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Globe net income falls by 10% to P8.1B in 1st half of 2017

MANILA, Philippines – The net income of Ayala-led Globe Telecom dropped by 10% in the 1st half of the year, as the effects of its purchase of San Miguel Corporation (SMC) telecommunications assets linger.

In a disclosure to the Philippine Stock Exchange (PSE) on Tuesday, August 8, Globe reported a net income of P8.1 billion for the 1st 6 months of the year, down 10% from the P9 billion in the same period in 2016.

The telco attributed this to the fact that charges related to the SMC transaction were only reflected in its financials starting 3rd quarter of 2016. Excluding the impact of the SMC transaction, Globe noted, net income would have just declined by 4% at P8.7 billion versus the 1st half of 2016.

Globe's core net income, which excludes the impact of non-recurring charges and foreign exchange and mark-to-market charges, also declined by 10% from P8.8 billion a year ago.

Revenues up

On the other hand, Globe's revenues hit a record high, with consolidated service revenues reaching P62.9 billion in the 1st half of 2017, 5% higher than the P59.9 billion reported in the same period in 2016.

Revenues posted record highs for two straight quarters this year, with the 2nd quarter ending at P31.8 billion, higher than the prior quarter's record-level revenues and the same quarter last year by 2% and 6%, respectively.

Mobile revenues stood at P48.3 billion as of end-June 2017, up 5% year-on-year, led by the sustained solid growth in mobile data.

Both Globe Prepaid and TM, the company's mass-market brand, registered 8% revenue growth compared to the same period last year, while Globe Postpaid posted a 1% increase year-on-year.

Globe's mobile subscriber base reached 59.7 million for the 1st semester of the year, down 3% from the 61.3 million subscribers during the same period in 2016.

The decline, Globe explained, was due to a change in reporting of the number of prepaid subscribers.

Beginning the 1st quarter of 2017, the telco excluded from its reporting the prepaid subscribers who do not reload within 90 days of the 2nd expiry period, versus the previous cut-off of 120 days.

Mobile data contributed around 42% of total mobile revenues for the 1st half of 2017, compared to 39% a year ago. Mobile data service revenues reached P20.3 billion as of end-June 2017, or 13% higher than the P18 billion in the same period last year.

Globe said it believes the increase in mobile data revenues is not representative of the true growth of the business, due to the application of certain accounting standards on promotions, especially the free Facebook offer (Facebook Free Basics) which began in 2015 and ended in June for TM and in May of this year for Globe Prepaid.

The promotion mutes the performance of the mobile data business due to the change in the assignment of revenues in the different periods, the telco said.

Globe's home broadband business delivered P7.7 billion in revenues as of end-June 2017, up 8% from the same period last year. The firm now has a total of 1.2 million broadband customers as of the 1st half of 2017, with fixed wireless growing by 22% year-on-year.

Globe's corporate data business registered a 3% increase year-on-year to P5.0 billion as of the 1st half of 2017, from the P4.9 billion posted in the same period in 2016.

Traditional fixed line voice revenues, however, posted a decline of 5% from a year ago.

Globe's consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at P27.3 billion, up 6%. Total operating expenses and subsidy grew by 4% year-on-year to reach P35.6 billion from P34.3 billion, largely coming from higher network-related costs, and subscriber-driven expenses. The EBITDA margin held steady year-on-year at 43%.

Globe has spent around P27.5 billion in capital expenditures as of end-June 2017 to support its growing subscriber base and the demand for data, with 87% of spending geared toward improving data networks. – Rappler.com