November 10, 2013

Globe grows 9M13 core income by 9%

In its disclosure, Globe reported 9M13 core net income of P9.53b on a 10% growth in revenues. Growth was primarily driven by the mobile (+8% YoY) on higher subscriber additions, broadband (+22%) and fixed line data (+12%) revenues that compensated for the 4% decline in fixed line voice revenues. EBITDA growth, however, was limited to 4% to P28.3b (but declined 8% YoY in 3Q13) that yielded a 42% EBITDA margin (41% in 3Q13) as high (+14% YoY) cash opex and subsidy.

Our take: The 9M13 core net income was slightly ahead of expectations as this was equivalent to about 81% full-year consensus forecast. In terms of growth, Globe appears to be showing a better number (vs. PLDT’s 4% and 2% YoY growth in core net income and consolidated revenues, respectively). However, we take note that Globe’s growth continues to come amid higher expenses with its EBITDA margin paling in comparison to PLDT’s 49% in 9M13 as the company sustained its aggressive push to acquire subscribers with greater focus on the postpaid market. No details were given on prospective capex.

Meanwhile, the company has reportedly ( acquired about 98% of the loans of Bayan Telecommunications and 100% of those of Radio Communications of the Phils Inc ( a unit of Bayantel). This has reportedly cost Globe US$130m or lower than the US$400m face value of Bayantel’s total debt. After converting about 69% of the acquired debt, Globe would own 56.6% of Bayantel. – WealthSec