The Ayala Group's Globe Telecom kept its growth engine running in the first quarter as surging mobile data use, expanding fiber adoption and rising contributions from GCash helped offset mounting pressure from a fragile macroeconomic backdrop.
The Ayala-led telco grew service revenues 5 percent to P42 billion and lifted the profit indicator known as earnings before interest, taxes, depreciation and amortization by 7 percent to P22.2 billion.
Improved margins also helped cushion earnings, with EBITDA margin rising to 52.8 percent from 52.1 percent a year ago.
Management’s view
“Sustained demand across mobile and broadband, continued expansion in fiber, and the growing contribution from our digital ecosystem supported this solid start to the year,” Globe president and CEO Carl Raymond R. Cruz said in a statement.
The results also largely captured conditions before the escalation of the Middle East conflict late in the quarter.
This also raises questions about whether inflation and weaker consumer spending could pressure demand and borrowing costs in the coming months as the Bangko Sentral ng Pilipinas hinted at further rate hikes to keep price increases in check.
GCash contributes 30% of earnings
Mynt, operator of GCash, is becoming a much bigger earnings driver for Globe. Globe’s share in Mynt earnings rose 8 percent to P1.9 billion in the first quarter.
GCash now accounts for 30 percent of Globe’s pre-tax income, up from 22 percent last year.
The figures show how fintech is becoming increasingly important to Globe beyond its core telecom business.
Warning signs emerge
Warning signs emerged as headline profit fell 20 percent to P5.6 billion as elevated interest expenses and the absence of last year’s one-off gains from tower sales and Mynt-related transactions dragged on earnings.
Total debt stood at P251.2 billion as of end-March, while capital spending surged 51 percent to P12.7 billion as Globe accelerated investments in 5G and fiber infrastructure.
Although Globe’s debt levels remain manageable, higher interest costs are already hurting earnings, raising pressure on the telco to keep funding its aggressive network expansion while borrowing remains expensive.
Globe also moved to proactively manage its debt, completing the buyback of $426 million worth of perpetual securities in April and cutting the outstanding balance to $174 million.
Mobile and fiber stay resilient
The stronger story underneath remained Globe’s core telecom and digital businesses.
Core net income rose 9 percent to P4.9 billion, while data-driven services now account for 91 percent of revenues, up from 87 percent a year ago.
Mobile remained Globe’s biggest business, with revenues rising 6 percent to P30 billion as data traffic jumped 18 percent and mobile data revenues climbed 11 percent to P26.8 billion, fueled by streaming, gaming, social media and digital payments.
Home broadband revenues also rose 6 percent to P6.2 billion as GFiber Prepaid reached 1 million subscribers nationwide.
—Edited by Miguel R. Camus
