Globe sees growth in service revenues this year, regains business momentum

Globe is looking at a low-to-mid single-digit growth in service revenues this year after allocating a record P70 billion for capital expenditures.

The country’s largest mobile network operator is optimistic about regaining momentum as it sees the Philippine economy recovering from the pandemic-induced recession last year.

“The company believes that the relevant product platforms in place, coupled with the aggressive investments made in the network, would allow revenues to increase by low-to-mid single-digit from 2020 level,” said Rizza Maniego-Eala, Globe’s Chief Finance Officer.

The Philippines slipped into recession with a record gross domestic product (GDP) contraction of 9.5% last year as the economy stalled when the government imposed the longest and strictest community quarantines in the world as early as March last year.

The slowdown eased with the GDP contraction of 11.4% in the third quarter and 8.3% in the fourth quarter as the economy was partially reopened when the National Capital Region (NCR) shifted to general community quarantine starting June.

“Although the COVID-19 pandemic has negatively affected the business, we are optimistic about regaining the momentum we have lost as the economy continues to recover,” Maniego-Eala added.

Globe’s consolidated service revenue stood at P146.4 billion despite the impact of the global health crisis across all businesses except for Home broadband.

The Ayala-led listed company booked a net income of P18.6 billion in 2020 and an EBITDA (earnings before interest, taxes, depreciation, and amortization) margin of 50%. Globe believes it will be able to control its expenses and keep margins above the 50% threshold in 2021.

“EBITDA margin is expected to remain in the low 50s, as margins will be continuously impacted by the increasing contribution of lower-margin data-related products, but offset with efforts in managing costs,” Eala said.

EBITDA is a measure of a company’s overall financial performance used as an alternative to net income.

This year’s capital expenditures budget is 16% higher than last year’s P60.3-billion allocation and will be used for continued network expansion and enhancement, with increased allocation for the rollout of the fiber network and 5G footprints.

“In 2021 we have earmarked another record-level cash capital expenditure of about P70 billion, to provide our customers with superior network performance and quality of service as we aim to deliver first-world internet connectivity for every Filipino,” said Ernest L. Cu, Globe’s President and CEO.

As an enabler of the digital economy, Cu pointed out Globe is fully committed to provide digital solutions to help more Filipinos adapt to an unfamiliar lifestyle due to the pandemic.

“We remain optimistic that our strategy to focus on fulfilling the needs of our customers, backed by our resilient and improved network, will drive our performance moving forward,” Cu said.

Globe is accelerating its cell site builds and upgrading existing sites with 4G/LTE and 5G technology as well as fast-tracking fiber rollout to the home with the recent support of the Anti Red Tape Authority and Bayanihan 2 Act to speed up the permitting processes for infrastructure builds.