High cost pulls down Globe’s 9-month profit

MANILA, Philippines—Publicly listed Globe Telecom Inc. on Thursday reported higher revenues for January to September, but higher costs associated with its ongoing network modernization effort reduced the earnings of the Ayala-controlled telecommunications firm.

In a statement, Globe Telecom said it closed the nine-month period with consolidated service revenue of P61.3 billion, up 6 percent from P57.7 billion last year.

“Sustained topline growth was underpinned by the strong performance of the mobile, broadband and fixed line data businesses which grew 6 percent, 14 percent and 9 percent over last year’s results, respectively,” the company said.

However, the firm’s net income after tax during the period declined by 15 percent to P6.8 billion from P8 billion a year ago.

This was due, in part, to the increase in Globe’s depreciation charges, as the country’s second-largest telephone company retired old network equipment.

The company’s marketing costs, aimed at acquiring new clients and retaining old ones, also increased amid the resurgence of competition in the industry.

Excluding foreign exchange and mark-to-market gains and losses, as well as non-recurring items such as the accelerated depreciation charges, Globe Telecom’s core net income was up by 7 percent year on year to P8.8 billion from P8.2 billion.

“Despite the very challenging competitive environment, our business remains fundamentally strong,” company president and CEO Ernest Cu said.

“We were able to build on our earlier triumphs with customer focus being our key differentiator.”

“Going against a traditionally lean season, we sustained our growth momentum once again in the third quarter,” he added. “We still managed to post another record quarter considering that we had to confront capacity constraints on our existing network due to the spike in voice and data traffic, which only reinforced our drive to modernize our entire network and IT infrastructure.”