The mobile business thrived against the challenges posted by competition, notwithstanding peaking penetration levels driven in part by multi-SIM usage and subscribers’ preference for services offering the best value for their money. This period’s mobile revenue growth is a testament to the strength of the brands that Globe has built over the past years and a result of the investments made in pioneering customizable services, improving the retail experience with the Globe concept stores, and introducing barrier-breaking product and service innovations which altogether revolutionized the industry. Cumulative mobile subscribers stood at 31.7 million as of end-June, up 12% from the same period last year.
Growth in broadband revenues, on the other hand, is driven by rising internet usage stemming from the popularity of social networking sites, the Filipinos’ constant need to communicate and be connected with loved ones who may be abroad, and the increasing affordability of access devices such as PCs, tablets and laptops. Tattoo-On-The-Go products continue to comprise bulk of quarterly acquisitions which led to the overall growth in broadband subscriber base to 1.6 million at the end of the first half of the year, higher by 22% from 1.3 million in the same period last year.
On a sequential basis, second quarter service revenues reached an all-time high of P20.5 billion, led by the record top line performance of the mobile business despite the step-up in competition during the period, coupled with broad-based growth from the fixed line and broadband business.
Consolidated EBITDA was down 2% year-on-year from P18.0 billion to about P17.7 billion as the Company continued to re-invest in marketing and subsidy to acquire new and re-contract open postpaid subscribers as well as defend its market position through brand-building initiatives and various product and service launches. This period’s expenses also include sustained investments and maintenance costs for Globe’s existing network infrastructure and incremental charges for the bigger network modernization and IT transformation program. These brought EBITDA margin down to 43% this period from 47% in the same six-month period last year. Coupled with higher depreciation charges resulting from ongoing modernization efforts, net income after tax was down 10% from last year’s P5.5 billion to P5.0 billion in the first half of the year. Excluding foreign exchange and mark-to-market gains and losses as well as non-recurring items, however, core net income was up 2% year-on-year from P5.6 billion to P5.7 billion.
Against last quarter, consolidated EBITDA improved by 4% to close the second quarter with P9.0 billion driven by a percentage increase in consolidated service revenues and a corresponding decline in total operating expenses and subsidy. Depreciation expenses in the second quarter, however, substantially increased with the ongoing network change-out. As a result, net income after tax declined by 16% quarter-on-quarter from P2.7 billion to P2.3 billion. Excluding non-recurring items such as the accelerated depreciation charges related to network upgrades, as well as foreign exchange and mark-to-market gains and losses, core net income in the second quarter rose 7% from P2.7 billion last quarter to P2.9 billion.
"We are very satisfied with our performance this period, allowing us to further extend our growth momentum for another quarter. This was achieved despite the challenges posed by competition that is beginning to leverage its scale advantages of having a bigger combined subscriber base and network. Also, the market’s preference for value offers continues to increase, putting more pressure on yields in our mobile business. Plus our existing network has to contend with emerging capacity constraints caused by the increased volume of voice and data traffic. Nevertheless, we remain focused on our strategy blueprint and were able to extend our gains in key business segments,” Ernest L. Cu, President and CEO of Globe Telecom, Inc. said. "We hope to build further on this momentum as we head into the second half of the year. While we expect competitive and market pressures to persist and even intensify, we believe that as we exert greater efforts to accelerate the completion of our network change-out and IT transformation initiatives, we will be in a better position to sustain these gains and adapt to this fast-evolving market,” added Mr. Cu.
To keep its momentum going and deliver on its promise of creating the happiest customers, Globe solidified its position in the mobile, broadband, and international business units by constantly reinventing itself through various marketing and promotional initiatives, enhancing our distribution channels with the introduction of mobile stores, and the seamless change-out of its networks to improve service quality.
Globe boosted its postpaid business with the introduction of gadgets that would further complement its game-changing customizable plans. Launched in the second quarter were the latest and sophisticated devices from leading manufacturers such as the Nokia Lumia 800, BlackBerry® Curve 9220 and BlackBerry® Curve 9320 that all perform best with Globe’s Unli Surf Combo Plans. As a follow on offer to the Apple™ iPhone 4S, Globe capped off the period with the successful launch of the much-awaited Samsung Galaxy S III. For the past two years, Globe has leveraged on the success of its pioneering personalized services where subscribers have the flexibility to design their plans by choosing the best possible mix of voice, SMS and browsing services that they need, change them as often as monthly and pay a monthly fee that best fits their budgets. With Globe’s My Super Plans, subscribers are able to choose the smartphones that suit their lifestyles and get them either for free or just a minimal cash out. All these enabled the Company to defy market expectations and grow the business to achieve record breaking revenues for the past several quarters.
In order to raise awareness on mobile data consumption, educate subscribers on browsing activities, and to ultimately provide the best value for money mobile internet packages, Globe pushed its PowerSurf Megabytes data plans which effectively segment subscribers according to data usage profiles. Available to Globe Postpaid and Globe Prepaid subscribers, PowerSurf Megabytes offers plans that range from as low as 20MB for P15 a day to 1 GB for P499 for 30 days. PowerSurf Megabytes lets subscribers determine their average data consumption and choose only the number of megabytes that suit their mobile internet lifestyle.
In the second quarter, Globe also launched a promo that gives subscribers free access to Twitter. To avail of the service, Globe Prepaid and TM subscribers just need to register FREE TWITTER to 8888 and wait for an SMS confirmation to be redirected to mobile.twitter.com. To ensure successful registration, subscribers must have a minimum P1 maintaining balance. During the period, TM also launched the *143# service for its subscribers. Previously available to Globe subscribers only, the self-service menu now enables TM subscribers to register to their favorite call and text promos, purchase ringtones, download music, and access the latest TM services by simply dialing *143# on their mobile phones.
The Company’s broadband business likewise continued to deliver on its value proposition by combining the services from the mobile Globe Postpaid brand and Tattoo Postpaid broadband. Launched in the second period, My Ultimate Super Plan is a bundled offer that provides subscribers calls, texts, mobile browsing, and broadband surfing under one plan for as low as P999 a month. Each plan comes with a free handset and a free Tattoo SuperStick, which enables Wi-Fi sharing up to five other devices at the same time. With just a single account, subscribers get the most value for their money compared to subscribing separately to Globe Postpaid and Tattoo Postpaid. During the period, the Company also launched Tattoo University-Sticks (U-Stick) in time for the start of the school season. Available in either Tattoo 3G Stick or Tattoo 4G SuperStick, each device comes with one-year free unlimited access to the subscriber’s school website, Yahoo! Mail, Google Mail as well as free 10-day unlimited access to Facebook and Twitter. In addition, the Tattoo U-Stick offers a special surfing rate of P25 for 3 hours valid for one day and a 2GB micro-SD card that will enable the dual functionality of the Tattoo U-Stick as a mobile broadband stick and a USB device.
To extend further the reach of its international services, Globe together with SingTel introduced a new product geared for overseas Filipinos. Launched in Singapore, the new 3G Kababayan Prepaid Mobile SIM gives overseas callers to Globe and TM subscribers in the Philippines more value and savings through special rates on calls and SMS to Globe and TM subscribers at SGD 0.16 per minute and SGD 0.05 per SMS, respectively. Starting last July, the 3G Kababayan Prepaid Mobile SIM also comes with a special promo rate of only SGD 0.08 per minute of voice call on weekends – the lowest price offered by any mobile service today. The 3G Kababayan Prepaid Mobile SIM also comes with free 5 MB of data and free incoming calls with every SGD 10 or SGD 20 top-up.
Globe has also re-launched one of its top-selling international call services and what used to be Super US Direct to Globe Duo International. Similar to the breakthrough 2-in-1 mobile and landline service Duo and SuperDuo, Globe Duo International provides subscribers with a virtual US landline number which they can use to call their loved ones in the USA. Correspondingly, family and friends from the USA may call their relatives back in the Philippines and be charged at domestic US rates only. The same also goes for loved ones who may be in Europe and Canada where they will be charged with IDD rates to a US number for every call made to their families in the Philippines.
Picking up from the success of the revitalized Globe Stores, the Company is again innovating and revolutionizing the sector with the launch of its deployable Pop-Up Stores. With store functions similar to a Globe concept store, the pop-up store carries the modern feel and features that offer a more interactive experience for subscribers. The pop-up store houses an extensive product display that showcases the latest gadgets and devices that Globe has to offer. It is also mobile and can be caravanned anywhere nationwide allowing more areas and customers to reach and experience the products of Globe.
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