Globe posts slight drop in Q1 profit

MANILA, Philippines — Globe Telecom Inc. recorded a slight drop in its earnings in the first quarter behind higher non-operating charges and depreciation due to sustained network investments.

The Ayala-led telco said consolidated net income declined by two percent to P6.6 billion in the first quarter from P6.7 billion in the same period last year, while core net income decreased three percent year-on-year to P6.7 billion.

Given the limited impact of the coronavirus disease 2019 or COVID-19 to operations during the three-month period, Globe managed to post a two percent improvement in its consolidated service revenues to P36.9 billion from last year’s P36 billion.

Globe said total data revenues, which now account for 75 percent of total service revenues, remained the key driver for the growth given the greater customer demand for online video entertainment and internet connectivity.

“Globe remained resilient and posted healthy results in the first quarter, despite going into enhanced community quarantine in the last two weeks of March. While we are grateful for our recent achievement, we understand that this is not reflective of our performance moving forward,” Globe president and CEO Ernest Cu said.

Cu said the company expects revenues in the second quarter to decline by low double digits from the first quarter levels “as the quarantine limits people’s movement and affects their disposable income.”

“However, as we prepare for the new reality, we do see an acceleration in home broadband services, and cloud-based and cybersecurity solutions given the move of most companies to work remotely. Consequently, we expect to maintain EBITDA margin at low 50s, as the reduced operations allow us to control some expenses,” he said.

With the quarantine implemented only in the last two weeks of the quarter, Globe said it was still able to continue to invest on its network with total spending of P10.7 billion.

But given the full impact of the quarantine and the delays it is experiencing with its network rollout, the telco said capex guidance for the second quarter would likely be lower by at least P2 billion from the first quarter capex spending.

Cu, however, assured Globe is very well positioned to pull through amid the challenges given its strong balance sheet and an efficient business continuity plan in place.

He said outlook for the balance of the year would be assessed further as the impact is highly dependent on the duration of the community quarantine.

Globe ended the first quarter with a total of 89.3 million mobile subscribers and 2.3 million home broadband subscribers, up by seven percent and 32 percent year-on-year, respectively.