GLOBE Telecom Inc. is poised to cut its capital expenditure in the second quarter by 20 percent given the full impact of the enhanced community quarantine (ECQ) that has delayed its network rollout.
Globe also expects its revenue to decline this quarter from the last quarter due to the impact of the ECQ that limits people’s movement and affects their disposable income.
As it is, Globe’s net income declined 2 percent to P6.6 billion in the first quarter from P6.7 billion in the same period last year.
The company’s consolidated service revenues rose 2 percent to P36.9 billion in first quarter from P36 billion a year ago, given the limited impact of the new coronavirus disease 2019 (COVID-19) to operations during the period covered.
“Globe remained resilient and posted healthy results in the first quarter despite going into ECQ in the last two weeks of March. While we are grateful for our recent achievement, we understand that this is not reflective of our performance moving forward. In light of this extraordinary environment, we expect revenues in the next quarter to decline by low double-digits from the first quarter levels, as the ECQ limits people’s movement and affects their disposable income,” said Ernest Cu, Globe president and chief executive officer.
As the ECQ only took effect in the last two weeks of the first quarter, Globe spent P10.7 billion for capex in January to March this year, 22 percent higher than last year spending.
“The capex guidance for the second quarter will likely be lower by at least P2 billion from the first quarter capex spend. Although plans to ramp up spending once operations normalize are in place, the full impact on the planned 2020 capex will be re-evaluated once ECQ is lifted on May 15, 2020.” Globe said.
Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) stood at P20.5 billion with EBITDA margin reaching 56 percent. The sustained network investments resulted in depreciation and non-operating charges likewise increasing, leading consolidated net income to decline by 2 percent. Similarly, core net income posted a year-on-year decline of 3 percent from P6.7 billion in 2019.
Cu said: “As we prepare for the new reality, we do see an acceleration in home broadband services, and cloud-based and cybersecurity solutions given the move of most companies to work remotely. Consequently, we expect to maintain EBITDA margin at low 50s, as the reduced operations allow us to control some expenses.”
From a product standpoint, mobile data revenues generated P18.5 billion in the first quarter of 2020 versus P16.5 billion of last year, as customers spend more time online. Mobile data now accounts for 69 percent of mobile revenues from 61 percent a year ago.
Mobile data traffic jumped from 370 petabytes in the first three months of 2019 to 522 petabytes this period, or a 41 percent growth year-on-year.
Globe’s board of directors yesterday approved, the declaration of the second quarter 2020 cash dividend of P24.83 per common share payable on June 3, 2020 to shareholders on record as of May 18, 2020.
The second quarter cash dividend payment total is about P3.3 billion.
