6 Feb 2013
Filipino telecoms operator Globe Telecom said net profit slumped 30% to PHP6.857 billion (USD169.2 million) last year, from PHP9.832 billion in FY2011, as the costs related to its network modernisation programme outstripped gains in revenue. Nonetheless, Ayala-backed Globe reported core net income of PHP10.275 billion in 2012, 2% higher than the PHP10.030 billion figure reported in the previous year. Service revenues rose 6% year-on-year to PHP82.742 billion, from PHP77.765 billion a year earlier, and operating costs rose 12% to PHP47.732 billion, from PHP42.661 billion previously.
Globe Telecom said that mobile continues to be the key revenue generator for the group, accounting for PHP67.189 billion of total sales, and up 6% from PHP63.538 billion a year ago. The operator closed out the year with a total of 33.119 million mobile subscribers, up 10% from 30,040 million at end-2011. Meanwhile, earnings derived from broadband activities increased by 16% to PHP8.721 billion, while profits from fixed line data rose to PHP4.167 billion. However, fixed line voice (landline) revenues dipped 9% to P2.665 billion.
In fiscal 2013, Globe Telecom says it intends to raise up to USD350 million from the domestic market to help finance its planned USD500 million CAPEX for the year. In a press briefing, the group’s CFO Albert de Larrazabal told reporters that a number of investments banks have already presented Globe with a range of alternatives, including the issuance of retail treasury bonds. Globe, the Philippine’s second largest telecoms company by revenue, initially aims to raise around USD200 million by Q1 2013 and borrow the balance later this year.
In a separate development, Globe this week said it sees no ‘regulatory roadblocks’ should it pursue its plan to purchase fellow operator – Lopez-led Bayan Telecommunications Inc. Globe president and CEO Ernest L Cu told journalists that as the amalgamation of the two ‘doesn’t create a monopolistic type of structure’, it is unlikely to face regulatory hurdles.
In January this year Globe bought out cash-strapped Bayan’s debt holders, effectively paving the way for it to make a formal equity investment in Bayan. In a stock market disclosure on 26 December, Globe confirmed that 98.26% of the aggregate ‘remaining principal amount’ of Bayan’s debts – along with 100% of Bayan subsidiary Radio Communications of the Philippines Inc (RCPI) – had been tendered and not withdrawn in the tender offer for the loans on 21 December 2012. The filing read: ‘The overall ‘Acceptance Level’, as such term is defined in the offer documents, is approximately 96.17%. All such tenders have been validated and accepted for purchase by Globe’. Ayala-backed Globe has said that once the debt offer is signed off on, it intends to amend the terms of Bayan’s rehabilitation plan and begin work on drafting a long-term and sustainable path for the Lopez-led company. Bayan has been in rehabilitation since 2003 and is expected to remain so until 2023.