1. business and industrial

COVER SHEET
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(Company's Full Name)
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(Business Address: No. Street City / Town / Province)
MA.
CARIDAD
D. D.
GONZALES
MA.
CARIDAD
GONZALES
730-2875
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2
Month
Day
Annual Meeting
Foreig
GLOBE TELECOM, INC.
4Q 2009
Financial & Operating Results
5 February 2010
1
2009 Performance Highlights
 SIM base at 23.2Mn with positive net additions in 4Q09
Subscribers
Revenues
 Broadband subscribers now at 715k, up three-fold from 2008,
and ahead of full-year guidance
 Service revenues of Php62.4 Bn, down 1%
Revenues
 Broadband and fixed line data up 74% and 23% YoY,
while mobile revenues down 4%
 Wireless EBITDA margins sustained at 65%, while broadband
Earnings
Shareholder
Returns
and fixed line improved to 22% from 17%
 Net Income of Php 12.6Bn, up 11% YoY
 TSR of 30% and ROE at all-time high of 26% from 21% in 2008
 Declared 1st semester dividend of Php40 per common share,
payable on March 15. Represents 42% of 2009 net income
2
1
SIM Base: Resumed growth in 4Q, with higher gross adds
from more focused campaigns and lower churn rates
2009 Quarterly Gross and
Net SIM Additions (in ‘000)
SIM Base (‘000)
4Q09
YoY
change
Postpaid
851
 7%
-
Globe
Prepaid
13,049
 2%
-
TM
9,345
 11%
 1%
TOTAL
23,245
 6%
 1%
5,956
4,901
4,803
QoQ
change
3,763
993
117
(616)
1Q
2Q
3Q
4Q
1Q
4Q
(1,896)
Gross Adds
Net Adds
 Gross additions up 30% compared to 3Q, while churn rates were down to 6.9% (from 7.8% in 3Q)
as low-quality acquisitions cycle out
3
Mobile Revenues: Strong results from TM and postpaid,
but Globe Prepaid still behind last year’s performance
Blended ARPUs
Revenues by Brand (Php Mn)
2009
YoY
change
QoQ
change
Postpaid
12,801
 2%
 6%
Globe
Prepaid
28,834
 9%
 3%
TM
11,686
 5%
 4%
TOTAL
53,321
 4%
 1%
+5%
196
4Q08
184
1Q09
179
2Q09
186
177
3Q09
4Q09
 TM & Globe Postpaid ARPUs up 9% and 5% QoQ, while 4Q service revenues up 4% and 6% –
TM’s FY09 revenues also up despite lower SIM base
 Globe Prepaid’s brand metrics are improving (higher recall, awareness levels), but sales performance
still to pick up
 4Q09 mobile revenues up sequentially, but is 9% below same period last year with weak consumer
economy and impact of typhoons which hit the country in late 3Q/early 4Q
4
2
Unique, pioneering service offers to increase usage
and drive growth
 UNLIMITED VOICE AND DATA OFFERS
 IMMORTALCALL + – 5 min call +50 intra-network
SMS with no expiry for only Php15
 SUPERUNLI – Unlimited call & text for
Php 150 for 5 days
 IMMORTALTXT – 50 intra & 10 inter SMS
with no expiry for Php 10
 ASTIGTXT10 – Unlimited intra SMS for
Php 10/day for TM subscribers
 WORLDWIDEST brand campaign reinforcing
Globe’s international network reach
 TipIDD card – Prepaid call card offering
discounted IDD rates
 IDD Suki –IDD load available via AMAX retailers
for calls to US, Canada, Hong Kong, Middle East
5
Broadband: Robust revenue growth sustained in 4Q
with record quarterly net subscriber additions
Revenues (Php Mn)
Cumulative Subscribers
(‘000)
+85%
1,063
4Q08
638
517
724
2Q09
3Q09
4Q09
92
320
287
128
138
499
379
231
1Q09
198
715
864
574
Net Subscriber Additions
(‘000)
203
81
150
159
176
197
4Q08
1Q09
2Q09
3Q09
53
56
4Q08
1Q09
216
4Q09
Wired
2Q09
3Q09
4Q09
Wireless
6
3
Operating margins remain strong with
controlled spending for non-network related items
EBITDA Margins by Segment
FY
2008
FY
2009
Wireless
65%
65%
Broadband
and Fixed Line
17%
22%
Consolidated
59%
58%
Key Opex Items - % Change YoY
Network-related
(+10%)
Total
Opex & Subsidy
(+2%)
Staff Costs
(-2%)
Others
(-1%)
Mktg & Subsidy
(-7%)
* Network-related opex includes rent, utilities, repairs and
maintenance, supplies, security & other contracted services.
 Consolidated marketing and subsidy at 8% of service revenues, from 9% in 2008
7
Three key priorities in 2010 …
1
Gain share of wallet in mobile business
 Enhance appeal of Globe, Tattoo, and TM brands to their respective
target markets – Drive usage, increase frequency of availments
 Strengthen loyalty and retention programs, improve customer service
 Improve distribution channel effectiveness, using Globe’s 739k-strong
AMAX retailer network as advocates of Globe’s products
2
Sustain growth momentum in broadband and corporate data
 Further expand WiMax footprint – Service now available in over 190 towns and cities, delivered through
more than 850 WiMax base stations nationwide
 Supply chain improvements to maximize sales & installation throughput for broadband services
 Expand service offerings to corporate clients – Evolve from being access-based to solutions-based
3
Network quality as competitive differentiator
 Expanded international connectivity – Globe joined a consortium that
includes Google, Singtel, Telkom Indonesia, KDDI, Bharti Airtel, etc to
build the SEA Japan Cable System. Facility operational by 2Q 2012.
 Recently given MEF (Metro Ethernet Forum) certification for carrier
ethernet offerings – a 1st in the Philippine telecom industry
8
4
Capex: 2010 spend expected to be at about US$500Mn,
in line with 2009 levels
Capex to Revenue Ratios
2010 Capex Guidance
2009A
Broadband –
$230Mn or 46%
One-time Capex$50Mn or 10%
(2009A = $207Mn)
2010F
40%
848
38%
Excluding onetime capex
31%
34%
Mobile
Business
13%
15%
Consolidated
Consolidated
(2009A = $115Mn)
Fixed Line Data
& Others –
$50Mn or 10%
(2009A = $52Mn)
Mobile - $170Mn or 34%
(2009A = $142Mn)
(1)
Based on Php 46/$ and using 2009 revenues
(2)
Mobile capex (excluding one-time investments)
divided by mobile revenues
 One-time capital investments include:
 FOBN2 – 2nd fiber optic backbone network that provides additional capacity and boosts resiliency of Globe’s
domestic network. Completed last Nov 2009 for US$70Mn.
 TGN-Intra Asia cable system – Provides customers with international bandwidth capacity, and increased options for
route diversity. Carried live traffic starting 1Q 2009. Project cost at $90Mn including cost of domestic backhaul
 For 2010 – SEA-Japan Cable system – Estimated project cost of US$60Mn
9
2010 Outlook
Mobile
Telephony
 Industry revenue growth at low to mid single-digit levels, in line with
broader economy (GDP growth forecasted at 2.5 – 5%)
 Globe expects to take proportionate share of industry growth
 Mobile telephony EBITDA margins at mid 60s
 Industry to grow to about 4 to 5Mn subscribers, from 2.5Mn as of end-2009
Broadband
 Globe aims to double subscriber base to about 1.3Mn by end 2010
 Subscriber growth will largely come from fixed wireless (WiMax)
and prepaid, nomadic segments
 Consolidated revenue growth at low to mid single-digit levels
Total Globe
 Consolidated EBITDA margins at mid to high 50s
 Capex at about US$500 Mn
10
5
Financial Performance
11
Consolidated Financial Highlights
In Php Mn
2009
2008
YoY
Change
4Q09
3Q09
QoQ
Change
Service Revenues
62,443
62,894
(1%)
15,548
15,202
2%
OPEX & Subsidy
25,981
25,496
2%
6,651
6, 732
(1%)
EBITDA
36,462
37,398
(3%)
8,897
8,470
5%
58%
59%
57%
56%
19,074
20,370
(6%)
4,160
4,040
3%
1,101
2,524
(56%)
274
300
(9%)
NIAT
12,569
11,276
11%
2,715
2,613
4%
Core NIAT*
12,003
11,765
2%
2,595
2,504
4%
EBITDA Margin
EBIT
Non-Operating
Charges
* Excludes forex, mark-to-market gains and losses, and non-recurring items
12
6
Blended ARPUs up while acquisition costs down
with lower handset subsidies for postpaid subscribers
GLOBE PREPAID
GLOBE POSTPAID
203
7,247
4,489
4,466
1,353
1,282
1,224
1,286
46
61
4Q08
1Q09
2Q0 9
Net ARPU
179
3Q09
4Q09
4Q08
36
1Q09
2Q0 9
SAC
Net ARPU
TM
100
91
94
36
4Q08
1Q09
2Q0 9
30
3Q09
34
4Q09
SAC
BLENDED
196
184
25
27
3Q09
4Q09
179
177
186
128
88
38
Net ARPU
171
105
96
110
40
170
5,055
4,937
1,270
192
4Q08
1Q09
SAC
97
2Q0 9
Net ARPU
85
3Q09
4Q09
SAC
13
Operating Expenses & Subsidy
2009
2008
YoY
Change
4Q09
3Q09
QoQ
Change
Subsidy & Marketing 5,296
5,687
(7%)
1,474
1,166
26%
Staff Costs
4,981
5,077
(2%)
1,113
1,223
(9%)
Utilities, Supplies &
Other Admin
2,693
2,710
(1%)
762
672
13%
Rent
3,469
2,883
20%
915
912
-
Repairs &
Maintenance
2,582
2,495
3%
702
642
9%
Provision & Others
725
1,237
(41%)
210
261
(20%)
Services & Others
6,235
5,407
15%
1,475
1,856
(21%)
OPEX & Subsidy
25,981 25,496
2%
6,651
6,732
(1%)
Depreciation &
Amortization
17,388
17,028
2%
4,737
4,430
7%
Total
43,369 42,524
2%
11,388
11,162
2%
9%
8%
In Php Mn
Marketing & Subsidy
as % of Sales
8%
9%
Subsidy & Marketing higher QoQ due to
seasonal spend, but is lower YoY and
as % of service revenues
Staff costs down YoY with lower headcount
from increased outsourcing. Also lower
QoQ due to lower performance-based pay
Rent higher YoY due to expanded network
for broadband and data, new cellsites, and
temporary leases for capacity protection
Provisions down YoY due to collection of
long outstanding accounts and lower
inventory charges
Services & Others increased YoY due to
higher costs for call centers, security, and
line installation. Charges down QoQ as
3Q09 included additional accruals for
services related to mobile network
14
7
Healthy balance sheet, with improvements in gearing
levels over past 3 years with capital management efforts
Key Balance Sheet & Cash Flow Metrics
(Php Mn)
2009
2008
%
Change
Cash & Cash
Equivalents
5,943
5,782
3%
Cash Flow from
Operations
30,135
25,659
17%
Gross Debt
47,477
40,588
17%
Debt to EBITDA
1.30
1.09
Debt to Equity
1.00
0.81
Gross Debt (Php Bn)
47.5
1.00
40.6
39.2
0.81
0.69
30.4
0.55
2006
2007
2008
2009
Gross Debt to Equity
15
Continuing to deliver superior returns to shareholders
2009 TSR
(Total Shareholder Return)
16%
Return on Equity
30%
22%
26%
24%
21%
19%
14%
Dividend Yield*
Share Price
Growth
TSR
2005
2006
2007
2008
2009
* Using DPS of Php114 and beginning of year share price of Php790
 ROEs higher with improved net income, and as a result of initiative to optimize balance sheet
 Starting 2010, regular dividend pay-out now at a range of 75-90% of prior year’s net income,
from earlier policy of 75%
16
8
Q&A
17
Appendices
18
9
Consolidated Service Revenues
In Php Mn
2009
2008
%
Change
4Q09
3Q09
%
Change
Mobile
53,321
55,436
(4%)
12,941
12,827
1%
Fixed-line Voice
2,795
3,088
(9%)
717
739
(3%)
Fixed-line Data
3,038
2,478
23%
827
772
7%
Broadband
3,289
1,892
74%
1,063
864
23%
Consolidated
62,443
62,894
(1%)
15,548
15,202
2%
19
ILD Revenues and Traffic
Globe Group
Year on Year
Quarter on Quarter
Q4
2009
Total ILD Revenues (in Php Mn)
Q3
2009
QoQ
Change
(%)
31-Dec
2009
31-Dec
2008
YoY
Change
(%)
3,600
3,446
4%
14,317
14,915
(4%)
47.340
48.073
(2%)
47.777
43.946
9%
Total ILD Revenues as a % of net service revenues
23%
23%
23%
24%
Total ILD Minutes (in million minutes)
602
595
1%
2, 388
2,457
(3%)
Inbound……………………………………………………………
514
499
3%
2,019
2,131
(5%)
Outbound.………………………………………………………..
88
96
(8%)
369
326
13%
ILD Inbound / Outbound Ratio (x)……………………
5.84
5.20
5.47
6.53
Average collection rates for the period (Php to US$1)
20
10
Breakdown of Expenses
Globe Group
Year on Year
Quarter on Quarter
Q4
2009
Q3
2009
QoQ
Change
(%)
31-Dec
2009
31-Dec
2008
YoY
Change
(%)
Cost of sales………………………………………….
834
658
27%
2,948
3,117
(5%)
Less: Non-service revenues…………………………
424
315
35%
1,418
1,924
(26%)
Subsidy
410
343
20%
1,530
1,193
28%
Selling, Advertising and Promotions ……………..
1,064
823
29%
3,766
4,494
(16%)
Staff Costs …………………………………………...
1,113
1,223
(9%)
4,981
5,077
(2%)
Utilities, Supplies & Other Administrative Expenses.
762
672
13%
2,693
2,710
(1%)
Rent……………………………………………………
915
912
-
3,469
2,883
20%
Repairs and Maintenance…………………………..
702
642
9%
2,582
2,495
3%
Provisions ………………… ………………………..
210
261
(20%)
725
1,237
(41%)
Services and Others………………………………..
1,475
1,856
(21%)
6,235
5,407
15%
Operating Expenses………………………………
6,241
6,389
(2%)
24,451
24,303
1%
Depreciation and Amortization …………………
4,737
4,430
7%
17,388
17,028
2%
Costs and Expenses………………………………
11,388
11,162
2%
43,369
42,524
2%
21
Non-operating Income/Expense
Globe Group
Year on Year
Quarter on Quarter
Q4
2009
Q3
2009
QoQ
Change
(%)
31-Dec
2009
31-Dec
2008
YoY
Change
(%)
Financing Costs – net
Interest Expense…………………………...
Gain (Loss) on derivative instruments – net
Swap costs and other financing costs……
Foreign Exchange (loss) – net……………
Foreign Exchange gain - net
Interest Income ………………………………
Property and Equipment Related Charges
Total Other Expenses……………………….
(488)
(481)
1%
(2,097)
(2,256)
(7%)
15
21
(29%)
(47)
2
(2,450%)
(13)
(13)
-
(39)
13
(400%)
-
-
-
-
(759)
(100%)
(486)
(473)
3%
(2,183)
(3,000)
(27%)
156
135
16%
287
-
-
70
88
(20%)
272
420
(35%)
(14)
(50)
(72%)
523
56
834%
(274)
(300)
(9%)
(1,101)
(2,524)
(56%)
22
11
Key Balance Sheet Items and Financial Ratios
Globe Group
31-Dec
31-Dec
YoY
2009
2008
Change
(%)
Balance Sheet Data
Total Assets ………………………………………………….
127,644
119,751
7%
Total Debt ……………………………………………………
47,477
40,588
17%
Total Stockholders’ Equity ………………………………….
47,709
50,092
(5%)
Financial Ratios (x)
Total Debt to EBITDA ………………………………………
1.30
1.09
Debt Service Coverage…………………………………….
2.08
4.74
Interest Cover (Gross) …………………………………….
11.89
13.74
Debt to Equity (Gross) …………………………………….
1.00
0.81
Debt to Equity (Net) ..………………………………………
0.87
0.69
Total Debt to Total Capitalization (Book) ………………..
0.50
0.45
Total Debt to Total Capitalization (Market) ...……………
0.28
0.29
23
Balance Sheet - Condensed
As of Dec. 31, 2009
(in Php millions)
Current Assets
Cash and short-term investments
Receivables and prepayments-net
Others
Property and equipment-net
Other Assets
TOTAL ASSETS
Short-term debt
Other current liabilities
Long-term Liabilities
Long-term debt
Other long-term liabilities
Shareholders' Equity
TOTAL LIABILITIES & EQUITY
31-Dec
31-Dec
2009
2008
Variance
Amt
%
5,943
10,783
1,690
101,694
7,534
127,644
5,782
12,580
1,293
93,540
6,556
119,751
161
(1,797)
397
8,154
978
7,893
3%
-14%
31%
9%
15%
7%
7,669
25,907
11,744
21,984
(4,075)
3,923
-35%
18%
39,808
6,551
47,709
127,644
28,844
7,087
50,092
119,751
10,964
(536)
(2,383)
7,893
38%
-8%
-5%
7%
24
12
Capital Expenditure
Globe Group
31-Dec
31-Dec
2009
2008
YoY
Change (%)
Capital Expenditures (Cash) ……………………………………………………...
22,057
19,417
14%
Increase (Decrease) in Liabilities related to Acquisition of PPE...
2,645
965
174%
Total Capital Expenditures …………………………………………………..
24,702
20,382
21%
Total Capital Expenditures / Service Revenues (%)…………………..
40%
32%
25
Debt Maturity Schedule
Debt Maturity (US$ Mn)
Year Due
2010………………………………………………………………………………..
2011…………………………………………………………………………………
2012………………………………………………………………………………..
2013………………………………………………………………………………..
2014………………………………………………………………………………..
2015 through 2016…..……………………………………………………..
Total
Principal
166
172
313
183
148
45
1,027
26
13
GLOBE TELECOM, INC.
4Q 2009
Financial & Operating Results
5 February 2010
27
14