The Ayala-backed Globe Telecom Inc. reported on Wednesday that its core net income expanded by 18% year-on-year, attaining ₱11.7 billion during the first half of 2024, excluding the effects of non-recurring charges, foreign exchange, and mark-to-market charges.
The company said in a disclosure that, on a comparable basis, assuming that ECPay had been deconsolidated from Globe's books during the first half of 2023, the core net income would have shown an even more robust growth of 21%.
"We are happy that our financial performance for the year's first half remained robust. Our EBITDA margin held steady at 52%. In comparison, Core NIAT grew by an impressive 21%, demonstrating our consistent growth and unwavering resilience amidst economic headwinds," said Ernest L. Cu, president and CEO of Globe Telecom Inc.
Globe's balance sheet remained healthy, comfortably satisfying bank covenants. Total debt improved from ₱250.0 billion as of the end of December 2023 to ₱248.7 billion this period. Globe's key gearing ratios for this period include Gross debt to EBITDA of 2.68x, Net debt to EBITDA of 2.48x, and debt service coverage ratio of 1.60x.
Cu added, "We are also thrilled that our landmark tower deal is nearing completion, with 88% of the covered towers successfully transferred to the towers as of July. We are on track to complete this transaction within the second half of the year. This strategic move will enhance our ability to fulfill the changing connectivity needs of our valued customers and solidify our position as an industry leader."
In addition, Globe booked ₱82.2 billion in consolidated gross service revenues in the first semester of 2024, up 2% from a year ago, despite the decline in home broadband and non-telco services. Mobile and corporate data businesses were the primary contributors to this remarkable performance, jointly accounting for an impressive 83% of the total consolidated gross service revenues, up from 79% in the same period last year.
Mobile revenues increased by 7%, while corporate data revenues showed an 8% improvement from the previous year. Notably, data revenues sustained their robust momentum, contributing 85% to consolidated gross service revenues compared to 82% in the previous year. On a comparable basis, assuming the deconsolidation of ECPay from Globe's books in the first half of 2023, the total consolidated gross service revenues would have grown by 4%.
Globe's mobile business has shown resilient growth with all-time high revenues of ₱58.4 billion as of June 2024 versus ₱54.8 billion in the same period last year. This achievement was fueled by Globe's effective market repair initiatives and sustained network quality, as evidenced by the continued preference of customers for Globe's products and services.
The company's success is further highlighted by the fact that total mobile revenues now constitute 71% of the total consolidated gross service
revenues, up from 68% in the same period last year, with the total mobile customer base ending at 59.5 million for the first six months of 2024.
Regarding product performance, mobile data revenues hit a record-breaking quarterly high of ₱24.2 billion, totaling ₱48.0 billion in the first half of the year. This represents a significant 9% growth compared to the previous peak of ₱44.0 billion achieved a year ago. The surge in mobile data revenues was primarily attributed to Filipinos' increasing reliance on mobile apps for various online activities such as e-commerce, media streaming, and social networking.
The widespread availability of smartphones further propelled this revenue expansion. Mobile data now accounts for a larger share of mobile revenues, growing from 80% last year to 82% this year. During this timeframe, mobile data traffic also experienced a notable increase, reaching 3,256 petabytes, compared to 2,814 petabytes reported in 2023, indicating improved data consumption across all brands.
On the other hand, traditional mobile voice and SMS revenues dropped 2% and 6%, respectively.
Likewise, the corporate data business maintained its positive momentum, driven by the company's commitment to providing innovative solutions.
These solutions supported the digital transformation and addressed the specific needs of its enterprise clients. As a result, corporate data revenues grew by a solid 8% year-on-year, generating approximately ₱9.8 billion as of June of 2024. This was mainly due to the solid contributions from information and communication technology (ICT) and core data services, which improved compared to last year by 9% and 7%, respectively. The increase in ICT revenues mainly came from business applications solutions (BAS), which grew by 22% from last year.
In contrast, home broadband revenues dropped by 6% year-on-year, from ₱12.8 billion to ₱12.1 billion by the end of June 2024, due to lower fixed wireless services. Despite this decline, postpaid fiber steadily expanded, accounting for 85% of home broadband revenues. The 3% increase in postpaid fiber subscribers and revenues partially offset the overall decline in home broadband revenues.
Globe's fixed wireless revenue decline is slowing down, which aligns with the company's expectations. The initial surge in demand for dependable data connectivity during the COVID-19 pandemic led to a substantial increase in sales for their Home Prepaid WiFi (HPW) product.
However, as market preferences shifted towards more stable wired connectivity post-pandemic, fixed wireless metrics gradually returned to normal levels, as anticipated. Globe expects this positive trend, along with the newly introduced GFiber Prepaid, to result in positive growth in overall broadband revenue during the year's second half.
Customers have been very receptive to GFiber Prepaid since its launch in late 2023. The service's strengths include a digital experience, affordability, reliable network connectivity, and convenient loading through GCash, as evidenced by positive feedback. This reflects Globe's
comprehension of the prepaid consumer market. As a result, the first half of GFiber Prepaid acquisitions increased by 272% vs 2023, indicating the service's promising growth trajectory, which is expected to
continue in the second half of 2024.
The home broadband subscriber base likewise declined from 2.2 million the previous year to 1.7 million this period, marking a 21% dip. This drop was mainly from the normalization of fixed wireless broadband as customers transitioned toward more dependable wired connectivity.
Similarly, HPW data traffic experienced a downward trend, decreasing from 166 petabytes in the preceding year to just 105 petabytes in the current reporting period.
Globe's non-telco revenues posted a significant decline, dropping by 58% year-on-year compared to the ₱2.8 billion reported at the end of June 2023. This substantial decrease was primarily due to the deconsolidation of ECPay from Globe's books following its 77% stake sale to Mynt in September 2023.
However, if Globe's records had been factored in during the first half of 2023, the deconsolidation of ECPay would have reduced total non-telco revenues by only 26%.
Globe's total operating expenses, including subsidy, posted a 2% drop from ₱39.9 billion as of June 2023 to ₱39.3 billion this period. This decline was mainly due to the reduced spending in various areas, such as marketing and subsidy, provisions, services, and others, as well as repairs and maintenance, due to the company's ongoing cost-saving measures and ECPay deconsolidation. On a comparable basis, assuming ECPay was deconsolidated in Globe's books as of the first half of 2023, total operating expenses (including subsidy) would have been higher by 1%.
Globe's consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to nearly ₱43.0 billion, a solid 6% increase from the previous year. This was propelled by the 2% rise in
consolidated gross service revenues coupled with the 2% reduction in operating expenses plus subsidy.
Additionally, if ECPay's deconsolidation from Globe's books were considered as of the first semester of 2023, EBITDA would have been higher by 7% year-on-year. The company's EBITDA margin has also
shown impressive year-on-year progress, rising from 50% to 52%, surpassing the full-year guidance of 50%.
Mynt, Globe's fintech arm, sustained its upward trajectory, cementing its status as the leading cashless ecosystem within the Philippines. GCash, the preferred choice for digital financial services, experienced a significant user base and profitability growth, empowering more Filipinos with diverse financial tools.
Globe's share in Mynt's equity earnings for the first half of 2024 surged to ₱2.1 billion, representing a 12% contribution to Globe's pre-tax net income, compared to 5% in the previous year. Mynt's equity earnings also witnessed a remarkable 120% increase compared to last year.
Net income posted a modest year-on-year growth of 1% at ₱14.5 billion from ₱14.4 billion the preceding year. This was primarily driven by the robust EBITDA growth, which counterbalanced the rise in depreciation expenses for the period. Excluding the one-time gain from the tower sale, normalized net income would have stood at ₱11.9 billion, reflecting a 19% increase from the year earlier.
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