Globe 2012 net falls 30% on rising costs

Dylan Bushell-Embling
07 Feb 2013

The Philippines' Globe Telecom has reported a 30% decline in 2012 net profit to 6.9 billion pesos ($169.7 million), blaming rising network investment and marketing costs.

Globe reported total service revenue for the quarter of a record 82.7 billion pesos, up 6% from 2011.

Around 67.2 billion pesos of this total came from the operator's mobile business, while broadband's contribution increased 16% to 8.7 billion.

But consolidated ebitda fell marginally to 35 billion pesos - and ebitda margins fell three percentage points to 42% - as a result of rising expenses.

Capex costs climbed 54% to 26.8 billion, as a result of heavy spending on the rollout of its HSPA+ network and expansion of its existing mobile and broadband networks. The company now has over 13,200 base stations and 7,000 cell sites, running 2G, 3G, HSPA+ and WiMax services.

Marketing and subsidy costs meanwhile grew to 13% of total service revenue, from 9% in 2011, as Globe spent heavily on attracting new postpaid and 3G customers with devices including the iPhone.

Total operating expenses increased 12% to 47.7 billion pesos, due to higher network-related costs as well as the marketing and subsidy spending.

A 25% spike in depreciation expenses related to the operator's network modernization and IT transformation programs also contributed to the decline in profit for the year.

Globe ended the year with 33.1 million mobile subscribers, including 1.7 million on postpaid. Postpaid churn increased to 1.8%, from 1.5% in 2011.

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