Globe profit dips on higher interest, weak peso

MANILA, Philippines — Globe Telecom Inc. sustained a seven-percent reduction in its profit, dragged by higher interest costs due to rate hikes and value losses from peso depreciation.

Based on its financial report, Globe’s net income dipped by seven percent to P16.48 billion in the nine months to September, from P17.69 billion a year ago, as spending rose across the board.

Globe, however, increased revenue by six percent to P139.35 billion, lifted by the stability of core mobile and broadband units.

On the other hand, the telco endured a six-percent hike in expenses to P71.31 billion. Globe said it paid more for utilities, supplies, services and lease during the period, raising costs.

Globe’s depreciation expenses also surged by eight percent to P43.27 billion. As the telco spends for the rollout of new projects, it pays depreciation costs from writing off legacy assets from its portfolio.

However, the larger trouble for Globe lies in financing costs that have gone up by half to P18.21 billion because of higher interest rates and foreign exchange losses.

Globe settled a higher P13.46 billion interest expense in the nine months to September, feeling the pang of rate hikes aimed at containing hot inflation.

Globe recorded P4.2 billion in losses from forex fluctuations, as the peso sank to fresh lows that made it costlier for telcos to import network assets.

Still, Globe sees bright spots in a challenging economy, especially in its e-wallet unit GCash. The e-wallet’s parent Mynt Inc. went public in October and raised a record P60.9 billion in proceeds, setting up a market capitalization of P442 billion.

Mynt currently makes up 28 percent of Globe’s profit before tax and is expected to go up further as the e-wallet grows. Globe Capital Venture Holdings Inc. owns 33.84 percent of Mynt, the biggest share among investors.

Globe president and CEO Carl Raymond Cruz said the telco is well aware of economic risks, but it is optimistic of long-term expansion through core products and digital solutions.

“As we enter the final quarter, we are mindful of the persistent inflationary pressures and tighter household budgets, which could weigh on consumer spending and Globe’s overall performance,” Cruz said.