Globe Telecom, Inc. Delivered Robust Financial Performance in Q12024, Revenues at P41.1 Billion, Up 3%

Globe's consolidated gross service revenues grew by 3% to P41.1 billion in the first three months of 2024, despite the decline in home broadband and non-telco services.

The company's mobile and corporate data businesses, which generated 83% of its topline, continued to develop rapidly, contributing to this impressive performance. Corporate data revenues increased by 10%, while mobile revenues increased by 8%. In the first quarter of 2024, Globe's data revenues increased significantly from 82% of total consolidated gross service revenues to 85% of that amount. Globe's total consolidated gross service revenues would have increased by 5% on a comparable basis if the previous period's adjustments were made to account for the deconsolidation of ECPay from Globe's books in Q12023 (after the sale of its 77% interest in ECPay to Mynt).
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Despite the difficult economic circumstances that have an impact on consumer purchasing, Globe's mobile division continued to develop, with revenues as of the end of March 2024 reaching P29.1 billion, an 8% increase from P27.1 billion the previous year. The reason for this success is that customers keep choosing Globe because of its unique network quality and service, which is fueled by the company's successful market repair initiatives. The share of overall mobile revenues in total consolidated gross service revenues has increased to 71% from 68% in the previous year. This is evidence of the company's solid business strategy and large client base, which for the first three months of the year totaled 58.8 million mobile users.

From a product standpoint, mobile data revenues increased from P21.7 billion to P23.8 billion during the first three months of this year, a 10% increase. This was mostly caused by the Filipino people's growing reliance on mobile devices for a variety of purposes, including social media engagement, online shopping, and media streaming. This revenue growth has also been aided by the growing popularity of data-intensive applications and the widespread usage of smartphones. From 1,352 petabytes recorded in the same period of 2023 to 1,610 petabytes in the same period of 2024, mobile data traffic increased dramatically. 82% of mobile revenues come from mobile data, up from 80% in the previous year. On the other hand, traditional mobile voice and SMS revenues were down 2% and 3% year over year to P3.4 billion and P1.9 billion, respectively.

The corporate data business grew during the first quarter of 2024, propelled by the company's commitment to providing cutting-edge solutions that support digital transformation and meet the demands of its enterprise clients. A 10% year-over-year increase in corporate data sales, or over P5.0 billion, was mostly due to the 12% growth in core data services and the 7% growth in information and communication technology (ICT) services.
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On the other hand, because of a drop in fixed wireless, Home Broadband's sales fell by 6% to P6.1 billion in the first quarter from P6.5 billion a year earlier. However, the increase in postpaid fiber helped partially offset this decline. The postpaid fiber market, which makes up 84% of home broadband, saw a rise in revenue and subscribers year over year of 3%. Revenues from home broadband, meanwhile, were unchanged from the fourth quarter.

In keeping with the company's projections, Globe's fixed wireless revenue drop is slowing. The company's Home Prepaid WiFi solution saw a notable spike in sales during the first COVID-19 pandemic due to the due to the rise in demand for dependable data connectivity. However, fixed wireless metrics started to stabilize and steadily fall after the pandemic as consumer preferences switched toward more reliable wired access, in line with earlier predictions. Globe predicts that the new GFiber Prepaid, in conjunction with this encouraging trend, will allow for a positive increase in overall broadband revenues in the second part of this year.

Customers have also responded very well to GFiber Prepaid since it launched in the latter half of 2023. The favorable reviews emphasize the benefits of the service, which include its completely digital experience, cost, dependable network access, and easy GCash loading. This illustrates Globe's comprehension of the demands of the prepaid consumer market and led to a 53% increase in acquisitions during the first quarter. Notably, GFiber Prepaid acquisitions increased threefold in April, demonstrating the service's encouraging development trend that is expected to continue in the second half of the year.

As the industry shifts to more dependable wired connectivity, the overall number of home broadband subscribers fell by 26% to 1.7 million from 2.3 million in the previous year. This is mostly because fixed wireless broadband is becoming more commonplace. Similarly, during the current reporting period, HPW data traffic decreased from 86 petabytes in the prior year to just 54 petabytes.
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When compared to the P1.4 billion reported at the end of March of the previous year, the company's non-telco revenues decreased by 60% year over year. The sale of Globe's 77% ownership in ECPay to Mynt in September 2023 led to the deconsolidation of ECPay from Globe's accounts, which caused this dramatic decline. All non-telco revenues would have decreased by only 31% if ECPay's deconsolidation had been recorded in Globe's books in the first quarter of 2023.

Meanwhile, Globe's overall operating costs, including subsidies, increased from P19.5 billion to P19.8 billion in the first three months of 2024. Reduced marketing and subsidies, as well as provisions, were among the company's cost-cutting measures, but they were outweighed by increases in leasing, maintenance and repairs, personnel costs, and administrative expenditures.

Globe's consolidated EBITDA for the first three months of this year was P21.4 billion, a significant increase of 4% over the same period last year. This was mostly caused by a 3% rise in topline revenue, which was somewhat countered by a 2% increase in operating expenses (including subsidies). In a similar vein, the company's EBITDA margin grew year over year, from 51% to 52%, surpassing the 50% full-year guidance. The company's commitment to optimizing operational effectiveness and guaranteeing ongoing development is demonstrated by this expansion.
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Globe's fintech division, Mynt, continued to grow, reaffirming its status as the biggest cashless ecosystem in the Philippines. As more and more Filipinos gain access to a wide range of digital financial tools and services, GCash continues to be the go-to option, with notable increases in its user base and profitability. Globe's portion of Mynt's equity earnings for the first quarter of this year was P962 million, or 11% of the net income before taxes for this time, as opposed to 4% for the same period last year. By comparison, Mynt's equity earnings increased by 138% over the same period last year.
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Compared to the P7.3 billion recorded the year before, net income decreased by 7% to P6.8 billion. Higher depreciation costs and non-operating charges—as compared to non-operating income during the same time last year—were the primary causes of this. Normalized net income would have been P5.8 billion if the one-time gain from the tower sale had not been deducted, indicating a 13% increase over the prior year.

Therefore, when non-recurring costs, foreign exchange, and mark-to-market charges are taken out of the picture, Globe's core net income soars to P5.8 billion during this time, a noteworthy 13% increase over the same period last year.

Globe's total debt increased from P250.0 billion at the end of December 2023 to P246.7 billion during this period. The company's gross debt to EBITDA ratio is 2.70x, its net debt to EBITDA is 2.52x, and its debt service coverage ratio is 1.89x. Globe's balance sheet remained sound, with gearing comfortably meeting bank covenants.

"Our financial performance for the first quarter exceeded expectations, with an impressive 52% EBITDA margin, indicating a positive start of the year and building momentum going into the coming quarters."said Ernest L. Cu, President and CEO of Globe Telecom Inc.

"We are also pleased with the progress of our landmark tower deal with the successful transfer of a significant portion of the towers, reaching nearly 70%. We have put in place plans to ensure that the majority of the proceeds will come in by the first half of the year. This move puts us in a solid position to meet the dynamic connectivity demands of our customers and stay at the forefront of the industry."

"Guided by a clear strategic focus on innovation and customer-centricity, we are confident in our ability to overcome challenges and seize the opportunities to create a brighter and more connected future for the Philippines." Mr. Cu added.

Globe Telecom, Inc. is a leading digital platform in the Philippines, with major interests in telecommunications, venture capital and venture building, shared services and digital marketing solutions. The company serves the telecommunications and technology needs of consumers and businesses across an entire suite of products and services including mobile, fixed, broadband, data connectivity, internet and managed services. In 2019, Globe became a signatory to the United Nations Global Compact, committing to implement universal sustainability principles. Its principals are Ayala Corporation and Singtel, acknowledged industry leaders in the country and in the region.