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Globe’s Q4 net profits drops sharply on marketing costs; full-year profits, revenue steady

13 Feb 2012

Globe Telecom of the Philippines reported a steep fall in net income for the last three months of 2011 due to higher than expected marketing costs following the merger of its two main rivals Philippine Long Distance Telephone Company (PLDT) and Digital Telecommunications Philippines Inc (Digitel), although full year profits and income were up year-on-year. Globe said its fourth-quarter profits tumbled by 29% to PHP1.85 billion (USD43.6 million) from PHP2.60 billion in Q4 2010 as a result of higher marketing spending ‘to kick off the company’s 2012 sales programmes and to counter the increased marketing push of competition during the period,’ it said. ‘Service costs were also higher in the fourth period on account of the various professional, advisory, and legal fees associated with the network modernization program,’ it added.

However, full year net profit totalled PHP10 billion, up 11% on 2010, which it attributed to an ‘all-time high service revenues from mobile and broadband.’ The group’s broadband business segment posted a 30% increase in revenues to PHP7.5 billion in FY2011, while the mobile business segment rose 8% to PHP54 billion. As of 31 December 2011 Globe’s total broadband subscriber base stood at 1.4 million, up 31% from about 1.1 million in the previous year. Mobile subscribers stood at 30 million up 13% y-o-y from 26.4 million in 2010. The strong results helped to push turnover for the year up by 9% to PHP67.8 billion from PHP62.0 billion previously, although operating expenses increased sharply from PHP29.0 billion to PHP32.7 billion. Globe Telecom plans to spend up to USD800 million in capital expenditures for 2012, an amount which includes spending on the upgrading of its IT system. As part of the CAPEX plan, Globe intends to undertake a PHP15 billion retail bond programme which will provide it with ‘the option to tap the retail market in one or more tranches over the next twelve months.’

Commenting on the results, Ernest Cu, president and chief executive officer of Globe, said: ‘The next two years will be a critical period for Globe as we execute our network modernisation programmes, and as we improve our business support systems and processes, all towards our goal of making customer experience a key differentiator. Our network and lT transformation program is an ambitious and yet necessary undertaking which will provide the platform that will make us even more competitive in this fast-moving market.’

Philippines, Globe Telecom (incl. Innove)

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