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Globe income down nearly 8%, capex guidance cut by 20%

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By Arjay L. Balinbin, Senior Reporter

THE second-quarter net income of Globe Telecom, Inc. declined 7.8% to P4.90 billion from P5.32 billion in the same period last year due to the impact of coronavirus lockdowns on its operations.

Compared with its first-quarter net income attributable to the parent of P6.6 billion, Globe’s latest net income is lower by 26%.

Globe’s service revenues in the second quarter declined 3.6% to P35.54 billion from P36.88 billion during the same period last year. The amount is also lower by 4% compared with the service revenues posted in the first quarter of the year.

In a regulatory filing, the Ayala-led telecommunications company said the decline in its revenues was mainly caused by the impact on its operations of the enhanced and modified enhanced community quarantine implemented in various areas during the period despite the surge in data revenues, which now account for 75% of total service revenues from 70% last year.

Globe’s mobile business revenues for the second quarter was down 6.55% to P25.04 billion from the first quarter’s P26.79 billion, mainly due to the decline in acquisition and prepaid top-up. It did not indicate its mobile business revenues for the same period last year.

“This was driven by the continued decline from traditional voice (-16%) and mobile SMS (-30%) as partly mitigated by the increase in mobile data (+5%). Compared to the prior quarter,” Globe said.

Home broadband revenues surged by 16% to P6.73 billion in the second quarter from the previous quarter’s P5.78 billion. Corporate data revenues dropped by 9% to P2.95 billion from P3.25 billion.

“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,” Globe President and Chief Executive Officer Ernest L. Cu said in a statement.

“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 digitalization efforts. Mobile data and digital solutions will also increase traction with more customers adopting a digital lifestyle in the new normal,” he added.

CAPEX GUIDANCE LOWERED
Globe revised its capital expenditure (capex) guidance for the year, lowering it to P50.3 billion from the original guidance of P63 billion “given the delays in the rollout” during the strict quarantines.

It said it had invested a total of P20.9 billion in its network in the first half of the year, “10% higher than last year and representing 29% of gross service revenues and 54% of EBITDA” or earnings before interest, taxes, depreciation, and amortization.

“Bulk of the capex spending went to data-related requirements, comprising 76% of the total capex spending for the period,” Globe added.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco told BusinessWorld via e-mail that Globe was “able to limit the percentage decline of both its top line and bottom line to single digits which shows the strength of the company amid the pressing times.”

He said Philstocks still expects strong demand for data services in the second half as many businesses continue with their digital transformation to cope up with the new normal.

“The shift of our education to online platforms are also expected to boost demand for telecommunication services. All of these could help Globe for the remainder of the year if it would be able to capitalize on these opportunities. With these, we’re also even seeing the possibility of Globe posting slightly better revenues for 2020 compared to 2019,” Mr. Tantiangco added.

Shares in Globe on Tuesday closed 2.78% higher at P2,070 apiece.





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