Globe expects capex to drop to $1 billion in 2024

GLOBE TELECOM, Inc. expects its capital expenditures (capex) to drop to $1 billion next year amid the reduction of purchase order issuances this year.

Globe’s capex for this year will remain at around $1.3 billion, it said in a statement, after spending P37.7 billion in the first six months of the year.

The continuous decline in capex will be enabled by the reduction of purchase order issuances for the year to $600 million, the company said.

“This steep reduction will directly impact capex spending over the next few years allowing capex to drop further to $1 billion by 2024, without sacrificing network quality or customer experience,” it added.

The company also revised its service revenue guidance for the year to mid-to-low single digit from mid-single digit growth, which it said is because of extended macroeconomic pressures.

“This adjustment takes into account the extended inflationary environment that weakened the Filipino consumers’ purchasing power, coupled with the continued decline in our legacy broadband business,” Globe said.

SECOND QUARTER PERFORMANCEGlobe reported an increase of 17.7% in its attributable net income to P7.07 billion for the second quarter from P6.01 billion in the same period last year.

From April to June, the company’s top line reached P44.49 billion, an increase of 1.7% from P43.76 billion in the corresponding period of 2022.

Cost and expenses during the period rose 6.6% to P39.34 billion from P36.91 billion last year.

However, Globe’s net income for the first semester declined 27.1% to P14.33 billion from P19.65 billion a year ago, despite a 2.5% increase in its top line to P89.52 billion from P87.32 billion last year.

The sharp decline was attributed to a P10.51-billion gain from the sale of its controlling interest in a data center business booked in the first six months of 2022.

The company’s first-half service revenues, which accounted for P80.4 billion or 89.8% of its top line, rose 1% from P78.88 billion in the first half of last year.

Meanwhile, non-service revenues climbed 8.1% to P9.12 billion for the first six months of the year from P8.44 billion last year.

“The Globe group’s consolidated service revenues rose… showing stable revenues year-on-year, backed by the data revenue growth across mobile and corporate data businesses,” the company said.

First semester consolidated data revenues were P53.11 billion, a 6.2% jump from the P49.99 billion booked a year ago, while broadband revenues were 7.1% lower at P12.81 billion from P13.79 billion last year.

Mobile data traffic grew to 2,814 petabytes as of the end of June, higher than the 2,177 petabytes reported in the year earlier.

“This was mainly fueled by the growing popularity of streaming and user-generated content through social media,” the company said.

Meanwhile, the company said its total Home Broadband subscribers declined by 31% to 2.2 million, which it attributed to the shift of the market to more reliable wired connectivity.

The company also saw a decline in revenues for the first half from voice services and SMS or short messaging service by 12.9% and 10.1% to P7.65 billion and P3.99 billion, respectively.

It also saw P77.99 billion in costs and expenses in the first six months of the year, a 4.4% rise from P74.71 billion a year ago.

“The Globe Group continues to perform well during the first half of the year, despite facing macroeconomic challenges,” said Ernest L. Cu, president and chief executive officer of Globe.

“We are confident that Globe will maintain its leadership in mobile going forward. The company is also well-positioned to adapt to the industry’s changing landscape and take first mover advantage with its innovative digital solutions that deliver life-enabling services to Filipinos,” he said. — Justine Irish D. Tabile