Globe Reports Strong Results for 1Q 2019
Globe Telecom Inc. (PSE: GLO) continues to invest in its network to support the increasing demand for data services of its customers. For the first three months of 2019, Globe spent around PhP8.8 billion in capital expenditures or 24% of topline revenues. About 68% of the total expenditures for this period was for data-related services.
Globe closed the first three months of 2019 with consolidated service revenues of PhP36 billion, up 13% from a year ago and 3% higher from prior quarter. This was mainly fueled by sustained increase in data usage across all data-related services and products, including the wide array of content offerings, through the company’s partnerships with global content providers.
Mobile revenues for the period grew close to PhP27 billion, up 11% from the same period of 2018 and 4% higher from the previous quarter, mostly coming from the Prepaid brands. From a product perspective, mobile data revenues amounted to PhP16.5. billion for the first three months of the year, due to the surge in consumer spending on mobile data, given the rising popularity of promos that provide the best surfing deals. Mobile data continued to be the top contributor to the Company’s total mobile business, and now accounts for 61% of gross service revenues from 47% a year ago. Globe is now reaping the benefits of its modernized 4G/LTE network that allows more of its customers to experience faster content downloads, smoother music and video streaming, and richer web browsing experiences, thus the mobile data traffic growth from 180 petabytes in same period of 2018 to 370 petabytes this period. Meanwhile, mobile voice and mobile SMS revenues for the period just ended posted PhP6.3 billion and PhP4.2 billion, lower year-on-year by 15% and 22%, respectively.
In view of the new regulatory requirement of one (1) year extension of prepaid load validity, Globe closed the first three months of 2019 with a total mobile subscriber base of 83.5 million, up 13% from the fourth quarter of 2018.
Globe’s home broadband business posted a robust 21% increase from a year ago and 3% against the prior quarter to reach PhP5.2 billion this period. Home broadband’s resilient performance, was attributed to subscriber expansion in fixed wireless solutions, supported by the affordable, flexible home broadband bundles plus the increasing popularity of Home Prepaid Wi-Fi. Total home broadband subscriber base now stands at over 1.7 million, up 22% from a year ago and around 63% are fixed wireless subscribers.
Moreover, corporate data business showed a notable 16% year-on-year growth from the PhP2.7 billion revenues from same period of 2018. This was mainly from internet and domestic services coupled with the 5% higher circuit count.
Globe’s total operating expenses and subsidy amounted to PhP16.1 billion for the period, or 1% higher year-on-year.
Consolidated EBITDA closed the first three months of 2019 with a total of PhP19.9 billion, up 24% versus last year, as this period’s topline gains fully offset the slight increase in expenses. EBITDA margin was at 55% this period compared to 50% from a year ago. Net income stood at PhP6.7 billion, 44% higher from a year ago, mainly due to the robust EBITDA growth, offsetting depreciation charges and non-operating expenses booked for the period just ended. Depreciation expenses remained high this period given Globe’s continued network expansion and acceleration of its LTE and broadband rollout. Core net income, which excludes the impact of non-recurring charges, and foreign exchange and mark-to-market charges, stood at PhP6.7 billion, 40% increase from same period of 2018.
“I am delighted to report another remarkable performance for the first three months of 2019 with revenues and margins growing beyond our expectations. As we continue to invest in our LTE network, we are also excited with the growth opportunities of our 5G commercial pilot launch in June this year. Through this launch, we will be able to offer our customers a whole new ecosystem of devices to enhance the way they experience data to the home. This is in line with our proven strategy of making our customers a priority, by providing them a superior digital and network experience, despite all the industry challenges that we face ahead,” said Ernest L. Cu, president and CEO of Globe Telecom. “For 2019, we are confident in our ability to maintain this strong growth momentum with the aggressive investments in the network, coupled with the evolving lifestyle bundles that aim to strongly influence the digital life of Filipinos. We believe this would allow full year 2019 revenues to increase by high single-digits from 2018 levels. Likewise, EBITDA margin is expected to end around 50% for 2019, as margins would be continuously impacted by the increasing contribution of the lower-margin data-related products, countered by our continued efforts in managing costs.”
In compliance with the directive of the National Telecommunications Commission (NTC), Globe will move the implementation of 8-digit telephone numbers in Greater Metro Manila to October 6, 2019 to give local banks and credit card companies ample time to prepare. The NTC issued an advisory, ordering local telecommunication companies to move the migration date to October 6, 2019 from March 18, 2019. This was after the Bankers Association of the Philippines (BAP) and the Credit Card Association of the Philippines (CCAP) filed their respective petitions to postpone the migration to a later date to provide banks and credit card companies sufficient time to implement the necessary changes to their operations and systems.
Lastly, the board of directors of Globe approved the declaration of the second quarter 2019 cash dividend of P22.75 per common share payable on May 31, 2019 to shareholders on record as of May 20, 2019. The second quarter cash dividend payment total is about PhP3 billion. The board of directors of likewise approved the declaration of the second semi-annual cash dividend for holders of its non-voting preferred shares on record as of July 26, 2019. The amount of the cash dividend shall be at a fixed rate of 5.2006% per annum calculated in respect of each share by reference to the offer price of PhP500.00 per share on a 30/360 day basis for the six-month dividend period. Total amount of the cash dividend will be paid on August 22, 2019.