Globe income gains 11% to P7.3 B in Q1

Published May 7, 2021, 3:40 PM

by Emmie V. Abadilla

Revenues up 3% at P37.8 B

Globe Telecom Inc. weathered   the extended lockdown, with P37.8-billion revenues, up 3 percent in the first quarter of 2021, with a robust contribution from its broadband data segment, and its net income is up 11% to P7.3 billion.

Although 2021 promises to be “a very challenging year, Globe is weathering it well because we’re a staple. People depend on us as a service,” Ernest L. Cu, President and CEO stated  Friday,  (May 7) in virtual presscon.

President and Chief Executive Officer Ernest L. Cu

The telco’s data revenues accounted for 79% of total service revenues from 75% last year, fueled by the rising data connectivity demands of consumers for remote working, entertainment, E-commerce, and education.

Despite the COVID-19 pandemic’s continued impact on mobility and the economy, Globe’s mobile business sustained its recovery, growing 1% versus the fourth quarter of 2020.

This increase was delivered despite the fact that major cities in the country reverted to stricter forms of community lockdown for the latter part of March 2021.

On a year-on-year basis, revenues lagged 2%, given the first quarter of 2020 was largely free from the impact of the pandemic. Total mobile revenues comprised 69.6% of the total service revenues, with total mobile subscriber base of 79.8 million. 

From a product view, mobile data revenues posted P19.2 billion for the first quarter from P18.5 billion reported in the first quarter of last year. 

The sustained customer demand for data to learn, earn, shop and be entertained amid the COVID-19 crisis drove this revenue growth. 

Mobile data now accounts for 73% of mobile revenues from 69% in the first quarter of 2020. 

Mobile data traffic climbed to 836 petabytes in the first quarter of 2021 from 522 petabytes in 2020, which translates to a healthy year-on-year growth of 60%. 

Meanwhile, mobile voice and mobile SMS revenues ended at P4.7 billion and P2.4 billion, lower year-on-year by 11% and 21%, respectively.

As the pandemic increased consumer reliance on the internet to support connections for everyone’s work and social activities, Home Broadband business l accelerated its growth momentum. 

Home Broadband revenues soared to a record P7.4 billion as of end-March of 2021, up a strong 27% versus a year earlier.

Total home broadband subscriber base now breached the 4 million mark, exceeding last year’s tally by 81%. This was mainly supported by the sustained fixed wireless broadband users’ expansion, now up by 105% from last year. 

The record performance of Home Broadband was likewise boosted by the continued increase in penetration in the prepaid market, coupled with the ramp up on high-speed postpaid wired acquisitions. 

As of end-March of 2021, HPW data traffic skyrocketed to 211petabytes from 58 petabytes in the same period of 2020. 

Corporate Data revenues for the first three months of the year slightly increased by P13 million from P3.3 billion as of end-March 2020.

Increase in the information and communication technology (ICT) revenues was muted by the declining trend from the domestic and international services. 

Fixed line voice, on the other hand, witnessed a 14% decline from the first quarter of 2020.

Meanwhile, Globe’s total operating expenses including subsidy reached P19.5 billion as of end-March 2021, exceeding last year’s operating costs including subsidy by 19% due to the increases across expense line items except for interconnection fees, repairs & maintenance and travel.

Total consolidated EBITDA landed at P18.3 billion, dropping by 11% year-on-year due to higher operating expenses. 

This led to weaker EBITDA margin to end the quarter at 48% from 56% a year earlier. 

Despite lower EBITDA, net income stood at P7.3 billion for the first quarter or up 11% relative to the same period of 2020, as the decline in non-operating charges fully offset the hike in depreciation expenses. 

Lower non operating expenses this period was mainly due to higher equity share in net income of affiliates. 

This quarter’s improvement in NIAT also resulted from lower taxes following the retroactive impact of the recently implemented CREATE Law.

Excluding the impact of CREATE adjustment, normalized NIAT would have been P5.0 billion, or 27% lower year-on-year.

Accordingly, core net income, which excludes the impact of non-recurring charges, and foreign exchange and mark-to-market charges, stood at P7.4 billion, up by 13% year-on-year. 

Globe’s balance sheet remained strong and gearing comfortably within bank covenants despite the increase in debt from P167.7 billion in 2020 to P168.9 billion in 2021. 

Globe’s gross debt to equity is at 1.92x while gross debt to EBITDA is at 2.46x; Net debt to equity ratio is at 1.76x while net debt to EBITDA is 2.25x; and debt service coverage ratio is at 2.61x. 

Significantly, Globe continued to be gung-ho on its capex.

In the first quarter of the year, the telco spent a total of P19.1 billion in capital expenditure, exceeding last year’s spending by 79%. 

This capex investment represents 51% of gross service revenues and 105% of EBITDA. 

Around 91% of the investment went primarily to data-related requirements to support the fast growing data demand and provide superior data customer experience. 

Globe’s continuous modernization of its network to make 5G as well as fiber technology available to more customers nationwide, is part of its effort to help the country achieve a #1stWorldNetwork. 

As of end-March 2021, Globe built a total of 318 new cell towers, 152% higher versus the same period last year. 

Total builds for wireless expansion which includes both 4G LTE and 5G reached 4,210 sites in the first quarter of 2021 or up by 106% from a year ago. 

Globe also installed over 287,000 high-speed lines reflecting a 212% increase from the first quarter of last year. 

Globe’s 5G network now covers 84% of Metro Manila, expanding to total 1,383 sites including Bacolod, Boracay, Cebu, Iloilo, Cagayan de Oro and Davao as of end-March this year.

Globe has also made its 5G service available abroad with the launch of its 5G service in Thailand, United Arab Emirates, Vietnam, Saudi Arabia, Singapore, Hong Kong and Kuwait in the first quarter of the year. 

Globe is likewise set to launch its 5G Roaming services to morinternational destinations across Asia, North America, and Europe in order to extend 5G connectivity for Filipino workers and travelers. 

“Despite the resurgence of COVID-19 cases in the country and the lingering uncertainties from the pandemic, we are encouraged by the improvements in Globe’s first quarter results,” according to Cu.

“Looking ahead, we believe that Globe is well positioned to provide more digital solutions and innovative offers to make our services more relevant to customers, especially during this time of crisis.” “Our 5G and fiber rollout as well as the continuous upgrading of our network will remain our utmost priority, as reliable connectivity is indispensable, both to overcome the pandemic and help fuel the recovery of the country’s economy,” he concluded.