Globe profit slips on lower voice revenues

GLOBE TELECOM, Inc. saw its net income drop by 6.7% in the second quarter, as revenues from its fixed line voice and mobile voice business declined.

In a regulatory filing on Tuesday, Globe said its net income fell to P4.33 billion in the April to June period, from P4.64 billion during the same period a year ago, as improved revenues in home broadband and mobile data were offset by lower fixed line voice and mobile voice revenues.

For the first half, the telecommunications giant’s income slipped 10% to P8.08 billion versus P8.97 billion a year ago, because of “higher interest expense and depreciation expenses, coupled with Globe’s share in equity losses and spectrum amortization related to the SMC (San Miguel Corp.) telco asset acquisition.”

“On a normalized basis ( excluding the impact of the SMC transaction), net income would have declined by 4% at P8.7 billion year on year and increased by 8% quarter on quarter,” Globe said.

Operating revenues for the second quarter increased by 6.6% to P33.62 billion, bringing the sixmonth figure 5% higher year on year to P66.54 billion.

For the first half, Globe said service revenues reached a new record of P62.9 billion, 5% higher than the previous year, driven by “strong contribution of data-related products and services.”

Mobile service revenues increased 5% to P48.31 billion during the January to June period, “driven by the sustained revenue performance of mobile data (+13%) and higher SMS revenues (+4%).”

However, mobile voice revenues, which accounted for 34% of the total mobile service revenues, slid 3% during the first half to P16.7 billion. Mobile SMS revenues hit P11.8 billion in the first semester, up 4% from a year ago.

Mobile data services revenues, which contribute 42% to total mobile revenues for the first half, went up 13% to P20.3 billion.

“This was due to the steady rise in smartphone penetration, which is now at 67%, and growing data usage, which saw mobile data traffic growth of 85% from 151 petabytes (PB) in 2016 to 280 PB this year,” Globe said.

However, Globe said the double-digit growth in mobile data revenues is “not representative of the true growth of the business due to the application of certain accounting standards on bundled promotions.” The company noted its free Facebook offer, for example, softens the performance of the mobile data business due to the change in the assignment of revenues in the different periods.

Adjusting for the impact of the free Facebook promotion, Globe said mobile data revenues would have increased by 24% this quarter against the same period last year.

“The Free Facebook offer was an initiative that allowed Globe to transform its customers’ behavior and successfully allowed the Company to increase its mobile data traffic and improve its yields leading to the revenue levels we see today,” Globe said.

As of end-June, Globe said its cumulative prepaid subscribers stood at 57.3 million, 3% lower than a year ago, while postpaid subscribers reached 2.5 million, 2% less than the same period in 2016.

Meanwhile, home broadband service revenues rose by 8% to P7.72 billion, while corporate data revenues inched up 3% to P5 billion.

However, fixed line voice revenues slipped 5% year-on-year to P1.83 billion during the first six months of 2017.

Globe reported its operating expenses and subsidy for January to June period reached P35.6 billion, 4% up from the P34.3 billion posted in the same period last year. This was attributed to higher maintenance, provisions, staff costs, leases, services and utilities but partly offset by lower subsidies, interconnection fees and marketing expenses.

The Ayala- led telecommunications company said it spent P27.5 billion in capital expenditures as of end June, as its subscriber base and its demand for data continued to grow. The bulk or 87% of the capex was used for data-related initiatives.

Shares in Globe rose 1.66% or P34 to close at P2,080 apiece on Tuesday. —