Globe net profit drops in 2017
GLOBE TELECOM, Inc. reported its net profit fell 5% to P15.08 billion in 2017 despite record revenues, as “increased investments in data network pushed non-operating expenses and depreciation charges higher.”
In a statement, Globe said it recorded a 2% increase in nonoperating expenses to P4.27 billion, “largely due to the increase in interest expenses and spectrum amortization related to the San Miguel Corp. (SMC) telco asset acquisition.”
“This, however, was partly offset by the recognition of a onetime gain last September, related to the increase in fair value of the retained equity interest of Globe in Globe Fintech Innovations, Inc. (Mynt),” the company said.
Core net income, which excludes the impact of nonrecurring charges and foreign exchange and mark- to- market charges, dropped by an annual 15% to P13.5 billion, with the full impact of the SMC acquisition.
For the fourth quarter, net profit plunged 57% to P2.1 billion, while core profit declined 28% to P2.33 billion.
Consolidated service revenues rose 6% to P127.9 billion in 2017, which the telecommunications giant says is its highest ever for the full year. Revenues for the October to December period went up 2% year on year to P32.8 billion.
“The sustained revenue momentum was driven by the solid growth in data-related products brought about by the increasing popularity of streaming and on demand video content,” Globe said.
Mobile revenues increased 7% to P98.5 billion in 2017, fueled by robust growth in mobile data revenues. Mobile data, which accounted for 44% of the total revenues, saw a 23% rise in revenues to P43.1 billion in 2017. On the other hand, SMS revenues were flat, while mobile voice dipped by 5% year on year.
As of end-December, Globe’s mobile subscriber base stood at 60.7 million, 3% lower than the 62.8 million subscribers reported a year ago. This after the company in 2017 started excluding from its reporting prepaid subscribers who do not reload within 90 days of the second expiry period, versus the previous cut-off of 120 days.
Revenues from its home broadband business went up 7% to P15.6 billion, as its total number of subscribers grew by 15% to 1.3 million. Corporate data business revenues jumped 4% to P10.3 billion.
However, traditional fixed-line voice revenues fell 8% to P3.49 billion in 2017.
“We are confident that our continued investments in our network’s data capacity and coverage, will allow us to continue to provide superior customer experience and improve the overall connectivity in the country, while building a solid foundation to deliver sustainable long-term growth and shareholder value,” Globe President and CEO Ernest L. Cu was quoted as saying in a statement.
SLOWER REVENUE GROWTH
The Ayala-led telecom is expecting slower revenue growth for this year, in the “low single digits.”
“In 2017, revenues grew by 6% and obviously, 2018, we’re coming off higher base from that 6% growth. While we do expect our corporate and broadband businesses to grow faster, there will be growth in mobile. Growth in 2017 was also not that large due to base. So, the guidance we have for this year is 4%. Last year, our guidance was mid- single digit, that’s 5%,” Globe Chief Financial Officer Rizza Maniego-Eala said during a briefing on Tuesday.
Mr. Cu said during the same briefing the company still sees growth, particularly in mobile data users.
“There’s still potential of growth... given 56% of customers use mobile data even if 70% have smartphones,” he said.
Meanwhile, Globe may keep its $850-million capital expenditure (capex) for the next two years.
“Historically, if you look at the spending trends, you can project. You see business and data growth. Logical for us but we don’t know the number. That is depending on what we see market needs. We do spend as necessary. If you look at the numbers, we went $750 million in ’15, $1 billion in ’16, $850 million in ’17 and projecting over $850 million to $900 million in ’18,” Mr. Cu said.
As of end-2017, Globe said it spent around P42.5 billion in capital expenditures “to support the growing subscriber base and its demand for date.”
Mr. Cu also said they are focusing on tapping the market for prepaid broadband, rather than rolling out an expansive fiber network, which is the strategy of PLDT.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls. —