Globe invested a record level of capital expenditure of ₱43.3 billion in the first half of 2021 to improve its network infrastructure and internet connectivity, beating last year’s spending by 107%. This capex investment represents 57% of gross service revenues and 116% of EBITDA. Majority or about 88% of the capex spending went to data network builds to address and elevate customer experience in this challenging time. Globe’s aggressive network expansion and network modernization from 3G to 4G LTE/5G as well as fiber technology available to more customers nationwide, is part of its strategy to make high-speed connectivity accessible for all and usher the Philippines closer to being a digital nation. Globe is fully committed to support 10 of the United Nations Sustainable Development Goals, such as UNSDG No. 9 on building resilient infrastructure, promoting sustainable industrialization and fostering innovation.
Globe Network Expansion
As of the first half of the year, Globe made significant strides in its network expansion with 641 new cell sites, and 8,175 site upgrades which include both 4G LTE and 5G. On the fixed line front, Globe already surpassed the 600,000 FTTH lines delivered in 2020, connecting more households all over the country to fiber. Globe has also been aggressively migrating its customers to 4G LTE or 5G technology with SIM and device offers nationwide. As a testament to Globe’s improved services to its customers, Ookla®’s recent SpeedtestⓇ data showed that Globe remained the leader in nationwide mobile consistency for two consecutive quarters. The Consistency Score in Q1 2021 was 70.43 and Q2 2021 was 75.981, still ahead versus competition.
Fastest Growing 5G Network Service Provider
Moreover, the 2021 International Finance Awards (IFA) recognized Globe Telecom as the “Fastest Growing 5G Network Service Provider.” The IFA for telecom seeks to validate the efforts of every contender that is technologically advanced and provides cutting-edge connectivity to customers all over the world. As the pioneer in 5G in the Philippines, Globe’s 5G outdoor coverage is now 92% in the National Capital Region (NCR), expanding to a total of 1,759 sites including Bacolod, Boracay, Cebu, Iloilo, Cagayan de Oro, Davao, General Santos and Zamboanga City as of end-June this year. Furthermore, with its quest to achieve the widest 5G coverage worldwide, the Company officially cemented its partnership with more international telcos during the second half of 2021 (i.e., USA-based AT&T, Canada-based Telus, South Korea with KT Corp, Mobily of Saudi Arabia, Italy’s Telecom Italia, China’s China Unicom, Vivacom in Bulgaria, Viettel of Vietnam and China Mobile). Globe will continue to launch its 5G Roaming services to more international destinations across Asia, North America, and Europe to give the best possible 5G network experience to Filipino workers and traveling customers.
Globe 2021 H1 Financial Highlights
Globe’s consolidated service revenues as of the first six months of 2021 closed at ₱75.5 billion, up 4% from ₱72.4 billion reported a year ago amid the sustained economic challenges the country is facing. The main growth driver continues to be data, mostly from @Home Broadband owing to the increase of digital activities among Filipinos. Total data revenues accounted for 79% of total service revenues from 76% last year.
Notwithstanding the lingering negative effects of the pandemic on public mobility and the economy, as Metro Manila and nearby provinces reverted to Enhanced Community Quarantine (ECQ)/Modified ECQ (MECQ) during the first half of the second quarter, the Mobile business sustained its recovery, growing by 1% year-on-year. Revenue improvement was also fueled by the increased Globe Prepaid top-ups boosted by the growing popularity of the new digital brand GOMO, given the increased use of data services during the pandemic. On a sequential basis, mobile revenues was relatively flat versus the first quarter. Total mobile revenues comprised 70% of the total service revenues, with total mobile subscriber base of 81.7 million, up 2% year-on-year.
From a product view, mobile data revenues posted ₱38.6 billion for the first half of the year from ₱36.0 billion reported a year ago. Mobile data now accounts for 73% of mobile revenues from 69% in the first semester of 2020. Given that the health crisis has changed the Filipino lifestyle across work, education, entertainment, gaming, health, socializing, and purchasing habits, the time spent on mobile applications increased even more. As a result, mobile data traffic climbed to 1,761 petabytes from 1,106 petabytes in the same period of 2020, which translated to a healthy year-on-year growth of 59%. Meanwhile, mobile voice and mobile SMS revenues ended at ₱9.1 billion and ₱4.8 billion, lower year-on-year by 11% and 17%, respectively.
Home Broadband business soared to all-time high revenues of ₱14.5 billion, surpassing the same period last year by 16%, driven by the greater reliance of Filipinos on the internet and the swiftly evolving digital tools as the COVID-19 situation persists. Total home broadband subscriber base reached 4.2 million, besting last year’s record by 47% due to higher fixed wireless broadband users, now up by 54% from last year. On the other hand, wired broadband subscriber base grew a solid 22% versus last year. Likewise, HPW data traffic steadily increased from 182 petabytes in the same period of 2020 to 423 petabytes this period. The outstanding performance of Home Broadband was also supported by the sustained volume of prepaid fixed-wireless broadband modem sales and increasing demand for high-speed postpaid wired solutions as home internet became a vital requirement for many households.
Corporate Data business revenues for the first six months of the year increased by 8% from ₱6.3 billion as of end-June 2020, mostly coming from domestic services and information and communication technology (ICT). Fixed line voice, on the other hand, witnessed a 10% decline from the first half of 2020.
Meanwhile, total operating expenses including subsidy reached ₱38.1 billion as of end-June 2021, exceeding last year’s operating costs including subsidy by 12% due to the increases across expense line items except for provisions. The increase in cost and expenses was attributed to higher spending to support its aggressive network expansion and improve customer digital lifestyle experience.
Total consolidated EBITDA closed the first half of the year at ₱37.4 billion, dropping by 3% from a year ago due to higher costs and expenses. This also resulted to EBITDA margin decline from 53% a year earlier to only 50% this period. Despite lower EBITDA, net income stood at ₱13.0 billion for the first semester of 2021 or up 13% from same period of 2020, as the decline in non-operating charges and taxes fully covered for the increase in depreciation expenses. Lower non-operating expenses this period was mainly due to the significantly lower equity share in Mynt losses, as the company moves closer to profitability, coupled with the one-time adjustment from investment in Vega related to CREATE Law. Improvement in NIAT also resulted from the upside impact of CREATE Law.
The Company’s core net income stood at ₱13.2 billion, up by 19% from ₱11.1 billion reported in 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 ₱185.5 billion this period. Globe’s gross debt to equity is at 2.09x while gross debt to EBITDA is at 2.65x; Net debt to equity ratio is at 1.93x while net debt to EBITDA is 2.45x; and debt service coverage ratio is at 2.34x.
Ernest L. Cu, President and CEO of Globe Telecom Inc., commented:
“We are pleased to report strong financial and operating results for the first half of 2021 with healthy balance sheet and cash flows despite the re-imposition of stricter lockdowns during the second quarter. In view of the significant progress in our 5G and fiber rollouts as well as the strengthening of our 4G/LTE network, we remain on track to help the country achieve a #1stWorldNetwork. Going forward, we will stay focused on innovation in the areas of fintech, healthcare, education, and e-commerce, among others, to help Filipinos thrive in this pandemic and best position ourselves for the remainder of 2021 and beyond.”
917Ventures, Globe’s corporate venture incubator, continue to reinvent lifestyle and movement through different products and services beyond telco to deliver indelible value to consumers and businesses. As the COVID-19 pandemic served as a catalyst for digitalization, Globe succeeded with its mobile wallet GCash, which is now the largest e-wallet in the Philippines. As of end-June 2021, GCash now has over 43 million registered users with over 2.5 million merchants and social sellers, and monthly gross transaction value already breaching ₱200 billion. More importantly, as a testament to GCash’s industry leadership, it reached a milestone by achieving positive EBITDA and NIAT last June.
Moreover, KonsultaMD and HealthNow lead in the health/medical category for the App Store & Google Play, as the pandemic propelled the growth of online health services and changed the way Filipinos interact with medical experts. KonsultaMD App has been posting record highs with consultations skyrocketing 305% versus 2020. KonsultaMD is a healthtech service that allows 24/7 unlimited access to licensed doctors via voice or video call for as low as ₱60 a month. It is already available in over 25,000 retail outlets nationwide through ECPay and is available online through Lazada, Shopee, and Kumu. The app also provides digital management of health consultation records and issuance of medical documents such as e-prescriptions, e-laboratory requests, e-referrals and e-medical certificates. Furthermore, in support of the country’s ongoing vaccination drive, HealthNow houses COVIDShield, the COVID-19 vaccination program of the Ayala Group and its partners, to fully inoculate about 500,000 employees and their loved ones, translating into one million COVID-19 vaccinations. The all-in-one healthtech app, which is jointly owned by Globe’s 917Ventures and AC Health, offers a convenient way to talk to a licensed physician through video teleconsultation, buy medicines online for delivery, and soon, schedule clinic and diagnostic appointments.
Recent Developments from Globe
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