Globe cuts profits as it spends more to hike customers, service coverage

MANILA, Philippines - Earnings of Globe Telecom Inc., the Philippines’ second-largest mobile phone company, slid by nearly half as it increased spending to expand broadband and mobile network to attract more customers. Profits of Globe, the exclusive Philippine seller of Apple iPhones, plummeted by 43 percent to P2.5 billion during the fourth quarter last year, lower than the P3.6 billion earned in the same period the previous year. Similarly, the company’s full-year profits fell to of P11.3 billion, 15 percent lower than the previous year’s P13.3 billion. For the full year, Globe said its net income slid 15 percent to P11.276 billion as service revenues were slightly lower by 0.4 percent to P62.894 billion while operating expenses and subsidy jumped 11 percent to $25.496 billion. “Network-related charges such as electricity and fuel charges, rent, repairs and maintenance were higher compared to last year [2007] as a result of an expanded 2G, 3G and broadband network," the company said in a disclosure to the Philippine Stock Exchange (PSE). Salaries paid to employees were also higher by 12 percent even as the company increased workers by six percent, the company said. Costs also rose because of the “full year impact of structural pay adjustments implemented in the second half of 2007," the company said. The company will be allotting some $350 million and $400 million (about P18.8 billion) for capital expenditures, lower than the P19.9-billion spent in 2008. The capital outlay for this year is "lower than 2008 spending but (is) still in excess of the annual capex reinvested in the business since 2005." "The 2009 capex plan includes sustained investments in wired and wireless broadband capacities for the residential markets, network enhancements and maintenance spend for its core 2G business, as well as amounts to support Globe's enterprise and corporate wireline data business," Globe said. As of end-2008, Globe said its subscriber base rose 22 percent to 24.7 million with Touch Mobile or TM, its mass market brand, leading the growth, accounting for 70 percent of the 4.4 million additions in 2008, bringing in more than 3 million incremental SIMs. On Tuesday Globe's shares closed about 1.2-percent higher to P850 each. - GMANews.TV