Globe reports 35% drop in Q2 profits on higher expenses

4 Aug 2010

Filipino operator Globe Telecom, which is backed by Ayala Corp and Singapore Telecom (SingTel), reported net profits of PHP2.11 billion (USD46.6 million) in the three months ended 30 June 2010, down 35% from PHP3.25 billion in the year-earlier quarter, as higher operating costs combined with a 1.5% fall in services revenues to PHP15.50 billion to impact on its bottom line. The telco said operating expenses and subsidies increased 12% year-on-year to PHP7.17 billion while service revenues dropped as a result of a decision to churn out marginal subscribers.

For the first half of the year, Globe Telecom said net profits dropped nearly 30% to PHP5.06 billion from PHP7.24 billion in the same period in 2009, on the back of a 3% dip in service revenues to PHP30.73 billion; operating expenses and subsidies for the period rose 9% y-o-y to PHP13.75 billion. Core profits, which eliminate the impact of foreign exchange and other unrealised gains (losses), also dropped, to PHP5.2 billion from PHP6.9 billion in H1 2009. Commenting on the results Globe president and CEO Ernest Cu said: ‘Our first half results are reflective of the challenges facing the industry – traffic is growing, but revenues are declining with the market’s increasing preference for unlimited services. Competition is becoming more intense, and will likely further intensify as the market slows.’ Nevertheless, Globe added a net 732,000 in the April-June quarter to close out the period with 24.6 million users (albeit that this figure is down 2% year-on-year). The readjustment of the mobile subscriber base is part of a deliberate policy to churn out low value customers and recalibrate its acquisition targets, it said. Broadband subscribers stood at 930,000 as at 30 June, up 90,000 quarter-on-quarter, and a near three-fold increase from 379,000 in 2Q09. The telco reported a healthy 89% rise in broadband revenues while fixed line data revenues were up 18%, helping to offset a 9% decline in mobile revenues.

Philippines, Globe Telecom (incl. Innove)