Document 6526818

Total Amount of Borrowings
COVER SHEET
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G L O B E
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(Business Address: No. Street City / Town / Province)
ALBERTO M. DE LARRAZABAL
797-4889
Company Telephone Number
Contact Person
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FORM TYPE
Month
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1
Secondary License Type, if Applicable
Amended Articles Number/Section
Dept. Requiring this Doc.
Domestic
Total No. Of Stockholders
To be accomplished by SEC Personnel concerned
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Month
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Annual Meeting
Foreign
SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17-C
CURRENT REPORT UNDER SECTION 17
OF THE SECURITIES REGULATIONS CODE (SRC)
AND SRC RULE 17(a)-1(b)(3) THEREUNDER
1.
10 February_2014
DateofReport(Date ofearliestevent reported)
2.
1177
SEC Identification Number
3.
000-768-480-000
BIR Tax Identification Number
4.
GLOBETELECOM, INC.
ExactNameofregistrantas specified in itscharter
5.
PHILIPPINES
| (SEC UseOnly)
6.
Province, countryorotherjurisdiction
of
Industry Classification Code
incorporation
7.
27/F, TheGlobeTower, 32nd Street corner7th Avenue,
Bonifacio Global City, Taguig
Addressofprincipal office
1634
Postal code
(02) 797-2000
Registrant's telephone number, including area code
9
5/F, Globe Telecom Plaza (Pioneer Highlands), Pioneer corner Madison Sts.,
lyiandaluyong City
Former name or former address, if changed since last report
10.
Securities registered pursuant to Sections 4 and 8 of the SRC
Title of Each Class
Number of Shares of Common Stock
Outstanding and Amount of Debt Outstanding
(as of December 31, 2013)
COMMON SHARES
132,595,709
TOTAL DEBT (in Millions of Pesos)
69,301
Indicate the item numbers reported herein
Re:
:
P!.e.3se.r
efer.to attached
FY 2013 FINANCIAL & OPERATING RESULTS
Pursuant to the requirements of the Securities Regulations Code, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
GLOBE
Date :
10 February 2014
/ALBERK) IVV. DE^LAJRRAZAE
V^^^Chief r
tn/nci^l Officer
GLOBE ANNOUNCES 4Q and FULL YEAR 2013 RESULTS:
4Q AND FULL YEAR SERVICE REVENUES SUSTAINED POSITIVE GROWTH
FY2013 REVENUES AT P90.5 BILLION, UP 9% YoY;
EBITDA AT P36.5 BILLION, 4% HIGHER YoY;
CORE NET INCOME AT P11.6 BILLION, UP 13% YoY;
MOBILE SUBSCRIBERS NOW STAND AT 38.5 MILLLION, UP 16% YoY
BROADBAND SUBSCRIBERS REACHED THE 2.0 MILLION MARK, UP 22% YoY
Globe Telecom, Inc. closed the year with consolidated service revenues of P90.5 billion, up 9%
from P82.7 billion last year, driven by the continued growth in the demand for data connectivity across
the mobile, broadband and fixed line data businesses, which improved by 8%, 20% and 13%,
respectively. The robust top-line results prove Globe’s sustained execution excellence of products and
promotions that remain relevant to its subscribers, backed by its improved network performance, as Globe
moves forward in its network and IT transformation programs.
Mobile revenues, which contributed over 80% of total revenues, grew 8% year-on-year to P72.8 billion
compared to the prior year’s P67.2 billion, owing to the sustained leadership of the Globe Postpaid brand.
Globe continued to invest in acquiring and retaining high-quality postpaid customers, resulting in the
growth of the subscriber base to over two million, up 17% from last year. The continued expansion of the
postpaid subscriber base has resulted in the sustained growth of postpaid revenues to P27.1 billion, an
18% improvement year-on-year. On the prepaid segments, revenues grew 3% year-on-year despite the
continued pressures on yields brought about by the shift from pay-per-use to value-based bucket and
unlimited offers and the pervasiveness of multi-SIM incidence in the market. Total mobile subscriber
base reached 38.5 million as of end-December, up 16% from the 33.1 million a year ago.
Globe’s broadband businesses flourished in 2013, registering sharp growths on both revenues (+20%) and
customer base (+ 22%) year-on-year. Globe ended the year with over 2 million broadband subscribers,
with the fixed DSL and nomadic broadband segments registering growths of 24% and 11%,
respectively. The competitiveness and affordability of the various offers launched throughout the year
and the expanded pervasiveness of our fixed and wireless broadband network contributed to the robust
performance in the year just ended.
The Company’s fixed line data segment registered revenues of P4.7 billion, P524 million or 13% higher
compared to revenues in 2012, mitigating the decline in traditional fixed line voice services. Growth in
fixed line data revenues was attributed to the continuous demand for various communications and
connectivity solutions to address the requirements of our enterprise clients.
Globe recorded consolidated EBITDA of P36.5 billion in 2013, up P1.5 billion or 4% against the P35.0
billion registered in 2012, as the revenue gains fully covered the increase in operating expenses.
Operating expenses, which include subsidy and other operating expenses, grew by 13% from P47.7
billion to P54.0 billion, largely on increases in subsidy and re-contracting costs, trade and other
provisions, and staff-and network-related expenses. EBITDA margin for 2013 stood at 40%, against 42%
as of end 2012.
1
Driven by the growth in EBITDA, Globe’s core net income, which excludes the impact of non-recurring
accelerated depreciation charges related to assets affected by the Company’s network and IT
transformation programs, grew to P11.6 billion from P10.3 billion in 2012. In 2013, Globe incurred noncash accelerated depreciation charges of P9.1 billion, up from P5.1 billion a year ago, which negatively
affected Globe’s net income. The Company ended the year with net income of P5.0 billion.
On a sequential basis and consistent with seasonal trends, Globe’s quarterly gross revenues improved 2%
in the fourth quarter of 2013, reaching P23.2 billion from P22.7 billion in the third period of the year.
The recent Haiyan calamity in the central Philippines softened the revenue growth in the seasonally
strong fourth quarter, directly through its impact on the subscribers in the affected areas and indirectly as
consumers cut back on spending in favor of donating to relief and rehabilitation efforts. Despite this,
Globe registered a new quarterly high in revenues in the fourth quarter of 2013.
The increase in revenues was not enough to offset the growth in operating expenses, which were partially
driven by the growth in re-contracting and advertising expenses from the launch of the Apple™ iPhone
5c/5s and Samsung Note 3, and additional provisions for accounts affected by the typhoon and accounts
affected by bill delays in the early part of 2013. The fourth quarter operating expenses also included
catch-up accruals for the year. Consolidated EBITDA registered at P8.2 billion, translating to EBITDA
margins of 35%. Core net income for the quarter registered at P2.1 billion, while reported net income
stood at P1.4 billion.
“We are happy and encouraged by what we have achieved in 2013, surpassing all our expectations. We
have said in the past that 2013 is a transition year and the most critical period for Globe, given the
network and IT modernization projects we undertook through the year while competing in a fast evolving
market. Our sustained growth momentum is an evidence of the underlying strengths of our superior
products and services and the differentiated customer experience we provide.” Ernest L. Cu, President
and CEO of Globe Telecom, Inc., stated. “Notwithstanding the impact of the recent devastation in the
Visayas region due to typhoon “Haiyan”, which tempered the seasonal uplift in the fourth quarter, we
still managed to end the year at a high note reaching all-time high gross consolidated revenues. While the
resilience of our performance is welcome, we will not be complacent and will strive harder in 2014.
Globe has always been and will continue to be firmly committed in creating more value for our customers
and shareholders.” Mr. Cu added.
As of the end of 2013, first phase of the network modernization is fully complete. Globe is now
embarking on building more sites, boosting capacity and enhancing network performance. Over 9,400
km. of fiber were added to Globe’s existing FOC infrastructure in support of the Company’s optical and
all-IP transport nationwide network. Moreover, the fiberization of target sites is already over 76%
completed and 3G coverage expansion is over 90% completed, providing customers with a faster mobile
browsing experience. As of end-December 2013, Globe had a total of 20,656 base stations, with over
7,800 for 4G 1, to support the service requirements of its subscribers. Nearly 700 of 4G LTE sites are
already in operation as of year-end 2013.
In relation to the IT transformation projects, the stabilization of postpaid mobile business support system
has led to marked improvements in system performance. Refinements of order processing and account
1
Includes HSPA+, WiMax and LTE
2
management are underway to further improve customer experience. The transition to a new enterprise
data warehouse is also underway using top-tier data warehouse components to deliver superior data
processing performance, comprehensive intelligence, and enhanced information value chain. With
strategic focus and action, the capabilities and benefits of the new BSS and Enterprise Data Warehouse
will continue to be optimized. For 2014, Globe will continue its BSS transformation with the migration
of mobile prepaid, broadband and landline subscribers.
Globe continued to lead in the Postpaid segment with the AppleTM launches during the last quarter of 2013
starting with the iPhone 5c and iPhone 5s and the eventual release of the new iPad Air and iPad mini with
Retina display. This year’s iPhone launch (iPhone 5c and iPhone 5s) however, was scaled down and used
to promote aid and relief efforts in light of the recent calamity “Haiyan” that affected millions of Filipinos
in the Visayas region. Subscribers who attended the event were encouraged to bring in-kind donations as
well as donate via Globe’s GCash facility. The iPhone 5c and iPhone 5s were made available under the
Company’s suite of first-ever fully customizable postpaid plans (Best-Ever mySUPERPLAN) and the
exclusive gadget upgrade program (iPhone Forever program). Under the iPhone Forever program, new
and existing Globe subscribers who are loyal iPhone users can swap their current devices to get a new
iPhone every year for free or with minimal one-time cash out. The iPhone 5c 16GB can be availed
starting at iPhone Forever Plan 1599, while the iPhone 5s 16GB is available at iPhone Forever Plan
1999, both for a contract of 24 months and are bundled with 1 gigabyte (GB) of mobile LTE surfing and
free calls and texts. Higher value postpaid plans are also available: iPhone Forever Plan 2999, iPhone
Forever Plan 5599 and iPhone Forever Plan 6999. The iPad Air and iPad mini with Retina display, on
the other hand, can now be availed with the following postpaid plans for 24 months contract period and
complete with 85 hours of LTE surfing: iPad Air 16GB is available for as low as P1,624 monthly at Plan
499 with P1,125 monthly cashout while the 32GB variant is available for as low as P1,790 monthly at
Plan 499 with P1,291 monthly cashout. Meanwhile, the iPad mini with Retina display 16GB is offered
at P1,499 monthly at Plan 499 with P1,000 monthly cashout while the 32GB variant is available at P1,665
monthly at Plan 499 with P1,165 monthly cashout.
Setting another milestone in Philippine telecommunications, the Company gave its over 38 million
subscribers (Postpaid/Prepaid/TM) free mobile phone access to Facebook for a period of three (3) months
until January 2014 and which was subsequently extended until February 14, 2014. Globe worked closely
with Facebook to enable customer experience innovations for the best free Facebook offer (users can
post, like, comment, chat, add friends, upload photos, share posts, and more on Facebook) without the
need for Wi-Fi. This campaign is in line with Globe’s strategy to bring more people online and overcome
the fear of using mobile internet, and increase the habit of mobile browsing and surfing over Globe’s
improved 3G, HSPA+ and LTE networks
Moreover, Globe Prepaid conducted a 3-day mall gadget sale dubbed “Prepaid on the Go, Great Gadget
Sale” wherein subscribers can get awesome discounts on various brands such as Samsung, Nokia, LG,
Sony, Alcatel, Lenov, O+, Cherry Mobile, MyPhone, and Star Mobile. Subscribers may also trade-in
their old phones or use their rewards points to enjoy up to 90% off for their purchase of phones and
gadgets. Also, in order to drive subscription to Globe Prepaid’s GoUnli30 (one-day unli calls/texts, unli
chat with the best chat apps) during the Christmas season, subscription to the promo qualifies its
subscribers a chance to win a barkada trip for 4 to Singapore. Globe likewise launched the “Choose Your
Number SIM” with FREE unlimited calls to Globe/TM and unlimited text to all networks plus Facebook.
3
TM, on the other hand, launched during the quarter TipIDD30 which offer four (4) minutes of
international calls to Saudi, UAE, Kuwait, Bahrain, Italy, UK, Australia and Japan for only P30 a day and
AstigItxt20which gives its subscribers 30 international and all-network texts for only P20 valid for 1 day.
For the Broadband business, Globe continued to step up its best value offers with the new Tattoo Prepaid
tablet bundles wherein its subscribers can save as much as P2,845 with these new offers which carry
affordable tablet selection starting at P4,995 for a CloudPad 705Wor a SkyWorth S73 and P6,995 for a
SkyWorth S82. All these new bundles come with FREE Tattoo Mobile Wi-Fi that connects up to 10
devices with speeds of up to 7.2 Mbps. Tattoo LTE Mobile Wi-Fi with LTE speed up to 42 Mpbs (with
power bank feature which recharges your phone up to 2 times), was also made available for only P4,995
with FREE 5GB of data for 7days. Tattoo Postpaid on the other hand, now offers a FREE Mobile Wi-Fi
with speed up to 12 Mbps with Tattoo unlimited Plan 999.
Globe once again expanded its international footprint with the launch of Globe local Italy SIM last
November 24, 2013. Filipino communities in Italy can now enjoy calls to Globe in the Philippines for
just five Euro cents per minute, the lowest among all Italian mobile operators. This was made possible
with the partnership with Compagnia Italia Mobile S.r.l., one of the leading MVNOs in Italy, and Effortel
Technologies, a Belgium-based network enabler company. Italy is now the sixth country where Globe
has robust presence, joining the ranks of the USA, the United Kingdom, Singapore, Hong Kong and the
Kingdom of Saudi Arabia.
GCash, Globe’s mobile payment and remittance service, is set to expand its network service in the
country by growing its user base with the recent partnership with TORCHe Global Marketing, Inc.
(TGMI), a marketing consultancy firm focused on helping companies reach out to the widest possible
consumer base through the latest technologies in mobile commerce and advertising. GCash services that
will be made available for use of TGMI affiliates include PowerPay+ Card, Buy Load service and Gcash
outlets. Also, during the last quarter of 2013, several initiatives on GCash were launched in order to
expand its portfolio of services including real property tax payments via GCash available in Quezon City
and Valenzuela; buy through blink coupon codes for subscribers to experience unlimited Movie and TV
show streaming; or convert Gcash to rewards points. In addition, subscribers can now also apply for
BanKO loan via GCash with low interest rate, fast approval and hassle-free loan payments. Loan credit
and collection will be through their GCashPowerPay+ wallet.
BPI-Globe Banko, the first mobile-based, microfinance-focused savings bank in the Philippines, have
joined hands with US Agency for International Development, in helping rural communities gain access to
formal financial services (i.e. cash in and cash out transactions, bills payment, airtime loading, money
remittance, and micro-insurance purchase) using their mobile phones. This partnership was announced
during the launch of the mobile money financial service for the llijan Multi-Purpose Cooperative.
4
4Q 2013 FINANCIAL SUMMARY
Globe Group
Quarter on Quarter
Year on Year
4Q
3Q
QoQ
Change
31 Dec
31 Dec
YoY
Change
2013
2013
(%)
2013
2012
(%)
Service Revenues
23,243
22,725
2%
90,500
82,742
9%
Mobile
Broadband
Fixed line Data
Fixed line Voice
18,691
2,663
1,242
647
18,232
2,632
1,190
671
3%
1%
4%
-4%
72,764
10,440
4,691
2,605
67,189
8,721
4,167
2,665
8%
20%
13%
-2%
15,022
13,372
12%
53,986
47,728
13%
8,221
35%
9,353
41%
-12%
36,514
40%
35,014
42%
4%
5,607
5,800
-3%
27,478
23,584
17%
733
1,215
-40%
9,066
5,080
78%
4,874
4,585
6%
18,412
18,504
-
1,431
2,091
2,119
3,100
-32%
-33%
4,960
11,617
6,845
10,264
-28%
13%
In Million Pesos
Operating Expenses and
Subsidy
EBITDA
EBITDA Margin
Depreciation
Affected by network modernization
Others
Net Income After Tax (NIAT)
Core Net Income
•
Full year consolidated service revenues once again reached a historic-high, registering at P90.5 billion
from P82.7 billion last year due to the continued positive growth of Globe’s mobile, broadband, and
fixed line data businesses. Mobile revenues were up by 8% from last year, still led by Globe
Postpaid and the Company’s mass market brand TM, which grew by 18% and 8%, respectively. The
increase in mobile revenues was supported by the expansion in mobile subscriber base, which
increased 16% year-on-year to 38.5 million from 33.1 million last year. Broadband and fixed line
data revenues likewise posted a 20% and 13% growth as against last year's levels, respectively, as the
cumulative customer base continued to grow year-on-year.
•
On a sequential basis, consolidated service revenues for the fourth quarter posted a slight
improvement of 2% as the usual seasonal uplift was softened by the impact of typhoon Haiyan, both
directly on subscribers in the affected areas and indirectly on subscribers’ choice to cut back on
spending to donate to relief and rehabilitation efforts. Fixed line data continued to grow quarter-onquarter (+4%) on account of the sustained demand for data services for the corporate sector, offsetting
the decline in fixed line voice revenues. The mobile and broadband businesses, likewise, increased
by 3% and 1% quarter-on-quarter, respectively.
•
Total operating expenses and subsidy increased 13% year-on-year to P54.0 billion from P47.7 billion,
driven by higher subscriber acquisition and re-contracting costs, following the sustained postpaid
subscriber acquisition and retention efforts with the launch of the Best-Ever MySuperplan in 2013.
Other drivers for the increase in operating expenses were higher trade provisions and staff-related
costs, and services expenses, all of which were in support of the growing subscriber and network
base. On a sequential basis, operating expenses and subsidy rose by 12% to P15.0 billion from P13.4
billion compared to the prior quarter due to higher spending on marketing and re-contracting
5
following the launch of iPhone 5c/5s and Samsung Note 3, higher provisions, services and other
catch-up accruals that were booked in the fourth quarter.
•
Full year 2013 consolidated EBITDA stood at P36.5 billion, up by 4% or P1.5 billion against last
year. Full year EBITDA margin stood at 40%. Overall revenue gains fully covered for the overall
upsurge in expenses. Compared to the third quarter and in line with seasonal trends, consolidated
EBITDA declined by P1.1 billion or 12% as the slight increase in the top-line was insufficient to
cover for the growth in operating expenses. This resulted in an EBITDA margin of 35% versus 41%
last quarter.
•
Total depreciation expenses increased by 17% year-on-year driven by the accelerated depreciation
charges related to the ongoing network modernization and IT transformation programs. Excluding
the accelerated depreciation costs related to the network and IT upgrade, depreciation expenses would
have remained flat year-on-year. On a quarterly basis, depreciation charges in the fourth quarter were
down by 3% resulting from the lower accelerated depreciation, as the bulk was already booked in the
first three quarters of 2013, partly mitigated by higher normal depreciation for various projects.
•
Non-operating charges grew by 29% or P494 million driven by foreign exchange and mark-to-market
losses, which fully offset the gains posted last year coupled with higher swap costs. These were
slightly mitigated by the higher interest income generated from the Bayantel loan receivables and
lower interest expenses due to last year’s one-time pre-termination costs on Globe’s retail bonds.
Quarter-on-quarter, non-operating charges increased by 29% due mainly to higher foreign exchange
loss and increased swap costs, mitigated by lower interest expense recognized during the period.
•
The Company’s full year consolidated net income after tax reached close to P5.0 billion, 28% or P1.9
billion lower compared to 2012 level, as the EBITDA growth and higher interest income were fully
offset by higher foreign exchange and mark-to-market losses and increased accelerated depreciation
costs related to the transformation projects. Excluding the non-recurring accelerated depreciation
expenses and foreign exchange and mark-to-market gains and losses, core net income after tax
reached P11.6 as of end 2013, which is 13% or P1.4 billion higher than end of 2012. On a sequential
basis, net income after tax likewise declined by 32% to P1.4 billion from P2.1 billion last quarter as
the seasonal revenue increase in the fourth quarter was tempered by the impact of the recent typhoon
as well as higher operating expenses booked during the quarter. Core net income after tax as of end
2013 also declined by 33% to only P2.1 billion from last quarter's P3.1 billion resulting from this
quarter’s lower EBITDA.
•
Total full year cash capital expenditures stood at about P29.0 billion, 44% above last year's level
of P20.1 billion. Globe’s ongoing network and IT transformation programs comprised 25% of total
cash capital expenditures.
Globe continues to embark on its network and IT modernization
programs, building more sites to adapt to the changing landscape in the country’s key business
districts, boosting capacity and enhancing the overall network performance. As of end 2013, 90% of
the network is already on 4G HSPA+ providing faster mobile browsing experience for Globe’s
subscribers. To support the requirements of its subscribers for 2G, 3G and 4G services, Globe has a
total of 20,656 base stations, including over 7,800 4G base stations.
•
On top of the transformation programs being undertaken, Globe continued to invest in traditional
services, particularly in building more sites and incorporating needed in-building solutions to address
coverage blind spots brought about by the changing skyline in urban areas. These investments were
meant to address requirements of Globe’s core services (voice and SMS) as well as data. Data
remained a key investment area for Globe in 2013, with approximately 26% of the total CAPEX for
the year, given the growth in demand from subscribers across the different segments. These datarelated investments include spends on LTE deployment and fixed broadband roll-out, both of which
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were considered out-of-scope in Globe’s modernization programs. Furthermore, Globe spent close
to P1.0 billion in investments in international cable systems in 2013, again aligned with the increasing
need for data connectivity for Globe’s mobile, broadband and enterprise segments.
•
For 2014 the Company expects the market to be more challenging and competition to remain intense
but more rationale on the ground. Against this environment, the Company sees consolidated revenues
to increase by mid to high single digit from 2013 level. Near-term earnings, meanwhile, will continue
to be impacted by (1) non-recurring costs of approximately P1.0 billion related to the purposeful
delay of Phase 2 migration of our IT transformation program, (2) trailing accelerated depreciation
costs of approximately P1.5 billion for the balance of the assets to be replaced by the modernization,
and (3) additional interest expenses from additional debt related to 2014 CAPEX. Moving forward,
EBITDA margin is expected to hover at the high-30s to low-40s, given the continuous growth of our
postpaid business and the necessary investments in subscribers needed to support this growth and the
increasing contribution of lower-margin data-related products. In terms of the balance sheet, Globe’s
gearing ratios are expected to remain elevated in 2014, but are seen to remain well within loan
covenants. The Company expects its balance sheet and financial position to remain strong, with
dividend pay-outs sustained at competitive levels.
•
For 2014, Globe has earmarked about US$600 to US$650 million in capital expenditures with
approximately one third for trailing CAPEX payments related to the transformation initiatives.
Another one third of the CAPEX are expected to be incurred for the expansion and capacitation of
Globe’s data network, including continued investments in LTE and fixed broadband. The balance of
the CAPEX are seen to be invested for traditional services, to enhance Globe’s network performance
and improve customer experience through additional sites and in-building solutions.
7
Mobile Business
Quarter on Quarter
In Million Pesos
4Q
3Q
2013
Year on Year
31 Dec
31 Dec
2013
QoQ
Change
(%)
2013
2012
YoY
Change
(%)
8,377
7,387
2,927
8,052
7,097
3,083
4%
4%
-5%
32,367
28,794
11,603
32,446
26,552
8,191
8%
42%
18,691
18,232
3%
72,764
67,189
8%
Service Revenues *
Voice
SMS
Mobile Browsing & Other Data
Mobile Service Revenues
* 2012 voice and data revenues have been restated for comparability.
Mobile revenues, which accounted for 80% of consolidated service revenues as of end-December,
increased to P72.8 billion, up by 8% from last year’s level of P67.2 billion. The mobile business
continued its growth trend driven mainly by higher revenue contributions from mobile browsing and
other value-added services and unlimited SMS. Likewise, growth was complemented by the strong
subscriber growth due to the sustained acquisitions of the Postpaid brand during the first half of the year
and Globe Prepaid’s and TM’s sharp growth in the fourth quarter.
Mobile voice revenues, which accounted for 44% of total mobile service revenues, was relatively
unchanged as of end of 2013, as the drop in international long distance, voice-over-internet protocol
(VOIP), regular domestic voice and roaming services was partly offset by the increase in unlimited and
bulk domestic voice subscriptions. Against the third quarter however, mobile voice registered a 4%
increase due to seasonality.
Mobile SMS which accounted for 40% of total mobile service revenues, closed the year at P28.8 billion,
higher by 8% from P26.6 billion of end 2012, driven by increases from unlimited SMS subscriptions
mitigating the decline in regular, bucket SMS and international SMS. On a sequential basis, mobile SMS
revenues increased by 4%, due to normal seasonal uplifts in the fourth quarter of the year.
Mobile browsing & other data revenues which accounted for 16% of total mobile service revenues
increased to P11.6 billion as of end 2013, up 42% from P8.2 billion of 2012, driven by the continuous
demand for data services and the popularity of data-driven products and applications, the increased
pervasiveness of Globe’s 3G, HSPA+ and LTE networks and the proliferation of data-enabled
smartphones. On a sequential basis, mobile browsing & other data revenues declined by 5%, due to the
launch of Globe’s Free Facebook campaign in the fourth quarter of the year. The promotion was part of
Globe’s mobile data strategy to provide seamless customer experience and seed the habit of using mobile
internet over Globe’s expanded 3G, HSPA+ and LTE networks. Despite the near-term impact to
revenues, Globe’s registered mobile data service users almost doubled during the three-month period, a
significant index in seeding the habit of internet access through smartphones over the wireless networks.
8
Key Drivers for the Mobile Business
Quarter on Quarter
Cumulative S ubscribers (or S IMs) –
Net End of Period
4Q
3Q
2013
38,475,130
Year on Year
31 Dec
31 Dec
2013
QoQ
Change
(% )
2013
2012
YoY
Change
(% )
36,516,711
5%
38,475,130
33,119,035
16%
Globe Postpaid 1
2,025,538
1,979,558
2%
2,025,538
1,734,468
17%
Prepaid
36,449,592
34,537,153
6%
36,449,592
31,384,567
16%
17,836,441
18,613,151
16,963,939
17,573,214
5%
6%
17,836,441
18,613,151
16,440,142
14,944,425
8%
25%
1,178
1,178
-
1,199
1,191
1%
140
81
144
80
-3%
1%
141
85
150
92
-6%
-8%
7,607
8,028
-5%
7,473
8,432
-11%
28
35
71
27
-61%
30%
40
27
20
16
100%
69%
2.2%
1.8%
1.9%
1.8%
5.7%
7.0%
6.3%
7.1%
5.7%
6.6%
5.6%
6.2%
Globe Prepaid
TM
Ave. Revenue Per S ubscriber
(ARPU)2
Globe Postpaid
Prepaid
Globe Prepaid
TM
S ubscriber Acquisition Cost (S AC)
Globe Postpaid
Prepaid
Globe Prepaid
TM
Ave. Monthly Churn Rate (%)
Globe Postpaid
Prepaid
Globe Prepaid
TM
1
As of 4Q 2013, Globe had a total of 2.42 million wireless postpaid subscribers which include 2.03 million mobile telephony and 0.39 million
wireless broadband customers. This is higher compared to the 2.36 million wireless postpaid subscribers as of 3Q 2013. Mobile telephony
revenues are reflected under “Mobile Service Revenues” while wireless broadband revenues are included under “Broadband.”
2
ARPU is computed by dividing recurring gross service revenues (gross of interconnect expenses) segment by the average number of the
segment’s subscribers and then dividing the quotient by the number of months in the period.
•
Globe closed the year with a total mobile subscriber base of 38.5 million, up 16% from 33.1 million
subscribers last year. Fourth quarter’s gross subscriber acquisitions registered a quarterly-high of 8.8
million subscribers, 19% higher than last quarter, steered by the record acquisitions of the Company’s
prepaid (Globe Prepaid) and mass market brands (TM). Combined, Globe Prepaid and TM gross
acquisitions comprised 98% of acquired SIMs during the period. The slowdown in postpaid
acquisitions in the fourth quarter was fully offset by the increase in gross additions of our prepaid
segments, boosted in part by the market relevant promotions we launched during the quarter,
including the Free Facebook campaign. Despite the elevated churn rate as of end December of 2013
of 5.95% from 5.69% of 2012, full year net incremental subscribers leapt to 5,356,095, 74% higher
than 2012 level of 3,078,635 net additions.
9
•
Globe Postpaid maintained its leadership on this segment of the market with the continued growth in
acquisitions throughout the year closing 2013 with over 2.0 million subscribers from 1.7 million last
year. The continued success of the fully customizable BEST-EVER MY SUPERPLAN bundled with
the latest devices from Apple™, Samsung, and BlackBerry® helped boost gross additions to reach
711,190 as of full year 2013, 21% higher than 589,642 a year ago. Also, the Company’s postpaid
plans continued to attract subscriptions from the industry’s high-end prepaid subscribers who switch
to postpaid, as well as unique and new subscribers. Full year net incremental postpaid subscribers
stood at 291,070, 4% above 2012 level of 279,762.
•
Globe Prepaid gross acquisitions substantially improved by 20% or 631,156 new SIMs in the fourth
quarter versus the third quarter, bringing the full year gross additions in 2013 to reach 13.2 million or
12% higher than 2012 level of 11.8 million. This is mainly attributed to continued popularity of
unlimited and bucket offers bundled with the best chat apps that have gained traction this year, as
well as the successful Free Facebook campaign launched in November 2013. Full year 2013 net
incremental subscribers also improved by 43% to 1,396,299 from 977,710 in 2012 despite the
elevated churn rates as of end 2013 of 5.75% from 5.63% in 2012.
•
TM on the other hand, generated the highest gross acquisitions particularly during the fourth quarter,
achieving a record high of 4.8 million new SIMs or 20% better than previous quarter level of
4,005,807. The free Facebook promo boosted the fourth quarter acquisition and TM’s ramp-up in
project executions in order to stay in step with the competition’s acquisition efforts. This brings the
full year total gross additions to nearly 17 million, up 38% from 12.3 million in 2012. TM’s sustained
growth momentum was boosted by the different product launches throughout the year that included
value-for-money offerings such as AstigCombo10, AstigCombo15, Combo15, Combo20, TM
“Extend” as well as TM Astig Facebook. Mobile browsing offers was likewise expanded during the
year to include Viber. Also during the last quarter of 2013, TM launched promotions in order to
improve its international offer with TipIDD30 and AstigItxt20. Even with the slightly elevated churn
rates as of end December 2013, full year net incremental subscribers improved by 101% from about
1.8 million in 2012 to 3.7 million.
•
Full year 2013 blended ARPU declined by 4% to P170 from P177 of 2012 due to the combined
effects of multi-sim usage, continued pressures on yields caused by the popularity of value-based
bucket and unlimited offers. Globe Postpaid ARPU of P1,199 was 1% higher than last year’s P1,191
as a result of a higher mix of higher-MSF plans. Globe Prepaid ARPU declined by 6% year-on-year
resulting from the revenue dilution from unlimited and bucket service offerings. TM ARPU was
down by 8% year-on-year with the continued shift from regular pay-as-you-use service to unlimited
and value offers.
•
Globe Postpaid subscriber acquisition cost (SAC) declined year-on-year by 11% from last
year’s P8,432 to P7,473 as of end 2013, driven in part by the healthy mix of smartphones and gadgets
will lower subsidy levels. Globe Postpaid SAC remained recoverable within the 24-month contract
period. Globe Prepaid SAC, on the other hand, were significantly higher than last year due to higher
ads and promo and commissions. Against last quarter, Globe Prepaid SAC declined by 61%. TM
SAC, however, was up 69% year-on-year and 30% quarter-on-quarter due to higher subsidy and
increased ads and promo. Globe Prepaid and TM SAC remained recoverable within a month’s
ARPU.
10
Fixed Line and Broadband Business
Quarter on Quarter
In Million Pesos
4Q
3Q
2013
Year on Year
31 Dec
31 Dec
2013
QoQ
Change
(%)
2013
2012
YoY
Change
(%)
2,663
1,242
647
2,632
1,190
671
1%
4%
-4%
10,440
4,691
2,605
8,721
4,167
2,665
20%
13%
-2%
4,552
4,493
1%
17,736
15,553
14%
Service Revenues
Broadband
Fixed Line Data
Fixed Line Voice
Fixed Line & Broadband
Service Revenues
Globe Tattoo Broadband ended 2013 with P10.4 billion, up 20% compared to 2012 as a result of the
strong growth in its customer base, which reached over two million subscribers as of end-December 2013.
The outstanding revenue performance of the broadband business resulted from the continued aggressive
acquisitions campaigns, attractive pricing offers and product bundles.
Quarter-on-quarter, revenues slightly improved by 1% from P4.5 billion in the third quarter for Tattoo
Broadband despite decline in ARPU due to the continued growth on both Tattoo-At-Home and TattooOn-The-Go subscriber base, rising to 2,031,902 from 1,881,087 last quarter.
Quarter on Quarter
4Q
3Q
2013
1,653,647
378,255
2,031,902
Year on Year
31 Dec
31 Dec
2013
QoQ
Change
(% )
2013
2012
YoY
Change
(% )
1,496,995
384,092
1,881,087
10%
-2%
8%
1,653,647
378,255
2,031,902
1,331,413
340,560
1,671,973
24%
11%
22%
Cumulative Broadband S ubscribers
Wireless 1
Wired
Total (end of period)
1
Includes fixed wireless and fully mobile broadband subscribers
The fixed line data segment continued its revenue growth with P4.7 billion, 13% higher year-on-year
while compared to previous quarter, the increase was 4% due to the Company’s continued push to expand
its portfolio to remain responsive to the evolving needs and increasing demand for high-speed data nodes,
transmission links, and bandwidth capacity of its business and enterprise clients, including those in the
financial services, retail, offshoring and outsourcing industries.
Total fixed line voice revenues declined by 4% quarter-on-quarter bringing total revenues to close the
year at P2.6 billion or 2% lower from P2.7 billion the previous year caused primarily by lower
international airtime rates.
11
For questions, please contact:
Tek O. Olaño
Financial Planning and Analysis
Email: [email protected]
Jose Mari S. Fajardo
Investor Relations
Email: [email protected]
(632) 797-4307
12
ANNEXES
Globe Group
Year on Year
Quarter on Quarter
4Q
3Q
QoQ
Change
31 Dec
31 Dec
YoY
Change
2013
2013
(%)
2013
2012
(%)
Interest Expense
-523
-541
-3%
-2,092
-2,105
-1%
Gain / (Loss) on Derivative Instruments - net
-40
-56
-28%
-89
-75
19%
Swap Costs and Other Financing Costs
-67
-49
37%
-245
-183
34%
Foreign Exchange (loss)
-155
-7
2119%
-486
-785
-653
20%
-2,912
(Php Mn)
Financing Costs - net
-
Foreign Exchange gain
Interest Income
Others - net
Total Other (Expenses) Income
-2,363
23%
318
-
160
180
-11%
688
580
19%
9
-4
-325%
52
-213
-124%
-616
-477
29%
-2,172
-1,678
29%
Globe Group
Year on Year
Quarter on Quarter
4Q
3Q
QoQ
Change
31 Dec
31 Dec
YoY
Change
2013
3,004
2013
3,018
(%)
2012
12,653
(%)
-
2013
11,825
-7%
43.520
43.377
-
42.188
42.384
-
Total ILD Minutes (in million
minutes)2
643
608
6%
2,494
2,691
-7%
Inbound
Outbound
567
76
536
73
6%
5%
2,190
304
2,338
353
-6%
-14%
7.43
7.38
7.20
6.62
Total ILD Revenues (Php Mn)
1
Average Collection rates for the Period
ILD Inbound / Outbound Ratio (x)
*Prior period revenues have been restated for comparability
13
Globe Group
Quarter on Quarter
Year on Year
4Q
3Q
QoQ
Change
31 Dec
31 Dec
YoY
Change
(Php Mn)
2013
2013
(%)
2013
2012
(%)
Cost of Sales
Less: Non-service Revenues
2,946
1,573
2,588
1,031
14%
53%
9,953
4,641
7,679
3,704
30%
25%
1,373
1,557
-12%
5,312
3,975
34%
2,304
1,490
718
2,130
2,300
1,113
303
1,813
34%
137%
17%
9,280
4,483
2,532
7,473
8,859
4,698
1,743
6,426
5%
-5%
45%
16%
1,127
1,155
-2%
4,399
4,260
3%
935
911
771
3,263
903
936
582
2,710
4%
-3%
32%
20%
3,535
3,657
2,457
10,858
3,153
3,672
1,604
9,338
12%
53%
16%
Operating Expenses
13,649
11,815
16%
48,674
43,753
11%
Depreciation and Amortization
5,607
5,800
-3%
27,478
23,584
17%
733
4,874
1,215
4,585
-40%
6%
9,066
18,412
5,080
18,504
78%
-
20,629
19,172
8%
81,464
71,312
14%
Subsidy
Interconnect
Selling, Advertising and Promotions
Re-contracting
Staff Costs
Utilities, Supplies & Other Administrative
Expenses
Rent
Repairs and Maintenance
Provisions
Services and Others
Affected by network modernization
Others
Costs and Expenses
Globe Group
31 Dec
2013
(Php Mn)
31 Dec YoY Change
2012
(%)
Capital Expenditures (Cash)
28,999
20,124
44%
Increase (Decrease) in Liabilities related to Acquisition
of PPE & Capitalized Asset Retirement Obligations
6,781
6,686
1%
35,780
26,810
33%
40%
32%
Total Capital Expenditures
1
Total Capital Expenditures / Service
Revenues (%)
1
Consolidated capital expenditures include property and equipment, intangibles and capitalized borrowing costs acquired
as of report date regardless of whether payment has been made or not.
14
Globe Group
31 Dec
2013
31 Dec
2012
YoY
Change
(%)
159,079
69,301
41,639
148,012
61,779
45,698
7%
12%
-9%
Balance Sheet Data (Php Mn)
Total Assets
Total Debt
Total Stockholders' Equity
Financial Ratios (x)
Total Debt to EBITDA
Debt Service Coverage
Interest Cover (Gross)
Debt to Equity (Gross)
Debt to Equity (Net)1
Total Debt to Total Capitalization (Book)
Total Debt to Total Capitalization (Market)
1.90
2.83
12.54
1.66
1.49
0.62
0.24
1.78
2.02
12.10
1.33
1.18
0.57
0.30
15