Globe Telecom posted a strong net income of P3.5 billion in the first quarter of 2006, flowing from its highest-ever quarterly EBITDA and EBIT of P9.7 billion and P5.7 billion, respectively. These results build on the momentum that started in the second half of 2005 when Globe introduced various compelling value-offers to its subscribers. They also reflect continuing efforts to manage the company’s cost of operations.
Globe’s first-quarter net income of P3.5 billion is up 19 percent from last year, despite the tripling of provisions for income tax year on year to P1.5 billion. The company’s effective income tax rate increased from 15 percent to 31 percent with higher corporate-tax rates and the expiry of the Globe’s tax holiday in March 2005. If the impact of mark-to-market and forex changes were to be excluded, the first quarter net income would be up 40 percent year on year and 19 percent quarter on quarter.
Net service revenues at P14.2 billion are 5 percent higher than the same period last year, but lower by 3 percent quarter on quarter with fourth-quarter 2005 revenues reflecting peak seasonal demand. Quarterly EBITDA and EBIT reached historic high points and grew by 23 percent and 39 percent, respectively, from first-quarter 2005 levels. EBITDA margins improved to 68 percent from 59 percent in the first quarter of 2005 and 64 percent in the fourth quarter of 2005.
In line with its thrust to improve price competitiveness and provide value propositions for specific customer segments, Globe further expanded its roster of innovative offers. Last February, Globe Text NonStop, under the banner offering Globe UNLIMITXT, was made a permanent feature to cater to the needs of heavy SMS users.
Extending its unique and compelling per-second offering for local calls to the IDD service, Globe introduced last March its Globe Tipid IDD Kada-Segundo, which allows per-second charging of US$0.003 to 12 select countries and US$0.007 for other destinations. Globe also made available its Tipid IDD rates of P7.50 per minute for calls to the U.S. and Canada on off-peak hours, and P7.50 per minute for calls to Hong Kong CSL mobile numbers. In addition, under Globe’s Kababayan Program, all Globe and Touch Mobile subscribers were offered reduced rates for calls to Saudi Arabia and Japan, as well as discounted SMS and voice calls to SingTel Mobile of Singapore. Finally, on April 16, Globe introduced another tariff breakthrough, the P0.90 per text to all networks, the lowest inter-network SMS rate in the market today.
This array of value offerings has helped strengthen Globe’s competitiveness and provide impetus for subscriber growth. Globe’s total wireless subscriber base reached 13.2 million at the end of the first quarter of 2006, 6 percent higher than the previous quarter’s 12.4 million and 2 percent better than last year’s 12.9 million. Net additions of about 0.8 million SIM cards reflect a significant turnaround from the previous quarter’s net disconnections of about 6,000.
On the wireline front, Innove Communications, Inc., registered a 2 percent year-on-year growth in service revenues to P1.6 billion by end-March, spurred by growth in the consumer broadband and corporate data businesses. This improvement in revenues was also underpinned by a roster of promotions such as free NDD calls of Globelines postpaid subscribers to any Globelines phone; lower IDD rates; the WorldPass Prepaid service that offered reduced internet browsing rates; and various bundled voice and unlimited dial-up and broadband internet services for Globelines subscribers.
“We are delighted by the market’s response to our initiatives and are encouraged by the results of the first quarter,” said Gerardo C. Ablaza, Jr., president and CEO of Globe. “While we expect competition to remain intense in the succeeding quarters, we will stay on course and strive to further strengthen our market position. We also remain committed to improving our operating efficiency and productivity.”
The above information was submitted on May 8, 2006, by Globe Telecom in compliance with the disclosure requirements of the Securities and Exchange Commission and the Philippine Stock Exchange.