Globe profit up 19% as revenue hits record high

MANILA, Philippines—Ayala-led Globe Telecom said its profit grew by nearly a fifth in the second quarter of the year after revenues reached a record high during the period.

In a briefing, the company said its broadband Internet business, which was the fastest-growing segment of the company’s operations in the second quarter, was expected to continue boosting revenues for the rest of the year.

“Solid results were achieved in a competitive market that is expected to stay as such even with consolidation imminent among local players,” Globe president and CEO Ernest Cu said.

Globe’s net income rose 19 percent to P2.51 billion in April to June.  This is the highest profit growth reported by Globe in the past several years, officials said.

Stripping out the effects of foreign exchange movements and investments, its core profit was up 9 percent to P2.61 billion.

Revenue reached an all-time high of P16.6 billion for the three-month period, surpassing the previous record of P16.5 billion, which was posted in the first quarter of the year. Globe bucked an industry-wide trend of declining revenues and profits arising from stiff competition and the near saturation of the Philippine telecom market.

Globe’s rival, Philippine Long Distance Telephone Co., recently reported a slight drop in profit and gross revenue.

PLDT, however, expects a return to profit growth by 2013.

It also said that the acquisition of Digitel Telecommunications Philippines Inc. was seen to have positive impact on the PLDT group’s earnings.

Globe ended the first half of the year with a net income of P5.5 billion, up 9 percent from a year ago. As of end June, the company has 28.4 million mobile phone subscribers, up by 15 percent from 24.6 million last year.

Mobile revenue, or earnings from traditional call and text messaging services, grew by 5 percent to P26.2 billion in the first half.

“Simply put, customers are spending more with us. As we know, most Filipinos carry multiple SIM cards. What we see is more customers using Globe than ever before,” Globe consumer business senior advisor Peter Bithos said.

Broadband subscribers increased to 1.3 million, up 39 percent year on year. This drove broadband revenue up 42 percent in the first half to P3.65 billion, or 11 percent of the company’s gross. Broadband revenue last year accounted for 8 percent of gross.

For the remainder of the year, the company said it plans to accelerate capital spending to increase network capacity to accommodate upsurge in network traffic due to the popularity of mobile Internet services.

“The company is allotting a significant portion of this year’s $500-million projected capex (capital expenditure) for the expansion and upgrading of mobile networks,” Globe said in a separate statement.

The company said it had spent P8.6 billion of its capital expenditure budget in the first semester of the year.