Globe Profit Drops 11% in H1, Eyes Recovery Fueled by GCash Growth

MANILA, Philippines — Globe Telecom Inc. sustained an 11-percent drop in profit in the first half, but the telco is confident of recovery thanks to the strength of its revenue base and growth of its e-wallet unit. Based on its financial report, Globe said its net income declined to P11.04 billion in the six months to June, from P12.44 billion a year ago, taking higher depreciation from building new projects. Although Globe was able to increase its revenue by six percent to P92.66 billion, it also paid for an expenditure hike of the same level to P47.79 billion. Likewise, Globe’s depreciation costs went up by eight percent to P28.67 billion, attributed to its ongoing efforts to expand network reach. The telco also started feeling the pang of its decreased stake in GCash, as the e-wallet welcomed a new investor in Mitsubishi Corp. last year. Still, Globe’s revenue base is firming up, as mobile and broadband revenues grew by six percent each. The provider booked a 15-percent hike in corporate revenues, capitalizing on businesses in need of enterprise-grade solutions to improve their digital readiness. The best thing for Globe is that GCash’s parent Mynt Inc. is expanding faster than ever, booking quarterly-high revenues of P22.4 billion in the second quarter. As such, Globe’s equity share in Mynt’s profit amounted to P3.7 billion in the first half, and the telco now sources 28 percent of its net income before tax from the e-wallet. Mynt is gearing up for an initial public offering in the fourth quarter worth P92.3 billion, a listing that could become the largest in Philippine history. As of June, Globe has hiked capital expenditures by 39 percent to P26.3 billion. Capex financed the telco’s deployment of 878 new 5G sites and 80,052 additional fiber-to-the-home lines. Globe president and CEO Carl Raymond Cruz said the telco has performed within expectations, keeping a 52.6-percent margin in the face of a difficult economy. He informed shareholders that investments are underway to ensure Globe keeps its competitive advantage. Cruz said the telco industry has been dealing with economic risks recently, especially as consumers cut down on their spending due to elevated fuel prices. “The results reflect disciplined execution, resilience of our business model and our unwavering focus on creating sustainable long-term value for customers and shareholders,” Cruz said.