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Globe Posts 3Q Core Net Income of PhP11.6B

Taguig—(PHStocks)—Globe Telecom Inc. (PSE: GLO) hit record-breaking revenues, reaching PhP72.7 billion as of the first nine months of 2014, 8% higher than the PhP67.3 billion reported in the same period last year. On a sequential basis, Globe posted another all-time high with quarterly revenues of PhP25 billion, up 2% from the previous record level in the second quarter of 2014 and 10% from the same quarter last year. The continued strong topline growth was due to the robust expansion of both mobile and broadband customer bases, the strong demand for data connectivity, and the successful execution of various innovative and relevant promotions during the period.

Globe’s mobile business posted revenues of PhP57.6 billion as of end September 2014, representing a 6% year-on-year growth against the PhP54.1 billion revenues recorded during the same period last year. This was underpinned by the strong contributions from the Globe Postpaid and TM segments. Globe Postpaid revenues for the first nine months of the year stood at PhP22.1 billion, up 11% from the prior year, driven by solid subscriber growth (+9% year-on-year).

TM, the Company’s mass-market brand, likewise, registered strong performance in the first nine months of the year, with revenues surging by 12% year-on-year to PhP14 billion from PhP12.5 billion in the same period last year, mitigating the slight decline in Globe Prepaid’s year-to-date revenues. At the end of September 2014, Globe’s mobile subscriber base reached 42.9 million, up a robust 17% from the 36.5 million a year ago. On a quarterly basis, the mobile subscriber base still improved from 42.7 million reported in the second quarter despite the increased churn from Globe’s prepaid brands, which was anticipated given the churn-out of non-paying customers who took advantage of the highly successful Free Facebook promo which ended in early May of 2014.

The sustained year-on-year growth in mobile revenues was largely fueled by the increase in mobile data revenues, which rose by 18% to PhP10.2 billion as of end September of 2014 from PhP8.7 billion in the same period last year. This was also complemented by the continued growth in mobile voice and SMS services, which were up by 8% and 1% year-on-year, respectively. The surge in mobile data revenues resulted from the Company’s initiative to move away from unlimited to volume-based or consumable data plans with the launch of GoSurf with Spotify offers. On a sequential basis, mobile revenues hit PhP19.8 billion, reaching a new quarterly high, up 2% from the PhP19.3 billion registered in the strong second quarter of 2014.

Meanwhile, Globe’s broadband business continued its consistent growth trajectory, again up by double digits year-on-year in terms of both revenues and subscriber base. The availability of wide range of product offers that best fit the customers’ budget, needs, and lifestyle and the pervasiveness of the Company’s modernized and robust network have paved the way for Globe Tattoo Broadband’s continued success. Broadband revenues stood at PhP9 billion as of September 2014, up 16% year-on-year from PhP7.8 billion in the same period last year. Total broadband subscriber base reached over 2.5 million as of the end of September this year, up a strong 36% from the 1.9 million subscribers recorded by the end of September last year. The solid subscriber expansion was broad-based across wireless broadband (+42%), fixed broadband (+11%) and long-term evolution (LTE) solutions.

Globe’s fixed line data business increased by 16% to PhP4 billion for the first nine months of the year from PhP3.4 billion during the same period last year. The unrelenting growth in fixed line data revenues was largely due to the expansion in circuit count and increased usage, and the variety of industry solutions and business applications offered by the Company, including cloud services, machine-to-machine (M2M) solutions, and data center services, among others. Traditional fixed line voice services, likewise, posted a 7% year-on-year increase in revenues due to the continued popularity of bundled internet and landline plans, offering faster speeds and more affordable price points.

Total operating expenses and subsidy grew by 10% year-on-year to PhP42.9 billion from PhP39 billion during the same period last year, as the Company continued to re-invest its revenue gains in seeding subscriber growth and expanding the Globe data network to further improve customer experience. As the growth in revenues outpaced the rise in spending, Globe’s consolidated EBITDA stood at PhP29.8 billion as of September 2014, 5% higher against the EBITDA reported in the same period last year. For the third quarter of the year, the record-high revenues, coupled with the managed expense growth, helped boost EBITDA to PhP10.7 billion, 4% higher quarter-on-quarter against the PhP10.3 billion in the second quarter of the year. With the strong quarterly growth in EBITDA, EBITDA margin improved to 43%, up from 42% in the prior quarter. EBITDA margin for the first nine months of the year stood at 41%, down against the 42% recorded in the same period in 2013.

Globe’s net income surged to PhP10.5 billion in the first nine months of the year, 198% higher against the net income reported in the same period of 2013, as a result of the improvement in EBITDA, coupled with lower depreciation expenses and non-operating charges. The Company’s core net income reached PhP11.6 billion as of September 2014, or 22% higher than the PhP9.5 billion reported in same period of 2013. Globe’s core net income excludes the impact of the non-recurring items, such as the accelerated depreciation charges related to the network modernization projects and mark-to-market charges.

“We are pleased with our third quarter results which prove that our growth momentum remains intact despite the intensifying competition.” said Ernest L. Cu, President and CEO of Globe Telecom. “Our strategy of focusing our efforts towards providing a differentiated customer experience has paved the way for our continued success. We have been consistently growing our mobile business with the solid customer base expansion and the strong demand for our mobile data services. Broadband is still a high-growth area with both revenues and customer base growing in double digit rates and our LTE solutions now becoming an increasingly important growth driver,” added Cu.

“We remain steadfast and confident that with the stronger and more reliable network and our continued service innovations, we are ready to deliver the best digital services and the most seamless experience to our valued customers,” said Cu.

Globe continued to create wonderful experiences for its valued customers with the introduction of new and exciting offers during the third quarter of the year. Globe has further expanded the portfolio of smartphones for its Globe Postpaid subscribers with the latest 4G LTE-powered smartphones such as the Nokia Lumia 635 LTE (available starting at Postpaid Plan599), Nokia Lumia 1320 and Samsung Galaxy Note II LTE (available at Plan1299), Samsung Galaxy S5 (available at Plan 1799) and LG G3 LTE free (available at Plan 2499). In addition, Globe launched several online sale events to further provide access to its subscribers to the latest phones and gadgets.

Globe Prepaid further improved the popular GoUnli25 to now offer unlimited SMS to ALL Networks, unlimited calls to Globe and TM plus free Viber for the same price of 25 pesos. Also, the Company brings even more innovation to beef up its product portfolio by expanding its popular promo GoSAKTO, the first-of-its-kind prepaid service that allows customers to create their own promo bundles the way they need it depending on their budget, lifestyle and needs. With the expanded GoSAKTO, Globe Prepaid customers can personalize their call, text and surfing needs for 1 day, 2 days, 3 days, 7 days, 15 days or even for 30 days. They can also select the type and number of call minutes and texts they need and adjust the MBs of mobile surfing the way they want it.

TM, likewise, introduced UNLITXT10 (T10), which provides unlimited texts to TM/Globe subscribers for two (2) days for only PhP10. In addition, for just a minimal price of PhP5, TM subscribers may either opt to add fifteen minutes of calls to TM/Globe to the UNLITXT10 promo or add unlimited text to TM/Globe to the UNLITAWAG15 promo.

Recognizing the changing demand of our customers as they adapt to the world of data, Globe remains steadfast in its strategy of building a portfolio of products and services that are designed to cater to the changing digital lifestyles. Globe continued to form long-term and mutually beneficial partnerships with the most popular over-the-top players and content providers globally.

In response to overwhelming public clamor and as way of giving back to its subscribers, Globe brought back its Free Facebook offer, allowing all its 42.9 million Globe and TM subscribers free access to Facebook through Globe’s largest 4G network. The promotion provides the subscribers with unlimited access to be able to share, posts likes, chat on Facebook, without counting megabyte (MB) usage. The Free Facebook promotion will run until 30 November of 2014.

The Company likewise spearheaded the shift from unlimited time-based data plans to volume-based consumable plans, geared towards improving the mobile data experience of its subscribers and ensure the most appropriate pricing of data. Instead of unlimited mobile internet SuperSurf, Globe and TM subscribers can choose from a variety of GoSurf consumable data plans, ranging from PhP15 for 20 MB to PhP2,499 for 15 GB per month. With every GoSurf data plan, subscribers can get free access to Spotify, one of the world’s most popular music streaming services, to stream music all day, listen to their favorite songs and create playlists from Spotify’s 30 million songs.

In addition, Globe launched “Piso Videos” to provide Globe and TM subscribers access to videos on their cellphones for as low as P1 per video. Subscribers can access to the service by simply texting “PISO” to 8888 or visit http://m.pisomall.com.ph for free.

The Company likewise, makes purchasing on Google Play Store easier and more convenient. Progressively rolled out since August 20, 2014, Globe Postpaid, Prepaid and TM customers have the ability to purchase any app or in-app item on the Google Play Store and charge the cost directly to their prepaid load or postpaid bill, bypassing the need for credit cards and enhancing the customers’ convenience for the Globe customers.

In another pioneering effort, Globe announced recently its comprehensive and multi-year partnership with the National Basketball Association (NBA). With the partnership, Globe, TM and Tattoo subscribers can enjoy NBA-related promotions and premium content and access new and unique product offerings from the NBA. These will include the introduction of NBA League Pass offers, including day passes, which will be exclusive Globe subscribers.

On the broadband business, Globe continued to innovate and launch new deals and promotions during the third quarter. Tattoo Postpaid continued to offer a wide array of tablet bundles (Skyworth S7000, Acer Iconia One 7, Coby Kyros 7065, Skyworth X7811, Samsung 7 lite with a free mobile Wi-Fi) plus 60 surfing hours for as low as PhP499 per month. Samsung Tab 3 7.0 was made available for only PhP899 per month with 100 surfing hours while Ipad Mini 16GB Wi-Fi was offered at PhP999 per month with 50 surfing hours. All Postpaid tablet offers come with Anti-Bill Shock Cap ranging from PhP1,650 to PhP1,699 depending on the postpaid tablet plan. The tablets were also offered through a one-time cash-out if purchased with a plan. Likewise, Tattoo Prepaid, unlocked the best tablet bundle offers with free mobile Wi-Fi and save as much as PhP2,250. Also, subscribers can now surf with blazing speeds with the latest Tattoo 4G Mobile Wi-Fi offer for only PhP1,495 from its previous price of PhP1,995.

The Company announced during the quarter its collaboration for the construction of a new submarine cable system directly connecting Southeast Asia and the United States (SEA-US). Aside from Globe Telecom, members of the SEA-US consortium include PT Telekomunikasi Indonesia International (Telin), Telkom USA, GTI Corporation (a member of the Globe Group of companies), RAM Telecom International (RTI), Teleguam Holdings (GTA) and Hawaiian Telcom (HTEL). The SEA-US cable project will be undertaken by NEC. The project is expected for completion in the last quarter of 2016 at project cost of approximately $250 million, and is envisioned to provide superior latency, deliver an additional 20 Terabits per second capacity, utilizing the latest 100 gigabits per second transmission equipment. Such additional capacity will cater to the anticipated exponential growth of bandwidth between the two continents.

Meanwhile, GCash recently launched the “GCash Libre Pera Padala” promo which allows its users to send money free of charge. Instead of the PhP1 charge for every PhP100 GCash sent, GCash registered customers can now have the money transferred for free, regardless of the amount. The free rate will immediately apply when you send money via GCash during the promo period.

Globe BanKO launched during the quarter “Ka-BanKO Panalo Milyonaryo Edition,” where all new bank account holders who use their accounts for any of the BanKO transactions (i.e., buy load, send money, pay bills, buy insurance or international remittance) can win through a raffle as much as PhP1 million.

Lastly, during its meeting held on 11 November 2014, Globe’s Board of Directors approved the declaration and payment of cash dividends for the Company’s voting preferred shares. The payment of cash dividends to all shareholders of Globe’s outstanding voting preferred shares shall be based on the average 30-day PDST-F (formerly MART1) as computed by the Philippine Dealing and Exchange Corporation plus 2%. The Record Date is on 25 November 2014 and Payment Date is on 11 December 2014.

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