Globe closed the first half of 2022 with ₱50.5 billion capital expenditure (capex), surpassing last year’s spending by 17%. A large portion of the capex or 84% was allocated for data requirements to meet consumer’s growing demand for data. This amount also represents 57% of the ₱89 billion capex earmarked for this year to further build its fiber assets, put up more cell sites, upgrade towers to 4G LTE, and roll out 5G technology and in-building solutions. As a testament to Globe’s commitment to deliver world-class connectivity to Filipinos, about 64% of this period’s revenues were reinvested back to its network infrastructure to improve customer experience. Globe’s capex to revenue ratio remained elevated and is still among the highest reinvestment ratios in Asia.
In line with the Company’s fiber strategy, over 1.0 million FTTH lines were installed as of end-June of 2022, versus over 600 thousand lines from a year ago. The Company likewise provides free migration to fiber to its customers for them to enjoy faster speed, bigger data, and a more stable connection for remote learning, digital entertainment, livelihood and productivity at home.
As of the first semester of 2022, Globe built 572 new cell sites nationwide, upgraded 6.8 thousand mobile sites, and installed 933 new 5G sites in response to the growing connectivity needs of the Filipinos. Globe remains on track with its network rollout and targets to end this year with about 1,700 new cell sites, aiming to beat last year’s builds of 1,407.
With the Company’s continuous efforts to advance its 5G infrastructure, Globe’s 5G network now reaches 96.6% of NCR and 85.8% of key cities in Visayas and Mindanao in terms of 5G outdoor coverage, allowing more Filipinos to enjoy the higher speed, lower latency, and more reliable data service. As of end-June 2022, Globe logged around 2.7 million devices in its 5G network. Globe is also accelerating its roaming rollout, particularly 5G, to more countries in Asia, the Middle East, and Europe to bring seamless and world class connectivity experience to travelers and OFWs. To ensure that more people will benefit from this new technology, Globe is offering several entry-level and mid-range 5G phone models for free when subscribed to a postpaid plan. The phones may also be bought separately from Globe stores at discounted prices when bundled with a SIM-only plan.
Moreover, Globe’s aggressive network expansion made its presence felt during the second quarter this year as proven by the recent recognition received by Globe from the global analytics firm Ookla® as the Philippines’ Most Reliable Mobile Network1 topping other players in terms of consistency and availability. Based on analysis by Ookla® of Speedtest Intelligence® data, Globe achieved the highest Consistency Score™ of 79.44 and Most Available All Technology score at 93.11. Globe’s consistency score of 79.44 is a near two-point advantage over the next player, which got 77.69. The third placer, meanwhile, got 73.82. In terms of availability, Globe received the highest score at 93.11, edging out competitors who got 91.91 and 91.41, respectively. The availability score identifies the network whose users spend the highest percent of their time on all technology.
Scoring another world first, Globe completed the deployment of a new series of antennas that efficiently enables the acceleration of 4G and the evolution of 5G technology. The powerful configuration allows simplified deployment in one antenna, with greater efficiency at 30%, a first in the industry. Since the antenna is smaller than the traditional design, it makes installation easier and faster even on cell sites with limited space. The technology also minimizes feed loss and improves energy efficiency by 10%~15%. This means that Globe can maximize energy efficiencies and lower electricity utilization through antenna development and power consumption innovation. This latest technology and Globe’s unceasing network improvements is part of its firm adherence to infrastructure buildup and innovation under the United Nations Sustainable Development Goals, particularly UN SDG No. 9, which highlights the roles of infrastructure and innovation as crucial drivers of economic growth and development.
Financial Highlights: Data revenue growth powered 1H’22 robust performance
Globe’s consolidated service revenue hit another record at ₱78.9 billion, up 4% year-on-year. The strong revenue performance was above the growth rates before the pandemic, fueled by the solid contribution of data related products and services across mobile and corporate data. Total data revenues catapulted to 81% of total service revenues from 79% last year.
Mobile business revenues likewise posted a 3% year-on-year growth reaching ₱54.0 billion from the ₱52.6 billion generated in the similar period of 2021. The revenue increase came mostly from the prepaid brands spurred by more consumer mobility with the easing of pandemic related restrictions in the country. Total mobile revenues comprised 69% of the total service revenues, with the total mobile customer base expanding to 87.4 million, or 7% higher from the year earlier.
From a product perspective, mobile data revenues grew by 8% to reach ₱41.8 billion in the first half of the year from ₱38.6 billion in the same period of 2021, as the new normal pushed more people to the digital world and accelerated Filipinos’ digital adoption. Thus, mobile data traffic jumped to 2,177 petabytes as of end-June this year, beating the 1,761 petabytes reported in the similar period. Mobile data now accounts for 77% of mobile revenues from 73% from the same time last year. Meanwhile, mobile voice and mobile SMS revenues ended at ₱7.8 billion and ₱4.4 billion, lower year-on-year by 15% and 8%, respectively.
Home Broadband business dipped further in the second quarter, bringing its total revenues for the first half of 2022 to only ₱13.8 billion from ₱14.5 billion a year earlier. This period’s result however was still better than pre-pandemic levels. The 5% drop in Home Broadband revenues was still driven by the continued transition and migration of broadband subscriber base, particularly HPW subscribers, to Fiber. This decline in Fixed Wireless Product fully negated the sustained growth in the fixed wired segment. As Globe continues to expand its fiber footprint, fiber subscribers and revenues rose to a solid 102% and 135%, respectively, against the same period of 2021. The rapid rise in fiber adoption among its customers who want a faster and more reliable broadband connection led to the continued migration of HPW subscribers to Fiber. Total Home Broadband subscriber count now stands at 3.1 million or down by 26% year-on-year. Similarly, HPW data traffic declined to only 253 petabytes as of the first half of 2022 from 423 petabytes a year ago.
Corporate Data revenues sustained its double-digit growth of 21% generating a historic-high of ₱8.2 billion this period from ₱6.7 billion from the same time last year. This outstanding performance was powered by the uptick from information and communication technology (ICT) and international leased line services. Growth from ICT was largely from business application services, cloud solutions, and cybersecurity services.
Complementing the gains from the telco core products and services, Globe’s non-telco businesses are growing at a rapid pace, with its revenue soaring to ₱1.9 billion in the first half of the year, up 118% from the corresponding period of 2021. The revenue increase was again contributed by Adspark, Yondu, and Asticom. This remarkable progress brings Globe closer to its vision of going beyond telco to empower the Filipino digital lifestyle.
To support Globe’s various business initiatives, total operating expenses including subsidy stood at ₱38.3 billion for the first half of 2022, or flat year-on-year. The increase from almost all expense line items were offset by the declines from marketing & subsidy as well as lease.
Consolidated EBITDA for the six months ended June 30, 2022 stood at ₱40.5 billion, up by 8% from a year ago due to the 5% improvement in the topline and flat total operating expenses (including subsidy). Consequently, EBITDA margin for the period rose to 51% from last year’s 49%. With higher EBITDA and lower non-operating expenses, which fully offset the increase in depreciation charges, net income reached ₱19.7 billion or 51% higher than the ₱13.0 billion reported in the similar period in 2021. Total non-operating income of ₱6.5 billion as of the first semester this year was mainly due to the one-time net gain of ₱8.5 billion (post-tax) on the partial sale of Globe’s data center business reported last quarter. Excluding this one-time gain, normalized net income would have been ₱11.2 billion, or up by 4% year-onyear. Accordingly, core net income, which excludes the impact of non-recurring charges, and foreign exchange and mark-to-market charges, ended at ₱11.0 billion for the period. Similarly, normalized core net income was up by 1% year-on-year.
Globe’s balance sheet remained healthy and gearing comfortably within bank covenants despite the increase in debt from ₱185.5 billion as of end-June 2021 to ₱240.0 billion this period. Globe’s gross debt to equity is at 1.91x while gross debt to EBITDA is at 2.59x; Net debt to equity ratio is at 1.81x while net debt to EBITDA is 2.46x; and debt service coverage ratio is at 4.05x.
“We are happy that the Globe Group’s performance accelerated solidly in the first half of the year, rebounding our topline to pre-COVID levels. We are consistently delivering value to our customers and uplifting their lives through connectivity or other digital solutions. As we expand our digital strategy, we will continue improving our network and service delivery, even as we manage our costs. We are confident that our leadership, being the most reliable network and the preferred brand of Filipinos, will bring steady business growth moving forward,” Ernest L. Cu, President and CEO of Globe Telecom Inc., said.