Globe hikes capex to P63B

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Globe Telecom
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GLOBE TELECOM, Inc. is raising its capital expenditure (capex) by 45% to P63 billion (about $1.2 billion) this year as it continues to expand its network to address rising demand for data services.

As a new telco player prepares to enter the market, Globe said its plan to expand and enhance its data network this year will require additional investments. In 2018, it spent P43.3 billion (around $821 million) in capex, the 77% of which was used for data-related services.

“We’re seeing increased demand from our consumers with respect to the data network and the data consumption… You saw our numbers, when it comes to data growth, 59% year-on-year in terms of volume. That has to be supported somehow, if not, the whole thing falls apart in terms of momentum,” Globe President and Chief Executive Officer Ernest L. Cu said in a briefing on the company’s 2018 financial results.

Globe said the capex will be funded by its operating cash and additional debt to be incurred this year.

The Ayala-led telco reported a 22% rise in its net income after tax for the full year 2018 to P18.447 billion, from P15.084 billion in 2017. Core net income, which excludes forex, mark-to-market gains/losses and non-recurring items, likewise grew 37% to P18.555 billion from P13.546 billion the previous year.

Globe said its fourth-quarter net income fell 21% to P3.809 billion from P4.85 billion in the third quarter, while core income also dropped 21% quarter on quarter to P3.789 billion.

Service revenues increased 10% to P140.232 billion for the full year. The bulk or 61% of service revenues came from data-related services as Globe customers grew 8% to 37 million.

Mobile revenues rose 9% year-on-year to P106.925 billion, with mobile data accounting for P55.3 billion, 28% up from the previous year.

Home broadband generated P18.5 billion in revenues (up 19%), while corporate data added P11.8 billion (up 15%).

On the other hand, revenues from fixed line voice services dropped 15% to P2.982 billion.

Globe said it continued to see a shift in demand for data-related services, as revenues from mobile voice fell 6% to P30.348 billion and for mobile SMS by 8% to P21.281 billion in 2018.

“Consistent with global trends, voice revenues declined given the migration of voice traffic to alternative internet-based applications… Similar to voice, mobile SMS declined with the continuous migration of mobile messaging traffic to over-the-top (OTT) messaging apps,” the telco said in a statement.

Globe’s mobile subscriber base ended 2018 at 74.1 million from 60.7 million in 2017, and home broadband subscribers to 1.6 million from 1.3 million the previous year.

HUAWEI PARTNERSHIP
In the same briefing, Mr. Cu addressed questions on growing concern in other countries over telco partnerships with Chinese technology company Huawei Technologies Co., Ltd.

“For us Huawei is the partner simply because they’re the ones ready… What we are seeing is that their technology is more than a year ahead of their competitors. So it enables us to have an advantage out there using their equipment on our network,” he said.

Globe has a partnership with Huawei for the upgrading and expansion of its networks, including fourth and fifth generation (4G and 5G), and the formation of a mobile innovation center in the Philippines.

Since last year, United States, United Kingdom and New Zealand prohibited their telcos from tapping Huawei for their network expansion over cybersecurity concerns involving the Chinese government.

But Mr. Cu said they’ve been assured by Huawei they will “continue on with their business” despite the allegations.

“We have had multiple conversations with them… We’ve been assured that from whatever accusations have been levied against them, they find that completely baseless,” he said.

Shares in Globe fell 1.21% or P24 to P1,956 each on Tuesday. — Denise A. Valdez