Globe Q2 revenue down 9% as profits slump 26%; cuts CAPEX to PHP503bn citing rollout delays

4 Aug 2020

In a filing to the Philippine Stock Exchange, Ayala Corp-led Globe Telecom reported that operating revenues for the second quarter of the year fell 9% to PHP37.623 billion (USD766.3 million) from PHP41.191 billion in 2Q19, as EBITDA declined 13% to PHP17.912 billion – with an EBITDA margin of 50% (down six percentage points year-on-year) – and net income slumped 26% to PHP4.900 billion. The telco said its falling turnover and profit was attributable in large part to ‘the impact of enhanced community quarantine [ECQ] and modified ECQ [MECQ] to Globe’s business operations’, which it noted had led to a 3% fall in consolidated operating revenues in 1H20, down to PHP78,814 billion from PHP81.521 billion in 1H19.

As strict lockdown measures to contain COVID-19 weighed heavily on its businesses, Globe reported that in April-June 2020, mobile service revenues dropped 7% y-o-y to PHP25.039 billion as its Corporate Data (down 9%), Fixed Line Voice (down 13%) Other (down 41%) business segments all saw declines, leaving only its Home Broadband service – up 16% to PHP6.733 billion – to buck the trend. The telco’s broadband division reported more than 2.867 million broadband subscribers at 30 June 2020, up 58% on an annualised basis, driven mainly by the sustained increase of fixed-wireless broadband users to 2.189 million. Meanwhile, mobile subscriptions had fallen by a net 10% y-o-y to 80.172 million, including 2.671 million post-paid accounts generating ARPU of PHP815 per month (down 5% quarter-on-quarter), with a churn rate of 1.1%, compared to 1.4% previously. Pre-paid ARPU for its ‘Globe Prepaid’ brand dipped 2% to PHP90, although ‘TM’ ARPU edged up 2% q-o-q to PHP60 from PHP57 in 1Q20.

Globe says it has decided to trim its CAPEX target to PHP50.3 billion in FY 2020, down from the original guidance of PHP63.0 billion, due to delays in the rollout – although the main focus will continue to be on its 4G LTE deployment programme. The carrier has invested PHP20.9 billion in its networks and services since the start of this year, 10% higher than last year and representing 29% of gross service revenues and 54% of EBITDA, it said. The bulk of the CAPEX spend (76%) went to data-related requirements, with Globe engineers reportedly having already ‘pushed for the expansion of its 5G coverage in key areas in the metro, specifically in the Makati and Bonifacio Global City Central Business Districts (CBDs) despite limitations brought about by the community quarantine and physical distancing restrictions’.

Commenting on the group’s performance, Globe president and CEO Ernest Cu said: ‘Globe’s network has withstood and continues to prove its resilience during this COVID-19 pandemic … While we expect revenues for full year 2020 to decline by low single digit against last year, given the impact of community quarantine restrictions, we do see growth opportunities on the home broadband front and ICT space. Higher demand for internet connectivity and cloud solutions are expected as companies have been forced to embrace remote working for employees and to fast-track their digitalisation efforts. Mobile data and digital solutions will also increase traction with more customers adopting a digital lifestyle in the new normal.’

Philippines, Globe Telecom (incl. Innove)