Data products propels Globe towards P16B net income in 2016

Chris Schnabel
Data products propels Globe towards P16B net income in 2016
Mobile data now the telcos biggest contributor to total mobile revenues at 38% compared to 37% for voice

MANILA, Philippines – Globe Telecom plans to focus on consolidating its data services, which pushed the firm to hit a record net income of P16 billion for the full-year 2016.

Mobile data is now the telco’s biggest contributor to total mobile revenues at 38% compared to 37% for voice. Mobile data service revenues in turn hit P36.6 billion in 2016, a jump of 25% compared to the P27.7 billion recorded in 2015.

“Notwithstanding 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 (earnings before interest, taxes, depreciation, and amortization),” said Globe chief executive officer Ernest Cu in a press briefing on Wednesday, February 8, at the company’s headquarters in Bonifacio Global City.

Globe closed 2016 with a record high net consolidated service revenue of close to P120 billion, outpacing the previous record of P113.7 billion set in 2015.

That revenue drove 2016 net income, which excludes non-recurring charges and foreign exchange and market to market charges, to rise by 6% compared to the P15.1 billion seen in 2015. The firm ended the year with EBITDA of close to P50 billion, which was also up 9% from 2015.

In 2016, Globe also finally overtook PLDT in terms of mobile subscribers, according to telco trade group GSM Association, whose research arm found that Globe had 66.6 million subscribers at the end of 2016 compared to 62.1 million for PLDT’s Smart Communications.

Globe’s own official figure puts its mobile subscriber base at 62.8 million in 2016, up 12% from the 56.2 million subscribers in 2015. While PLDT has not yet released its own official year-end figures, its chairman Manuel V. Pangilinan conceded last month that Globe may now have the upper hand.

Despite the milestone, Cu said Globe is much more focused on revenue.

“We focus actually less on subscriber count than we do with revenues. Leadership in mobile subscribers really means nothing if you don’t produce the revenues associated with the subscribers. That’s been a Globe philosophy since 2009,” he said.

“In Q3, revenue numbers were certainly close to 50-50 (with Smart) so given the results we see today, it’s possible our Q4 [revenues] have exceeded their Q4 revenues. So for us, there’s really no change in the way we do things,” he added.

Data-driven

Cu pointed out that the revenue momentum was driven mainly by the solid growth of data-related products across all segments.

Mobile revenues were up 1% to P91.9 billion from P91.2 billion in 2015 due to the continued growth of the firm’s mass market brand TM, which grew by 3%, and Globe postpaid, which grew by 1% year-on-year.

Mobile data traffic also grew 44% to 361 Petabytes (PB) compared to the 252 in 2015. Globe subscribers’ smartphone penetration hit 62% at the end of the year.

These, however, were partly offset by a decline in Globe prepaid which went down 1% year-on-year.

The firm’s broadband business also saw year-on-year growth of 28%, hitting P14.5 billion with total subscribers now at 1.13 million. Its corporate data business likewise improved by 28% year-on-year, bringing in revenue of P9.9 billion compared to the P7.7 billion in 2015.

Focus on video streaming

Having established a strong digital presence, Cu said Globe will focus on consolidating its position for 2017.

“For us now, it’s about the video viewing habit of the people. We do think that home internet users are going to switch massively to viewing video on demand or streaming services like Netflix and we certainly have a great portfolio that allows them to do that,” he said.

“This puts us in direct competition with pay-TV companies but one advantage we have is that we have no legacy pay-TV service on our portfolio to cannibalize from. We just go straight and head on to the next habit that’s forming among Filipinos, which is watching video through streaming services.”

Globe signed deals with 6 content providers in 2016, including streaming giant Netflix and Astro, the largest pay-TV content group in Malaysia.

For 2017, Globe expects the market to remain highly competitive given the continued shift of customer lifestyle and usage to the digital world.

“Against this environment, we believe the current revenue momentum we have built, coupled with aggressive investments in the Globe network and firm’s lifestyle bundles will allow our revenues to increase in the mid-single digit levels in 2017,” Cu said.

He added that EBITDA margins are expected to remain at around 40%, as margins will be continually impacted by growth in the postpaid business and increasing contribution of data-related products as well as efforts to manage costs.

Globe expects to spend around $750 million in capital expenditures this year, mostly on data-related services including investments for LTE mobile and LTE at home deployment, higher network capacity and coverage, as well as modernization of fixed line and transmission facilities. – Rappler.com

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