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Unlimited promotion plans drive Globe’s 9M10 net profit down

5 Nov 2010

Globe Telecom, the Philippines’ second largest cellular operator by subscribers, said its decision to offer value-based bucket and unlimited promotions to attract new subscribers adversely affected profits for the first nine months of this year. Globe reported net income for January-September of PHP7.4 billion (USD175 million), down 24% compared with the same period last year, while consolidated service revenues slipped 2% in the same period to PHP45.8 billion. The telco, which also offers fixed line and broadband access, noted a rise in revenues for those two segments but said turnover derived from its core mobile business weakened as a result of a marketing campaign based on bucket plans and promos. In addition, the operator’s operating expenses and subsidies increased as it looked to invest heavily in upgrading its cellular and high speed internet networks, acquire new customers and compete for market share.

Despite the rocky year endured so far, the firm’s president, Ernest Cu, says there are encouraging signs of improvement in the fourth quarter. ‘We have posted four consecutive quarters of growth in our mobile subscriber base, following the clean-up we did last year. Mobile post-paid growth continues to be strong, and this quarter’s post-paid net adds are at a seven-year high, despite a maturing market. Broadband is still a high-growth area and revenues continued to grow at double-digit rates, with our pioneering WiMAX service becoming an increasingly important growth driver,’ Cu said. Globe Telecom closed out September 2010 with 980,000 mobile users on monthly contracts, up 16% year-on-year, while pay-as-you-go SIMs reached 25.4 million.

Philippines, Globe Telecom (incl. Innove)

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