Globe Telecom's Q3 net income drops by 50%
MANILA, Philippines – Globe Telecom Incorporated's net income halved to P2.74 billion in the 3rd quarter of the year, weighed down by the expenses from the P69.1-billion deal to buy out the telecommunications business of San Miguel Corporation (SMC).
The Ayala-led telco announced that it saw its net income after tax dropping by 50% to P2.74 billion in the July to September period, from P5.43 billion in the same period in 2015. (READ: Globe wish list for Duterte: submarine cables, less red tape)
"There are a couple of reasons for this: the higher non-operating charges and depreciation because of a larger network. Every year, you see depreciation goes up, as we build more infrastructure that we put into service. The other is the cost related to SMC transaction," Globe president and CEO Ernest Cu said in a media briefing in Taguig City on Monday, November 7.
It was in May this year when Globe and PLDT Incorporated acquired for P69.1 billion the telecommunications business of SMC – the company which was supposed to launch a 3rd major player this year.
"We [are experiencing] the effects of the losses that we shared with PLDT (Incorporated). That is now affecting [us]," Cu added.
Through the transaction, Globe and PLDT will each acquire half of all equity interest of SMC's telecommunications business.
Meanwhile, Globe's gross revenues for the 3rd quarter remain unchanged at P30.85 billion; while its gross expenses increased by 12.6% to P26.54 billion from a year ago's P23.57 billion.
"If you remove the one-time items, which is the impact of San Miguel [buyout], net income would only have gone down by 2% year-on-year," Cu said.
Its quarterly financial performance weighed down on its year-on-year performance.
Globe's net income after tax slid by 17% to P11.7 billion in January to September from that of the same period a year ago.
Still on track
"Notwithstanding the serious turn in the level of competition, we are happy that the company's overall financial results remained strong and still on track with our guidance for the year," Cu told reporters.
For 2016, Globe expects its net income to grow by 7% to 9%, seeing uptake in data-related services continuously offsetting decline in traditional voice and SMS revenue. (READ: Globe spends, makes money on mobile data phenomenon)
Rizza Maniego-Eala, the telco's chief finance officer, said the company is "on track" to meet its target.
Globe's mobile revenues slightly grew by 1% year-on-year, reaching P68.3 billion for the first 9 months of the year, from the P67.5 billion reported a year ago, given the continued shift towards a digital lifestyle from the core services of voice and SMS. – Rappler.com