Corporate News

Globe bolsters broadband unit amid growing competition

Posted on April 13, 2011

GLOBE TELECOM, Inc. is gearing up for growing competition in the broadband Internet business, a segment in which its rivals have been teaming up to consolidate resources.

The telecommunication unit of Ayala Corp. has allocated more than a third of its 2011 capital expenditure to bolster its broadband services which consumers have tapped to complement the usual voice and text channels, its top official said at a press briefing after the annual stockholders’ meeting.

“We all know the trend is toward more use of broadband,” Globe Chief Executive Ernest L. Cu said.

“Very large enterprise customers to small and medium enterprises [are using this service]. This group has shown double-digit growth, that momentum is being carried this year,” Mr. Cu said.

The company said it has allocated $180 million of its $500-million capital expenditure for the year for the broadband business.

This comes after the Philippine Long Distance Telephone Co. (PLDT) earlier said it was likewise seeing an opportunity in the mobile broadband business after announcing that it will acquire a 51.55% controlling stake in Sun Cellular operator Digital Telecommunications Philippines, Inc. before July this year.

PLDT had said it will use the “combined networks of PLDT, Smart and Sun” to expand the reach of its mobile broadband services and also to “enhance capacity and expand broadband and 3G coverage for Sun Cellular.”

The competition in this segment was attributed to the changing profile of consumers who are “now using other channels to communicate,” Mr. Cu said.

Aside from the capital expenditure allotment for the broadband business, Globe Telecom will also be working to secure more bandwidth from the government, Mr. Cu said.

“Globe is the only other telecommunication company qualified for the remaining 3G slot of the government,” he claimed.

The company, in a disclosure filed yesterday with the local bourse, went on to report that the Southeast Asia-Japan cable consortium, which is currently building a submarine cable system expected to finish by 2013, will help boost the infrastructure needed to service broadband consumers.

Globe Telecom will also be looking to grow the segment serving businesses and also rolling out province-specific marketing campaigns to further support growth targets, Mr. Cu added.

Mr. Cu said such “regionalized offers” will give the company momentum.

“The market is matured but there is incredible diversity in promos in areas and carriers are taking advantage of that,” Globe advisor for the consumer facing unit Peter Bithos for his part said.

“We will go down to town levels and regions than broad strokes,” Mr. Bithos said.

For 2010, Globe’s net income fell 23% to P9.7 billion from P12.6 billion due to the “hyper competitive industry.”

Globe claims its subscriber base for broadband reached one million customers in 2010 while its mobile subscribers numbered 26.5 million.

Shares in Globe closed yesterday at P840, down 0.06% from its previous close of P840.50 apiece. -- Emilia Narni J. David