SingTel – BT

SingTel unit Globe’s earnings down 15% last year

WEAK market demand and foreign exchange losses dragged down last year’s earnings of Singapore Telecom’s listed Philippine unit Globe Telecom.

In a report to the Philippine Stock Exchange yesterday, Globe said consolidated net income slumped 15 per cent to 11.3 billion pesos (S$362.7 million) due to flat revenue of 62.9 billion pesos. Core net income, which excludes forex gains and losses, was down 14 per cent to 11.8 billion pesos.

Globe, SingTel’s joint venture with listed Manila conglomerate Ayala Corp, blamed the weak economic environment, intense competition, forex and mark-to-market losses and other adverse factors, including one-time bond redemption costs, for its poor earnings.

Overall, revenue from wireless services fell one per cent to 55.6 billion pesos, while that from fixed lines edged up 7 per cent to 7.3 billion pesos.

Though interest expenses were lower compared with 2007, this was offset by higher net forex losses arising largely from the revaluation of the company’s US dollar-denominated debt.

Analysts said Globe’s revenue could have sunk deeper if not for its strong performance during the holiday season in the fourth quarter of last year. Q4 revenue surged 5 per cent to 16.3 billion pesos – Globe’s highest quarterly revenue to date – as it launched new mobile and broadband services at competitive rates.

‘Our strong topline performance in Q4 enabled us to regain some of the ground that we lost in the early part of the year,’ said Globe president and CEO Gerardo Ablaza.

He believes the good Q4 results have given Globe, the country’s second-largest telco, the momentum to face the challenges in the telecom market this year.

‘We are encouraged by the resilient growth of both our mobile and broadband subscriber base, and remain committed to delivering products and services that serve the needs of our subscribers at affordable prices,’ he said.

Globe, whose stock closed 1.2 per cent higher at 850 pesos yesterday, posted a 22 per cent rise in wireless subscribers to 24.7 million last year. Broadband subscribers almost doubled to 234,000.

Mr Ablaza said demand for Globe’s fixed and mobile broadband services has been ‘very positive,’ exceeding expectations. It expects broadband growth to continue this year, with the increasing affordability of the service and data devices.

‘For 2009, our objective is to build on the earnings of 2008, sustain our Q4 gains and step up growth for all our businesses,’ he said. ‘While we will adapt to changes in near-term demand with the slowing economy, we will continue to invest and set our sights on the long term.’

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