Globe profits down 22 percent year-on-year

Ayala-led Globe Telecom Inc. saw profits fall by more than a fifth last year amid stiff competition from rival networks that have put pressure on profit margins across the industry. In a statement Wednesday, Globe said profits fell to P9.7 billion in 2010, down 22 percent from P12.6 billion last year. This came amid lackluster revenues, despite a double-digit growth in its subscriber base. The company ended the year with service revenues of P62 billion, just below prior year's level of P62.4 billion. The company ended the year with a total mobile SIM base of 26.5 million, up 14 percent from P23.2 million in 2009. Steady gross additions and declining churn led to net subscriber additions. About 1.1 million of these users are on higher-value post paid accounts. The broadband business likewise registered an impressive performance with total subscribers reaching 1.1 million or up 50 percent in the same comparable period. The company has said the prevalence of "unlimited" and bucket-priced promos have put a strain on its network due to the exponential growth in data that they handle. "The company continued to invest in meeting the needs of its growing subscriber base upgrading and modernizing its networks, increasing capacities to meet the surge in traffic, and improving its customer service capabilities," the company said Wednesday. As a result, operating expenses and subsidy of P29 billion were 12 percent higher than the 2009's P26 billion. Network-related costs alongside higher marketing and outsourced services were the key drivers behind the growth in full year expenses, the company said. Capital expenditures totaled to P19.5 billion compared to P24.7 billion. Of the capital expenditures for 2010, about P9.1 billion was for wired and wireless broadband capacities and around P7.9 billion was used to expand and upgrade the company's mobile network. For 2011, the company expects to spend an additional $500 million, including carryover expenses from projects started in 2010. "This year, we will continue to build on service quality as a key differentiator for Globe. We will implement a pro-active approach in meeting the upsurge in voice and data requirements across all customer segments, including the larger enterprises," Globe president and CEO Ernest Cu said. "We will also improve power and transmission management to meet our quality objectives in terms of network availability and capacity," he said. — TJD/VS, GMA News