpaid acquisition particularly during ECQ period. 

Prepaid top ups began recovering close to pre-ECQ levels during the latter part of the quarter, as the country slowly re-opened the economy, allowing some sectors of the society to go out and work. 

Total mobile revenues comprised 72% of the total service revenues, with total mobile subscriber base of 80.2 million. 

Mobile data revenues generated P35.8 billion in the first six months of 2020 versus P34.0 billion of last year, as customers now spend more time online. 

Mobile data currently accounts for 69% of mobile revenues from 63% a year ago. 

Mobile data traffic jumped from 764 petabytes in the first half of 2019 to 1,106 petabytes this period, or a 45% growth year-on-year. 

As more customers shift to data-based services versus the traditional voice calls and text, mobile voice and mobile SMS revenues ended at P10.2 billion and P5.8 billion, lower year-on-year by 16% and 30%. 

Offsetting the decline in mobile business, home broadband sustained its growth momentum, generating a 19% revenue growth to reach P12.5 billion.

Total home broadband subscriber base now stands at over 2.9 million, up 58% from the first half of 2019, driven mainly by the sustained increase of fixed wireless broadband users. 

This growth was also achieved due to higher take up of Home Prepaid Wi-Fi as demand for wireless

connectivity increased as Filipinos were forced to stay and work or learn from home due to restrictions brought about by the community quarantine. 

As of the first semester of 2020, Home Prepaid Wi-Fi (HPW) data traffic soared to 182 petabytes from 45 petabytes in same period of 2019.

Corporate Data revenues on the other hand, contracted by 3% year-on-year with total revenues of P6.2 billion as of end-June 2020, largely coming from lower domestic and international services. 

This was partly cushioned by higher information and communication technology (ICT) revenues, as enterprises advanced their digitalization efforts.

“Globe’s network has withstood and continues to prove its resilience during this COVID-19 pandemic,” the President observed.

“Our priority to keep our network up to speed has allowed us to continuously serve our customers and ensure that communities stay connected during these tough times.”

For the first half of 2020 alone, Globe already invested P20.9 billion in capex, which represent 29% of revenues and 54% of EBITDA, he stressed.

Globe’s  capex was also 10% higher than last year.

The bulk of spending went to data-related requirements, comprising 76% of the total capex spending for the period. 

Despite limitations brought about by the community quarantine and physical distancing restrictions, Globe expanded its 5G coverage in key areas in the metro, specifically in the Makati and Bonifacio Global City Central Business Districts (CBDs) to make the servive available to mobile customers by the 3rd quarter of this year. 

Globe was the first telco in the country to introduce 5G technology in 2019, and the first company to offer the first 5G capable smartphone in the Philippines early this year. 

To support the roll-out of this high-speed mobile technology, the telco revised its 2020 capex guidance to P50.3 billion, lower than the original guidance of P63.0 billion given the delays in the rollout during the ECQ/MECQ period.

Meanwhile, total operating expenses including subsidy totaled P34.0 billion, a 1% decline from same period last year due to the cost saving initiatives put in place to manage some of the impact from the pandemic. 

This was partly negated by the additional provisions for trade receivables booked in the second quarter. 

Excluding this one-time trade provisions, operating expenses would have dropped by 6%against the first half of 2019. 

Consolidated EBITDA ended the first half of 2020 at P38.4 billion, slightly lower by 1% from same period of 2019. 

Nevertheless, Globe’s balance sheet remained strong with ample liquidity and gearing comfortably within bank covenants. 

Despite the higher debt of P151.7 billion versus P136.3 billion in 2019, Globe is well within the ratios prescribed under its loan agreements.

Its Gross debt to equity is at 1.78x while gross debt to EBITDA is at 2.06x.

Net debt to equity ratio is at 1.61x while net debt to EBITDA is 1.86x; and Debt service coverage ratio is at 4.48.

Last month, Globe successfully raised US$600 million in bonds consisting of US$ 300 million 10-year and US$ 300 million 15-year Reg S only dual tranche unrated US dollar-denominated senior notes with a coupon rate of 2.500% and 3.000%, respectively.