Globe Telecom 2016 profit falls despite subs, data gains - Mobile World Live

Globe Telecom 2016 profit falls despite subs, data gains

08 FEB 2017

Globe Telecom, the largest mobile operator in the Philippines with a 51.5 per cent market share, posted a drop in its profit for 2016 as a rise in non-operating expenses and higher capex offset data revenue gains.

The operator, which boosted its subscriber base by 12 per cent year-on-year in 2016 to 62.8 million, reported its net profit fell 4 per cent last year to PHP15.89 billion ($319 million), which it attributed to an increase in non-operating expenses and higher depreciation expenses.

Non-operating expenses included PHP1.1 billion in costs for an acquisition of Vega Telecom, including Globe’s share in net losses of the joint venture, spectrum amortisation and interest expenses related to the Vega transaction.

Vega formed part of San Miguel Corp (SMC), which Globe and rival PLDT jointly acquired in May 2016

Globe’s EBITDA rose 9 per cent through the year to PHP50 billion as a result of a rise in revenue and lower marketing and subsidy expenses, it said.

“Notwithstanding the heightened market competition in 2016 and falling prices, we ended the year on a high note,” said Globe president and CEO Ernest Cu. Its core net income in Q4 jumped 76 per cent to PHP4.2 billion.

Consolidated service revenue rose 6 per cent to PHP120 billion. Mobile revenue for the year edged up less than 1 per cent to PHP91.9 billion, which the operator said was driven by the continued shift from core voice and SMS in favour of data. Mobile data revenue increased 25 per cent to PHP34.6 billion, while voice revenue was down 8 per cent to PHP34.1 billion and SMS fell 12 per cent to PHP23.2 million.

Strong data growth
Despite a data price war in the second half of the year, Globe said mobile data now accounts for 38 per cent of mobile revenue, the biggest contributor, outpacing voice which represents 37 per cent of mobile revenue. Mobile data traffic grew 44 per cent last year as smartphone penetration reached 61 per cent.

Despite a 13 per cent jump in its prepaid user base to 60.3 million, its postpaid subscribers fell 4 per cent to 2.49 million through 2016. Postpaid ARPU was stable, but prepaid ARPU dropped 14 per cent year-on-year in Q4.

Its home broadband revenue grew 28 per cent to PHP14.5 billion in 2016, with the subscriber base increasing 6 per cent to 1.13 million.

Capex increased 14 per cent to PHP36.7 billion in 2016, with 65 per cent allocated to data services. Globe said the increase was partially driven by the delay in capex cash flows in the latter part of 2015, which spilled into 2016 and its continued aggressive network expansion.

Last year it rolled out 500 LTE sites on the 700MHz band and 1,200 on the 2.6GHz band. in 2017 its plans to add another 1,800 sites using the 700MHz band and 1,000 on the 2.6GHz band. It has a total of 32,846 base stations, with more than 21,300 for 4G.

Globe said 2017 will be impacted by the additional interest expenses from increased debt related to capex and the SMC transaction. Depreciation charges will remain elevated given the anticipated capex programmes. The company’s share in equity losses and spectrum amortisation related to the SMC transaction will be around PHP75 million to PHP100 million per month.

Revenue is forecast to grow at a mid single-digit rate through 2017.

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Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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