Globe to remain strong despite industry slowdown — S&P

Standard & Poor’s Ratings Services expects Globe Telecom, Inc. to remain a strong contender in the Philippine mobile telecommunications market, even as the industry's subscriber base continues slowing down and competition intensifies. The global debt watcher affirmed its ‘BB+’ long-term corporate credit rating on Globe, with a stable outlook, citing its large customer base and nationwide network coverage. A ‘BB+’ credit rating is considered the highest speculative grade by market participants. Speculative grade means a company’s ability to pay debt is only moderate. S&P said the stable outlook reflected the company’s steady market position, favorable financial situation, and higher operating efficiency. "We affirmed the ratings to reflect our expectation that the industry’s subscriber growth will slow down and that competition will remain intense," S&P credit analyst Manuel Guerena said. He added that these challenges are offset by Globe’s steady market position and measures to protect solid cash flow. S&P noted that after a period of industry-wide intense promotion to attract customers and increase traffic, Globe cleaned disconnected, inactive and marginal consumers from its user base, most of them prepaid users. As of Sept. 30, Globe had 23.1 million SIM (subscriber identity module) cards in use, down from 23.7 million a year earlier. “This number suggests the company’s market share is only slightly higher than 30%, compared with 50-55 percent for its major competitor, [Smart Communications, Inc.]," S&P said. — GMANews.TV