GLOBE ANNOUNCES 3rd QUARTER/9M 2021 RESULTS:
ALL-TIME HIGH CAPEX OF ₱65.4 BILLION AS NETWORK BUILD MOMENTUM CONTINUES
GLOBE RECOGNIZED IN ALL THE COVETED CATEGORIES IN OPENSIGNAL’S 5G GLOBAL IMPACT AWARDS FOR 2021
GLOBE MAINTAINS MOBILE CONSISTENCY SCORE IN NCR, AT PAR WITH GLOBAL BENCHMARKS
REVENUE MOMENTUM ON TRACK AT ₱113.6 BILLION, UP 4% YoY; NIAT OF ₱18.0 BILLION, UP 13% YoY
RECORD HOME BROADBAND REVENUES AT ₱22.4 BILLION, UP 15% YoY
ACCELERATED FIBER ROLLOUT BEARS FRUIT IN INCREASED TAKE UP OF FTTH WITH FIBER SUBSCRIBERS AND REVENUES NOW UP 240% YoY AND 169% YoY
Amidst its relentless campaign to deliver first-world connectivity to Filipinos, Globe sustained the momentum in its network build reaching a total of 1,080 new cell sites, and upgraded at least 12.9 thousand sites including both 4G LTE and 5G for the first nine months of 2021.
Aside from these, Globe completed 73 in-building solutions or IBS to provide quality indoor coverage to customers for better mobile signals.
On the fixed line front, Globe installed over one million fiber-to-the-home lines, which already surpassed this year’s full-year target. Continuing on this pace, Globe is expecting to roll out 1.4 million FTTH lines by year-end.
The Company’s efforts to improve the country’s state of connectivity utilizing 4G LTE, 5G and fiber technologies are paying off, as evidenced by the recent report of Ookla® which showed that Globe was able to maintain a mobile consistency score of 81.99% in the National Capital Region and 76% nationwide making it at par with global benchmarks such as, T-Mobile in the United States with 84.8 percent; Videotron in Canada with 87.4 percent; Telekom in Germany with 90.1 percent.
Globe’s network rollout since January of 2021 have resulted in another record level capital expenditure amounting to ₱65.4 billion, already surpassing last year’s full year investment of ₱60.3 billion. This CAPEX spending represents 58% of gross service revenues and 115% of EBITDA. Majority or about 84% of the CAPEX spent this period went to data network builds to help boost mobile and internet experiences for a greater number of Filipinos. Globe is fully committed to support 10 of the United Nations Sustainable Development Goals, such as UNSDG No. 9 highlighting the roles of infrastructure and innovation as crucial drivers of economic growth and development.
Furthermore, Globe has consistently been at the forefront in bringing innovation and new technologies with its leadership in mobile data, content, 3G, 4G LTE, and now with 5G technology.
Due to Globe’s unceasing network expansion, its 5G outdoor coverage in the National Capital Region has now reached 95% and is already present in over 1,900 locations in the country as of end-September this year. Likewise, Globe is helping migrate its customers to 5G-enabled devices and offering free SIM 4G LTE/5G, so customers can experience the power of the new technology.
Strengthening its status as the pioneer in 5G supremacy in the Philippines, Globe was recently recognized in Opensignal’s 5G Global Impact awards[3]for 2021, winning awards in all categories: No. 1 in the Games Experience category with a whopping uplift of 65.2% over 4G vs. 8.2% global average improvement; No. 2 in Video Experience, with its users reporting a better streaming experience of 32.8% with 5G vs. 8.8% global average improvement; and, One of the top 10 operators globally for both Download (improvement of 774.4%) and Upload Speed (improvement of 200.7%).
Financial Highlights: Home Broadband and Corporate Data business sustained its revenue recovery
Against the backdrop of the significant economic and public mobility challenges amidst the COVID-19 crisis, Globe closed the first nine month of the year with a robust consolidated service revenues of ₱113.6 billion, beating last year’s revenues by 4% and 3% higher than the same period of 2019 which was pre pandemic.
This quarter’s service revenues of ₱38.1 billion is the second highest in Globe’s history, breaching the ₱38 billion quarterly revenue level since the fourth quarter of 2019. The rising data consumption and broadband usage in the country remains the biggest driver for this period’s improved topline. Total data revenues accounted for 80% of total service revenues from 76% last year.
Mobile business remained stable growing by 1% year-on-year, mostly fueled by higher prepaid top ups given the consumer’s heightened need to maintain connectivity. This revenue improvement was also achieved despite the fact that Metro Manila was placed again under hard lockdown last August to curb the spread of the highly transmissible Delta variant. Total mobile revenues comprised 69% of the total service revenues, with total mobile subscriber base now reaching 84 million, or up 7% year-on-year.
From a product perspective, mobile data revenues posted ₱57.9 billion for the first nine months of the year from ₱53.7 billion reported a year ago. Mobile data now accounts for 74% of mobile revenues from 69% in the first nine months of 2020.
The increased reliance of the Filipinos on connectivity and digital services resulted in mobile data traffic to surge to 2,730 petabytes from 1,762 petabytes in the same period of 2020, which translated to a strong year-on-year growth of 55%. Meanwhile, mobile voice and mobile SMS revenues ended at ₱13.3 billion and ₱7.2 billion, lower year-on-year by 14% and 17%, respectively.
Home Broadband business benefited from the growing demand for high-speed, reliable and affordable internet connectivity. As of end-September 2021, Home broadband revenues posted a record ₱22.4 billion, exceeding the same period of 2020 by 15%. The accelerated fiber rollout already yielded positive results with the increased take up of FTTH lines of 240% and fiber revenues growing by 169% compared to a year ago. Compared to the same period of 2019 or before the COVID-19 outbreak, Home broadband revenues likewise grew by 39%.
The sustained stellar performance of Home Broadband was driven by the accelerated digital habits of the Filipinos brought about by the pandemic. Total Home broadband subscriber base rose from 3.5 million to 3.7 million this period, with the wired broadband customer base growing by 32%. Additionally, HPW data traffic jumped 79% from 352 petabytes in the same period of 2020 to 628 petabytes this period.
Corporate Data business revenues for the first nine months of the year, increased by 11% from ₱9.4 billion as of end-September 2020, mostly coming from domestic services and information and communication technology (ICT). Growth in ICT was largely from cloud and cybersecurity services. Compared to the end of September of 2019, Corporate Data revenues improved by 8%. Fixed line voice, on the other hand, posted a 14% decline versus the year earlier due to lower outbound usage.
Meanwhile, total operating expenses including subsidy reached ₱56.6 billion as of end-September 2021, exceeding last year’s comparable by 7%. Bulk of the increase in expenses came mostly from staff costs, utilities, maintenance, and marketing costs, which was partly offset by lower trade provisions and subsidies. This period’s higher spending was mainly to support its aggressive network upgrades and site builds as well as to improve the customer experience.
Total consolidated EBITDA closed the first nine months of the year at ₱56.9 billion, up by 1% from a year ago due to improvement in the topline. EBITDA margin stood at 50% from 52% a year earlier. Consolidated net income likewise grew by 13% at ₱18.0 billion as of end-September 2021 from ₱15.9 billion in the same period of 2020, as the decline in non-operating charges and taxes fully offset the increase in depreciation expenses. Lower non-operating expenses this period was mainly due to lower equity share in Mynt losses, with its continued improved performance and the upside impact of CREATE law in the Vega group.
The Company’s core net income stood at ₱18.3 billion, up by 17% from ₱15.6 billion reported in the same period of 2020. Globe’s core net income excludes the impact of non-recurring charges, and foreign exchange and mark-to-market charges.
Globe’s balance sheet remained healthy and gearing within bank covenants despite the increase in debt from ₱167.7 billion as of end-December 2020 to ₱207.4 billion this period. Globe’s gross debt to equity is at 2.59x while gross debt to EBITDA is at 2.87x; Net debt to equity ratio is at 2.43x while net debt to EBITDA is 2.69x; and debt service coverage ratio is at 4.32x.
Ernest L. Cu, Globe President and CEO stated: “We are happy to report a resurgent business performance in the third quarter, with the topline now back to pre-pandemic levels, despite the continued economic and public mobility challenges, and competitive industry environment. Buoyed by the success of Mynt’s latest funding round and achieving double unicorn status, we believe that our strategy to use the telco business as a platform to become a digital solutions group by exploring adjacencies in high-growth areas such as fintech, healthtech, AdTech, and e-commerce, among others, will embolden us to launch more potential unicorns in the near term and pave the way for us to become a leader in the digital space. Rest assured that Globe will continue to create new and exciting propositions to reach more customers, as we provide connectivity and solutions to power and enable a robust digital ecosystem for the Filipino.”
Going beyond Telco to help empower the Filipino digital lifestyle:
Globe continues its transformation into a digital solutions group by exploring adjacent businesses, spurred by the rapid consumer digital adoption. One of Globe’s businesses created to leverage the firm’s assets and expertise is GCash, the undisputed leader and preferred mobile wallet in the Philippines.
GCash has over 51 million registered users, 3.9 million digital touchpoints, more than 94,000 cash-in and cash-out agents, and over 750 billers. GCash remains on track to triple its gross transactions handled to ₱3 trillion this year from the record ₱1 trillion reported in 2020. GCash is operated by Mynt, the lone Philippine startup in Credit Suisse’s Southeast Asia 35 Unicorns list.
Other portfolio companies under Globe’s corporate builder 917Ventures include telehealth service platforms KonsultaMD and HealthNow, a digital and mobile marketing solutions firm. KonsultaMD and HealthNow both reported significant growth in consultations.
Healthnow is also leading the COVID Vaccination Program for the Ayala Group and its partners. 917Ventures also has adtech company AdSpark, loyalty, and e-commerce solutions provider RUSH, and online grocery shopping platform PureGo. PureGo has been quickly expanding its reach and is now available in all cities in NCR, Cavite, Bulacan and Rizal. Its monthly recurring revenues (MRR) now posted 50x growth since January this year with successful orders also increasing by 33% week-on-week.
Additionally, Globe continues to scale up its information technology solutions and services through the multi-payment platform Electronic Commerce Payments Inc. (ECPay) that aims to onboard 70,000 general trade retailers by end 2021. Globe’s corporate venture capital arm, Kickstart Ventures, on the other hand, now has $240 million aggregate assets under management from a mere $2.4 million in 2012, focusing on among others, media, content and advertising, healthtech, and logistics tech.
Commitment to Sustainability:
Globe has shifted to clean energy for 13 corporate offices and key facilities in Metro Manila, Luzon, and Visayas as part of its journey towards decarbonizing its operations and helping address climate change.
The company started buying power from energy companies producing renewable energy in 2019 through Retail Electricity Suppliers (RES). Since then, it has increased the number of key facilities operating on clean energy.
By purchasing renewable energy from RES, Globe aims to encourage more investments towards clean energy in support of the Philippines’ commitment to the Paris Agreement through the Nationally Determined Contribution (NDC) to reduce carbon emissions by 75 percent in 2030.
Globe actively pursues various environmental sustainability initiatives under its climate strategy primarily to make substantial contributions to the UN Sustainable Development Goals and to the #RaceToZero campaign target of carbon neutrality by 2050. Earlier this year, Globe expressed support to the Task Force on Climate Related Financial Disclosure (TCFD) which will be the foundation of its climate action strategy.
This will help mitigate the impact of climate change by having a science-based and data-backed report. Globe is also the first and only Philippine company listed in the Science-Based Target initiative (SBTi), committing to set science-based emissions reduction targets that are consistent with keeping global warming to 1.5°C above pre-industrial levels.
In addition, to help address concerns over informal e-waste processing and its associated risks to the people and environment, Globe joined a multi-stakeholder partnership that will put up the country’s second community e-waste Treatment, Storage, and Disposal (TSD) facility in Barangay Dampalit, Malabon City.
The facility is expected to be inaugurated by late November 2021 and will start operations immediately after necessary technical training is completed. Barangay Dampalit was selected as the new TSD site and the local e-waste pickers, led by their association—Samahan ng Magbabaklas, will be trained on proper handling and dismantling of e-waste to discourage unconventional and harmful means of recycling. Globe is providing fund support to construct the TSD facility.
The company will also provide bins for additional e-waste drop-off points, facilitate the safe transport of non-CRT e-waste items to the DENR-accredited recycling facilities, co-develop communications and creative materials, and introduce affordable financial and health services such as GCash, G-Insure, and KonsultaMD to identified informal e-waste pickers in Barangay Dampalit, Malabon City. Globe’s involvement in the TSD project is part of the company’s E Waste Zero Program, which actively promotes the safe and responsible disposal of e-waste since 2014.
To date, Globe has collected more than 1.4 million kilograms of old and non-working electronic devices from its corporate offices and key facilities, customers, and partners.
The company strongly supports the United Nations Sustainable Development Goals, particularly UN SDG No. 13, which is to take urgent action to combat climate change and its impacts, UN SDG No. 12 for sustainable consumption and production about achieving economic growth and sustainable development by urgently reducing our ecological footprint, and UN SDG No. 17 that highlights global partnerships for the goals. Globe is committed to upholding the United Nations Global Compact principles and contributing to 10 UN SDGs.
Globe’s Business Operations and Commitment to Service Amid COVID-19:
As of October 2021, 97% of Globe’s strong workforce are now fully vaccinated through the combined efforts of the Ayala Group and support from various Local Government Units (LGUs), with their dependents already receiving inoculations beginning August 2021.
This ensures the safety of the Globe family amid the rising number of COVID-19 cases caused by the virulent Delta variant. The Globe vaccination program reinforces Globe’s support for the government’s intensified national vaccination rollout to reach herd immunity and help the country’s economic recovery.
As the country goes full-throttle in its efforts to roll out COVID-19 vaccinations, LGUs have turned to Globe for SMS solutions that would help them quickly, easily, and securely send out official text alerts and announcements for their respective vaccination programs.
The city governments of Navotas, Bacoor, and Cabanatuan have harnessed the power of SMS API, a text messaging solution from Globe Labs, that allows them to send targeted vaccination announcements to their constituents.
Meanwhile, the LGUs of Cebu City, Mandaluyong City, and Daraga in Albay have partnered with Globe for its Automated Mobile Blaster (AMBER) services to disseminate vaccination program alerts to more people in their areas. The city governments of Cauayan in Isabela, and Las Piñas have also opted for AMBER to communicate their public announcements to their constituents.
Another milestone in innovation for Globe is the launch of two digital stores called “Globe Shop & Pay” during the quarter. This aims to create a better experience for Filipinos looking for safe and convenient ways to make transactions in the new normal.
Globe Shop & Pay innovative features and life-enabling solutions combine digital and brick-and-mortar experiences for more convenient access to Globe’s products and services. Through its digital displays, customers can shop, pay, explore, and even access information on how to request customer service support in Globe’s mobile platforms.
For recent updates on how Globe is responding to COVID-19, the general public may access the Globe website via this link: https://www.globe.com.ph and the Globe #StayAtHome page via this link: https://www.globe.com.ph/stay-safe-at-home.html.
Recent Developments:
Asticom Technology Inc., a shared services company wholly owned by Globe, launched a second subsidiary that aims to help telecommunications providers accelerate their fiber rollouts nationwide.
Fiber Infrastructure and Network Services Inc. (FINSI) is the latest addition to the Asticom Group. The company operates with a license from the Philippine Contractors Accreditation Board and will provide end-to-end services and industry-specific solutions to telco companies, towers, and infrastructure and technology, including construction, building, installation, and maintenance services.
On November 2, 2021, Globe Telecom successfully issued US$600 million senior perpetual capital securities with an initial distribution rate of 4.20% payable semi-annually and callable on or after August 2, 2026.
The distribution rate is subject to a step up on the fifth year anniversary and shall be recalculated every five years thereafter. The Perpetual Capital security shall account for as an equity instrument. On November 3, 2021, the capital securities were listed in Singapore Exchange Securities Trading Limited.
Mynt, the Philippines’ #1 digital financial solutions provider and the company behind the popular GCash payment services app, raised over $300 million in funding at a valuation of over $2 billion last November 2, 2021.
This solidifies its status as the Philippines’ only unicorn, and one of the leading fintech companies in Southeast Asia. The investment round was led by global investment giant Warburg Pincus, New York-based global private equity and venture capital firm Insight Partners, and Bow Wave Capital, one of Mynt’s existing investors.
The round also includes participation from Itai Tsiddon and Amplo as well as capital from Globe and Ayala. With the entry of Mynt’s new international investors, the company is joining an eminent league of world-class companies that are redefining the global technology and innovation landscape. (Globe) -rir
