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Globe 2012 annual report
management discussion and analysis
Management Discussion & Analysis
Operational Performance
Note: 2011 service revenues have been restated to reflect the change in the presentation of outbound revenues to be at gross of
interconnect expenses (from net previously).
1 Includes mobile voice and data revenues.
2 Includes revenues from wired, fixed wireless, and fully mobile broadband services.
3 Includes international and domestic data services, corporate internet access, and data center solutions.
4 Includes revenues from landline and DUO services.
Mobile Business
Globe provides digital mobile communication services
nationwide using a fully digital network based on the Global
System for Mobile Communication (GSM) technology. It
provides voice, data and value-added services to its mobile
subscribers through three major brands: Globe Postpaid, Globe
Prepaid and TM.
Globe Postpaid includes all postpaid plans such as regular
G-Plans, consumable G-Flex Plans, Load Allowance Plans,
Load Tipid, Apple TM iPhone 3G plans and high-end Platinum
Plans. In 2010, the Company expanded its postpaid offerings
to include MY SUPERPLAN and MY FULLY LOADED PLAN
which allow subscribers to personalize their plans, choose and
combine various unlimited call, text and web browsing service
options. In addition to these personalized plans, Globe has
made available various add-on roaming and mobile browsing
plans to cater to the needs of its subscribers.
Globe earlier consolidated its personalized and customizable
plan service with the launch of the All New My Super Plan
where subscribers are given the flexibility to create their own
plans by either subscribing to an All-Unlimited Plan or an All-
Consumable Plan. Subscribers also get the chance to design
their plans based on their usage by selecting the freebies and
add-on services that would come with their subscriptions. To
further enhance their experience, subscribers are allowed to
change the freebies and add-on services monthly. Driven by
the popularity of social networking sites as well as increased
smartphone penetration, Globe introduced a fully-customizable
unlimited data plan to its subscribers in mid-2011. The Unli
Surf Combo Plan provides uninterrupted mobile surfing for
on-the-go subscribers without the need for a WiFi connection.
Data plan subscriptions also come with consumable amounts
which subscribers may use to make local and international
calls and text messages. On top of this, subscribers also
get bonus calls and SMS which they can change monthly
depending on their needs.
Globe Prepaid and TM are the prepaid brands of Globe.
Globe Prepaid is targeted towards the mainstream market.
TM, on the other hand, caters to the value-conscious
segment of the market, offering various affordable voice and
data services to its subscribers.
The Company had earlier launched its Today I Will campaign
for Globe Prepaid. The campaign aims to support the
aspirations of the Filipino youth aided by the brand’s suite of
products and services. Its unique brand proposition revolves
around its innovative product and service offerings, superior
customer service, and Globe Telecom’s “worldwidest”
services and global network reach. In 2012, the Company
revolutionized the mobile business anew by introducing a
self-service menu that provides subscribers an easy way
to access and avail of the latest promos and services from
Globe. Subscribers simply have to dial *143# to get a list of
Globe Telecom's latest offerings and choose which services
they wish to avail.
In addition to digital wireless communications, Globe also
offers mobile payments and remittance services under the
GCASH brand. GCASH is an internationally acclaimed
micro payment service that transforms a mobile phone into
a virtual wallet, enabling secure, fast, and convenient money
transfers at the speed and cost of a text message. Since
the launch of GCASH, wholly-owned subsidiary GXI has
established a wide network of local and international partners
that includes government agencies, utility companies,
cooperatives, insurance companies, remittance companies,
universities, and commercial establishments which all accept
GCASH as a means of payment for products and services.
The mobile business closed 2012 with record revenues
of ₱67.2 billion, 6% above previous year’s ₱63.5 billion,
to counter market challenges underpinned by peaking
penetration rates driven partly by the prevalence of multi-SIM
usage, eroding prices and margins as a result of subscribers’
continued preference for unlimited and bucket services,
and the increasingly competitive environment. The strong
performance in 2012 was a reflection of the Company’s
continued success in its pioneering customizable and
innovative service offers for both domestic and international
markets, value-for-money promotions, as well as handset
and gadget launches. The year-on-year growth was
broad based and was supported by an overall increase in
subscribers as well as improvements across key product
segments. Subscriber acquisitions remained robust led
by the prepaid brands and the ample contribution from the
postpaid segment which benefited from the highly successful
launch of the Apple iPhone 5 in the last quarter of the year.
Both mobile voice and data segments delivered 6% yearon-year
revenue expansion led by the increase in unlimited
voice subscriptions and mobile browsing services which
contributed ₱3.1 billion to total mobile top line compared to
only ₱2.0 billion in 2011.
Globe ended the year with cumulative mobile subscriber
base of 33.1 million, up 10% from 30.0 million in 2011. Gross
additions increased by 6% year-on-year from 23.2 million in
2011 to 24.6 million. Although churn rates were maintained
within manageable levels, net incremental subscribers were
down by 14% from 3.6 million in the previous period to about
3.1 million in 2012.
Globe Postpaid, accounts for 5% of the total mobile
subscriber base and remains the stronghold of the
Company. In 2012, Globe Postpaid continued to post robust
acquisitions led by strong sales of the latest devices from
Apple, Samsung, and BlackBerry®. Globe capped off the
year with the launch of Apple iPhone 5 which also helped
to fuel acquisitions in the segment to bring full year 2012
gross additions to a record 589,642 subscribers, slightly up
by 1% from 585,724 in 2011. With slightly elevated churn,
full year net incremental postpaid subscribers of 279,762
were below the 2011 level of 388,569. Full year 2012
net acquisitions reflected as well the improving quality of
acquired subscribers with about 42% of regular postpaid net
additions signing up for plans with monthly service fees of
₱999 and above, compared to just 19% in 2011. Cumulative
postpaid subscribers stood at 1,734,468 at yearend, 19%
over previous year’s level of 1,454,706. Globe Postpaid
ARPU of ₱1,191 was 3% below last year’s ₱1,223 as a
result of a higher mix of lower-MSF plans and the increase
in subscriptions to the Company’s value service offerings.
Meanwhile, subscriber acquisition costs (SAC) increased
substantially in 2012 mainly on higher handset subsidies for
subscriber availments of devices from Apple, Samsung
and BlackBerry®. Costs, however, remain recoverable well
within the 24-month contract period for postpaid subscribers.
Globe Prepaid accounts for 50% of cumulative mobile
subscriber base in 2012. Globe Prepaid continued to
offer the best value-for-money services to its subscribers.
Boosted by services that included the all-unlimited service
GoUnli as well as All Unli Trio, All Net Combo, Immortal
Offers and Unli Tingi, and further reinforced by competitivelypriced
international services such as GoTipIDD, full year
gross acquisitions improved by 3% from about 11.4 million
in 2011 to nearly 11.8 million in 2012. While churn rates
were maintained at manageable levels, the third quarter’s
underperformance weighed down full year 2012 net
incremental subscribers to 977,710, 40% below the 2011
level of 1,627,716 net incremental subscribers. Despite this
slowdown in net additions, total Globe Prepaid subscribers
were still up by 6% year-on-year from about 15.5 million to
16.4 million. Globe Prepaid ARPU meanwhile declined by
12% year-on-year resulting from the revenue dilution from
unlimited and bucket service offerings. Globe Prepaid SAC,
on the other hand, was below its 2011 levels due mainly to
lower ads and promo spending, and remained recoverable
within a month’s ARPU.
TM accounts for the remaining 45% of the total mobile
subscriber base in 2012. TM generated the highest gross
acquisitions in the last quarter of the year to bring full year
total gross additions to about 12.3 million, up 9% from 11.2
million in 2011. TM benefited from the various product
launches throughout the year that included value service
offerings such as TM Combo and the enhanced mobile
browsing offers for TM which now include SuperSurf,
Social20, Mail20, and Fun20. With churn rates maintained
within manageable levels, full year net incremental
subscribers increased by 17% from about 1.6 million in
2011 to 1.8 million. As a result, cumulative TM subscribers
increased by 14% from 13.1 million in 2011 to 14.9 million in
2012. TM ARPU meanwhile was down by 9% year-on-year
with the continued shift from regular pay-as-you-use service
to unlimited and value offers. TM SAC, on the other hand,
was below its 2011 levels due mainly to lower ads and promo
spending, and remained recoverable within a month’s ARPU.
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