Globe ends 2016 with record core net profit at P16 B; up 6% YOY

Globe Telecom closed the year with all time high consolidated service revenues of close to P120.0 billion, outpacing the previous record level of P113.7 billion in 2015 by 6%, pushing core net profit to reach record high of P16 billion, up 6% on year from P15.1 billion.

The sustained revenue momentum, despite the competitive intensity in the market during the second half of 2016, was driven by the solid growth in data-related products across all segments, and robust subscriber growth for both mobile and broadband. This was likewise supported by the sustained execution excellence for the various product launches during the year, backed by its improved network performance, as Globe moves forward with its capacity and coverage enhancement initiatives intended to elevate the state of internet in the country.

“Notwithstanding the heightened market competition in 2016, we ended the year on a high note, marked by all-time high quarterly and full year revenues, and record-level EBITDA. Our sustained growth momentum is evidence of the underlying strengths of our superior products and services and our conscious effort to create wonderful experiences for our customers,” Globe President & CEO Ernest L. Cu, said. “As we move forward in 2017, we are optimistic that we will maintain our growth trajectory as we continue to strengthen our leadership in the digital space, through the use of innovation and partnerships with global content providers. Our aggressive investments in our network are designed to meet the country’s future digital demands,” Cu added.

Mobile revenues slightly grew year-on-year, at P91.9 billion in 2016 from the P91.2 billion reported a year ago, driven by the continued shift from core voice and SMS in favor of data as more Globe customers adopt the digital lifestyle. TM, the company’s mass-market brand, registered 3% revenue growth from last year, while Globe Postpaid revenues posted a slight 1% improvement from 2015, partly offset by Globe Prepaid revenues, which posted a year-on-year decline of 1%. At the end of December 2016, Globe Telecom’s mobile subscriber base reached 62.8 million, up a robust 12% from the 56.2 million subscribers reported in 2015, driven by the record-level prepaid gross acquisitions during the year despite the increased blended churn rates.

On a product perspective, mobile data is now the biggest contributor to total mobile revenues (38%), outpacing voice (37%), despite the industry war in data pricing in the second half of the year. Mobile data service revenues reached P34.6 billion in 2016, 25% higher than the P27.7 billion reported a year ago. Mobile data traffic grew 44% from 252 petabytes (PB) to 361 PB in the year just ended, as smartphone penetration now reached 61%, given the market’s positive response to Globe Telecom’s expanded data-driven product portfolio. Consistent with global trends, voice and SMS revenues remain challenged with the continuous migration to internet-based applications.

The Globe home broadband business likewise sustained its growth momentum at P14.5 billion in 2016, increasing revenues by 28% year-on-year, with total subscriber base now reaching 1.13 million. The impressive growth in revenues was driven by the continued subscriber expansion in fixed wireless (+23%) solutions, given the favorable customer response to Globe home broadband’s latest plans, which not only incorporate fully-upgraded speeds and data allocation, but also comes bundled with their choice of premium content, and the most cutting-edge devices for a full on-demand entertainment experience.

Globe Telecom’s corporate data business likewise improved year-on-year at P9.9 billion as of end 2016 or 28% higher from the P7.7 billion posted in 2015, as demand for data connectivity continues to surge, impacting customer expansion, circuit count increase and higher usage. The strong demand for internet and domestic leased lines, as well as cloud computing solutions, contributed to the revenue growth in the corporate data business. The growth was likewise aided by the revenue contribution from Bayan’s corporate data revenues. Traditional fixed line voice revenues, also posted an 11% increase year-on-year at P3.8 billion as of end 2016 due to the continued popularity of the new home broadband bundled plans.

Globe posted another record-level consolidated EBITDA, ending the year with close to P50 billion, up a robust 9% from a year ago. Total operating expenses and subsidy grew in step with revenues, or higher by 3% year-on-year to P70.0 billion from P67.7 billion last year, as Globe continued to re-invest gains to support the growing subscriber base and the aggressive expansion of its data network. EBITDA margin was at 42%, higher than the previous year’s margin of 40%. Increase in non-operating expenses included the P1.1 billion of costs related to the acquisition of Vega Telecom, Inc. (“VTI”), as well as the company’s share in net losses of joint venture, spectrum amortization and interest expenses related to the additional debt incurred from the VTI transaction.

Globe spent around P36.7 billion ($772 million) in capital expenditures as of end-December of 2016 to support the growing subscriber base and its demand for data. Of the total capital expenditures spent this year, about 65% was for the data service needs of its customers.