part i financial information - Globe

SEC Number 1177
File Number ____
GLOBE TELECOM, INC.
(Company’s Full Name)
5th Floor Globe Telecom Plaza (Pioneer Highlands)
Pioneer corner Madison Streets, 1552 Mandaluyong City
(Company’s Address)
(632) 730-2000
(Telephone Numbers)
31 December 2006
(Quarter Ending)
SEC FORM 17-Q
(Form Type)
SEC Form 17Q - 4Q 2006 1

SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17-Q
QUARTERLY REPORT PURSUANT TO SECTION 17 OF THE SECURITIES
REGULATION CODE AND SRC RULE 17(2)(b) THEREUNDER
1. For the quarterly period ended 31 December 2006
2. Commission identification number: 1177
3. BIR Tax Identification No. 000-768-480-000
4. Exact name of registrant as specified in its charter: GLOBE TELECOM, INC.
5. Province, country or other jurisdiction of incorporation or organization: PHILIPPINES
6. Industry Classification Code: (SEC Use Only)
7. Address of registrant’s principal office:
5th Floor, Globe Telecom Plaza (Pioneer Highlands)
Pioneer corner Madison Streets
1552 Mandaluyong City
8. Registrant’s telephone number, including area code: (632) 730-2000
9. Former name, former address and former fiscal year, if changed since last report: Not Applicable
10. Securities registered pursuant to Sections in Securities Regulation Code
Number of shares of stock
Title of each class outstanding
Common Stock, P50.00 par value 132,079,785
Preferred Stock, P5.00 par value 158,515,021
11. Are any or all of the Securities listed on the Philippine Stock Exchange? Yes
12. Indicate whether the registrant:
a) Has filed all reports required to be filed by Section 17 of the Code and SRC Rule 17 thereunder or
Sections 11 of the SRC and SRC Rule 11(a)-1 thereunder, and Sections 26 and 141 of the Corporation
Code of the Philippines, during the preceding 12 months (or for such shorter period the registrant was
required to file such reports).
Yes
b) Has been subject to such filing requirements for the past 90 days.
Yes
SEC Form 17Q - 4Q 2006 2

PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Our consolidated financial statements include the accounts of Globe Telecom, Inc. and its wholly owned
subsidiaries, Innove Communications, Inc.(“Innove”) and G-Xchange, Inc. (“GXI”), collectively referred to as
the “Globe Group” in this report.
The consolidated financial statements for the year ended 31 December 2006 have been prepared in accordance
with Philippine Financial Reporting Standards (PFRS) and are filed as Annex I of this report.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (“MD&A”)
The following is a discussion and analysis of Globe Group’s financial performance for the full year ended 31
December 2006. The prime objective of this MD&A is to help the readers understand the dynamics of our
Company’s business and the key factors underlying our financial results. Hence, our MD&A is comprised of a
discussion of our core business, and our analysis of the results of operations for each business segment. This
section also focuses on key statistics from the consolidated financial statements and pertains to known risks and
uncertainties relating to the telecommunications industry in the Philippines where we operate up to the stated
reporting period. However, our MD&A should not be considered all inclusive, as it excludes unknown risks,
uncertainties and changes that may occur in the general economic, political and environmental condition after
the stated reporting period.
Our MD&A should be read in conjunction with our consolidated financial statements and the accompanying
notes. All financial information is reported in Philippine Pesos (Php) unless otherwise stated.
Any references in this MD&A to “we”, “us”, “our”, “Company” means the Globe Group and references to
“Globe” mean Globe Telecom, Inc., not including its wholly owned subsidiaries.
Additional information about the Company, including annual and quarterly reports, can be found on our
corporate website www.globe.com.ph.
SEC Form 17Q - 4Q 2006 3

The following is a summary of the key sections of this MD&A:
OVERVIEW OF OUR BUSINESS ......................................................................................................... 5
KEY PERFORMANCE INDICATORS................................................................................................. 9
FINANCIAL AND OPERATIONAL RESULTS ................................................................................ 11
GROUP FINANCIAL HIGHLIGHTS ............................................................................................................. 11
GROUP RESULTS OF OPERATIONS ......................................................................................................... 12
GROUP OPERATING REVENUES ................................................................................................. 12
WIRELESS BUSINESS.................................................................................................................. 13
WIRELINE BUSINESS.................................................................................................................. 20
OTHER GLOBE GROUP REVENUES ........................................................................................ 23
GROUP OPERATING EXPENSES .................................................................................................. 25
LIQUIDITY AND CAPITAL RESOURCES....................................................................................... 28
FOREIGN EXCHANGE AND INTEREST RATE EXPOSURE...................................................... 32
RECENT DEVELOPMENTS ............................................................................................................... 34
MAJOR STOCKHOLDERS......................................................................................................................... 35
BOARD OF DIRECTORS ........................................................................................................................... 35
SEC Form 17Q - 4Q 2006 4

OVERVIEW OF OUR BUSINESS
Our Company is a leading telecommunications company in the Philippines. We continue to grow and engage
our customers through our clear commitment of “Making Great Things Possible”.
The Globe Group is comprised of the following three focused companies:
• Globe provides our wireless telecommunications services;
• Innove, a wholly-owned subsidiary, provides our fixed line telecommunications services and
information and communications infrastructure and services for internal applications, internet
protocol-based solutions and multimedia content delivery. Innove also currently offers cellular
services under the TM prepaid brand. The TM brand is supported in the integrated cellular networks
of Globe and Innove; and
• As part of its wireless business, Globe also provides mobile commerce services through its whollyowned
subsidiary, G-Xchange, Inc. (GXI) which was incorporated in 2004.
Wireless Business: Products and Services
Our Company offers its wireless services including local, national long distance, international long distance,
international roaming and other value-added services through three brands: Globe Postpaid, Globe Prepaid
and TM.
Globe Postpaid is the postpaid brand of Globe. This includes all postpaid plans such as G-Plans and
consumable G-Flex Plans, Platinum (for the high-end market), and GlobeSolutions (for corporate and
business needs).
Globe Prepaid and TM are the prepaid brands of the Globe Group. Each brand is positioned at different
market segments. Globe Prepaid is focused on the mainstream, broad market while TM is focused on valueconscious,
working class market. Additionally, Globe has customized services and benefits to address
specific market segments, each with its own unique positioning and service offerings.
Globe also provides our subscribers with mobile payment and remittance services under the GCash brand.
Now on its second year, this service enables our subscribers to perform international and domestic remittance
transactions, pay annual business registration fees, income taxes for professionals, utility bills, avail of microfinance
transactions, donate to charitable institutions, and buy Globe prepaid reloads.
To cater to a wide variety of our prepaid subscribers, we provide various top up facilities at each subscriber’s
convenience. Our Globe Prepaid and TM subscribers can reload airtime value or credits using various
reloading channels.
Subscribers can purchase Globe Prepaid Call and Text cards in P100, P300 and P500 denominations while
TM Call and Text cards are available in P50, P100, and P300 denominations. They can also utilize Globe
AutoloadMAX, our over-the- air (OTA) reload channel, which offers the most affordable and flexible load
credits in P1 increments from P10 to P150 for our TM subscribers, and P15 to P150 for our Globe Prepaid
subscribers. Globe AutoLoadMAX currently has over four hundred thousand active retailers nationwide.
Subscribers can also top up using bank channels like ATMs, credit cards, Internet banking and Bank of the
Philippine Islands (BPI) 24 Hour Call Center and Express Phone, as well as through E-POS (electronic pointof-sale)
terminals located at retail outlets and our business centers.
SEC Form 17Q - 4Q 2006 5

A consumer to consumer top up facility, Share A Load, is also available whereby our Globe Prepaid and TM
subscribers can share prepaid load credits among themselves in denominations of P1 to P150 (in P1
increment). In addition, our Globe Postpaid subscribers can Share A Load to our prepaid subscribers in P1 to
P150, P300 and P500 denominations. Another reloading channel available is GCash Load, where Globe
Prepaid and TM subscribers can top up their own or somebody else’s mobile phone by converting their
GCash to prepaid load credits in increments of P1 from P10 to P24 and increments of P25 from P25 to P150.
Denominations of P300, P500 and P1,000 are also available. Moreover, the GCash Load promotion includes
a standard 5% GCash rebate on all GCash Load transactions.
Wireline Business: Products and Services
Innove, a wholly-owned subsidiary, provides our wireline voice communications, private data networks and
Internet services to individuals and enterprises in the Philippines under the Globelines and GlobeQuest
brands.
Under our Globelines brand, we provide state-of-the-art digital communications technologies to homes and
small and medium-sized enterprises through the following products and services:
Globelines is a wireline voice communications service offering that includes local, national long distance,
international long distance and other value-added services, through its postpaid, prepaid and payphone lines.
With the availability of postpaid or prepaid options, subscription to Globelines comes with standard features
and value-added services such as IDD, NDD, Phone Lock, Caller ID, Call Waiting, Multi-Calling, Call
Forwarding, Voice Mail, Duplex Number, Hotline and Special Numbers.
Globelines Business Connections is a bundled telephone package to help our clients manage their operations
and enjoy big business efficiency on a small business overhead. There are various Globelines Connections
packages suitable for clients requiring single and/or multiple lines.
Globelines subscribers with personal computers can also surf the Internet and have their own Web-based
email by using our Globelines Dial-up Internet service. Users of this service pay only for the actual minutes
used at a low flat rate of P0.33 per minute.
Globelines Broadband is a high speed internet connection that keeps our subscribers online all the time,
getting instant access to communication, knowledge and entertainment. Application-based packages such as
Express Unlimited and Explore are designed to cater to various Internet needs. Globelines Broadband
subscribers may also activate their VoIP account and use Globelines Broadband VoIP softphone service to
call overseas for a special rate of US$0.05/minute.
Globelines Worldpass Prepaid is the first prepaid internet card in the market that allows the user to access the
internet with total mobility, flexibility and convenience. The user may choose his access point - via dial-up
using any landline, mobile access via WiFi from any WiZ hotspots, or broadband connection via Globelines
Broadband kiosks. It is a pay per use internet access which comes in denominations of P20, P50, and P100
which expires 15 days after first use. Worldpass Prepaid vouchers can be purchased at any Globelines
Payments and Services (GPS) Centers, Globe business centers, and other retail outlets.
SEC Form 17Q - 4Q 2006 6

Globelines Worldpass Postpaid is also available for subscribers who wish to access the internet anytime and
anywhere through Wi-Fi, Broadband or Dial-up using just one account. Subscribers can use a laptop, PC,
PDA or mobile phone and surf wirelessly at any WiZ Hotspot, dial-up to the internet using any landline in the
country or connect via Broadband using a Globelines Broadband account. Subscribers can even access their
accounts when they travel to international destinations through connectivity with iPass. All these are possible
with just one username and password. Postpaid plans are available with a consumable monthly service fee of
P250 (VAT included).
Globe1 is our one-card for all communications needs. This PIN-based prepaid card service allows our
customers to make local, domestic and international calls using our Globelines landline (postpaid and
prepaid), Globelines Payphone, Globe and TM. This versatile and convenient product is offered in
denominations of P100 and P300 and is available in our GPS Centers, Globe business centers and prepaid
card dealers.
Under our GlobeQUEST brand, we offer end-to-end solutions for corporate clients based on value-priced,
high-speed data services over a nationwide broadband network. This includes domestic and international data
services, wholesale and corporate internet access data center services and segment-specific solutions
customized to the needs of vertical industries. Some of the products and services we offer are as follows:
GlobeQUEST Broadband Internet offers our clients a complete range of Internet services that operate at
broadband speeds using our Internet backbone which, at more than 2 Gbps and growing, is one of the largest
in the Philippines. Some of the services currently being offered are:
• Digital Subscriber Line (DSL) – This service lets you access the Web at ultra-high speed connection
for both downloads and uploads using our DSL access network and growing Internet backbone.
Various access packages are available to ensure the service is cost-efficient and fits different
corporate needs and budgets.
• Internet Direct – This offers guaranteed service levels delivered over leased line facilities and is
especially offered to those corporate clients running mission-critical applications.
• Broadband Internet Zone (BIZ) – This is GlobeQuest’s broadband-to-the-room Internet service
which provides secure, reliable and convenient high-speed broadband Internet access to transient
business travelers and/or tenants of high-density buildings such as hotels, condominiums and other
multi-tenant establishments. This service also utilizes wireless Internet access in convenient public
locations and hotspots to provide mobile workers with Internet connectivity outside their offices.
• GIX Burstable – This bandwidth on-demand service offers wholesale Internet access with a payment
scheme that is based on average use only. Customers are allowed to start with a minimum
subscription of 5 Mbps burstable to 45 Mbps depending on the actual growth of their internet traffic.
Primarily used by wholesale customers and large enterprises, this service provides the pricing
flexibility that supports the ever-changing business requirements of these companies.
• Freeway IP – This service is GlobeQuest’s managed international private leased circuit to the USA.
To ensure cost-efficiency for businesses, our package allows customers to pay a fixed monthly
charge regardless of actual usage and increase bandwidth when needed.
• Universal Access services – These are subscription plans available for corporate users, which enables
WiFi and dial up access through a single user account.
SEC Form 17Q - 4Q 2006 7

GlobeQuest WIZ (Wireless Internet Zone) is Innove’s brand for its WiFi (Wireless Fidelity)-enabled network
providing broadband access on 802.11b/g-enabled strategic locations called “hotspots” such as airports,
hotels, coffee shops and business lounges. It covers more than 520 locations to date, including “hotzones”
such as Ayala Center Greenbelt and Glorietta malls, Ayala Center Cebu, Alabang Town Center, NCCC Mall
in Davao, Supercat Terminals in the Visayas, Mactan and Davao International Airports.
WIZ can also be accessed by customers and subscribers of Innove’s WorldPass, Globe through Wiz On (text
to 2333) service, GlobeQUEST-owned Universal Access and DSL corporate customers, as well as
subscribers on international roaming service through our partners, GoRemote, iPass, T-Systems among
others. This service is available both on prepaid and postpaid plans to cater to our customers’ various needs
and budget.
GlobeQUEST Private Networks offers a variety of dedicated communications services that allow customers
to run various data applications, access LANs or corporate intranets and extranets with integrated voice
services on high speed, efficient and reliable connections. These include domestic and international leased
lines, frame relay, IPVPN, and remote access services. International data services are offered in partnership
with global network service providers.
GlobeQUEST DataCentres optimizes the security of mission-critical information and applications through
secure data centers operated and supported by a team of IT experts. GlobeQUEST has six commercially
available data centers, namely: MK1 (Valero Data Center), MK2 (Pasong Tamo), MD1 (Sheridan), MD2
(Pioneer), Cebu and Laguna DataCentres. These offer complementary services to GlobeQUEST network
services, ensuring that corporate customers are given end-to-end capabilities and solutions.
GlobeQUEST Corporate Voice provides a full suite of telephony services, from basic direct lines to ISDN
services, 1-800 numbers, IDD and NDD access as well as managed voice solutions which enables companies
to access advanced telecommunications technology, such as managed IP communications. With the advent
of VOIP technology, GlobeQUEST is introducing new functionalities on their Corporate Voice portfolio
which will drive the voice business.
GlobeQUEST BroadBand Access is a network access solution that provides our customers ultra-high speed
fiber optic network connectivity, over a fully redundant and diverse DWDM-based fiber backbone. This
service is designed for wholesale and corporate customers with huge bandwidth requirements, missioncritical
applications and rapidly growing needs, and who demand uninterrupted access for their business
operations. This service offering ranges from high speed leased lines to Ethernet services and even Escon or
fibre channel connections for disaster-recovery service connectivity. Today, these services are heavily used
by service providers, call centers and BPO (Business Process Outsourcing) companies as well as banking and
manufacturing institutions.
GlobeQUEST offers our customers with superior dial-up services such as:
• Dedicated Dial-up (DDU) – This service enables multiple users to connect to the internet using only
one phone line, as well as maintain a static IP address for better accessibility.
• E-Business in a box – This provides start up companies with a complete set of solutions to establish
and maintain web presence for their businesses.
• Wholesale and Corporate Remote Access Servers (RAS) – This provides companies the ability to
give its mobile/remote workers, as well as customers, access to the Local Area Network (LAN) and
Internet through a private and secure dial-up access without investing in and maintaining costly
network infrastructure.
SEC Form 17Q - 4Q 2006 8

KEY PERFORMANCE INDICATORS
Our Company acknowledges the importance of our shareholders and is dedicated to optimize profitability
and efficiently manage our use of capital resources with a view to increasing shareholder value.
We constantly review and monitor our activities and key performance indicators to measure our success in
implementing our operating and financial strategies, plans and programs. Some of our key performance
indicators are set out below. Except for Net Income, these key performance indicators are not measurements
in accordance with Philippine GAAP and should not be considered as an alternative to net income or any
other measure of performance which are in accordance with Philippine GAAP.
GROSS AVERAGE REVENUE PER UNIT (GROSS ARPU)
Gross ARPU measures the average monthly gross revenue generated for each subscriber. This is computed
by dividing recurring gross service revenues for a business segment for the period by the average number of
the segment’s subscribers and then dividing the quotient by the number of months in the period.
NET AVERAGE REVENUE PER UNIT (NET ARPU)
Net ARPU measures the average monthly net revenue generated for each subscriber. This is computed by
dividing recurring net service revenues of the segment for the period (net of discounts and interconnection
charges to external carriers) and content provider revenue share by the average number of the segment’s
subscribers and then dividing the quotient by the number of months in the period.
SUBSCRIBER ACQUISITION COST (SAC)
SAC is computed by totaling marketing costs (including commissions and handset/SIM subsidies 1 ) for the
segment for the period divided by the gross incremental subscribers.
AVERAGE MONTHLY CHURN
The average monthly churn rate is computed by dividing total disconnections (net of reconnections) for the
segment by the average number of the segment’s subscribers, and then divided by the number of months in
the period. This is a measure of the average number of customers who leave/switch/change to another type
of service or to another service provider and is usually stated as a percentage.
EBITDA
EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) is calculated as net service
revenues less subsidy 1 , operating expenses and other income and expenses 2 . This measure is used because it
provides useful information regarding a company’s ability to generate cash flows, incur and service debt,
finance capex and working capital changes. As the Company’s method of calculating EBITDA may differ
from other companies, it may not be comparable to similarly titled measures presented by other companies.
1
Subsidy is the difference between non-service revenues and cost of sales.
2
Operating expenses and other income and expenses do not include any property and equipment-related gains and losses
and financing costs.
SEC Form 17Q - 4Q 2006 9

EBITDA MARGIN
EBITDA margin is calculated as EBITDA divided by total net service revenues. Total net service revenues
is equal to total net operating revenues less non-service revenues. This is useful in measuring the extent to
which subsidies, operating expenses (excluding property and equipment-related gains and losses and
financing costs) and other income and expenses, use up revenue.
EBIT
EBIT is defined as earnings before interest, property and equipment-related gains and losses and income
taxes. This measure is calculated by deducting depreciation and amortization from EBITDA. Globe Group’s
method of calculating EBIT may differ from other companies, hence, may not be comparable to similar
measures presented by other companies.
NET INCOME
As presented in the consolidated financial statements for the full years ended 31 December 2006 and 2005,
net income provides an indication of how well our Company performed after all costs of the business have
been factored in.
For more details about the Company’s performance, see “Financial and Operational Results” section below.
SEC Form 17Q - 4Q 2006 10

FINANCIAL AND OPERATIONAL RESULTS
GROUP FINANCIAL HIGHLIGHTS
For the Full Year ended 31 December 2006
• Our Company posted a net income of P11.8 billion for the year, a 14% improvement than the P10.3
billion registered in 2005. This net income improvement was achieved in spite of a 48% year-on-year
increase in provisions for income tax due to a higher corporate tax rate, the expiration of Globe’s income
tax holiday last March 2005, and a higher taxable base. The full year consolidated effective tax rate was
33% compared to 27% last year.
The Company’s improved and expanded network coverage, the launch of various innovative, value-based
propositions, and its expansion into the mass markets through the TM brand have all contributed to the
growth of Globe’s subscriber base and service revenues. Meanwhile, targeted acquisitions and calibrated
marketing spend and the implementation of various cost-reduction initiatives translated to lower
operating expenses, higher margins, and record profitability levels.
• Consolidated EBITDA and EBIT for the year registered double-digit growth of 11% and 13% year-onyear,
closing at P37.2 billion and P20.1 billion, respectively. EBITDA margins stood at 65% of service
revenues, up from 61% for the same period in 2005, while EBIT margins were at 35%, up from 32% last
year.
• Consolidated service revenues grew by 4% year-on-year, mainly driven by the year-on-year
improvements in both the wireless voice and data segments. Meanwhile, wireline service revenues
continued to be impacted by the stronger peso, decreasing by 1%. Total cumulative wireless subscribers
stood at 15.7 million, a 26% year-on-year growth due to healthier net additions across all brands.
Targeted subscriber acquisition efforts, competitive service offers, calibrated marketing spend, and
effective retention promotions have all contributed to the strong gross additions and managed churn
levels.
• Total capital expenditures for the year amounted to P14.83 billion, at par with last year’s P14.76 billion
as Globe’s 2G wireless network expansion program tapers off with geographic coverage of 94% and a
population reach of 98% by year end. Globe is currently carrying out its 3G network roll out as part of
its commitment to innovation and to enhance our subscribers’ experience with the service. Total cell
sites reached 5,884 at the end of December 2006, a 14% increase from 5,159 established last year.
• The Company closed the year with free cash flow of P20.75 billion, up from last year’s P19.5 billion.
• In its February 5, 2007 meeting, the Board of Directors declared the first semi-annual dividend for 2007
of P33 per common share or a 10% increase over the previous semi-annual rate of P30.
SEC Form 17Q - 4Q 2006 11

GROUP RESULTS OF OPERATIONS
The following table details the consolidated results of operations for the Globe Group for the third and fourth
quarters of 2006 and for the full years ended 31 December 2006 and 2005.
Results of Operations (in millions of pesos)
Globe Group
For the Quarter Ended For the full year ended
Q4
2006
Q3
2006
QoQ
Change
(%)
31 Dec
2006
31 Dec
2005
YoY
Change
(%)
Profit & Loss Data
Net Operating Revenues ………………………… 15,230 14,735 3% 59,949 58,748 2%
Service Revenues …………………………………… 14,517 14,070 3% 57,034 54,897 4%
Non-Service Revenues 1 ………………………………. 713 665 7% 2,915 3,851 -24%
Costs and Expenses ……………………………… 6,202 5,487 13% 22,729 25,314 -10%
Cost of Sales…………………………………… 1,144 1,157 -1% 4,619 6,025 -23%
Operating Expenses …………………………… 5,058 4,330 17% 18,110 19,289 -6%
EBITDA …………………………………………… 9,028 9,248 -2% 37,220 33,434 11%
EBITDA Margin………………………………….. 62% 66% 65% 61%
Depreciation and Amortization……………….. 5,043 4,094 23% 17,138 15,734 9%
EBIT ………………………………………………. 3,985 5,154 -23% 20,082 17,700 13%
Financing………………………………………. (468) 168 -379% (3,272) (3,141) 4%
Interest Income………………………………… 161 119 35% 715 520 38%
Others - net……………………………………. 32 (64) -150% (66) (897) -93%
Provision for Income Tax………………………..... (1,264) (1,827) -31% (5,704) (3,867) 48%
Net Income After Tax (NIAT)…………………… 2,446 3,550 -31% 11,755 10,315 14%
NIAT before Forex/MTM gain (loss)……………. 2,036 2,653 -23% 10,833 8,715 24%
_________________________________
1 Non-service revenues are reported net of discounts on phonekits and SIM (Subscriber Identification Module) packs. The cost related to the sale of
handsets and SIM packs are shown under cost of sales. The difference between non-service revenues and cost of sales is referred to as subsidy.
GROUP OPERATING REVENUES
For the full year 2006, Globe Group’s total net operating revenues grew by 2% to P59,949 million from last
year’s P58,748 million.
Operating Revenues By Segments (in millions of pesos)
Globe Group
For the Quarter Ended For the full year ended
Q4
2006
Q3
2006
QoQ
Change
31 Dec
2006
31 Dec
2005
YoY
Change
(%)
(%)
Wireless 13,629 13,172 3% 53,561 52,229 3%
Service Revenues………………………………………. 12,934 12,510 3% 50,672 48,481 5%
Non-Service Revenues………………………………… 695 662 5% 2,889 3,748 -23%
Wireline 1,601 1,563 2% 6,388 6,519 -2%
Service Revenues………………………………………. 1,583 1,560 1% 6,362 6,416 -1%
Non-Service Revenues………………………………… 18 3 500% 26 103 -75%
Total Net Operating Revenues…………………………. 15,230 14,735 3% 59,949 58,748 2%
SEC Form 17Q - 4Q 2006 12

Consolidated net service revenues grew by 4% to reach P57,034 million at year end compared to P54,897
million in 2005. This growth is in spite of revenue losses resulting from the effects of Typhoons Milenyo,
Reming and Seniang and the earthquake in Taiwan on 26 December that damaged international submarine
cables linking the Philippines to the rest of the world.
Consolidated non-service revenues dropped by 24% to P2,915 million for the year from last year’s P3,851
million. This is mainly due to lower handset, SIM pack and SIM card sales related to subscriber acquisitions
following the Company’s overall thrust towards more cost-effective acquisition and loyalty programs.
WIRELESS BUSINESS
Globe
For the Quarter Ended For the full year ended
Wireless Revenues (in millions of pesos)
Q4
2006
Q3
2006
QoQ
Change
31 Dec
2006
31 Dec
2005
YoY
Change
Service
(%)
(%)
Voice 1 ….……………………………………………… 6,900 7,179 -4% 28,982 28,111 3%
Data 2 ..………………………………………………… 6,034 5,331 13% 21,690 20,370 6%
Wireless Net Service Revenues…………………..……...
_________________________________________________________________________
1
Wireless voice net service revenues include the following:
a) Monthly service fees on postpaid plans;
12,934 12,510 3% 50,672 48,481 5%
b) Charges for intra-network and outbound calls in excess of the consumable minutes for various Globe Postpaid plans, including currency
exchange rate adjustments, or CERA net of loyalty discounts credited to subscriber billings;
c) Airtime fees from prepaid reload denominations (for Globe Prepaid and TM) for intra network and outbound calls recognized upon the earlier
of actual usage of the airtime value or expiration of the unused value of the prepaid reload denomination which occurs between 1 and 60 days
after activation depending on the prepaid value reloaded by the subscriber net of (i) bonus credits* and ii) prepaid reload discounts; and
revenues generated from inbound international and national long distance calls and international roaming calls;
Revenues from (b) to (c) are net of any interconnection or settlement payouts to international and local carriers and content providers.
2 Wireless data net service revenues consist of revenues from value-added services such as inbound and outbound SMS and MMS, content
downloading, subscription fees on prepaid services and infotext net of any interconnection or settlement payouts to international and local carriers
and content providers.
Overall, the wireless business recorded a 3% year-on-year operating revenue growth, with P53,561 million in
net operating revenues for the full year ended December 2006 from last year’s P52,229 million. This
increase was mainly driven by a 5% improvement in total wireless service revenues from P48,481 million to
P50,672 million, accounting for 89% of consolidated net service revenues for the year.
In the fourth quarter of 2006, additional prompt payment discounts (PPDs) of P266 million were booked
resulting mainly from the change in timing of the booking of such discounts. PPDs are discounts given to
international operators in relation to revenues derived from inbound IDD calls. Prior to the fourth quarter,
PPDs were booked upon availment. However, starting with the fourth quarter, discounts are booked based on
historical patterns of availment. Excluding these charges, wireless service revenues would have grown a
higher 5.5% quarter-on-quarter.
For 2006, wireless voice revenues contributed 57% to total wireless service revenues. Wireless voice
segment grew by 3% year-on-year to P28,982 million on the back of higher usage of local and international
voice services.
Globe continued to offer various voice services designed to promote acquisition, stimulate usage, and
encourage loyalty among new and existing subscribers. For heavy voice users within our network, we
extended our various promotions offered under our banner campaign, “Globe Super Sulit Offers”. These
promotions include the P10 for a 3-minute call and our unrivaled per-second charging offer of 10 centavos
SEC Form 17Q - 4Q 2006 13

per second local call rate for Globe to Globe and TM to TM calls. For IDD voice users, we likewise
continued our Super Sulit Tipid IDD rates of P7.50 per minute for IDD calls to our Bridge Mobile Alliance
partners such as Taiwan Mobile, HK CSL, Singtel and Maxis Malaysia, as well as for off-peak calls to the
US and Canada. We also continued our discounted call rate of $0.30/minute to Japan. Our breakthrough offer
of per-second charging has also been extended to IDD calls under the Globe Tipid IDD kada-Segundo promo.
Starting from the fourth quarter to date, Globe introduced US$0.20 per minute calls to Saudi Arabia, Oman
and Qatar and P24-for-3 minute calls to the United States and Canada available any time of the day. Globe
also expanded its wide-ranging IDD promotions to include SMS by offering P5.00 international SMS rates to
Saudi Arabia (promotion expired 9 December 2006) while continuing with its Globe-Singtel Kababayan Text
Promo rate of P1.00 for an international SMS to a SingTel mobile subscriber.
Wireless data revenues accounted for the remaining 43% of total wireless service revenues. Wireless data
continued to register positive growth, increasing 6% year-on-year to close the year at P21,690 million. The
main revenue drivers have been the higher subscriptions acquired from our unlimited SMS offers coupled
with the higher usage of value-added services from an expanded prepaid subscriber base.
To further expand our wireless data business, Globe continued to offer value promotions to different
customer segments including Globe’s UNLIMITXT, TM Todo Text and TM-TM discounted SMS campaigns.
Globe’s UNLIMITXT, a permanent offering to our postpaid and prepaid subscribers, provides heavy SMS
users the option to send unlimited intra-network text messages. The UNLIMITXT service requires a
registration fee that ranges from: P15 for 1 day, P25 for 2 days and P50 for 5 days. Globe also offered an
inter-network SMS offer under the P0.75 Sulit Text to all networks promotion that ran from 9 August until 7
October 2006. Accelerated take-up in UNLIMITXT registrations early in the fourth quarter prompted Globe
to introduce the UNLIMITXTPLUS promo that offered unlimited intra-network text messaging plus a P0.75
inter-network text messaging rate for only P20 for 1 day and P40 for 2 days. The promotion ran from 12
November 2006 to 11 December 2006.
During the fourth quarter, TM also launched two new variations of its Todo Text campaigns: Daytime
Unlimited Texting and the Todo Tipid Text to all networks.The Daytime Unlimited Texting allows subscribers
to send unlimited intra-network SMS from 8 AM to 4:59 PM for just P10 per day. On the other hand, the
Todo Tipid Text to all networks provides TM subscribers with unlimited intra-network text messaging and
inter-network text messaging at P0.75 per SMS for only P20 for 1 day and P40 for 2 days. TM’s new Todo
Text variants are still available to TM subscribers. On 1 February 2007, the UNLIMITXT service was
relaunched as Globe’s Unlimited Text service and comes in four variants to accommodate different texting
needs of the market.
On the VAS or Value Added Services front, Globe introduced GLOBE IMEVRYWHR, an instant messaging
innovation. This instant messaging service offers unlimited chatting, voice messaging and unlimited photo
sending at promotional rates of only P20 for 1 day, P120 for 7 days and P500 for 30 days. To add to its
versatility, this service is also fully-integrated with other Globe VAS services such as the GCash, Share-A-
Load and AskG. GLOBE IMEVRYWHR was launched last 6 December and is available to all Globe postpaid
and prepaid subscribers.
For further details on products and services introduced beginning the fourth quarter of 2006, refer to Wireless
Promotions section on page 18.
SEC Form 17Q - 4Q 2006 14

The wireless business results were further driven by the following key drivers set out in the table below:
Key Drivers
Q4
2006
Globe
For the Quarter Ended For the full year ended
Q3
2006
QoQ
Change
(%)
31 Dec
2006
31 Dec
2005
YoY
Change
(%)
Cumulative Subscribers (or SIMs*) – Net 15,659,742 14,467,985 8% 15,659,742 12,403,575 26%
Postpaid . ………………………………… 643,901 636,381 1% 643,901 594,142 8%
Prepaid .…………………………………… 15,015,841 13,831,604 9% 15,015,841 11,809,433 27%
Globe Prepaid ……………… 10,118,897 9,572,651 6% 10,118,897 8,699,687 16%
TM ………………………………………… 4,896,944 4,258,953 15% 4,896,944 3,109,746 57%
Average Revenue Per Subscriber (ARPU)
Gross ARPU
Postpaid . ……………………………………… 2,276 2,238 2% 2,290 2,246 2%
Prepaid 1
Globe Prepaid ……………… 362 364 -1% 372 378 -2%
TM …………………………………………… 229 225 2% 246 333 -26%
Net ARPU
Postpaid . …………………………………… 1,686 1,649 2% 1,673 1,635 2%
Prepaid
Globe Prepaid ……………. 251 259 -3% 262 268 -2%
TM ………………………………………… 168 169 -1% 181 214 -15%
Subscriber Acquisition Cost (SAC)
Postpaid . …………………………………… 5,208 6,788 -23% 6,787 7,026 -3%
Prepaid
Globe Prepaid ……………. 91 63 44% 83 248 -67%
TM ………………………………………… 102 103 -1% 91 90 1%
Average Monthly Churn Rate (%)
Postpaid . ………………………………… 2.74% 1.75% 1.83% 3.10%
Prepaid
Globe Prepaid ……………. 4.51% 4.55% 4.73% 7.77%
TM ……………………………………….... 6.58% 7.07% 5.94% 9.45%
____________________________________________
*The word “subscriber” may be used interchangeably with the term “SIM.”
1 Revenue from a prepaid subscriber is realized upon actual usage of the airtime value (pre-loaded airtime value of SIM cards and subsequent top-ups)
for voice, SMS, MMS, content downloading, infotext services and prepaid unlimitext subscriptions net of free SMS allocation, bonus credits (included
airtime on SIM cards provided under Globe’s SIM swap program which was concluded last May 2005) or the expiration of the unused value,
whichever comes earlier. Proceeds from the sale of prepaid cards, airtime value through electronic load services such as ATM and airtime value
through over-the-air (OTA) reloading are treated as deferred or unearned revenues are shown under the liabilities section of the balance sheet since the
service has not yet been rendered, reduced by actual amount of usage for the period.
Our subscriber base continued on an upward trajectory posting a significant year-on-year growth of 26%,
ending the year with 15.7 million subscribers. Total gross subscriber additions for the year amounted to 11.6
million which is at par with 2005 level. However, gross subscriber additions in 2005 still included
acquisitions of prepaid subscribers from the SIM swap program which created a number of non-revenue
generating subscribers that were subsequently churned out after their second expiry.
SEC Form 17Q - 4Q 2006 15

With improved churn rates across all brands, Globe’s net additions for the full year reached 3.3 million, a
reversal from the net reduction of 110 thousand in 2005.
The succeeding sections cover the key segments and brands of the wireless business – Globe Postpaid, Globe
Prepaid and TM.
Globe Postpaid
For the full year of 2006, our postpaid segment comprised approximately 4% of our total subscriber base.
Our cumulative postpaid subscribers grew by 1% from the previous quarter and 8% from last year to reach
643,901 at the end of 2006. Total postpaid gross additions registered 185,801 for the year while net additions
reached 49,759 as a result of lower churn at 1.83%, which is significantly below last year’s churn rate of
3.10%. The improvements in churn during the year can be attributed to continuing subscriber loyalty
programs and innovations introduced. Additionally, these are fortified with various tariff offers that are
available across both postpaid and prepaid brands.
The postpaid segment posted a gross ARPU of P2,290 during 2006, a 2% improvement from last year’s
average of P2,246 due to higher intra-network voice traffic. On the other hand, net ARPU increased by 2% to
P1,673 from P1,635 in 2005, driven mainly by IDD voice and supported by higher contributions from VAS
services.
SAC decreased by 3% year-on-year due mainly to lower handset subsidies. However, on a quarter-on-quarter
basis, the 23% decrease is attributable to lower-value handset releases to new postpaid subscribers. Handset
subsidies accounted for about 97% of total acquisition costs for the year compared to 86% in 2005.
Prepaid
For the year, our prepaid segment, composed of our Globe Prepaid and TM brands, made up 96% of our total
subscriber base.
Overall, our consolidated prepaid subscribers significantly increased by 27% from 11.8 million in 2005 to
around 15 million at year end. Total prepaid gross additions of 11.4 million in 2006 were at par with 2005
levels despite SIM swap acquisitions which continued until the program’s termination in May 2005. With
lower year-on-year churn levels across both prepaid brands, consolidated prepaid net additions improved to
3.2 million in 2006 compared to 74 thousand net reductions in 2005.
A prepaid subscriber was recognized upon the activation and use of a new SIM card. The subscriber was
provided with 60 days (first expiry) to utilize the preloaded airtime value (except for SIM-swappers who
were required to reload credits within only 30 days from the first expiry). If the subscriber did not reload
prepaid credits within the first expiry period, the subscriber retained the use of the wireless number, but was
only entitled to receive incoming voice calls and text messages for another 120 days (second expiry).
However, if the subscriber did not reload prepaid credits within the second expiry period, the account would
be permanently disconnected and considered part of churn. The first expiry periods of reloads vary depending
on the denominations, ranging from 1 day for P10 to 60 days for P300 to P500 reloads. The second expiry is
120 days from the date of the first expiry. The first expiry is reset based on the longest expiry period among
current and previous reloads. Under this policy, subscribers are included in the subscriber count until
churned. SIM-swappers are counted as subscribers after their first reload. However, from the second half of
2004 until the end of the SIM-swap program in May 2005, Globe revised its subscriber count policy to reflect
a subscriber’s intent to use the service by monitoring its reload history. Hence, based on the revised policy,
SEC Form 17Q - 4Q 2006 16

Globe culled out the non-revenue generating subscribers related to its SIM-swap program following end of
the program.
The succeeding sections discuss Globe Prepaid and TM in more detail.
Globe Prepaid
Globe Prepaid registered strong growth rates this year, posting a 16% year-on-year and 6% quarter-onquarter
growth in its SIM base to close the year with 10.1 million subscribers. Gross additions were 8%
lower year-on-year at 6.8 million compared to 7.3 million in 2005 owing to the inflated acquisitions during
the SIM-swap period the prior year. However, the significant improvement in its churn rate from 7.77%
down to 4.73% has led to healthy net additions of 1.4 million compared to the 1.5 million net reductions the
previous year. Competitive and unique value offers and effective retention and loyalty programs are the
drivers behind the brand’s strong performance this year.
Gross ARPU for Globe Prepaid decreased by 2% while net ARPU remained flat compared to last year. This
is attributed to the lower regular billable SMS due to a shift to the unlimited SMS offer, offset by higher
UNLIMITXT SMS registrations, improved voice usage of IDD services and local calls attributable to
discounted and per-second IDD tariff offers and per-second local intra-network calls.
SAC dropped by 67% year-on-year from P248 to P83 in 2006 due to targeted acquisitions and more focused
spending on marketing costs and subsidies. Subsidies comprised 58% of total SAC, advertising and
promotions contributed 38%, while commissions made up the balance of 4%. For 2005, SAC composition
was 40% subsidies while 60% went to advertising and promotions and commissions.
TM
TM had another banner year in 2006. Following its relaunch in January 2005, the brand continues to expand
its reach and establish its presence in the market with its strong value propositions evident in all of its service
offerings. As a result, TM closed the year with 4.9 million cumulative subscribers, a remarkable 57% yearon-year
and 15% quarter-on-quarter growth in its subscriber base. It currently accounts for 33% of total
prepaid subscribers.
The significant improvement in its subscriber base is attributable to strong gross additions and effective
management of its churn rate. The brand posted 4.6 million in gross additions compared to last year’s 4.1
million. Through steady introductions of compelling value promotions customized to its target market’s
needs, TM successfully acquired new subscribers and drove down its churn rate. From a high of 12.70%
recorded for full year 2004 and 9.45% for 2005, TM’s churn rate stood at a stronger 5.94% for full year 2006.
On a quarter-on-quarter basis, TM’s churn has also decreased to 6.58% compared to the 7.07% level in third
quarter in 2006. If we exclude terminations due to ISR (International Simple Resale) activities which are
illegal in the Philippines, the average monthly churn rate for TM for the year would be only at 5.15%.
The Company continues to put processes in place to enable the early detection of illegal ISR usage and the
immediate disconnections of SIMs used for this purpose. (See related discussion in ILD section)
SEC Form 17Q - 4Q 2006 17

With strong gross additions and healthier churn rate, TM’s net additions for the year stood at 1.8 million, up
27% from last year’s 1.4 million.
TM’s net ARPU for the year declined by 15% from P214 in 2005 to P181. The decrease in ARPU was
brought about by a combination of lower tariffs and increased subscriber levels despite higher volumes
brought about by its Power-Piso promotions.
SAC showed a slight increase of 1% from P90 to P91 for the year, 15% of which was composed of subsidies,
83% from advertising and promotions with commissions making up the balance of 2% for 2006.
Wireless Promotions
Globe introduced the following products and services to its subscribers since the start of the fourth quarter of
2006:
• On 10 November 2006, Globe offered its P5.00 per international SMS to Saudi Arabia. This
promotion was offered to all Globe postpaid, prepaid and TM subscribers with no registration fees or
dialing procedures required. This promotion ended last 9 December 2006.
• On 12 November 2006, Globe launched its GLOBE UNLIMITXTPLUS promo that offered unlimited
intra-network SMS and discounted inter-network SMS rate of P0.75 for P20 for 1 day and P40 for 2
days. This promo ended on 11 December 2006.
• On 3 December 2006, Globe prepaid launched its Kabalikat Christmas program which covered all
the touch points of the OFWs and their families during the Christmas season: 1) OFW Family days in
16 provinces nationwide - where Globe, in partnership with OWWA and POEA, held Christmas
celebrations for returning OFWs and their families; 2) Duty Free Christmas Rush promo provided
balikbayans a chance to win various prizes when they purchase Globe products at Duty Free shops;
3.) NAIA Presidential and Celebrity Salubong (organized together with OWWA) - returning OFWs
were welcomed by the President of the Republic and selected Globe-hired celebrities last Dec. 21-
Dec.30.
• On 6 December 2006, Globe introduced its GLOBE IMEVRYWHR instant messaging service that
offers unlimited chatting, voice messaging and unlimited photo sending for only P20 for 1 day, P120
for 7 days and P500 for 30 days. This service is available to all Globe postpaid and prepaid
subscribers and includes the following service features – integrated registration with MyGlobe,
preference list and address book, MyGlobe instant messaging service, text messaging, prepaid
balance inquiry and integrated functions with VAS services such as GCash, Share-A-Load and AskG.
• On 1 January 2007, Globe launched a new US$0.20 per minute call rate to Saudi Arabia, Oman and
Qatar. This service was made available to all Globe postpaid, prepaid and TM subscribers.
Subscribers just need to dial 12-800 and the complete destination number details to avail of the
service. This promotion ended on 31 January 2007.
• On 15 January 2007, Globe introduced its P24-for-3 minute calls to the United States and Canada.
Globe postpaid, prepaid and TM subscribers just need to dial 12-803 and the complete destination
number details to avail of the service.
SEC Form 17Q - 4Q 2006 18

GCash
• On 1 February 2007, Globe launched the following unlimited texting services customized to fit
different needs and lifestyles of its subscribers:
a. UNLITXT or regular ALL DAY unlimited texting;
b. UNLITXTD or DAYSHIFT unlimited texting (8 AM to 4:59 PM)
c. UNLITXTN or NIGHTSHIFT unlimited texting (10 PM to 7:59 AM)
d. TXTPLUS for unlimited intra-network texting plus an inter-network texting rate of P0.75 per
text
UNLITXT is available in P20, P40 and P80 denominations for 1, 2 and 4 days, respectively, of
unlimited texting. UNLITXTD comes in P15 and P30 variations for 1 and 2 days, respectively of
unlimited texting while UNLITXTN is offered in P10 and P20 denominations for 1 and 2 days,
respectively. TXTPLUS now comes in P25 and P50 variants for 1 and 2 days of unlimited
texting plus a text rate of P0.75 to other networks. Starting 1 February 2007, these unlimited
texting services will be available to Globe prepaid subscribers while Globe postpaid subscribers
will initially be offered the UNLITXT service.
GCash continues to establish its presence in the mobile commerce industry. Now on its second year,
GCash’s initial thrust towards money-transfers, purchase of goods and services from retail outlets, and
sending and receiving domestic and international remittances has spurred alliances in the field of mobile
commerce. Today, GCash allows Globe and TM subscribers to pay or transact for the following using their
mobile phone:
• utility bills
• interest and amortization of loans
• insurance premiums
• donations to various institutions and organizations
• sales commissions
• school tuition fees
• micro tax payments (for annual business registration)
• electronic loads and pins
• online purchases
• train tickets using the G-PASS chip
In addition to the above transactions, GCash is also used as a wholesale payment facility. As of 31
December 2006, GCash handled an average monthly value transaction size of around P5.67 billion. Net
registered GCash user base as of end of December 2006 totaled 500,813.
SEC Form 17Q - 4Q 2006 19

WIRELINE BUSINESS
Globe and Innove have adopted a customer-centric market approach to allow for the development of
products based on specific consumer or business requirements and to better serve the varied needs of its
customers. Dedicated business units have been created and organized within the Company to focus on the
wireless and wireline needs of specific market segments and customers – be they residential subscribers,
wholesalers and other large corporate clients, or smaller scale industries. The Enterprise Business Group
(EBG) is one such business unit, created in response to our corporate clients’ preferences for integrated
mobile and wireline communications solutions. Complete with its own dedicated technical and customer
relationship teams, the EBG consists of GlobeSolutions, which is the corporate wireless business group of
Globe, and GlobeQUEST, the corporate wireline group of Innove.
Wireline Revenues (in millions of pesos)
Q4
2006
Innove
For the Quarter Ended For the Full Year Ended
Q3
2006
QoQ
Change
(%)
31 Dec
2006
31 Dec
2005
YoY
Change
(%)
Service
Voice 1 ….……………………………………………… 1,082 1,059 2% 4,312 4,396 -2%
Data 2 ..………………………………………………… 501 501 - 2,050 2,020 1%
Wireline Net Service Revenues…………………..……... 1,583 1,560 1% 6,362 6,416 -1%
_______________________________________
1 Wireline voice net service revenues consist of the following:
a) Monthly service fees including CERA;
b) Revenues from local, international and national long distance calls made by postpaid, prepaid wireline subscribers and payphone customers,
net of (i) prepaid and payphone call card discounts (ii) bonus credits and (iii) loyalty discounts credited to subscriber billings;
c) Revenues from inbound local, international and national long distance calls from other carriers terminating on our network; and
d) Installation charges and other one-time fees associated with the establishment of the service.
Revenues from (b) and (c) are net of any interconnection or settlement payments to domestic and international carriers.
2 Wireline data net service revenues consist of revenues from:
a) Monthly service fees from International and domestic leased lines;
b) Monthly service fees on Corporate Internet services and charges in excess of free allocation;
c) One-time connection charges associated with the establishment of service.
d) Other wholesale transport services and
e) Revenues from value-added services.
Revenues from (b) are net of any interconnection or settlement payments to other carriers.
Overall, the wireline business recorded a decline of 2% from last year, reporting P6,362 million in net service
revenues for the full year ended December 2006. Lower wireline revenues resulted mainly from the
appreciation of the peso which impacted the business’ US$-linked revenues, as well as the effects of the 26
December earthquake in Taiwan. In 2006, wireline foreign-currency linked revenues comprised 60% of its
net revenues.
SEC Form 17Q - 4Q 2006 20

Wireline Voice
Key Drivers
Innove
For the Quarter Ended For the full year ended
Q4
2006
Q3
2006
QoQ
Change
(%)
31 Dec
2006
31 Dec
2005
YoY
Change
(%)
Cumulative Voice Subscribers -
Net (End of period)……………....................... 383,876 373,106 3% 383,876 362,143 6%
Average Revenue Per Subscriber (ARPU)
Gross ARPU……………………………….. 1,086 1,103 -2% 1,110 1,233 -10%
Net ARPU…………………………………. 957 971 -1% 978 1,088 -10%
Average Monthly Churn Rate ..…………….. 1.4% 2.2% 1.9% 1.7%
Broadband Subscribers-Net (End of period)…
51,426 43,651 18% 51,426 22,479 129%
As of 31 December 2006, Innove increased its total wireline voice subscribers by 6% to 383,876 from
362,143 in 2005. This subscriber base is comprised of 63% postpaid and 37% prepaid, with the business to
residential mix ratio of 22:78 and 23:77 for the years 2006 and 2005, respectively.
Our broadband business continues to show robust growth, registering a year-on-year increase in subscribers
of 129%, bringing our cumulative base to 51,426 by the end of 2006. This growth is attributable to the
increasing affordability of our consumer broadband offerings which are now bundled with free landline
service with waived monthly fees in selected franchise areas. Innove also introduced a speed upgrade for its
broadband consumers, increasing speeds from 384 kbps to 512 kbps, at no extra charge to customers.
While cumulative subscribers grew, churn rates for the year increased year-on-year from 1.7% to 1.9% owing
to the higher disconnections experienced in the postpaid service resulting from company-initiated clean up of
delinquent accounts.
As of year end, our wireline voice service revenues slightly dropped by 2% from last year’s P4,396 million to
P4,312 million this year. Gross and net ARPUs have been affected by lower voice maintenance revenues and
the drop in collection rates. In addition, decreased IDD revenues owing to the stronger peso have further
contributed to the decrease in total voice service revenues. (See related discussion in the Foreign Exchange
and Interest Rate Exposure section)
SEC Form 17Q - 4Q 2006 21

Wireline Data
Service Revenues (in millions of pesos)
Q4
2006
Innove
For the Quarter Ended For the full year ended
Q3
2006
QoQ
Change
(%)
31 Dec
2006
31 Dec
2005
YoY
Change
(%)
Wireline Data
International …..………………………………… 139 138 1% 604 679 -11%
Domestic …… …………………………………. 213 211 1% 834 797 5%
Others 1 ………………………………………… 149 152 -2% 612 544 13%
Total Wireline Data Service Revenues………………….. 501 501 - 2,050 2,020 1%
________________________________________________________________________
1 Includes revenues from value-added services and corporate internet services.
On the wireline data front, wireline data business registered service revenues of P2 billion, broadly in line
with the previous year. Despite the higher circuit base, total revenues were flat largely due to the appreciation
of the peso.
To further promote our products and services, we have introduced a stream of service innovations and
customized solutions for our SME and corporate markets. Our GlobeQuest Store Express is customized for
the retail industry, allowing for a timely and reliable exchange of sales and inventory information between
headquarters and its branches, and the hosting of other voice, video and POS applications. For our large
enterprise clients, we also continue to offer various innovative solutions to address their evolving needs, thus
the enhancement of the GlobeQUEST network to ICON (IP-Converged Optical Network), which is the first
IP core network in the country that incorporates MPLS and IP as its core technologies, allowing traffic
prioritization for IP traffic. It is a fully-meshed network that allows for cost-effective inter-working of various
access technologies, whether frame relay, Ethernet, DSL or other wireless protocols.
Wireline Promotions
Innove introduced the following products and services to its subscribers during the fourth quarter of 2006:
• Globelines launched its “Globelines Broadband” (GBB) residential promotions that included the
following packages:
a. Waived 12 months of Globelines’ voice Monthly Service Fees (MSF) for selected GBB
packages; This promotion started on 1 October 2006 and lasted for one month.
b. Two months of waived voice MSF for subscribers who upgrade to the Globelines Postpaid
Plus service
c. assorted promotional items for certain GBB packages;
The promotions discussed in items (b) and (c) above started on the 15 th and 27th of November,
respectively. Both promotions ended last 31 January 2007.
• On 27 November 2006 Globelines offered its “Switch to Globe Broadband until December 31 and
get 2 months free” promotion. The promotion ended on 31 January 2007.
SEC Form 17Q - 4Q 2006 22

OTHER GLOBE GROUP REVENUES
International Long Distance (ILD) Services
ILD Revenues and Minutes
Q4
2006
Globe Group
For the Quarter Ended For the full year ended
Q3
2006
QoQ
Change
(%)
31 Dec
2006
31 Dec
2005
YoY
Change
(%)
Total ILD Revenues (in millions of pesos) ……………… 3,013 3,561 -15% 13,967 13,526 3%
Total ILD Revenues as a percentage of net service revenues 21% 25% 24% 25%
Total ILD Minutes (in million minutes) 1 ……………… 533 479 11% 1,948 1,469 33%
Inbound……………………………………………… 463 415 12% 1,689 1,251 35%
Outbound.…………………………………………… 70 64 9% 259 218 19%
ILD Inbound / Outbound Ratio (x) …………………. 6.61 6.48 6.52 5.74
_______________________________________________________________________________________
1 ILD minutes originating from and terminating to Globe and Innove networks.
On a consolidated basis, ILD revenues from the Wireless and Wireline services increased by 3% to P=13,967
million during the year compared to P=13,526 million for the same period in 2005. We continue to see positive
results from the successful launches of various IDD tariff promotions starting the second half of 2005. This
has resulted in higher inbound and outbound ILD minutes and increased revenue for our wireless business.
Both Globe and Innove offer ILD services which cover international calls between the Philippines and over
200 countries. This service generates revenues from both inbound and outbound international call traffic with
pricing based on agreed international termination rates for inbound traffic revenues and NTC-approved ILD
rates for outbound traffic revenues.
As part of our commitment to serve our overseas Filipino communities better and to address the needs of
specific segments such as the heavy IDD users among our wireless postpaid subscribers, Globe has launched
various IDD promos since the second half of 2005. Following its IDD CelebRATE! series of offerings in
2005, Globe re-launched various promos in 2006 under the umbrella Globe Super Sulit Offers. We continue
to provide a discounted IDD rate of P7.50 per minute, or equivalent to that of a local rate, for calls to
selected countries such as US and Canada (off-peak hours only), and other Bridge Mobile Alliance partners
such as Taiwan Mobile, HK CSL, Singtel, and Maxis Malaysia. Globe also introduced very competitive IDD
rates of US$0.20 and US$0.30 per minute to countries with large OFW groups such as Japan and Saudi
Arabia, Oman, and Qatar, respectively.
Globe’s per second charging remains a unique offering to this date. We continue to offer the IDD rate of
US$.003 per second to selected countries such as US, Canada, China, Malaysia, Hong Kong, Singapore,
Thailand, South Korea, Taiwan, Australia, United Kingdom, Kuwait and Equatorial Guinea, as well as the
per-second rate of US$.0067 for other countries.
Through our alliance with the Bridge Mobile partners, Globe was also able to launch co-branded SIMs with
Singtel, Hong Kong CSL, and Taiwan Mobile to provide our OFWs the opportunity to take advantage of
discounted call and SMS rates when calling their family in the Philippines.
SEC Form 17Q - 4Q 2006 23

On the wireline front, Globelines launched and continued to offer its Lowest IDD rates promotion where its
Globelines subscribers, Globe1 card users and Globelines Broadband subscribers are charged a reduced rate
of US$0.20 per minute for IDD calls to selected countries. Globe1 card users could also make IDD calls for
P2.50 per minute and P4.50 per minute to selected destinations from Globelines postpaid and prepaid lines
including payphones nationwide.
To ensure that the Company fully benefits from the increased ILD volume, we continue to actively monitor
International Simple Resale (ISR) operations passing through our networks. An ISR operation, a bypass and
block service considered illegal in the Philippines, is a method of terminating inbound international calls
without passing through the International Gateway Facility (IGF). If ISR operations are unchecked, Globe
will not be able to realize the full inbound international revenue and instead earn only normal domestic
termination charges for local or NDD calls or access charges from other carriers, which are lower than
international termination rates.
To reduce ISR activities, Globe initiated increased detection and blocking procedures including closer
coordination of detected ISR lines with other industry players. The Company also implemented arrangements
with international carriers to reduce arbitrage opportunities for ISR operators. The Company further tightened
its fraud and risk evaluation process for corporate and individual accounts and is implementing legal,
commercial and technical solutions to the ISR concern, such as the immediate termination of SIMs detected
as being used for ISR operations and the suspension of AutoLoad Max retailers identified as having
significant loading transactions to ISR SIMs. The Company also regularly coordinates with the NTC and
other government agencies in addressing this concern. Because of these ongoing efforts, ISR losses have
significantly decreased compared to last year.
Interconnection
Domestically, the Globe Group pays interconnection charges to other carriers for calls originating from its
network terminating to other carriers’ networks, and hauling charges for calls that pass through Globe’s
network terminating in another network.
Internationally, the Globe Group also incurs payouts for outbound international calls. These charges are
based on a negotiated price per minute.
The interconnection expenses paid as a percentage of gross service revenues for the year registered at 15%
from 19% for the same period in 2005.
The Globe Group also collects termination fees from local and foreign carriers whose calls terminate in
Globe Group’s network. Domestic calls terminating to wireless networks are charged a termination rate of
P4.00 per minute while calls terminating to wireline voice networks are charged a termination rate of P3.00
per minute.
SEC Form 17Q - 4Q 2006 24

GROUP OPERATING EXPENSES
For the full year of 2006, the Globe Group’s total subsidy, operating expenses and depreciation and
amortization expenses decreased by 1% to P=36,952 million from P=37,197 million for the same period in
2005.
Costs and Expenses (in millions of pesos)
Q4
2006
Globe Group
For the Quarter Ended For the full year ended
Q3
2006
QoQ
Change
(%)
31 Dec
2006
31 Dec
2005
YoY
Change
(%)
Cost of sales……………………………………………….. 1,144 1,157 -1% 4,619 6,025 -23%
Less: Non-service revenues………………………………… 713 665 7% 2,915 3,851 -24%
Subsidy 431 492 -12% 1,704 2,174 -22%
Selling, Advertising and Promotions…………………. 1,156 783 48% 3,525 4,697 -25%
Staff Costs …………………………………………… 986 897 10% 3,564 3,519 1%
Utilities, Supplies & Other Administrative Expenses… 611 511 20% 2,121 1,982 7%
Rent…………………………………………………… 518 510 2% 2,081 1,840 13%
Repairs and Maintenance……………………………… 471 558 -16% 2,122 1,877 13%
Provisions …………………………………………… 21 173 -88% 446 683 -35%
Services and Others……………………………………
Insurance and security……………………………. 373 298 25% 1,441 1,478 -3%
Professional and Other contracted services……….. 562 341 65% 1,394 1,495 -7%
Taxes and Licenses……………………………….. 231 72 221% 756 832 -9%
Others…………………………………………….. 129 187 -31% 660 886 -26%
Operating Expenses………………………………………. 5,058 4,330 17% 18,110 19,289 -6%
Depreciation and Amortization ……………….………… 5,043 4,094 23% 17,138 15,734 9%
Total………………………………………………………. 10,532 8,916 18% 36,952 37,197 -1%
Subsidy
Total subsidies dropped by 22% to P1,704 million from P2,174 million last year due to lower issuance of
handset and phonekits to newly-acquired subscribers. This is in line with the Company’s overall thrust to
calibrate subsidy and marketing spending by shifting to more cost-effective, customized and segmented
subscriber acquisition and retention programs.
Selling, Advertising and Promotions
Through our targeted acquisition and retention campaigns, the Company was able to drive down its
marketing expenses by P1.2 billion or 25% compared to last year’s spending. However, higher spending on
loyalty programs and corporate events during the holiday season increased total marketing expenses quarteron-quarter
by 48%. As a percentage of total service revenues, total marketing expenses and subsidy declined
year-on-year from 13% in 2005 to 9% by the end of 2006.
Staff Costs
Staff costs accounted for 20% of total operating expenses. The slight increase of 1% year-on-year was due to
additional personnel hired during the year as total headcount increased by 3.6% to 5,161 from 4,984 in 2005.
SEC Form 17Q - 4Q 2006 25

Utilities, Supplies and Other Administrative Expenses
Utilities, Supplies and Other Administrative expenses accounted for 12% of total operating expenses and
registered a 7% year-on-year increase to P2,121 million from last year’s P1,982 million mainly due to higher
power and utilities charges to support Globe’s expanded 2G network facilities, as well as the ongoing 3G
network build out this year. Power and utilities accounts for 71% of total utilities, supplies and other
administrative expenses.
Rent Expenses
Rent expenses accounted for 11% of total operating expenses and increased by 13% year-on-year to P2,081
million from last year’s P1,840 million due to increased rentals for cell sites, leases on interconnection
facilities and warehouses in support of the Globe Group’s expanded network facilities and logistical support
requirements.
Repairs and Maintenance Expenses
Repairs and Maintenance expenses likewise increased by 13% year-on-year and accounted for 12% of total
operating expenses for the year. The increase is mainly due to additional technical support and maintenance
costs of the Globe Group’s expanded network facilities and information systems infrastructure. This year’s
expenses also included costs relating to the restoration work resulting from Typhoon Milenyo and the 26
December Taiwan earthquake.
Provisions
The provisions account includes provisions related to trade, non-trade and traffic receivables and inventory.
Total provisions decreased by 35% to P446 million due to improvements in asset quality in terms of
recoverability of subscriber and traffic receivables and inventory balances.
Provisions for subscriber receivables decreased by 30% to P395 million compared to P563 million in 2005
due to improved credit quality and recovery from delinquent subscriber accounts. Provisions for traffic
receivables likewise decreased by 18% to P44 million from lower provisions related to certain carrier
accounts.
Provisions for inventory losses also posted a net reversal of P61 million, decreasing by 177% from last year’s
net provision of P80 million. The net reversal was a result of recent reassessments of recoverable values for
stock inventory levels.
Services and Others
Services and Others accounted for 23% of total operating expenses and decreased by 9% to P4,251 million
compared to P4,691 million for the same period in 2005. This was mainly attributable to various costeffective
initiatives which resulted in reduced spending on professional, contracted services and other
miscellaneous expenses. Insurance and security services likewise declined by 3% year-on-year despite an
expanded network facilities and cell site base. Professional and other contracted services, including
janitorial, clerical, courier and delivery expenses, were 7% lower at P1,394 million during the year due to
less professional and legal consultations and engagements entered into this year compared to 2005. Quarteron-quarter,
taxes and licenses increased by 221% due to reversals in accruals made during the prior period
while professional and other contracted services grew by 65% due to higher consultancy fees for the period.
However, on a year-on-year basis, taxes and licenses and professional and other contracted services were 9%
and 7% lower respectively.
SEC Form 17Q - 4Q 2006 26

Depreciation and Amortization
Depreciation and amortization increased by 9% to P=17,138 million for the year compared to P=15,734 million
in 2005. This increase reflected the additional depreciation charges related to various telecommunications
equipment placed in service during the period. Depreciation is computed using the straight-line method over
the estimated useful life (EUL) of the assets, where the weighted EUL of all depreciable assets is 8.6 years.
In the fourth quarter of 2006, the Globe Group recognized additional depreciation on telecommunications
equipment amounting to P790 million due to shortened remaining useful lives of certain assets resulting from
continuing upgrades made to the network, as well as changes in estimated remaining useful lives of certain
components of network assets as a result of the application of a more comprehensive approach to component
accounting. Out of this P790 million increase, P377 million are charges pertaining to the first three quarters
of the year. These changes have been accounted for as change in accounting estimates.
Other Income Statement Items
Other income statement items include financing costs – net interest income and others – net as shown below:
Q4
2006
Globe Group
For the Quarter Ended For the full year ended
Q3
2006
QoQ
Change
(%)
31 Dec
2006
31 Dec
2005
YoY
Change
(%)
Financing Costs – net
Interest Expense………………………………………… (992) (1,025) -3% (4,214) (4,658) -10%
Gain (Loss) on derivative instruments – net…………… 133 58 129% (338) (104) 225%
Swap costs and other financing costs…………………… (87) (124) -30% (426) (682) -38%
Foreign Exchange (loss)gain – net……………………… 478 1,259 -62% 1,706 2,303 -26%
(468) 168 -379% (3,272) (3,141) 4%
Interest Income …………………………………………… 161 119 35% 715 520 38%
Property and Equipment related charges - net ……………. 32 (64) -150% (66) (897) -93%
Total Other Income (Expenses)………………………… (275) 223 -223% (2,623) (3,518) -25%
For 2006, the Globe Group registered a P=131 million or 4% year-on-year increase in financing costs due
mainly to lower foreign exchange gains recognized during the period. The Philippine peso continued to
appreciate against the US$, ending the year at P=49.045 at the end of December 2006. The peso appreciated by
8% from last year’s level of P53.062. In 2005, the currency rose by 6% from P56.341 to P53.062. The
Company registered a P=1,706 million foreign exchange gain for the year, compared to last year’s P=2,303
million. (See related discussion on derivative instruments and swap costs in the Foreign Exchange and
Interest Rate Exposure section)
Interest expense was at P4,214 million in 2006, a decrease of 10% or P444 million from P4,658 million in
2005 due to repayment of loans to foreign and local banks during the year, coupled with decrease in peso
interest rates. Swap costs incurred to manage Globe Group’s interest rate and foreign exchange risk
exposures in loans registered a drop of 38% or P256 million. The lower costs incurred is due to a reduction
in the amount of outstanding swaps. On the other hand, interest income increased by 38% from P520 million
in 2005 to P715 million in 2006 due to higher levels of short-term placements.
The Globe Group also recognized impairment provisions on telecommunications assets amounting to P89
million for the year compared to the P926 million net provisions in 2005.
SEC Form 17Q - 4Q 2006 27

The consolidated provision for current and deferred income tax for the Globe Group increased by 48% or
P1,857 million to P5,704 million for the year from P3,867 million in 2005, as a result of the expiry of the
income tax holiday incentive of Globe on 31 March 2005, higher taxable income base due to improved
earnings, and the increase in corporate income tax rates by 3% to 35% starting November 2005 as mandated
by Republic Act 9337. Consolidated effective income tax rate was at 33% for the year compared to 27% for
the same period in 2005.
As a result of the above, the Globe Group’s consolidated net income increased by 14% year-on-year to
P=11,755 million for the full year ended December 2006 from P=10,315 million for the same period in 2005.
Excluding foreign exchange and mark-to-market gains and losses, core earnings would have been P=10,833
million, a 24% improvement from last year’s P=8,715 million.
Accordingly, consolidated basic earnings per common share were P88.56 and P76.74 and consolidated
diluted earnings per common share were P88.32 and P76.60 for the year 2006 and 2005, respectively.
LIQUIDITY AND CAPITAL RESOURCES
As of and for the full year ended
31 Dec
2006
Globe Group
31 Dec
2005
YoY change
(%)
Balance Sheet Data (in millions of pesos)
Total Assets ……………………………………………………………… 124,580 125,102 -
Total Debt ………………………………………………………………. 39,207 49,693 -21%
Total Stockholders’ Equity ……………………………………………… 56,948 51,619 10%
Financial Ratios (x)
Total Debt to EBITDA ………………………………………………….. 1.05 1.49
Debt Service Coverage……………………………………………………. 2.99 1.85
Interest Cover (Gross) …………………………………………………… 8.74 7.01
Debt to Equity (Gross) ………………………………………………….. 0.69 0.96
Debt to Equity (Net) 1 ……………………………………………………. 0.43 0.73
Total Debt to Total Capitalization (Book) ………………………………. 0.41 0.49
Total Debt to Total Capitalization (Market) ...…………………………… 0.19 0.34
1 Net debt is calculated by subtracting cash, cash equivalents and short term investments from total debt.
Globe Group’s consolidated assets as of 31 December 2006 amounted to P=124,580 million compared to
P=125,102 million for the same period in 2005.
Consolidated cash, cash equivalents and short term investments (including investments in assets available for
sale and held to maturity) was at P=14,812 million at the end of the year, 22% higher than the P12,165 million
registered in 2005. Gross debt to equity ratio as of 31 December 2006 was 0.69:1 on a consolidated basis and
remains well within the 2:1 debt to equity limit dictated by certain debt covenants. Net debt to equity ratio
was at 0.43:1 as of 31 December 2006.
SEC Form 17Q - 4Q 2006 28

The financial tests under Globe’s loan agreements include compliance with the following ratios:
• Total debt to equity not exceeding 2:1;
• Total debt to EBITDA not exceeding 3:1;
• Debt service coverage 1 exceeding 1.3 times;
• Secured debt ratio 2 not exceeding 0.2 times.
1 Debt service coverage ratio is defined as the ratio of EBITDA to required debt service, where debt service includes subordinated debt but excludes
shareholder loans. Globe has obtained the consent of its creditors to exclude the early prepayment of its Senior Notes due 2012 from the computation
of the debt service coverage ratio.
2 Secured debt ratio is defined as the ratio of the total amount for the period of all present consolidated obligations for payment, whether actual or
contingent which are secured by Permitted Security Interest as defined in the loan agreement to the total amount of consolidated debt.
Consolidated Net Cash Flows
Globe Group
For the full year ended (in millions of pesos)
31 Dec 31 Dec YoY change
2006 2005
(%)
Net Cash from Operating Activities ……………………………………. 32,565 28,952 12%
Consolidated net cash flow from operations amounted to P=32,565 million for the full year ended 31
December 2006, a 12% increase from P=28,952 million from last year.
Globe Group
For the full year ended (in millions of pesos)
31 Dec 31 Dec YoY change
2006 2005
(%)
Capital Expenditures (Cash) …………………………………………………. 12,586 15,922 -21%
Increase (Decrease) in Liabilities related to Acquisition of PPE ……………. 2,246 (1,164) 293%
Total Capital Expenditures 1 ………………………………………………. 14,832 14,758 -
Total Capital Expenditures / Service Revenues (%)……………………… 26% 27%
1 Consolidated capital expenditures include property and equipment and intangibles, acquired as of report date regardless of whether payment has
been made or not, but excludes capitalized borrowing costs during the period.
Consolidated net cash used in investing activities amounted to P=18,908 million for the year, a 19% increase
from the P=15,943 million in 2005. Consolidated capital expenditures, of P=14,832 million remained at par with
previous year’s level. For 2007, Globe is allocating approximately US$350 million for capital expenditures to
deepen coverage for its 2G wireless network, accelerate broadband network roll-out, and upgrade necessary
facilities for 3G. The 2007 capital expenditure program will be funded through internally-generated cash and
debt financing.
Consolidated net cash used in financing activities for the year amounted to P=17,062 million, a 9% increase
compared to P=15,680 million in 2005. Consolidated total debt as of year end amounted to P=39,207 million, a
21% decrease from the P=49,693 million from last year. Loan repayments of Globe for 2006 amounted to
P=10,429 million compared to the P=12,527 million paid for in 2005.
As of 31 December 2006, gross debt dropped to P=39,207 million, 62% of which are denominated in US$. Of
the 62%, 33% has been swapped to pesos. As a result, the amount of US$ debt swapped into pesos and pesodenominated
debt accounts for approximately 59% of consolidated loans as of 31 December 2006.
SEC Form 17Q - 4Q 2006 29

Below is the schedule of debt maturities for Globe for the years stated below based on total outstanding debt
as of 31 December 2006:
Year Due Principal
(US$ millions)
2007 ……………………………………………………………………………………………… 133
2008………………………………………………………………………………………………. 100
2009………………………………………………………………………………………………. 153
2010 through 2012 ………………………………………………………………………………. 414
Total 800
Last 12 January 2007, the Company has announced that it is considering redeeming its US$300 million
9.75% Senior Notes due 2012 in April 2007 after receiving Bangko Sentral ng Pilipinas (BSP) approval.
Globe has the option to call the Senior Notes on or after April 15, 2007 at 104.875% of the principal. Globe
will issue a formal call to the trustee after securing refinancing. Redemption will bring on a largely non-cash
impact of approximately P1.17 billion to the company’s 2007 profit & loss statement, primarily from the
reversal of mark-to-market values. Estimated after-tax interest expense savings of P2.3 billion is expected to
be realized over the remaining life of the bond.
Stockholders’ equity was P56,948 million as of 31 December 2006 resulting in a 10% increase from the
P51,619 million from last year.
Treasury Shares
On February 1, 2005, the BOD approved an offer to purchase one share for every fifteen shares of the
outstanding common stock of Globe Telecom from all stockholders of record as of February 10, 2005
at P950.00 per share. The approval allowed Globe Telecom to purchase up to 9,326,924 shares
representing 6.67% of Globe Telecom’s outstanding common shares. Each shareholder is entitled to
tender a proportionate number of shares at the 1:15 ratio for purchase by Globe Telecom upon and
subject to the terms and conditions of the tender offer. Globe Telecom also filed with the SEC the
tender offer report with a copy of the letter to the shareholders, the terms and conditions of the tender
offer and the tender form. Globe Telecom commenced the tender offer on February 3, 2005 and
ended on March 3, 2005.
On March 15, 2005, Globe Telecom acquired 8,064,094 shares at a total cost of P7,675.66 million,
including incidental costs.
On April 4, 2005, Globe Telecom’s stockholders approved the cancellation of the 20.06 million
treasury shares consisting of the 12.00 million shares acquired from Deutsche Telekom (DT) in 2003
and the 8.06 million shares acquired during the share buyback, and the amendments of the articles of
incorporation of Globe Telecom to reduce accordingly the authorized capital stock of the corporation
from 11,250.00 million to 10,246.72 million. On April 29, 2005, Globe Telecom applied for the
retirement and cancellation of the existing treasury shares with the SEC, which the latter approved on
October 28, 2005. Accordingly, Globe Telecom has cancelled the existing treasury shares at cost.
SEC Form 17Q - 4Q 2006 30

As of 31 December 2006, Globe’s capital stock consists of:
(Please refer to page 34 for the shareholder structure)
Preferred Shares
Preferred stock Series “A” at a par value of P5 per share of which 158 million shares are outstanding
out of a total authorized of 250 million shares.
Preferred stock “Series A” has the following features:
a. Convertible to one common share after 10 years from issue date at a price which shall not be less
than the prevailing market price of the common stock less the par value of the preferred shares;
b. Cumulative and non-participating;
c. Floating rate dividend (set at MART 1 plus 2% average for a 12-month period);
d. Issued at par;
e. Voting rights;
f. Globe has the right to redeem the preferred shares at par plus accrued dividends at any time after
5 years from date of issuance in 2001; and
g. Preferences as to dividend in the event of liquidation.
On December 11, 2006, the BOD approved the declaration of cash dividends to preferred
shareholders “Series A” as of record date December 31, 2006 amounting to P64.67 million.
Common Shares
Common shares at par value of P50 per share of which 132 million are issued and outstanding out of
a total authorized of 180 million shares.
Cash Dividends
On 7 February 2006, the BOD approved the declaration of first semi-annual cash dividends in 2006
of P20 per share to common stockholders of record as of 21 February 2006 and paid last 15 March
2006.
On 31 July 2006, the BOD approved an amendment of its dividend policy and increased its payout
from 50% to 75% of prior year’s net income. The approved dividends were paid on 12 September
2006 to all stockholders of record on 17 August 2006.
On 5 February 2007, the BOD declared the first semi-annual cash dividend in 2007 of P33 per
common share with a record date of 19 February 2007 and payment date of 15 March 2007. This is
consistent with our cash dividend policy of distributing 75% of prior year’s net income and
represents an increase of 11% over the previous semi-annual rate of P30.
On 24 March 2006, the Company offered additional stock options to key executives, directors and
senior management personnel. It required the grantees to pay a nonrefundable option purchase price
of P1,000.00. The additional stock options provide for an exercise price of P854.75, which is the
average quoted market price of the last 20 trading days preceding 24 March 2006. Fifty percent of the
options become exercisable from 24 March 2008 to 23 March 2016, while the remaining fifty percent
become exercisable from 24 March 2009 to 23 March 2016. In order to avail of the privilege, the
grantees must remain with Globe Telecom or its related parties from grant date up to the beginning of
the exercise period of the corresponding shares. As of December 31, 2006, outstanding stock options
granted to key executives, directors, and senior management personnel totaled to 235,800.
SEC Form 17Q - 4Q 2006 31

Consolidated Return on Average Equity (ROE) for the full year ended 31 December 2006 increased to 22%
from 19% for the same period last year.
FOREIGN EXCHANGE AND INTEREST RATE EXPOSURE
The Philippine Peso stood at P=49.045 as of 31 December 2006, an 8% appreciation versus P=53.062 at the end
of 2005.
The foreign exchange differentials arising from revaluation of foreign currency-denominated accounts are
charged against/credited to current operations. Globe Group’s net foreign exchange gains credited to current
operations amounted to a P1,706 million gain and a P2,303 million gain, in 2006 and 2005, respectively.
To mitigate foreign exchange risk, the Globe Group enters into short-term foreign currency forwards and
long-term foreign currency swap contracts. Short-term forward contracts are used to manage our foreign
exchange exposure related to foreign currency-denominated monetary assets and liabilities. For certain long
term foreign currency denominated loans, we enter into long term foreign currency and interest rate swap
contracts to manage our foreign exchange and interest rate exposures.
As of 31 December 2006, our Company had US$130 million in outstanding foreign currency swap
agreements and US$74 million in short-term forward contracts, some of which have option features. We also
had sold covered currency options with total notional amount of US$3 million maturing in March 2007.
Interest rate swaps are used to manage our interest rate risk in a cost-efficient manner. As of 31 December
2006, our Company had US$24 million in notional amount of US$ swaps under which it effectively swapped
some of its floating US$ denominated loans into fixed rate, with semi-annual payment intervals up to August
2007. We also have US$5 million in notional amount of US$ swaps under which the Company effectively
swapped the 9.75% fixed coupon of its 2012 Senior Notes to a floating rate based on LIBOR, subject to a
cap. The performance of the swap is linked to the 10-year and 30-year US$ Constant Maturity Swap Rates.
Our Company also has a fixed to floating interest rate swap contract with a notional amount of P1 billion, in
which it effectively swapped a fixed rate Philippine peso denominated bond into floating rate with quarterly
payment intervals up to February 2009 and float to fixed interest rate swap contracts with a notional amount
of P1 billion which converts the floating rate back to fixed rate.
The Group also has embedded forwards and options in certain financial and non-financial contracts with total
notional amount of US$6 million. In addition, Globe’s 2012 Senior Notes also have an embedded call option
which has a notional amount of US$294 million that give us the right to prepay the Notes at a certain call
price per year.
Gains (losses) on derivative instruments represent the net mark-to-market (MTM) gains (losses) on derivative
instruments. Beginning 2005, MTM values have to be booked as required by PAS 39. The MTM value of
outstanding derivatives of the Globe Group as of 31 December 2006 amounted to P541 million. Of this
amount, P1,425 million represents the MTM value of the embedded call option on Globe's Senior Notes due
2012. The MTM value of the embedded option will be reversed to the P&L through the life of the Notes, or
upon exercise of the call. The remaining P885 million in MTM loss represents the MTM value of other
embedded derivatives as well as foreign exchange and interest rate hedges. Losses on derivative instruments
arising from changes in MTM reflected in the consolidated income statements for the year ended 31
December 2006 amounted to P338 million. (See related discussion under Results of Operations)
SEC Form 17Q - 4Q 2006 32

Consolidated foreign currency-linked revenues were 29% and 27% of total net revenues for the periods ended
31 December 2006 and 2005, respectively. Wireless foreign-currency linked revenues were 25% of net
revenues for the full year ended 31 December 2006 and 22% for the same period in 2005. Wireline foreigncurrency
linked revenues were 60% of net revenues for the full years ended 31 December 2006 and 2005.
Foreign currency linked revenues include those that are: (1) billed in foreign currency and settled in foreign
currency, or (2) billed in Pesos at rates linked to a foreign currency tariff and settled in Pesos, or (3) wireline
monthly service fees and the corresponding application of the Currency Exchange Rate Adjustment or CERA
mechanism, under which our Group has the ability to pass the effects of local currency depreciation to its
subscribers. These revenues serve as a natural hedge to our foreign exchange exposure. The Globe Group
also incurred foreign-currency linked expenses which registered 12% and 15% (as a percentage of total
operating expenses) for the years 2006 and 2005, respectively.
SEC Form 17Q - 4Q 2006 33

RECENT DEVELOPMENTS
Globe is an intervenor in and Innove is a party to Civil Case No. Q-00-42221 entitled "Isla Communications
Co., Inc. et. al., versus National Telecommunications Commission (‘NTC’) et al.," before the Regional Trial
Court (‘RTC’) of Quezon City by virtue of which Globe and Innove, together with other cellular operators,
sought and obtained a preliminary injunction against the implementation of NTC Memorandum Circular
(‘MC’) No. 13-6-2000 from the RTC of Quezon City. NTC MC 13-6-2000 prescribed new billing
requirements for cellular service providers. The NTC appealed the issuance of the injunction to the Court of
Appeals. On 25 October 2001, we received a copy of the decision of the Court of Appeals ordering the
dismissal of the case before the RTC for lack of jurisdiction, but without prejudice to the wireless companies’
seeking relief before the NTC, which the Court of Appeals claims had jurisdiction over the matter. On 22
February 2002, we filed a Petition for Review with the Supreme Court (‘SC’) to annul and reverse the
decision of the Court of Appeals. The Supreme Court (‘SC’), on 2 December 2003, overturned the CA’s
earlier dismissal of the petitions filed by SMART and Globe. In its 13-page decision, the SC said that the
Quezon City trial court could hear and decide the case, contrary to NTC’s argument. The SC has also since
denied the NTC’s motion for reconsideration. We are still awaiting resumption of the proceedings before the
R TC of Quezon City.
On May 22, 2006, Innove received a copy of the Complaint of Subic Telecom Company (“Subictel”), Inc., a
subsidiary of PLDT, seeking an injunction to stop the Subic Bay Metropolitan Authority and Innove from
taking any actions to implement the Certificate of Public Convenience and Necessity granted by SBMA to
Innove. Subictel claimed that the grant of a CPCN allowing Innove to offer certain telecommunications
services within the Subic Bay Freeport Zone would violate the Joint Venture Agreement (“JVA”) between
PLDT and SBMA. Innove has since filed its Opposition to the Prayer for Injunction with Motion to Dismiss,
citing that SBMA is not entitled to an injunction on the basis of the grounds it has cited in the complaint, that
an injunction in this case would be contrary to public policy, and that the complaint is forum-shopping since
Subictel had already previously objected to the grant of the CPCN in the proceedings before the regulatory
body. SBMA also filed its Opposition pointing out, among others, that Subictel is not a proper party in this
case since Subictel is not a party to the JVA. The court granted Innove’s Motion to Dismiss and Subictel has
filed a Motion for Reconsideration. The Motion for Reconsideration was subsequently denied and Subictel
has appealed to the Court of Appeals. The appeal is pending.
On July 4, 2006, Smart Communications, Inc. (“Smart”) filed a letter-complaint with the National
Telecommunications Commission (“NTC”) against the 500 free text promotion offered by Innove on its
Speak and Surf product. The promotion allows Speak and Surf subscribers to send 500 free text messages to
Globe and Touch Mobile subscribers. Smart complained that this promotion was predatory and
discriminatory. On July 17 the NTC issued a Show-Cause order requiring Globe to explain its position on
this matter. On July 25, 2006, Globe filed its answer. In its answer, Globe explained that Innove actually pays
Globe the regular termination rate of P0.35 per text message, and that the cost of the “free” texts are
sufficiently covered by the monthly service charge of P995 paid by Speak n’ Surf subscribers. In this light,
the offer is neither discriminatory nor predatory. In its answer, Globe also extended an invitation to Smart
and other networks to join the promotional offer. The company is currently awaiting the disposition of the
NTC on this matter.
On 8 January 2007, Globe signed an Underwriting Agreement with Standard Chartered Bank for a P5 billion
corporate note issue.
On January 12, 2007, the Bangko Sentral ng Pilipinas (BSP) approved Globe Telecom’s application to
redeem the 2012 Senior Notes in 2007. Globe Telecom plans to issue a formal call to the trustee after
refinancing has been secured.
SEC Form 17Q - 4Q 2006 34

MAJOR STOCKHOLDERS
The following are the major stockholders of Globe Telecom as of 31 December 2006:
Stockholders Common Shares
% of Common
Shares Preferred Shares
% of Preferred
Shares Total % of Total
Ayala Corporation 45,327,713 34% - 45,327,713 16%
Singapore Telecom 58,833,614 45% - 58,833,614 20%
Asiacom - - 158,515,021 100% 158,515,021 55%
Public 27,918,458 21% - 27,918,458 9%
Total 132,079,785 100% 158,515,021 100% 290,594,806 100%
BOARD OF DIRECTORS
As of 31 December 2006, the members of the Board of Directors of the Globe Group are as follows:
Jaime Augusto Zobel de Ayala II Chairman
Delfin L. Lazaro Co-Vice Chairman
Lim Chuan Poh Co-Vice Chairman
Gerardo C. Ablaza, Jr. Director
Romeo L. Bernardo Director
Fernando Zobel de Ayala Director
Dr. Roberto F. de Ocampo Director
Koh Kah Sek Director
Xavier P. Loinaz Director
Guillermo D. Luchangco* Director
Jesus P. Tambunting* Director
* Independent Directors
Key Officers - Globe
Name Position
Gerardo C. Ablaza, Jr. President and Chief Executive Officer
Ferdinand M. de la Cruz Head – Consumer Business Group
Rebecca V. Eclipse Head – Office of Strategy Management
Rodell A. Garcia Chief Information Officer
Delfin C. Gonzalez, Jr. Chief Financial Officer
Susan Rivera-Manalo Head – Human Resources
Rodolfo A. Salalima Head - Corporate Affairs and Regulatory Matters
Renato O. Marzan Corporate Secretary
Consultants
Name Position
Andrew Buay Chief Operating Adviser
Robert L. Wiggins Chief Technical Adviser
Key Officer - Innove
Name Position
Gil B. Genio Chief Executive Officer
SEC Form 17Q - 4Q 2006 35

GLOBE TELECOM, INC. AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 2006, 2005 and 2004

GLOBE TELECOM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Notes 2006
December 31
2005
(In Thousand Pesos)
2004
ASSETS
Current Assets
Cash and cash equivalents 27, 29 P=7,505,715 P=10,910,961 P=13,581,842
Short-term investments 27 6,155,349 – 720,831
Available-for-sale investments 27 293,614 1,220,318 –
Held-to-maturity investments 27 857,563 33,441 –
Receivables - net 4, 27 5,527,905 6,764,130 5,457,913
Inventories and supplies 5 993,495 1,372,459 1,136,885
Derivative assets 27 1,626,667 1,477,257 –
Prepayments and other current assets 6 1,254,682 1,115,469 1,083,408
Total Current Assets
Noncurrent Assets
24,214,990 22,894,035 21,980,879
Property and equipment - net 7 96,073,413 98,554,670 101,643,592
Investment property - net 8 314,503 259,538 261,516
Intangible assets - net 9 1,129,624 1,100,727 944,265
Investments in an associate and a joint venture 10 37,332 43,263 91,925
Deferred income tax - net 23 801,863 1,163,943 2,413,253
Derivative assets 27 – 71,634 –
Other noncurrent assets 11 2,008,108 1,014,580 2,368,498
Total Noncurrent Assets 100,364,843 102,208,355 107,723,049
P=124,579,833 P=125,102,390 P=129,703,928
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued expenses 12, 27 P=16,485,265 P=13,972,222 P=13,772,028
Provisions 13 248,310 231,455 282,309
Derivative liabilities 27 558,087 308,688 –
Income taxes payable 23 831,381 291,348 47,655
Unearned revenues 1,270,075 1,301,684 1,732,747
Current portion of:
Long-term debt 14, 27 6,271,601 7,858,150 9,018,650
Other long-term liabilities 15, 27 93,422 269,737 292,589
Total Current Liabilities 25,758,141 24,233,284 25,145,978
Noncurrent Liabilities
Deferred income tax - net 23 5,539,999 4,432,867 3,474,732
Long-term debt - net of current portion 14, 27 32,935,256 41,835,238 43,199,301
Derivative liabilities 27 528,036 423,058 –
Other long-term liabilities - net of current portion 15, 27 2,870,250 2,559,133 3,377,015
Total Noncurrent Liabilities 41,873,541 49,250,296 50,051,048
Total Liabilities 67,631,682 73,483,580 75,197,026
Equity 17
Paid-up capital 33,484,361 33,315,408 39,435,577
Cost of share-based payment 16, 18 340,743 312,644 193,096
Cumulative translation adjustment 27 (193,790) (235,892) –
Retained earnings 23,316,837 18,226,650 23,070,999
Treasury stock - common – – (8,192,770)
Total Equity 56,948,151 51,618,810 54,506,902
P=124,579,833 P=125,102,390 P=129,703,928
See accompanying Notes to Consolidated Financial Statements.

GLOBE TELECOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31
Notes 2006 2005 2004
(In Thousand Pesos, Except Per Share Figures)
INCOME
Service revenues 16 P=57,033,619 P=54,896,813 P=52,741,358
Nonservice revenues 2,915,389 3,850,788 2,867,622
Interest income 19 715,337 519,648 454,038
Others - net 16 445,183 577,476 407,290
61,109,528 59,844,725 56,470,308
COSTS AND EXPENSES
General, selling and administrative 20 18,080,931 19,142,262 15,403,963
Depreciation and amortization 7, 8, 9 17,137,553 15,733,959 14,705,825
Cost of sales 4,618,735 6,024,711 6,675,198
Financing costs 21 3,272,362 3,140,593 6,326,879
Impairment losses and others 7, 22 534,948 1,608,856 635,447
Equity in net losses of an associate and a joint venture 10 5,834 13,334 62
43,650,363 45,663,715 43,747,374
INCOME BEFORE INCOME TAX
17,459,165 14,181,010 12,722,934
PROVISION FOR INCOME TAX 23
Current 4,251,899 1,747,249 379,928
Deferred 1,452,593 2,119,253 946,764
5,704,492 3,866,502 1,326,692
NET INCOME
P=11,754,673 P=10,314,508 P=11,396,242
Earnings Per Share 26
Basic P=88.56 P=76.74 P=80.92
Diluted P=88.32 P=76.60 P=80.78
Cash dividends declared per common stock 17 P=50.00 P=40.00 P=36.00
See accompanying Notes to Consolidated Financial Statements.

GLOBE TELECOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Notes
Capital
Stock
Additional
Paid-in
Capital
Cost of
Share-Based
Payments
Treasury
Stock - Common
Cumulative
Translation
Adjustment
Retained
Earnings Total
For the Year Ended December 31, 2006 (In Thousand Pesos)
At January 1, 2006 P=7,333,741 P=25,981,667 P=312,644 P=– (P=235,892) P=18,226,650 P=51,618,810
Changes in fair value of cash flow hedges 27
Transferred to income and expense
– – – – (254,589) – (254,589)
for the year for cash flow hedges
Tax effect of items taken directly to
– – – – 277,736 – 277,736
or transferred from equity
Changes in fair value of available-for-
– – – – 7,716 – 7,716
sale investments
– – – – 11,239 – 11,239
Net income recognized directly in equity – – – – 42,102 – 42,102
Net income for the year – – – – – 11,754,673 11,754,673
Total income for the year – – – – 42,102 11,754,673 11,796,775
Dividends on: 17
Common stocks – – – – – (6,599,817) (6,599,817)
Preferred stocks – – – – – (64,669) (64,669)
Cost of share-based payments
Collection of subscriptions
16, 18 – – 161,628 – – – 161,628
receivable - net of refunds
6,946 – – – – – 6,946
Exercise of stock options 8,967 153,040 (133,529) – – – 28,478
At December 31, 2006 P=7,349,654 P=26,134,707 P=340,743 P=– (193,790) P=23,316,837 P=56,948,151
For the Year Ended December 31, 2005 (In Thousand Pesos)
At December 31, 2004
Cumulative effect of change in accounting
policy for financial instruments as of
P=8,323,023 P=31,112,554 P=193,096 (P=8,192,770) P=– P=23,070,999 P=54,506,902
January 1, 2005 – – – – (151,008) 31,290 (119,718)
At January 1, 2005 8,323,023 31,112,554 193,096 (8,192,770) (151,008) 23,102,289 54,387,184
Changes in fair value of cash flow hedges
Transferred to income and expense
27 – – – – (429,336) – (429,336)
for the year for cash flow hedges
Tax effect of items taken directly to
– – – – 237,619 – 237,619
or transferred from equity
Changes in fair value of available-for-sale
– – – – 114,167 – 114,167
investments
– – – – (7,334) – (7,334)
Net loss recognized directly in equity – – – – (84,884) – (84,884)
Net income for the year – – – – – 10,314,508 10,314,508
Total income (expense) for the year
Acquisition of treasury stock for the
– – – – (84,884) 10,314,508 10,229,624
year 17 – – – (7,675,658) – – (7,675,658)
Retirement of treasury shares 17 (1,003,283) (5,179,349) – 15,868,428 – (9,685,796) –
Dividends on: 17
Common stock – – – – – (5,436,017) (5,436,017)
Preferred stock – – – – – (68,334) (68,334)
Cost of share-based payments
Collection of subscriptions
16, 18 – – 161,731 – – – 161,731
receivable - net of refunds
10,968 – – – – – 10,968
Exercise of stock options 3,033 48,462 (42,183) – – – 9,312
At December 31, 2005 P=7,333,741 P=25,981,667 P=312,644 P=– (P=235,892) P=18,226,650 P=51,618,810

Notes
Capital
Stock
- 2 -
Additional
Paid-in
Capital
Cost of
Share-Based
Payments
Treasury
Stock - Common
Cumulative
Translation
Adjustment
Retained
Earnings Total
For the Year Ended December 31, 2004 (In Thousand Pesos)
At January 1, 2004 P=8,307,828 P=31,110,194 P=59,091 (P=8,192,770) P=– P=16,786,424 P=48,070,767
Net income for the year – – – – – 11,396,242 11,396,242
Dividends on: 17
Common stock – – – – – (5,036,539) (5,036,539)
Preferred stock – – – – – (75,128) (75,128)
Cost of share-based payments
Collections of subscriptions
16, 18 – – 134,769 – – – 134,769
receivable - net of refunds
15,195 – – – – – 15,195
Exercise of stock options – 2,360 (764) – – – 1,596
At December 31, 2004 P=8,323,023 P=31,112,554 P=193,096 (P=8,192,770) P=– P=23,070,999 P=54,506,902
See accompanying Notes to Consolidated Financial Statements.

GLOBE TELECOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31
Notes 2006 2005 2004
(In Thousand Pesos)
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax P=17,459,165 P=14,181,010 P=12,722,934
Adjustments for:
Depreciation and amortization 7, 8, 9 17,137,553 15,732,204 14,541,584
Interest expense - net of amortization of bond premium 21 4,213,976 4,657,748 4,368,716
Loss on derivative instruments - net 21 324,082 264,435 –
Cost of share-based payment 16, 18 161,628 161,731 134,769
Impairment losses on property and equipment 22 88,673 925,772 11,726
Other probable losses 22 84,833 (12,694) (500,889)
Equity in net losses of an associate and a joint venture 10 5,834 13,334 62
Loss (gain) on disposal of property and equipment (22,597) (28,398) 17,777
Interest income 19 (715,337) (519,648) (454,038)
Amortization of deferred charges and others – 1,755 164,241
Dividend income – (105) (350)
Operating income before working capital changes 38,737,810 35,377,144 31,006,532
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables 2,165,694 (1,792,779) 6,628,685
Inventories and supplies 378,965 (233,421) (555,305)
Prepayments and other current assets (299,288) (624,734) (24,877)
Increase (decrease) in:
Accounts payable and accrued expenses (342,264) 2,078,805 (4,609,553)
Unearned revenues (31,609) (431,063) (644,159)
Other long-term liabilities (192,634) (25,373) 56,675
Cash generated from operations 40,416,674 34,348,579 31,857,998
Interest paid (4,140,041) (4,646,042) (4,727,341)
Income taxes paid (3,711,866) (750,342) (125,702)
Net cash flows provided by operating activities 32,564,767 28,952,195 27,004,955
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to:
Property and equipment 7 (12,265,742) (15,325,931) (19,529,468)
Intangible assets 9 (320,206) (595,621) (620,600)
Capitalized borrowing costs 7 (48,080) (139,663) (211,135)
Proceeds from sale of property and equipment 68,520 183,434 27,370
Decrease (increase) in:
Short-term investments (6,155,349) – 1,941,537
Available-for-sale investments 937,942 (512,113) –
Held-to-maturity investments (824,122) (33,441) –
Other noncurrent assets (993,432) (12,524) 173,924
Interest received 692,636 492,828 461,051
Dividends received – 105 350
Net cash flows used in investing activities (18,907,833) (15,942,926) (17,756,971)
(Forward)

- 2 -
Years Ended December 31
Notes 2006 2005 2004
(In Thousand Pesos)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of borrowings:
Long-term 14 (P=10,429,453) (P=12,505,808) (P=18,814,228)
Short-term – (21,000) (60,000)
Payments of dividends to stockholders: 17
Common (6,599,817) (5,436,017) (5,036,539)
Preferred
Collection of subscription receivable and exercise of
(68,334) (75,128) (67,957)
stock options - net of related expenses
17 35,424 20,280 16,791
Purchase of treasury stock - common 17 – (7,675,658) –
Proceeds from borrowings:
Long-term – 9,992,181 15,194,743
Short-term – 21,000 60,000
Net cash flows used in financing activities (17,062,180) (15,680,150) (8,707,190)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR
(3,405,246) (2,670,881) 540,794
10,910,961 13,581,842 13,041,048
CASH AND CASH EQUIVALENTS AT END OF
YEAR 27, 29 P=7,505,715 P=10,910,961 P=13,581,842
See accompanying Notes to Consolidated Financial Statements.

GLOBE TELECOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Corporate Information
Globe Telecom, Inc. (hereafter referred to as “Globe Telecom” or the “Parent Company”) is a
stock corporation organized under the laws of the Philippines, and enfranchised under Republic
Act (RA) No. 7229 and its related laws to render any and all types of domestic and international
telecommunications services. Globe Telecom is one of the leading providers of digital wireless
communications services in the Philippines under the Globe brand using a full digital network
based on the Global System for Mobile Communication (GSM) technology. It also offers domestic
and international long distance communication services or carrier services. Globe Telecom’s
principal executive offices are located at 5th Floor, Globe Telecom Plaza, Pioneer Highlands,
Pioneer corner Madison Streets, Mandaluyong City, Metropolitan Manila, Philippines.
Globe Telecom owns 100% of Innove Communications, Inc. (“Innove”). Innove is a stock
corporation organized under the laws of the Philippines and enfranchised under RA No. 7372 and
its related laws to render any and all types of domestic and international telecommunications
services. Innove is one of the providers of digital wireless communication services in the
Philippines. Innove currently offers cellular service under the Touch Mobile (TM) prepaid cellular
brand. The TM brand is supported in the integrated cellular networks of Globe Telecom and
Innove. Innove also offers a broad range of wireline voice communication services, as well as
domestic and international long distance communication services or carrier services. On June 17,
2005, Innove was granted a Provisional Authority (PA) from the National Telecommunications
Commission (NTC) for a nationwide local exchange carrier (LEC) service, allowing Innove to
expand the reach of its network. A motion for a Certificate of Public Convenience Necessity
(CPCN) and/or extension of PA was filed in November 2006. Innove’s principal executive office
is located at 18th Floor, Innove IT Plaza, Samar Loop corner Panay Road, Cebu Business Park,
Cebu City, Philippines.
Globe Telecom owns 100% of G-Xchange, Inc. (GXI), a corporation formed with the primary
purpose of developing, designing, administering, managing and operating software applications
and systems, including systems designed for the operations of bills, payment and money
remittance, payment and delivery facilities through various telecommunications systems operated
by telecommunications carriers in the Philippines and throughout the world and to supply software
and hardware facilities for such purposes. GXI is registered with the Bangko Sentral ng Pilipinas
(BSP) as a remittance agent. GXI handles the mobile payment and remittance service using Globe
Telecom’s network as transport channel under the G-Cash brand. The service, which is integrated
into the cellular services of Globe Telecom and Innove, enables easy and convenient person-toperson
fund transfers via short messaging services (SMS) and allows Globe Telecom and Innove
subscribers to easily and conveniently put cash into and get cash out of the G-Cash system. GXI
started commercial operations on October 16, 2004. GXI’s principal executive office is located at
6th Floor, Globe Telecom Plaza, Pioneer Highlands, Pioneer corner Madison Streets,
Mandaluyong City, Metropolitan Manila, Philippines.

- 2 -
On February 5, 2007, the Board of Directors (BOD) approved and authorized the release of the
audited consolidated financial statements of Globe Telecom, Inc. and Subsidiaries as of and for the
years ended December 31, 2006, 2005 and 2004.
2. Accounting Policies
2.1 Basis of Financial Statement Preparation
The accompanying consolidated financial statements of Globe Telecom and its wholly-owned
subsidiaries, Innove and GXI collectively referred to as the “Globe Group”, have been
prepared under the historical cost convention method, except for derivative financial
instruments and available-for-sale (AFS) financial assets that are measured at fair value. The
carrying values of recognized assets and liabilities that are hedged are adjusted to record
changes in the fair values attributable to the risks that are being hedged.
The functional currency of the Globe Group is the Philippine peso.
The consolidated financial statements of the Globe Group are presented in Philippine peso and
rounded to the nearest thousands except when otherwise indicated.
2.2 Statement of Compliance
The consolidated financial statements of the Globe Group have been prepared in accordance
with Philippine Financial Reporting Standards (PFRS).
2.3 Basis of Consolidation
The accompanying consolidated financial statements include the accounts of Globe Telecom
and its subsidiaries as of December 31, 2006, 2005 and 2004. The subsidiaries, which are all
incorporated in the Philippines, are as follows:
Name of Subsidiary Principal Activity
Percentage of
Ownership
Innove Wireless and wireline voice and data
communication services 100%
GXI Software development for
telecommunications applications 100%
The financial statements of the subsidiaries are prepared for the same reporting year as Globe
Telecom using uniform accounting policies for like transactions and other events in similar
circumstances. All significant intercompany balances and transactions, including
intercompany profits and losses, were eliminated during consolidation in accordance with the
accounting policy on consolidation.

- 3 -
2.4 Changes in Accounting Policies
The accounting policies adopted are consistent with those of the previous financial years
except as follows:
The Globe Group has adopted the following new and amended PFRS and International
Financial Reporting Interpretation Committee (IFRIC) interpretations during the year.
Adoption of these revised standards and interpretations did not have any effect on the Globe
Group except for additional disclosures on the consolidated financial statements.
• Amendments to Philippine Accounting Standards (PAS) 19, Employee Benefits -
Actuarial Gains and Losses, Group Plans and Disclosures, introduce an additional option
for recognition of actuarial gains and losses in post-employment defined benefit plans.
The amendment permits an entity to recognize actuarial gains and losses in the period in
which they occur outside profit or loss. The amendment also requires additional
disclosures on the consolidated financial statements to provide information about trends in
the assets and liabilities in the defined benefit plans and the assumptions underlying the
components of the defined benefit cost. The adoption of amendments to PAS 19 does not
have an effect on the Globe Group’s result of operations and financial position. The Globe
Group elected to continue to recognize a portion of actuarial gains and losses in profit and
loss if the cumulative unrecognized actuarial gains and losses at the end of the previous
reporting period exceeded the greater of 10% of the present value of defined obligation or
10% of the fair value of plan assets. Additional disclosures required by the amendments
were included in the Globe Group’s consolidated financial statements, where applicable
(see Note 18).
• Amendments to PAS 21, The Effects of Changes in Foreign Exchange Rates, state that all
exchange differences arising from a nonmonetary item that forms part of the Globe
Group’s net investment in foreign operation are recognized in a separate component of
equity in the consolidated financial statements regardless of the currency in which the
monetary item is denominated. The Globe Group does not have any nonmonetary item
that forms part of net investment in foreign operations. These amendments have no impact
on the consolidated financial statements.
• Amendments to PAS 39, Financial Instruments: Recognition and Measurement,
(a) Amendment for financial guarantee contracts (issued August 2005), amended the
scope of PAS 39 to require financial guarantee contracts that are not considered as
insurance contracts to be recognized initially at fair value and to be remeasured at the
higher of the amount determined in accordance with PAS 37, Provisions, Contingent
Liabilities and Contingent Assets and the amount initially recognized less, when
appropriate, cumulative amortization recognized in accordance with PAS 18, Revenue;
(b) Amendment for hedges of forecast intragroup transactions (issued April 2005), allow
the foreign currency risk of a highly probable forecast intragroup transaction to qualify as
a hedged item in a cash flow hedge provided that the transaction is denominated in a
currency other than the functional currency of the entity entering into transaction and that
the foreign currency

- 4 -
risk will affect the consolidated statements of income; and (c) Amendment for the fair
value option (issued June 2005), prescribes the conditions under which the fair value
option on classification of financial instruments at fair value through profit or loss (FVPL)
maybe used. Adoption of these amendments did not have a significant impact on the
consolidated financial statements.
• PFRS 6, Exploration for and Evaluation of Mineral Resources, permits an entity to
develop an accounting policy for exploration and evaluation of assets without specifically
considering the requirements of PAS 8, Accounting Policies, Changes in Accounting
Estimates and Error. Adoption of this standard has no impact on the consolidated
financial statements as this standard does not apply to the activities of the Globe Group.
• IFRIC Interpretation 4, Determining Whether an Arrangement Contains a Lease, provides
for guidance in determining whether arrangements contain a lease to which lease
accounting must be applied. Adoption of this interpretation did not have a significant
impact on the consolidated financial statements.
• IFRIC Interpretation 5, Rights to Interest Arising from Decommissioning, Restoration and
Environmental Rehabilitation Funds, provides the accounting treatment for funds
established to help finance decommissioning for Globe Group’s assets. The Globe Group
does not operate in a country where such funds exist. This interpretation has no impact on
the consolidated financial statements.
• IFRIC Interpretation 6, Liabilities Arising from Participating in a Specific Market,
establishes the recognition date for liabilities arising from European Union (EU) Directive
relating to the disposal of Waste Electrical and Electronic Equipment. Adoption of this
interpretation has no impact on the consolidated financial statements as it has no
operations in countries covered by the EU Directive.
2.5 Future Changes in Accounting Policies
PFRS 7 Financial Instruments: Disclosures
PFRS 7 introduces new disclosures to improve the information about financial instruments.
It requires the disclosure of qualitative and quantitative information about exposure to risks
arising from financial instruments, including specified minimum disclosures about credit risk,
liquidity risk and market risk, as well as sensitivity analysis to market risk. It replaces
PAS 30, Disclosures in the Financial Statements of Banks and Similar Financial Institutions,
and the disclosure requirements in PAS 32, Financial Instruments: Disclosure and
Presentation. It is applicable to all entities that report under PFRS. The Globe Group will
adopt PFRS 7 beginning January 1, 2007.
Amendment to PAS 1 Presentation of Financial Statements
The amendment to PAS 1 introduces disclosures about the level of an entity’s capital and how
it manages capital. The Globe Group is currently assessing the impact of PFRS 7 and the
amendment to PAS 1 and expects that the main additional disclosures will be the sensitivity
analysis to market risk and the capital disclosures required by PFRS 7 and the amendment to
PAS 1. The Globe Group will apply the amendment to PAS 1 starting January 1, 2007.

- 5 -
IFRIC 8 Scope PFRS 2
IFRIC Interpretation 8 becomes effective for financial years beginning on or after May 1,
2006. This interpretation requires IFRS 2 to be applied to any arrangements where equity
instruments are issued for consideration which appears to be less than fair value. As equity
instruments are only issued to employees in accordance with the employee share scheme, the
Globe Group does not expect the interpretation to have significant impact on its financial
position.
IFRIC 9, Reassessment of Embedded Derivatives
IFRIC Interpretation 9 was issued in March 2006 and becomes effective for financial years
beginning on or after June 1, 2006. This interpretation establishes that the date to assess the
existence of an embedded derivative is the date an entity first becomes a party to the contract,
with reassessment only if there is a change to the contract that significantly modifies the cash
flows. The Globe Group expects that the adoption of this interpretation will have no impact
on the consolidated financial statements.
IFRIC 10, Interim Financial Reporting and Impairment
IFRIC Interpretation 10, which becomes effective for financial years beginning on or after
November 1, 2006, provides that the frequency of financial reporting does affect the amount
of impairment charge to be recognized in the annual financial reporting with respect to
goodwill and AFS investments. It prohibits the reversal of impairment losses on goodwill and
AFS equity investments recognized in the interim financial reports even if impairment is no
longer present at the annual balance sheet date. This interpretation is not expected to have a
significant impact on the consolidated financial statements of the Globe Group.
IFRIC 11, IFRS 2 - Group and Treasury Share Transactions
IFRIC 11 interpretation will be effective January 1, 2008 for the Globe Group. This
interpretation requires arrangements whereby an employee is granted rights to an entity’s
equity instruments to be accounted for as an equity-settled scheme by the entity even if (a) the
entity chooses or is required to buy those equity instruments (e.g., treasury shares) from
another party, or (b) the shareholder(s) of the entity provide the equity instruments needed. It
also provides guidance on how subsidiaries, in their separate financial statements, account for
such schemes when their employees receive rights to the equity instruments of the parent. The
Globe Group does not expect this interpretation to have significant impact on its consolidated
financial statements.
IFRIC 12, Service Concession Arrangement
IFRIC 12 interpretation will become effective January 1, 2008. This interpretation covers
contractual arrangements arising from public-to-private service concessions arrangements if
control of the assets remain in public hands but the private sector operator is responsible for
construction activities as well as for operating and maintaining the public sector infrastructure.
This interpretation will have no impact on the consolidated financial statements of the Globe
Group as this is not relevant to the Globe Group’s current operations.

- 6 -
PFRS 8, Operating Segments
The Globe Group will adopt PFRS 8, Operating Segments, effective January 1, 2009. PFRS 8
will replace PAS 14, Segment Reporting, and adopts a management approach to reporting
segment information. The information reported would be that which management uses
internally for evaluating the performance of operating segments and allocating resources to
those segments. Such information may be different from that reported in the consolidated
balance sheets and consolidated statements of income and companies will need to provide
explanations and reconciliations of the differences. The Group will assess the impact of this
standard to its current manner of reporting segment information.
2.6 Significant Accounting Policies
2.6.1. Revenue Recognition
The Globe Group provides wireless services and wireline voice and data
communication services which are both provided under postpaid and prepaid
arrangements.
Revenue is recognized when the delivery of the products or services has occurred and
the collectibility is reasonably assured.
Revenue is stated at amounts invoiced and accrued to customers, taking into
consideration the bill cycle cut-off (for postpaid subscribers), and charged against
preloaded airtime value (for prepaid subscribers), switch-monitored traffic (for
carriers and content providers) and excludes value added tax (VAT) and overseas
communication tax. Inbound traffic revenues, net of estimated prompt payment
discount and outbound traffic charges, are accrued based on actual volume of traffic
monitored by Globe Group’s network and in the traffic settlement system.
2.6.1.1 Service Revenue
2.6.1.1.1 Subscribers
Revenues from subscribers principally consist of: (1) fixed
monthly service fees (for postpaid wireless and wireline voice
and data subscribers and wireless prepaid subscription fees for
discounted promotional SMS) (2) usage of airtime and toll fees
for local, domestic and international long distance calls in excess
of consumable fixed monthly service fees, less (a) bonus airtime
credits, airtime on free Subscribers’ Identification module (SIM)
for SIM swap transactions and loyalty discounts, (b) prepaid
reload discounts, and (c) interconnection fees; (3) revenues from
value added services (VAS) such as SMS in excess of
consumable fixed monthly service fees (for postpaid) and free
SMS allocations (for prepaid) and multimedia messaging services
(MMS), content downloading and infotext services, net of
interconnection fees and payout to content providers; (4) inbound
revenues from other carriers which terminate their calls to Globe
Group’s network less estimated prompt payment discount; (5)
revenues from international roaming services; (6) usage of

- 7 -
broadband and internet services in excess of fixed monthly
service fees; and (7) one-time registration fees (for postpaid
wireless subscribers) and one-time service connection fees (for
wireline voice and data subscribers).
Postpaid service arrangements include fixed monthly service fees,
which are recognized over the subscription period on a pro-rata
basis. Telecommunications services provided to postpaid
subscribers are billed throughout the month according to the bill
cycles of subscribers. As a result of bill cycle cut-off, monthly
service revenues earned but not yet billed at end of the month are
estimated and accrued. These estimates are based on actual usage
less estimated consumable usage using historical ratio of
consumable usage over billable usage.
Proceeds from over-the-air reloading services and the sale of
prepaid cards are deferred and shown as “Unearned revenues” in
the consolidated balance sheets. Revenue is recognized upon
actual usage of airtime value net of discounts on promotional
calls and SMS and bonus reload. Unused airtime value is
recognized as revenue upon expiration.
2.6.1.1.2 Traffic
Inbound revenues refer to traffic originating from other
telecommunications providers terminating to the Globe Group’s
network, while outbound charges represent traffic sent out or
mobile content delivered using agreed termination rates and/or
revenue sharing with other foreign and local carriers and content
providers. Adjustments are made to the accrued amount for
discrepancies between the traffic volume per Globe Group’s
records and per records of the other carriers and content providers
as these are determined and/or mutually agreed upon by the
parties. Uncollected inbound revenues are shown as traffic
settlements receivable under “Receivables”, while unpaid
outbound charges are shown as traffic settlements payable under
“Accounts payable and accrued expenses” in the consolidated
balance sheets unless a legal right of offset exists. Prompt
payment discount is recognized based on the Globe Group’s
estimate of the probability and amount of availment. Based on the
established historical pattern of discount availments of the
carriers, the Globe Group recorded inbound revenues net of the
estimated prompt payment discount as of December 31, 2006.
2.6.1.2 Nonservice revenue
Proceeds from sale of handsets, phonekits, wireline telephone sets, SIM
packs, and other phone accessories are recognized upon delivery of the item
to customers. The related costs of handsets, phonekits, wireline telephone

- 8 -
sets, SIM packs and accessories sold to customers are presented as “Cost of
sales” in the consolidated statements of income.
2.6.1.3 Others
Lease income from operating lease is recognized on a straight-line basis over
the lease term.
Interest income is recognized as it accrues using the effective interest rate
method.
Dividend income is recognized when the Globe Group’s right to receive
payment is established.
2.6.2 Subscriber Acquisition and Retention Costs
The related costs incurred in connection with the acquisition of subscribers are
charged against current operations. Subscriber acquisition costs primarily include
commissions, handset and phonekit subsidies and selling expenses. Handset and
phonekit subsidies represent the difference between the book value of handsets,
accessories and SIM cards (included in “Cost of sales”), and the price offered to the
subscribers (included in “Nonservice revenues”). Retention costs for existing postpaid
subscribers are in the form of free handsets and bill credits. Free handsets are charged
against current operations and included under “General, selling and administrative
costs and expenses” in the consolidated statements of income. Bill credits are
deducted from service revenues upon application against qualifying subscriber bills.
2.6.3 Cash and Cash Equivalent
Cash includes cash on hand and in banks. Cash equivalents are short-term, highly
liquid investments that are readily convertible to known amounts of cash with original
maturities of three months or less from date of placement and that are subject to an
insignificant risk of changes in value.
2.6.4 Financial Instruments
2.6.4.1 Accounting Policies Effective January 1, 2005
2.6.4.1.1 General
Financial instruments are recognized in the Globe Group’s
consolidated balance sheets when the Globe Group becomes a
party to the contractual provisions of the instrument. Purchases
or sales of financial assets that require delivery of assets within
the time frame established by regulation or convention in the
marketplace are recognized on the settlement date.
Financial instruments are recognized initially at fair value of the
consideration given (in the case of an asset) or received (in the
case of a liability). Except for financial instruments at FVPL, the
initial measurement of financial assets includes transaction costs.

- 9 -
The Globe Group classifies its financial assets in the following
categories: financial assets at FVPL, held- to-maturity (HTM)
investments, AFS investments, and loans and receivables.
The Globe Group classifies its financial liabilities into financial
liabilities at FVPL and other financial liabilities. The
classification depends on the purpose for which the investments
were acquired and whether they are quoted in an active market.
Management determines the classification of its investments at
initial recognition and, where allowed and appropriate, reevaluates
such designation at every reporting date.
The fair value for financial instruments traded in active markets
at the balance sheet date is based on their quoted market price or
dealer price quotations (bid price for long positions and ask price
for short positions), without any deduction for transaction costs.
When current bid and asking prices are not available, the price of
the most recent transaction provides evidence of the current fair
value as long as there has not been a significant change in
economic circumstances since the time of the transaction.
For all other financial instruments not listed in an active market,
the fair value is determined by using appropriate valuation
techniques. Valuation techniques include net present value
techniques, comparison to similar instruments for which market
observable prices exist, option pricing models, and other relevant
valuation models. Any difference noted between the fair value
and the transaction price is treated as expense or income, unless it
qualifies for recognition as some type of asset or liability.
Where the transaction price in a non-active market is different
from the fair value of other observable current market
transactions in the same instrument or based on a valuation
technique whose variables include only data from observable
market, the Globe Group recognizes the difference between the
transaction price and fair value (a “Day 1” profit) in the
consolidated statements of income. In cases not observable data
is used, the difference between the transaction price and model
value is only recognized in the consolidated statements of income
when the inputs become observable or when the instrument is
derecognized. For each transaction, the Globe Group determines
the appropriate method of recognizing the “Day 1” profit amount.
2.6.4.1.2 Financial Assets or Financial Liabilities at FVPL
This category consists of financial assets or financial liabilities
that are held for trading or designated by management as at FVPL
on initial recognition. Derivative instruments, except

- 10 -
those covered by hedge accounting relationships, are classified
under this category.
Financial assets or financial liabilities at FVPL are recorded in the
consolidated balance sheets at fair value, with changes in fair
value being recorded in the consolidated statements of income.
Interest earned or incurred is recorded in interest income or
expense, respectively, while dividend income is recorded in other
income according to the terms of the contract, or when the right
of payment has been established.
Financial assets or financial liabilities are classified in this
category as designated by management on initial recognition
when the following criteria are met:
• the designation eliminates or significantly reduces the
inconsistent treatment that would otherwise arise from
measuring the assets or liabilities or recognizing gains or
losses on a different basis; or
• the assets and liabilities are part of a group of financial assets,
financial liabilities or both which are managed and their
performance are evaluated on a fair value basis, in accordance
with a documented risk management or investment strategy;
or
• the financial instrument contains an embedded derivative,
unless the embedded derivative does not significantly modify
the cash flows or it is clear, with little or no analysis, that it
would not be separately recorded.
As of December 31, 2006, the Globe Group has not
designated any financial asset or financial liability at FVPL.
2.6.4.1.3 HTM investments
HTM investments are non-derivative financial assets with fixed
or determinable payments and fixed maturities for which the
Globe Group’s management has the positive intention and ability
to hold to maturity. Where the Globe Group sells other than an
insignificant amount of HTM investments, the entire category
would be tainted and reclassified as AFS investments. After
initial measurement, HTM investments are subsequently
measured at amortized cost using the effective interest rate
method, less impairment in value. Amortized cost is calculated
by taking into account any discount or premium on acquisition
and fees that are an integral part of the effective interest rate. The
amortization is included in ‘Interest income’ in the consolidated
statements of income. Gains and losses are recognized in income
when the HTM investments are

- 11 -
derecognized and impaired, as well as through the amortization
process. The effects of restatement of foreign currencydenominated
HTM investments are recognized in the
consolidated statements of income.
2.6.4.1.4 Loans and receivables
Loans and receivables are financial assets with fixed or
determinable payments that are not quoted in an active market.
They are not entered into with the intention of immediate or
short-term resale and are not classified as financial assets held for
trading, designated as AFS investments or designated at FVPL.
This accounting policy relates both to the balance sheet caption
“Receivables”, which arise primarily from subscriber and traffic
revenues, and other types of receivables, and “Short-term
investments”, which arise primarily from unquoted debt
securities.
Receivables are recognized initially at fair value, which normally
pertains to the billable amount. After initial measurement,
receivables are subsequently measured at amortized cost using the
effective interest rate method, less allowance for impairment
losses. Amortized cost is calculated by taking into account any
discount or premium on the issue and fees that are an integral part
of the effective interest rate. Penalties, termination fees and
surcharges on past due accounts of postpaid subscribers are
recognized as revenues upon collection. The losses arising from
impairment of “Receivables” are recognized in “Impairment
losses and others” in the consolidated statements of income. The
level of allowance for impairment losses is evaluated by
management on the basis of factors that affect the collectibility of
accounts (see accounting policy on 2.6.4.1 Impairment of
Financial Assets).
Short-term investments are recognized initially at fair value,
which normally pertains to the consideration paid. Similar to
receivables, subsequent to initial recognition, short-term
investments are measured at amortized cost using the effective
interest rate method, less allowance for impairment losses. In
2006, certain short-term investments were presented as AFS and
HTM in the consolidated balance sheets. Accordingly, the 2005
comparative figures have been reclassified to conform to the
current year’s presentation.
2.6.4.1.5 AFS investments
AFS investments are those investments which are designated as
such or do not qualify to be classified as designated as FVPL,
HTM investments or loans and receivables. They are purchased
and held indefinitely, and may be sold in response to liquidity

- 12 -
requirements or changes in market conditions. They include
equity investments, money market papers and other debt
instruments.
After initial measurement, AFS investments are subsequently
measured at fair value. The effective yield component of AFS
debt securities, as well as the impact of restatement on foreign
currency-denominated AFS debt securities, is reported in
Consolidated statements of equity. Interest earned on holding
AFS investments are reported as interest income using the
effective interest rate. The unrealized gains and losses arising
from the fair valuation of AFS investments are excluded from
reported earnings and are reported as “Cumulative translation
adjustment” (net of tax where applicable) in the equity section of
the consolidated balance sheets. When the security is disposed
of, the cumulative gain or loss previously recognized in equity is
recognized in the consolidated statements of income.
When the fair value of AFS investments cannot be measured
reliably because of lack of reliable estimates of future cash flows
and discount rates necessary to calculate the fair value of
unquoted equity instruments, these investments are carried at
cost. Dividends earned on holding AFS investments are
recognized in the consolidated statements of income when the
right of payment has been established.
The losses arising from impairment of such investments are
recognized as “Impairment losses and others” in the consolidated
statements of income.
2.6.4.1.6 Other financial liabilities
Issued financial instruments or their components, which are not
designated at FVPL are classified as other financial liabilities,
where the substance of the contractual arrangement results in the
Globe Group having an obligation either to deliver cash or
another financial asset to the holder, or to satisfy the obligation
other than by the exchange of a fixed amount of cash or another
financial asset for a fixed number of own equity shares. The
components of issued financial instruments that contain both
liability and equity elements are accounted for separately, with
the equity component being assigned the residual amount after
deducting from the instrument as a whole the amount separately
determined as the fair value of the liability component on the date
of issue. After initial measurement, other financial liabilities are
subsequently measured at amortized cost using the effective
interest rate method. Amortized cost is calculated by taking into
account any discount or premium on the issue and fees that are an
integral part of the effective interest rate. Any effects of

- 13 -
restatement of foreign currency-denominated liabilities are
recognized in the consolidated statements of income.
This accounting policy applies primarily to the Globe Group’s
debt, accounts payable and other obligations that meet the above
definition (other than liabilities covered by other accounting
standards, such as income tax payable).
2.6.4.1.7 Derivative Instruments
2.6.4.1.7.1 General
The Globe Group enters into short-term deliverable and
nondeliverable currency forward contracts to manage its
exchange exposure related to short-term foreign currencydenominated
monetary assets and liabilities. The Globe
Group also enters into structured currency forward contracts
where call options are sold in combination with such currency
forward contracts.
The Globe Group enters into deliverable prepaid forward
contracts that entitle the Globe Group to a discount on the
contracted forward rate. Such contracts contain embedded
currency derivatives that are bifurcated and marked-to-market
through earnings, with the host debt instrument being
accreted to its face value.
The Globe Group enters into short-term interest rate swap
contracts to manage its interest rate exposures on certain
short-term floating rate peso investments. The Parent
Company also enters into long-term currency and interest rate
swap contracts to manage its foreign currency and interest
rate exposures arising from its long-term loan. Such swap
contracts are sometimes entered into in combination with
options. The Globe Group also sells covered currency options
as cost subsidy for outstanding currency swap contracts.
2.6.4.1.7.2 Recognition and measurement
Derivative financial instruments are recognized and measured
in the consolidated balance sheets at fair values. The method
of recognizing the resulting gain or loss depends on whether
the derivative is designated as a hedge of an identified risk
and qualifies for hedge accounting treatment. The objective
of hedge accounting is to match the impact of the hedged
item and the hedging instrument in the consolidated
statements of income. To qualify for hedge accounting, the
hedging relationship must comply with strict requirements
such as the designation of the derivative of an

- 14 -
identified risk exposure, hedge documentation, probability of
occurrence of the forecasted transaction in a cash flow hedge,
assessment and measurement of hedge effectiveness, and
reliability of the measurement bases of the derivative
instruments.
Upon inception of the hedge, the Globe Group documents the
relationship between the hedging instrument and the hedged
item, its risk management objective and strategy for
undertaking various hedge transactions, and the details of the
hedging instrument and the hedged item. The Globe Group
also documents its hedge effectiveness assessment
methodology, both at the hedge inception and on an ongoing
basis, as to whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in fair
values or cash flows of hedged items.
Hedge effectiveness is likewise measured, with any
ineffectiveness being reported immediately in the
consolidated statements of income.
2.6.4.1.7.3 Types of Hedges
The Globe Group designates derivatives which qualify as
accounting hedges as either: (a) a hedge of the fair value of a
recognized fixed rate asset, liability or unrecognized firm
commitment (fair value hedge); or (b) a hedge of the cash
flow variability of recognized floating rate asset and liability
or forecasted transaction (cash flow hedge).
Fair Value Hedges
Fair value hedges are hedges of the exposure to variability in
the fair value of recognized assets, liabilities or unrecognized
firm commitments. The gain or loss on a derivative
instrument designated and qualifying as a fair value hedge as
well as the offsetting loss or gain on the hedged item
attributable to the hedged risk are recognized currently in the
consolidated statements of income in the same accounting
period. Hedge effectiveness is determined based on the hedge
ratio of the fair value changes of the hedging instrument and
the underlying hedged item. When the hedge ceases to be
highly effective, hedge accounting is discontinued.
As of December 31, 2006 and 2005, there were no derivatives
designated and accounted for as fair value hedges.
Cash Flow Hedges
The Globe Group designates as cash flow hedges the
following derivatives: (a) certain floating-to-fixed cross

- 15 -
currency swaps as cash flow hedges of both the currency and
interest rate risks of the floating rate foreign currencydenominated
obligations; (b) certain principal only swaps and
fixed-to-fixed cross currency swaps as cash flow hedges of
the currency risk of certain fixed rate foreign currency
denominated obligations; and (c) interest rate swaps as cash
flow hedge of the interest rate risk of a floating rate foreign
currency-denominated obligation.
A cash flow hedge is a hedge of the exposure to variability in
future cash flows related to a recognized asset, liability or a
forecasted transaction. Changes in the fair value of a hedging
instrument that qualifies as a highly effective cash flow hedge
are recognized in “Cumulative translation adjustment,” which
is a component of equity. Any hedge ineffectiveness is
immediately recognized in the consolidated statements of
income.
If the hedged cash flow results in the recognition of a nonfinancial
asset or liability, gains and losses previously
recognized directly in equity are transferred from equity and
included in the initial measurement of the cost or carrying
value of the asset or liability. Otherwise, for all other cash
flow hedges, gains and losses initially recognized in equity
are transferred from equity to consolidated statements of
income in the same period or periods during which the
hedged forecasted transaction or recognized asset or liability
affect earnings.
Hedge accounting is discontinued prospectively when the
hedge ceases to be highly effective. When hedge accounting
is discontinued, the cumulative gain or loss on the hedging
instrument that has been reported in “Cumulative translation
adjustment” is retained in the equity until the hedged
transaction impacts earnings. When the forecasted transaction
is no longer expected to occur, any net cumulative gain or
loss previously reported in “Cumulative translation
adjustment” is recognized immediately in the consolidated
statements of income.
2.6.4.1.7.4 Other Derivative Instruments Not Accounted for as Hedges
Certain freestanding derivative instruments that provide
economic hedges under Globe Group’s policies either do not
qualify for hedge accounting or are not designated as
accounting hedges. Changes in the fair values of derivative
instruments not designated as hedges are recognized
immediately in the consolidated statements of income. For
bifurcated embedded derivatives in financial and

- 16 -
nonfinancial contracts that are not designated or do not
qualify as hedges, changes in the fair values of such
transactions are recognized in the consolidated statements of
income.
2.6.4.1.8 Offsetting
Financial assets and financial liabilities are offset and the net
amount is reported in the consolidated balance sheets if, and only
if, there is a currently enforceable legal right to offset the
recognized amounts and there is an intention to settle on a net
basis, or to realize the asset and settle the liability simultaneously.
This is not generally the case with master netting agreements,
thus, the related assets and liabilities are presented gross in the
consolidated balance sheets.
2.6.4.2 Impairment of Financial Assets
The Globe Group assesses at each balance sheet date whether a financial or
group of financial assets is impaired.
2.6.4.2.1 Assets carried at amortized cost
If there is objective evidence that an impairment loss on financial
assets carried at amortized cost (e.g., receivables) has been
incurred, the amount of the loss is measured as the difference
between the asset’s carrying amount and the present value of
estimated future cash flows discounted at the asset’s original
effective interest rate. Time value is generally not considered
when the effect of discounting is not material. The carrying
amount of the asset shall be reduced either directly or through use
of an allowance account. The amount of the loss shall be
recognized in the consolidated statements of income.
The Globe Group first assesses whether objective evidence of
impairment exists individually for financial assets that are
individually significant, and individually or collectively for
financial assets that are not individually significant. If it is
determined that no objective evidence of impairment exist for an
individually assessed financial asset, whether significant or not,
the asset is included in a group of financial assets with similar
credit risk characteristics and that group of financial assets is
collectively assessed for impairment. Assets that are individually
assessed for impairment and for which an impairment loss is or
continues to be recognized are not included in a collective
assessment of impairment.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognized, the previously
recognized impairment loss is reversed. Any subsequent reversal

- 17 -
of an impairment loss is recognized in the consolidated statements
of income, to the extent that the carrying value of the asset does
not exceed its amortized cost at the reversal date.
With respect to receivables, the Globe Group performs a regular
review of the age and status of these accounts, designed to
identify accounts with objective evidence of impairment and
provide with the appropriate allowance for impairment losses.
The review is accomplished using a combination of specific and
collective assessment approaches, with the impairment losses
being determined for each risk grouping identified by the Globe
Group.
2.6.4.2.1.1 Subscribers
Full allowance for impairment losses is provided for
receivables from permanently disconnected wireless and
wireline subscribers. Permanent disconnections are made
after a series of collection steps following nonpayment by
postpaid subscribers. Such permanent disconnections
generally occur within a predetermined period from statement
date.
For receivables from active subscriber accounts, prior to the
third quarter of 2006, full allowance for impairment losses is
generally provided for those that are past due by 90 days for
individual wireless accounts and 120 days for corporate
wireless accounts.
Starting September 2006, the allowance for impairment losses
is determined based on the results of the net flow to write-off
methodology. Net flow tables are derived from account-level
monitoring of subscriber accounts between different age
brackets, from current to 1-day past due to 210-days past due.
The net flow to write-off methodology relies on the historical
data of net flow tables to establish a percentage (“net flow
rate”) of subscriber receivables that are current or in any state
of delinquency as of reporting date that will eventually result
in write-off. The allowance for impairment losses is then
computed based on the outstanding balances of the
receivables as of balance sheet date and the net flow rates
determined for the current and each delinquency bracket. The
impact of these enhancements on the Globe Group’s recorded
impairment losses on receivables is not material.
For active residential and business wireline voice subscribers,
full allowance is generally provided for outstanding
receivables that are past due by 90 and 150 days,

- 18 -
respectively. Full allowance is likewise provided for
receivables from wireline data corporate accounts that are
past due by 150 days.
Regardless of the age of the account, additional impairment
losses are also made for wireless and wireline accounts
specifically identified to be doubtful of collection when there
is information on financial incapacity after considering the
other contractual obligations between the Globe Group and
the subscriber.
2.6.4.2.1.2 Traffic
Full allowance is generally provided after review of the status
of settlement with the carriers for net receivables not settled
within 10 months and 6 months for international roaming
partners.
Additional impairment losses are made for accounts
specifically identified to be doubtful of collection regardless
of age of the account.
2.6.4.2.2 AFS financial assets carried at cost
If there is objective evidence that an impairment loss on an
unquoted equity instrument that is not carried at fair value
because its fair value cannot be reliably measured, or on a
derivative asset that is linked to and must be settled by delivery of
such unquoted equity instrument has been incurred, the amount of
the loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows
discounted at the current market rate of return for a similar
financial asset.
2.6.4.2.3 AFS financial assets carried at fair value
If an available-for-sale asset is impaired, an amount comprising
the difference between its cost and its current fair value, less any
impairment loss previously recognized in the consolidated
statements of income, is transferred from equity to the
consolidated statements of income. Reversals in respect of equity
instruments classified as AFS are not recognized in profit or loss.
Reversals of impairment losses on debt instruments are reversed
through profit or loss if the increase in fair value of the instrument
can be objectively related to an event occurring after the
impairment loss was recognized in profit or loss.

- 19 -
2.6.4.3 Derecognition of Financial Instruments
2.6.4.3.1 Financial Asset
A financial asset (or, where applicable a part of a financial asset
or part of a group of financial assets) is derecognized where:
• the rights to receive cash flows from the asset have expired;
• the Globe Group retains the right to receive cash flows from
the asset, but has assumed as obligation to pay them in full
without material delay to a third party under a “pass-through”
arrangement; or
• the Globe Group has transferred its rights to receive cash
flows from the asset and either (a) has transferred
substantially all the risks and rewards of ownership and
retained control of the asset, or (b) has neither transferred nor
retained the risk and rewards of the asset but has transferred
the control of the asset.
Where the Globe Group has transferred its rights to receive cash
flows from an asset or has entered into a pass-through
arrangement, and has neither transferred nor retained substantially
all the risks and rewards of the asset nor transferred control of the
asset, the asset is recognized to the extent of the Globe Group’s
continuing involvement in the asset.
2.6.4.3.2 Financial Liability
A financial liability is derecognized when the obligation under
the liability is discharged or cancelled or expired. Where an
existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing
liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability
and the recognition of a new liability, and the difference in the
respective carrying amounts is recognized in the consolidated
statements of income.
2.6.4.4 Accounting Policies Prior to January 1, 2005
Investments in government securities are carried at amortized cost. The
amortization of premium or accretion of discount is computed using the
straight-line method.
Translation gains or losses on currency forward and swap contracts are
computed by multiplying the notional amounts by the difference between the
exchange spot rates prevailing at the balance sheet date and the exchange spot
rates at the contract inception date (or the last reporting date). The resulting
translation gains or losses on the currency forward and swap contracts are

- 20 -
offset against the translation losses or gains on the underlying foreign
currency-denominated monetary assets and liabilities. The related revaluation
amounts on the translation of currency forward and currency swap contracts
are included in “Other noncurrent assets” account in the consolidated balance
sheets, including the carrying amounts of forward premiums or discounts
which are amortized over the term of the related contracts. Swap costs
accruing on long-term currency and interest rate swap contracts that are
currently due to or from the swap counterparties are charged against current
operations.
The mark-to-market gains or losses on these contracts as well as the other
types of derivative contracts are not considered in the determination of
consolidated net income but are disclosed in the related notes to the
consolidated financial statements.
2.6.5 Inventories and Supplies
Inventories and supplies are stated at the lower of cost or net realizable value (NRV).
NRV for handsets and accessories and wireline telephone sets is the selling price in
the ordinary course of business less direct costs to sell, while NRV for SIM packs, call
cards, spare parts and supplies consists of the related replacement costs. In
determining the NRV, the Globe Group considers any adjustment necessary for
obsolescence, which is generally provided 100% for nonmoving items for more than
one year. Cost is determined using the moving average method.
Supplies of SIM packs are consumed upon activation.
2.6.6 Property and Equipment
Property and equipment, except land, are carried at cost less accumulated depreciation
and amortization and accumulated impairment losses. Land is stated at cost less any
accumulated impairment losses.
The initial cost of an item of property and equipment includes its purchase price and
any cost attributable in bringing the property and equipment to its intended location
and working condition. Cost also includes: (a) interest and other financing charges on
borrowed funds used to finance the acquisition of property and equipment to the
extent incurred during the period of installation and construction; and (b) asset
retirement obligations (ARO) specifically on property and equipment
installed/constructed on leased properties.
Subsequent costs are capitalized as part of property and equipment only when it is
probable that future economic benefits associated with the item will flow to the Globe
Group and the cost of the item can be measured reliably. All other repairs and
maintenance are charged against current operations as incurred.
Assets under construction are carried at cost and transferred to the related property
and equipment account when the construction or installation and related activities
necessary to prepare the property and equipment for their intended use are complete,
and the property and equipment are ready for service.

- 21 -
Depreciation and amortization of property and equipment commences once the
property and equipment are available for use and computed using the straight-line
method over the estimated useful lives (EUL) of the assets regardless of utilization.
Leasehold improvements are amortized over the shorter of their EUL or the
corresponding lease terms.
The EUL of property and equipment are reviewed annually based on expected asset
utilization as anchored on business plans and strategies that also consider expected
future technological developments and market behavior to ensure that the period of
depreciation and amortization is consistent with the expected pattern of economic
benefits from items of property and equipment.
When property and equipment is retired or otherwise disposed of, the cost and the
related accumulated depreciation and amortization and accumulated provision for
impairment losses, if any, are removed from the accounts and any resulting gain or
loss is credited to or charged against current operations.
2.6.7 Asset Retirement Obligations
The Globe Group is legally required under various contracts to restore leased property
to its original condition and to bear the cost of dismantling and deinstallation at the
end of the contract period. The Globe Group recognizes the fair value of the liability
for these obligations and capitalizes these costs as part of the balance of the related
property and equipment accounts, which are depreciated on a straight-line basis over
the useful life of the related property and equipment or the contract period, whichever
is shorter.
2.6.8 Investment Property
Investment property is initially measured at cost including transaction costs.
Subsequent to initial recognition, investment property is carried at cost less
accumulated depreciation and impairment in value.
Expenditures incurred after the investment property has been put in operation, such as
repairs and maintenance costs, are normally charged to income in the period in which
the costs are incurred.
Depreciation of investment property is computed using the straight-line method over
its useful life, regardless of utilization. The EUL and the depreciation method are
reviewed periodically to ensure that the period and the method of depreciation are
consistent with the expected pattern of economic benefits from items of investment
properties.
Transfers are made to investment property, when, and only when, there is a change in
use, evidenced by the end of the owner occupation, commencement of an operating
lease to another party or completion of construction or development. Transfers are
made from investment property when, and only when, there is a change in use,
evidenced by the commencement of owner occupation or commencement of
development with the intention to sell.

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Investment property is derecognized when it has either been disposed of or
permanently withdrawn from use and no future benefit is expected from its disposal.
Any gain or loss on the derecognition of an investment property is recognized in the
consolidated statement of income in the period of derecognition.
2.6.9 Intangible Assets
Intangible assets acquired separately are capitalized at cost. Subsequently, intangible
assets are measured at cost less accumulated amortization and provisions for
impairment losses, if any. The useful lives of intangible assets with finite life are
assessed at the individual asset level. Intangible assets with finite life are amortized
over their useful life. Periods and method of amortization for intangible assets with
finite useful lives are reviewed annually or earlier when an indicator of impairment
exists.
Costs incurred to acquire computer software (not an integral part of its related
hardware) and telecommunications equipment licenses and bring it to its intended use
are capitalized as intangible assets. Costs directly associated with the development of
identifiable computer software that generate expected future benefits to the Globe
Group are recognized as intangible assets. All other costs of developing and
maintaining computer software programs are recognized as expense when incurred.
A gain or loss arising from derecognition of an intangible asset is measured as the
difference between the net disposal proceeds and the carrying amount of the asset and
is recognized in the consolidated statements of income when the asset is derecognized.
2.6.10 Debt Issuance Costs
Prior to January 1, 2005, issuance, underwriting and other related expenses incurred in
connection with the issuance of debt instruments are deferred and amortized over the
terms of the instruments using the straight-line method and unamortized debt issuance
costs are shown under “Other noncurrent assets” account in the consolidated balance
sheets. Effective January 1, 2005, these were amortized using the effective interest
method and unamortized debt issuance costs are netted against the related carrying
value of the debt instrument in the consolidated balance sheets (see accounting policy
on “Financial Instruments”).
2.6.11 Investments in an Associate and a Joint Venture
Investments in an associate and a joint venture (JV) are accounted for under the equity
method, less any impairment losses. An associate is an entity in which the Globe
Group has a significant influence and which is neither a subsidiary nor a JV. A JV is
an entity, not being a subsidiary nor an associate, in which the Globe Group exercises
joint control together with one or more venturers.
Under the equity method, the investments in an associate and a JV are carried in the
consolidated balance sheets at cost plus post-acquisition changes in the Globe Group’s
share of net assets of the associate and JV, less any accumulated impairment in value.
The consolidated statements of income reflect the share of the results of operations of
the associate and JV. Where there has been a change recognized

- 23 -
directly in the associates’ equity, the Globe Group recognizes its share of any changes
and discloses this, when applicable, in the consolidated statements of changes in
equity.
2.6.12 Impairment of Non-financial Assets
An assessment is made at the balance sheet date to determine whether there is any
indication that an asset may be impaired, or whether there is any indication that an
impairment loss previously recognized for an asset in prior periods may no longer
exist or may have decreased. If any such indication exists and when the carrying value
of an asset exceeds its estimated recoverable amount, the asset or cash generating unit
to which the asset belongs is written down to its recoverable amount. The recoverable
amount of an asset is the greater of its net selling price and value in use. Recoverable
amounts are estimated for individual assets or, if it is not possible, for the cashgenerating
unit to which the asset belongs. For impairment loss on specific assets, the
recoverable amount represents the net selling price.
An impairment loss is recognized only if the carrying amount of an asset exceeds its
recoverable amount. An impairment loss is charged against operations in the period in
which it arises. A previously recognized impairment loss is reversed only if there has
been a change in estimate used to determine the recoverable amount of an asset,
however, not to an amount higher than the carrying amount that would have been
determined (net of any accumulated depreciation and amortization for property and
equipment) had no impairment loss been recognized for the asset in prior periods. A
reversal of an impairment loss is credited to current operations.
2.6.13 Income Taxes
2.6.13.1 Current Tax
Current tax assets and liabilities for the current and prior periods are
measured at the amount expected to be recovered from or paid to the tax
authority. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted as at the balance sheet
date.
2.6.13.2 Deferred Tax
Deferred income tax is provided using the balance sheet liability method
on all temporary differences, with certain exceptions, at balance sheet
date between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes.
Deferred income tax liabilities are recognized for all taxable temporary
differences, with certain exceptions. Deferred income tax assets are
recognized for all deductible temporary differences and carryforward
benefit of unused tax credits from excess minimum corporate income tax
(MCIT) over regular corporate income tax and net operating loss
carryover (NOLCO) to the extent that it is probable that taxable income
will be available against which the deductible temporary differences and
the carryforward benefit of unused MCIT and NOLCO can be used.

- 24 -
Deferred income tax is not recognized when it arises from the initial
recognition of an asset or liability in a transaction that is not a business
combination and, at the time of transaction, affects neither the accounting
profit nor taxable profit or loss. Deferred income tax liabilities are not
provided on nontaxable temporary differences associated with investment
in a domestic associate and a JV.
The carrying amounts of deferred income tax assets are reviewed at each
balance sheet date and reduced to the extent that it is no longer probable
that sufficient taxable income will be available to allow all or part of the
deferred income tax assets to be utilized.
Deferred income tax assets and liabilities are measured at the tax rate that
is expected to apply in the period when the asset is realized or the liability
is settled based on tax rates (and tax laws) that have been enacted or
substantially enacted as of balance sheet date.
2.6.14 Provisions
Provisions are recognized when: (a) the Globe Group has present obligation (legal or
constructive) as a result of a past event; (b) it is probable (i.e., more likely than not)
that an outflow of resources embodying economic benefits will be required to settle
the obligation; and (c) a reliable estimate can be made of the amount of the obligation.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current
best estimate. If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessment of the time value of money and, where appropriate, the
risks specific to the liability. Where discounting is used, the increase in the provision
due to the passage of time is recognized as an interest expense under “Financing
costs” in the consolidated statements of income.
2.6.15 Share-based Payment Transactions
Certain employees (including directors) of the Globe Group receive remuneration in
the form of share-based payment transactions, whereby employees render services in
exchange for shares or rights over shares (“equity-settled transactions“) (see Note 18).
The cost of equity-settled transactions with employees is measured by reference to the
fair value at the date at which they are granted. In valuing equity-settled transactions,
vesting conditions, including performance conditions, other than market conditions
(conditions linked to share prices), shall not be taken into account when estimating the
fair value of the shares or share options at the measurement date. Instead, vesting
conditions are taken into account in estimating the number of equity instruments that
will vest.

- 25 -
The cost of equity-settled transactions is recognized in the consolidated statements of
income, together with a corresponding increase in equity, over the period in which the
service conditions are fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (‘vesting date’). The cumulative expense
recognized for equity-settled transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired and the number of awards
that, in the opinion of the management of the Globe Group at that date, based on the
best available estimate of the number of equity instruments, will ultimately vest.
No expense is recognized for awards that do not ultimately vest, except for awards
where vesting is conditional upon a market condition, which are treated as vesting
irrespective of whether or not the market condition is satisfied, provided that all other
performance conditions are satisfied.
Where the terms of an equity-settled award are modified, as a minimum, an expense is
recognized as if the terms had not been modified. In addition, an expense is
recognized for any increase in the value of the transaction as a result of the
modification, measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date
of cancellation, and any expense not yet recognized for the award is recognized
immediately.
However, if a new award is substituted for the cancelled award, and designated as a
replacement award on the date that it is granted, the cancelled and new awards are
treated as if they were a modification of the original award, as described in the
previous paragraph. The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of earnings per share (see Note 26).
2.6.16 Treasury Stock
Treasury stock is recorded at cost and is presented as a deduction from equity. When
the shares are retired, the capital stock account is reduced by its par value and the
excess of cost over par value upon retirement is debited to additional paid-in capital to
the extent of the specific or average additional paid-in capital when the shares were
issued and to retained earnings for the remaining balance.
2.6.17 Pension Cost
Pension cost is actuarially determined using the projected unit credit method. This
method reflects services rendered by employees up to the date of valuation and
incorporates assumptions concerning employees’ projected salaries. Actuarial
valuations are conducted with sufficient regularity, with option to accelerate when
significant changes to underlying assumptions occur. Pension cost includes current
service cost, interest cost, expected return on any plan assets, actuarial gains and
losses, past service cost and the effect of any curtailment or settlement.

- 26 -
The net pension asset recognized by the Globe Group in respect of the defined benefit
pension plan is the lower of: (a) the fair value of the plan assets less the present value
of the defined benefit obligation at the balance sheet date, together with adjustments
for unrecognized actuarial gains or losses and past service costs that shall be
recognized in later periods; or (b) the total of any cumulative unrecognized net
actuarial losses and past service cost and the present value of any economic benefits
available in the form of refunds from the plan or reductions in future contributions to
the plan. The defined benefit obligation is calculated annually by an independent
actuary using the projected unit credit method. The present value of the defined
benefit obligation is determined by discounting the estimated future cash outflows
using risk-free interest rates of government bonds that have terms to maturity
approximating the terms of the related pension liabilities.
A portion of actuarial gains and losses is recognized as income or expense if the
cumulative unrecognized actuarial gains and losses at the end of the previous
reporting period exceeded the greater of 10% of the present value of defined benefit
obligation or 10% of the fair value of plan assets. These gains and losses are
recognized over the expected average remaining working lives of the employees
participating in the plan.
2.6.18 Borrowing Costs
Borrowing costs are capitalized if these are directly attributable to the acquisition,
construction or production of a qualifying asset. Capitalization of borrowing costs
commences when the activities for the asset’s intended use are in progress and
expenditures and borrowing costs are being incurred. Borrowing costs are capitalized
until the assets are ready for their intended use. These costs are amortized using the
straight-line method over the EUL of the related property and equipment. If the
resulting carrying amount of the asset exceeds its recoverable amount, an impairment
loss is recognized. Borrowing costs include interest charges and other related
financing charges incurred in connection with the borrowing of funds. Premiums on
long-term debt are included under “Long-term debt” account in the consolidated
balance sheets and are amortized using the effective interest rate method.
Other borrowing costs are recognized as expense in the period in which these are
incurred.

- 27 -
2.6.19 Leases
The determination of whether an arrangement is, or contains a lease is based on the
substance of the arrangement and requires an assessment of whether the fulfillment of
the arrangement is dependent on the use of a specific asset or assets and the
arrangement conveys a right to use the asset. A reassessment is made after inception
of the lease only if one of the following applies:
• there is a change in contractual terms, other than a renewal or extension of the
arrangement;
• a renewal option is exercised or extension granted, unless that term of the renewal
or extension was initially included in the lease term;
• there is a change in the determination of whether fulfillment is dependent on a
specified asset; or
• there is a substantial change to the asset.
Where a reassessment is made, lease accounting shall commence or cease from the
date when the change in circumstances gave rise to the reassessment for any of the
scenarios above, and at the date of renewal or extension period for the second
scenario.
For arrangements entered into prior to January 1, 2005, the date of inception is
deemed to be January 1, 2005 in accordance with the transitional requirements of
IFRIC 4.
2.16.19.1 Group as Lessee
Finance leases, which transfer to the Globe Group substantially all the
risks and benefits incidental to ownership of the leased item, are
capitalized at the inception of the lease at the fair value of the leased
property or, if lower, at the present value of the minimum lease payments
and included in Property and equipment account with the corresponding
liability to the lessor included in “Other long-term liabilities” account.
Lease payments are apportioned between the finance charges and
reduction of the lease liability so as to achieve a constant rate of interest
on the remaining balance of the liability. Finance charges are charged
directly to interest expense.
Capitalized leased assets are depreciated over the shorter of the EUL of
the assets or the respective lease terms, if there is no reasonable certainty
that the Group will obtain ownership by the end of the lease term.
Leases where the lessor retains substantially all the risks and benefits of
ownership of the asset are classified as operating leases. Operating lease
payments are recognized as an expense in the consolidated statements of
income on a straight-line basis over the lease term.

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2.16.19.2 Group as Lessor
Finance leases, where the Globe Group transfers substantially all the risk
and benefits incidental to ownership of the leased item to the lessee, are
included in the statements of condition under loans and receivables
account. A lease receivable is recognized over the leasing period of an
amount equaling the present value of the lease payments using the
implicit rate of interest and including any guaranteed terminal value. All
income resulting from the receivable is included in Interest income in the
consolidated statements of income.
Leases where the Globe Group does not transfer substantially all the risk
and benefits of ownership of the assets are classified as operating leases.
Initial direct costs incurred in negotiating operating leases are added to
the carrying amount of the leased asset and recognized over the lease term
on the same basis as the rental income. Contingent rents are recognized
as revenue in the period in which they are earned.
2.6.20 Selling, Advertising and Promotions Expenses
Selling, advertising and promotions expenses are charged against current operations as
incurred.
2.6.21 Foreign Currency Transactions
The functional and presentation currency of the Globe Group is the Philippine Peso.
Transactions denominated in foreign currencies are recorded in Philippine Peso based
on the exchange rates prevailing at the transaction dates. Foreign currencydenominated
monetary assets and liabilities are translated to Philippine Peso at the
exchange rate prevailing at the balance sheet date. Foreign exchange differentials
between rate at transaction date, and rate at settlement date or balance sheet date of
foreign currency-denominated monetary assets or liabilities are credited to or charged
against current operations.
2.6.22 Earnings Per Share (EPS)
Basic EPS is computed by dividing earnings applicable to common stock by the
weighted average number of common shares outstanding, after giving retroactive
effect for any stock dividends, stock splits or reverse stock splits during the period.
Diluted EPS is computed by dividing net income by the weighted average number of
common shares outstanding during the period, after giving retroactive effect for any
stock dividends, stock splits or reverse stock splits during the period, and adjusted for
the effect of dilutive options and dilutive convertible preferred shares. Outstanding
stock options will have a dilutive effect under the treasury stock method only when
the average market price of the underlying common share during the period exceeds
the exercise price of the option. If the required dividends to be declared on convertible
preferred shares divided by the number of equivalent common shares, assuming such
shares are converted, would decrease the basic EPS, then such convertible preferred
shares would be deemed dilutive. Where the effect of the assumed conversion of the
preferred shares and the exercise of all outstanding options have anti-dilutive effect,
basic and diluted EPS are stated at the same amount.

- 29 -
2.6.23 Segment Reporting
The Globe Group’s major operating business units are the basis upon which the Globe
Group reports its primary segment information. In 2005, the Globe Group started
monitoring its wireline voice and data businesses as one major converged service with
similar risks and returns. The Globe Group’s business segments consist of:
(1) wireless communication services and (2) wireline communication services. The
Globe Group generally accounts for inter-segment revenues and expenses at agreed
transfer prices.
2.6.24 Contingencies
Contingent liabilities are not recognized in the consolidated financial statements.
These are disclosed unless the possibility of an outflow of resources embodying
economic benefits is remote. Contingent assets are not recognized in the consolidated
financial statements but are disclosed when an inflow of economic benefits is
probable.
2.6.25 Subsequent Events
Any post period-end event up to the date of approval of the BOD of the consolidated
financial statements that provides additional information about the Globe Group’s
position at balance sheet date (adjusting event) is reflected in the consolidated
financial statements. Any post period-end event that is not an adjusting event is
disclosed in the notes to the consolidated financial statements when material.
3. Management’s Significant Accounting Judgments and Use of Estimates
3.1 Judgments and Estimates
The preparation of the accompanying consolidated financial statements in conformity with
PFRS requires management to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying notes. The estimates and
assumptions used in the accompanying consolidated financial statements are based upon
management’s evaluation of relevant facts and circumstances as of the date of the consolidated
financial statements. Actual results could differ from such estimates.
Judgments and estimates are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under
the circumstances.
3.1.1 Judgments
3.1.1.1 Leases
The Globe Group has entered into various lease agreements as lessee and lessor.
The Globe Group has determined that it retains all the significant risks and
rewards on equipment and office spaces leased out on operating lease and various
items of property and equipment acquired through finance lease.

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3.1.1.2 Fair value of financial instruments
Where the fair values of financial assets and financial liabilities recorded on the
consolidated balance sheets cannot be derived from active markets, they are
determined using a variety of valuation techniques that include the use of
mathematical models. The input to these models is taken from observable
markets where possible, but where this is not feasible, a degree of judgment is
required in establishing fair values. The judgments include considerations of
liquidity and model inputs such as correlation and volatility for longer dated
derivatives.
3.1.1.3 HTM investments
The classification to HTM investment requires significant judgment. In making
this judgment, the Globe Group evaluates its intention and ability to hold such
investments to maturity. If the Globe Group fails to keep these investments to
maturity other than in certain specific circumstances - for example, selling an
insignificant amount close to maturity - it will be required to reclassify the entire
portfolio as AFS investments. The investments would therefore be measured at
fair value and not at amortized cost.
3.1.1.4 Financial assets not quoted in an active market
The Globe Group classifies financial assets by evaluating, among others, whether
the asset is quoted or not in an active market. Included in the evaluation on
whether a financial asset is quoted in an active market is the determination on
whether quoted prices are readily and regularly available, and whether those
prices represent actual and regularly occurring market transactions on an arm’s
length basis.
3.1.2 Estimates
3.1.2.1 Revenue recognition
The Globe Group’s revenue recognition policies require management to make use
of estimates and assumptions that may affect the reported amounts of the revenues
and receivables.
The Globe Group’s agreements with local and foreign carriers for inbound and
outbound traffic subject to settlements require traffic reconciliations before actual
settlement is done, which may not be the actual volume of traffic as measured by
management. Initial recognition of revenues is based on observed traffic in the
network since normal historical experience adjustments are not material to the
consolidated financial statements. Differences between the amounts initially
recognized and actual settlements are taken up in the accounts upon
reconciliation. However, there is no assurance that such use of estimates will not
result in material adjustments in future periods.
Starting fourth quarter of 2006 based on the established historical pattern of
discount availments of the carriers, the Globe Group recorded inbound revenues
net of the estimated prompt payment discount amounting to P=170.0 million as of
December 31, 2006.

- 31 -
Total unsettled net inbound traffic revenues from local and foreign traffic carriers
as of December 31, 2006, 2005 and 2004 (included under “Receivables”)
amounted to P=1,959.17 million, P=3,120.37 million and P=2,315.05 million,
respectively. Total unsettled and net outbound traffic to local and foreign carriers
as of December 31, 2006, 2005 and 2004 (included under “Accounts payable and
accrued expenses”) amounted to P=1,501.93, P=1,544.66 million and P=1,104.86
million, respectively.
3.1.2.2 Allowance for impairment losses on receivables
The Globe Group maintains allowance for impairment losses at a level considered
adequate to provide for potential uncollectible receivables. The Globe Group
performs regular review of the age and status of these accounts, designed to
identify accounts with objective evidence of impairment and provide with the
appropriate allowance for impairment losses. The review is accomplished using a
combination of specific and collective assessment approaches, with the
impairment losses being determined for each risk grouping identified by the
Globe Group. The amount and timing of recorded expenses for any period would
differ if the Globe Group made different judgments or utilized different
methodologies. An increase in allowance for impairment losses would increase
the recorded operating expenses and decrease current assets.
Impairment losses on receivables amounted to P=422.83 million, P=615.73 million
and P=1,052.22 million in 2006, 2005 and 2004, respectively (see Note 22).
Receivables, net of allowance for impairment losses, amounted to P=5,527.91
million, P=6,764.13 million and P=5,457.91 million as of December 31, 2006, 2005
and 2004, respectively (see Note 4).
3.1.2.3 Allowance for obsolescence and market decline
The Globe Group, in determining the NRV, considers any adjustment necessary
for obsolescence which is generally with 100% provision for items that have been
nonmoving for more than a year. The Globe Group adjusts the cost of inventory to
recoverable value at a level considered adequate to reflect market decline in value
of the recorded inventories. The Globe Group reviews the classification of the
inventories and generally provides adjustments for recoverable values of new,
actively sold and slow-moving inventories by reference to prevailing values of the
same inventories in the market.
The amount and timing of recorded expenses for any period would differ if
different judgments were made or different estimates were utilized. An increase
in allowance for obsolescence and market decline would increase recorded
operating expenses and decrease current assets.
Inventory obsolescence and market decline amounted to P=80.05 million and
P=72.39 million in 2005 and 2004, respectively (see Note 22). Reversal of
inventory, obsolescence and market decline in 2006 amounted to P=61.39 million
(see Note 22).

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Inventories and supplies, net of allowances, amounted to P=993.50 million,
P=1,372.46 million and P=1,136.89 million as of December 31, 2006, 2005 and
2004, respectively (see Note 5).
3.1.2.4 Asset retirement obligations
The Globe Group is legally required under various contracts to restore leased
property to its original condition and to bear the costs of dismantling and
deinstallation at the end of the contract period. These costs are accrued based on
an in-house estimate, which incorporates estimates of asset retirement costs, third
party margins and interest rates. The Globe Group recognizes the fair value of the
liability for these obligations and capitalizes the present value of these costs as
part of the balance of the related property and equipment accounts, which are
being depreciated and amortized on a straight-line basis over the useful life of the
related asset or the lease term, whichever is shorten. The market risk premium
was excluded from the estimate of the fair value of the ARO because a reasonable
and reliable estimate of the market risk premium is not obtainable. Since a market
risk premium is unavailable, fair value is assumed to be the present value of the
obligations. The fair value and present value of dismantling costs is computed
based on an average credit adjusted risk free rate of 7.50% and 14.62% in 2006
and 2005, respectively. Assumptions used to compute ARO are reviewed and
updated annually.
The amount and timing of recorded expenses for any period would differ if
different judgments were made or different estimates were utilized. An increase in
ARO would increase recorded operating expenses and increase noncurrent
liabilities.
As of December 31, 2006, 2005 and 2004, ARO included in property and
equipment has a carrying value of P=1,316.61 million, P=907.05 million and
P=769.80 million, respectively (see Note 15).
3.1.2.5 EUL of property and equipment, intangible assets and investment property
Globe Group reviews annually the EUL of these assets based on expected asset
utilization as anchored on business plans and strategies that also consider
expected future technological developments and market behavior. It is possible
that future results of operations could be materially affected by changes in these
estimates brought about by changes in the factors mentioned. A reduction in the
EUL of property and equipment, intangible assets and investment property would
increase the recorded depreciation and amortization expense and decrease
noncurrent assets.

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The EUL of property and equipment of the Globe Group are as follows:
Years
Telecommunications equipment:
Tower 15
Switch 10 and 15
Outside plant 10-20
Distribution dropwires 5
Cellular facilities and others 3-10
Buildings 20
Leasehold improvements 5 years or lease term, whichever is shorter
Investments in cable systems 15
Furniture, fixtures and equipment
Transportation and work
3-5
equipment 2-5
The EUL of intangible assets are amortized over the EUL of the related computer
software ranging from 3 to 5 years or life of the telecommunications equipment
where it is assigned.
The EUL of investment property is 15 years.
In the fourth quarter of 2006, the Globe Group recognized additional depreciation
on telecommunications equipment amounting to P=790.06 million due to shortened
remaining useful lives of certain assets resulting from continuing upgrades made
to the network and changes in estimated remaining useful lives of certain
components of network assets as a result of the application of a more
comprehensive approach to component accounting. These changes have been
accounted for as change in accounting estimates.
As of December 31, 2006, 2005 and 2004, property and equipment, intangible
assets and investment property amounted to P=97,517.54 million,
P=99,914.94 million and P=102,849.37 million, respectively (see Notes 7, 8 and 9).
3.1.2.6 Asset impairment
Globe Group assesses impairment on assets whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The factors that Globe Group considers important which could
trigger an impairment review include the following:
• significant underperformance relative to expected historical or projected
future operating results;
• significant changes in the manner of use of the acquired assets or the strategy
for overall business; and
• significant negative industry or economic trends.

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An impairment loss is recognized whenever the carrying amount of an asset
exceeds its recoverable amount. The recoverable amount is the higher of an
asset’s net selling price and value in use. The net selling price is the amount
obtainable from the sale of an asset in an arm’s length transaction while value in
use is the present value of estimated future cash flows expected to arise from the
continuing use of an asset and from its disposal at the end of its useful life.
Recoverable amounts are estimated for individual assets or, if it is not possible,
for the cash-generating unit to which the asset belongs. For impairment loss on
specific assets, the recoverable amount represents the net selling price.
In determining the present value of estimated future cash flows expected to be
generated from the continued use of the assets, Globe Group is required to make
estimates and assumptions that can materially affect the consolidated financial
statements.
In 2005, the Globe Group recognized impairment losses on certain network assets
amounting to P=925.77 million as a result of impairment reviews and reconciliation
exercise based on the count activity.
For the Globe Group, the cash-generating unit is the combined wireless and
wireline asset groups of Globe Telecom and Innove. This asset grouping is
predicated upon the requirement contained in Executive Order (EO) No. 109 and
RA No. 7925 requiring licensees of Cellular Mobile Telephone System (CMTS)
and International Digital Gateway Facility (IGF) services to provide 400,000 and
300,000 LEC lines, respectively, as a condition for the grant of such licenses.
Property and equipment, investment property, intangible assets and investment in
an associate and a joint venture amounted to P=97,554.87 million,
P=99,958.20 million and P=102,941.30 million as of December 31, 2006, 2005 and
2004, respectively (see Notes 7, 8, 9 and 10).
3.1.2.7 Deferred income tax assets
The carrying amounts of deferred income tax assets are reviewed at each balance
sheet date and reduced to the extent that it is no longer probable that sufficient
taxable income will be available to allow all or part of the deferred income tax
assets to be utilized.
As of December 31, 2006, 2005 and 2004, Innove and GXI has net deferred
income tax assets of P=801.86 million, P=1,163.94 million and P=2,413.25 million,
respectively, while Globe Telecom has net deferred income tax liabilities of
P=5,540.00 million, P=4,432.87 million and P=3,474.73 million, respectively (see
Note 23). Globe Telecom and Innove has no unrecognized deferred income tax
assets as of December 31, 2006, 2005 and 2004. GXI has not recognized deferred
income tax assets on its NOLCO.

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3.1.2.8 Financial assets and liabilities
Globe Group carries certain financial assets and liabilities at fair value, which
requires extensive use of accounting estimates and judgment. While significant
components of fair value measurement were determined using verifiable objective
evidence (i.e., foreign exchange rates, interest rates, volatility rates), the amount
of changes in fair value would differ if the Globe Group utilized different
valuation methodologies. Any changes in fair value of these financial assets and
liabilities would affect profit and loss and equity.
Financial assets carried at fair values as of December 31, 2006 and 2005,
amounted to P=1,920.28 million and P=2,769.21 million, respectively, and financial
liabilities carried at fair values as of December 31, 2006 and 2005, amounted to
P=1,086.12 million and P=731.75 million, respectively (see Note 27).
3.1.2.9 Pension and other employee benefits
The determination of the obligation and cost of pension and other employee
benefits is dependent on the selection of certain assumptions used in calculating
such amounts. Those assumptions include, among others, discount rates, expected
returns on plan assets and salary increase rates (see Note 18). In accordance with
PFRS, actual results that differ from the Globe Group’s assumptions, subject to
the 10% corridor test, are accumulated and amortized over future periods and
therefore, generally affect the recognized expense and recorded obligation in such
future periods.
As of December 31, 2006, the Globe Group has unrecognized actuarial loss of
P=259.06 million while unrecognized actuarial gains of P=153.59 million and
P=105.46 million were recognized in 2005 and 2004, respectively (see Note 18).
The Globe Group also determines the cost of equity-settled transactions using
assumptions on the appropriate pricing model. Significant assumptions include,
among others, share price, exercise price, option life, risk-free interest rate,
expected dividend and expected volatility rate for the cost of share-based
payments.
Cost of share-based payments in 2006, 2005 and 2004 amounted to
P=161.63 million, P=161.73 million and P=134.77 million, respectively (see Note 16).
The Globe Group also estimates other employee benefit obligations and expenses,
including cost of paid leaves based on historical leave availments of employees,
subject to the Globe Group’s policy. These estimates may vary depending on the
future changes in salaries and actual experiences during the period.
The accrued balance of other employee benefits (included in Accrued expenses
under “Accounts payable and accrued expenses” account and in “Other long-term
liabilities” account in the consolidated balance sheets) as of December 31, 2006
and 2005 amounted to P=246.98 million and P=217.26 million, respectively.

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While the Globe Group believes that the assumptions are reasonable and
appropriate, significant differences between actual experiences and assumptions
may materially affect the cost of employee benefits and related obligations.
3.1.2.10 Contingencies
Globe Telecom and Innove are currently involved in various legal proceedings.
The estimate of the probable costs for the resolution of these claims has been
developed in consultation with outside counsel handling Globe Telecom and
Innove’s defense in these matters and is based upon an analysis of potential
results. Globe Telecom and Innove currently do not believe that these proceedings
will have a material adverse effect on the consolidated financial position. It is
possible, however, that future results of operations could be materially affected by
changes in the estimates or in the effectiveness of the strategies relating to these
proceedings (see Note 25).
4. Receivables
This account consists of receivables from:
Notes 2006 2005 2004
(In Thousand Pesos)
Subscribers P=5,947,904 P=8,022,307 P=7,988,865
Traffic settlements - net 16a 1,959,169 3,120,374 2,315,050
Others 305,615 305,076 242,789
8,212,688 11,447,757 10,546,704
Less allowance for impairment losses
Subscribers 2,485,188 4,468,009 4,787,070
Traffic settlements and others 199,595 215,618 301,721
2,684,783 4,683,627 5,088,791
P=5,527,905 P=6,764,130 P=5,457,913
Traffic settlements receivables are presented net of traffic settlements payables of
P=3,675.43 million, P=1,979.29 million and P=1,196.82 million as of December 31, 2006, 2005 and
2004, respectively, (see Note 12).

5. Inventories and Supplies
This account consists of:
- 37 -
2006 2005
(In Thousand Pesos)
2004
At cost:
Wireline telephone sets P=– P=– P=69,767
Call cards and others 21,390 10,601 6,116
21,390 10,601 75,883
At NRV:
Handsets and accessories 520,352 840,244 393,803
SIM packs, spare parts and supplies 385,795 469,335 667,199
Wireline telephone sets 65,958 52,279 –
972,105 1,361,858 1,061,002
P=993,495 P=1,372,459 P=1,136,885
6. Prepayments and Other Current Assets
This account consists of:
Note 2006 2005 2004
(In Thousand Pesos)
Prepayments P=392,840 P=297,109 P=331,591
Input VAT - net 43,000 286,784 312,566
Other current assets 24d 818,842 531,576 439,251
P=1,254,682 P=1,115,469 P=1,083,408
Innove and GXI’s net input VAT amounting to P=43.00 million, P=286.78 million and
P=312.57 million as of December 31, 2006, 2005 and 2004, respectively, is presented net of output
VAT of P=85.26 million, P=102.74 million and P=172.98 million, respectively.

7. Property and Equipment
2006
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The rollforward analysis of this account follows:
Buildings and
Furniture, Transportation
Telecommunications Leasehold Investments in Fixtures and and Work
Assets Under
Equipment Improvements Cable Systems Equipment Equipment Land Construction Total
(In Thousand Pesos)
Cost
At January 1 P=125,123,066 P=18,932,872 P=9,062,539 P=4,091,131 P=1,332,701 P=897,914 P=2,875,734 P=162,315,957
Additions 2,295,585 119,722 1,085,012 371,135 301,702 – 10,387,091 14,560,247
Retirements/disposals (437,156) (41,548) – (67,870) (156,446) – (16,946) (719,966)
Reclassifications/adjustments 5,000,324 1,371,319 (129,589) 114,731 134 – (6,600,376) (243,457)
At December 31
Accumulated Depreciation,
Amortization and
Impairment Losses
131,981,819 20,382,365 10,017,962 4,509,127 1,478,091 897,914 6,645,503 175,912,781
At January 1 52,824,235 5,355,595 2,060,827 2,625,964 894,666 – – 63,761,287
Depreciation and amortization 13,150,285 1,786,495 622,633 872,593 205,351 – – 16,637,357
Retirements/disposals (313,795) (25,032) – (66,240) (125,814) – – (530,881)
Reclassifications/adjustments 11,191 1,769 (42,120) 798 (33) – – (28,395)
At December 31
Net Book Value at
65,671,916 7,118,827 2,641,340 3,433,115 974,170 – – 79,839,368
December 31 P=66,309,903 P=13,263,538 P=7,376,622 P=1,076,012 P=503,921 P=897,914 P=6,645,503 P=96,073,413
2005
Buildings and
Furniture, Transportation
Assets
Telecommunications Leasehold Investments in Fixtures and and Work
Under
Equipment Improvements Cable Systems Equipment Equipment Land Construction Total
(In Thousand Pesos)
Cost
At January 1 P=117,423,719 P=15,688,934 P=9,011,832* P=3,436,886 P=1,191,320 P=928,222 P=4,142,164 P=151,823,077
Additions 1,616,476 108,003 33,350 440,860 222,410 36 12,529,070 14,950,205
Retirements/disposals (3,549,702) (19,819) (2,581) (446,965) (85,182) (30,344) – (4,134,593)
Reclassifications/adjustments 9,632,573 3,155,754 19,938 660,350 4,153 – (13,795,500) (322,732)
At December 31 125,123,066 18,932,872 9,062,539 4,091,131 1,332,701 897,914 2,875,734 162,315,957
Telecommunications
Equipment
Buildings and
Leasehold
Improvements
Investments in
Cable Systems
Furniture,
Fixtures and
Equipment
Transportation
and Work
Equipment Land
Assets
Under
Construction Total
Accumulated Depreciation,
Amortization and
Impairment Losses
At January 1 42,953,548 3,791,378 1,441,963 2,182,047 760,902 – – 51,129,838
Depreciation and amortization 12,107,710 1,583,301 618,345 811,762 193,734 – – 15,314,852
Impairment 294,138 – – 17,742 – – – 311,880
Retirements/disposals (2,526,563) (7,952) (961) (413,845) (64,752) – – (3,014,073)
Reclassifications/adjustments (4,598) (11,132) 1,480 28,258 4,782 – – 18,790
At December 31 52,824,235 5,355,595 2,060,827 2,625,964 894,666 – – 63,761,287
Net Book Value at
December 31 P=72,298,831 P=13,577,277 P=7,001,712 P=1,465,167 P=438,035 P=897,914 P=2,875,734 P=98,554,670
* Includes PAS 39 adjustment (see Note 16c).

2004
Telecommunications
Equipment
Buildings and
Leasehold
Improvements
- 39 -
Investments in
Cable Systems
Furniture,
Fixtures and
Equipment
Transportation
and Work
Equipment Land
Assets Under
Construction Total
(In Thousand Pesos)
Cost
At January 1 P=104,069,288 P=11,431,609 P=10,071,745 P=2,307,792 P=976,109 P=927,857 P=3,109,261 P=132,893,661
Additions 951,758 113,981 64,748 1,173,420 272,767 365 19,125,299 21,702,338
Retirements/disposals (530,886) (48,686) – (93,010) (56,275) – (12,404) (741,261)
Reclassifications/adjustments 12,933,559 4,192,030 37,613 48,684 (1,281) – (18,079,992) (869,387)
At December 31
Accumulated Depreciation,
Amortization and
Impairment Losses
117,423,719 15,688,934 10,174,106 3,436,886 1,191,320 928,222 4,142,164 152,985,351
At January 1 32,055,043 2,633,507 940,287 1,543,056 652,081 – – 37,823,974
Depreciation and amortization 11,671,431 1,177,305 713,597 704,138 151,605 – – 14,418,076
Retirements/disposals (286,775) (18,992) – (59,203) (42,903) – – (407,873)
Reclassifications/adjustments (486,151) (442) – (5,944) 119 – – (492,418)
At December 31
Net Book Value at
42,953,548 3,791,378 1,653,884 2,182,047 760,902 – – 51,341,759
December 31 P=74,470,171 P=11,897,556 P=8,520,222 P=1,254,839 P=430,418 P=928,222 P=4,142,164 P=101,643,592
The carrying values of property and equipment held under finance leases where Globe Group is
the lessee are as follows (see Note 24c):
2006 2005 2004
(In Thousand Pesos)
Furniture, fixtures and equipment P=144,372 P=138,978 P=166,417
Transportation and work equipment 4,043 3,850 4,400
148,415 142,828 170,817
Less accumulated depreciation 147,793 136,481 147,902
Net book value at December 31 P=622 P=6,347 P=22,915
The Globe Group’s information about borrowing costs for the year follows:
2006 2005 2004
(In Thousand Pesos)
Capitalized interest P=45,530 P=111,340 P=77,670
Other capitalized borrowing costs 2,550 28,323 133,465
The Globe Group uses its borrowed funds to finance the acquisition of property and equipment to
its intended location and working condition. Borrowing costs incurred relating to these
acquisitions were included in the cost of property and equipment using 9.75% capitalization rate
for the years ended December 31, 2006 and 2005 while capitalization rate ranges from 9.75% to
10.47% for the year ended December 31, 2004.
Investments in cable systems includes the cost of Globe Group’s ownership share in the capacity
of certain cable systems under a joint venture or a consortium or private cable set-up and
indefeasible rights of use (IRUs) of circuits in various cable systems. It also includes the cost of
cable landing station and transmission facilities where Globe Group is the landing party.

8. Investment Property
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The rollforward analysis of this account follows:
2006 2005
(In Thousand Pesos)
2004
Cost
At January 1 P=308,455 P=290,834 P=281,821
Additions 95,232 17,621 9,013
At December 31
Accumulated Depreciation
403,687 308,455 290,834
At January 1 48,917 29,318 10,833
Depreciation for the year 19,196 19,599 18,485
Reclassifications/adjustments 21,071 – –
At December 31 89,184 48,917 29,318
Net Book Value at December 31 P=314,503 P=259,538 P=261,516
Investment property represents the portion of a building that is currently being held for lease to
third parties (see Note 24b). Additions to investment property during the year represent new leases
of office spaces to third parties.
The details of income and expenses related to the investment property follow:
2006 2005 2004
(In Thousand Pesos)
Lease income P=33,445 P=29,011 P=20,844
Direct expenses 40,788 20,091 19,005
The fair value of the investment property as of December 31, 2006, as determined by market data
approach, amounted to P=285.74 million based on the report issued by an independent appraiser
dated December 6, 2006.

9. Intangible Assets
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The rollforward analysis of this account follows:
2006 2005
(In Thousand Pesos)
2004
Cost
At January 1 P=2,756,829 P=2,265,820 P=1,807,059
Additions 320,206 595,621 620,600
Retirements/disposals (742) (91,012) (154,682)
Reclassifications/adjustments 191,470 (13,600) (7,157)
At December 31
Accumulated Amortization
3,267,763 2,756,829 2,265,820
At January 1 1,656,102 1,321,555 1,202,108
Amortizations 481,000 395,998 269,264
Retirements/disposals (6) (61,342) (144,928)
Reclassifications/adjustments 1,043 (109) (4,889)
At December 31 2,138,139 1,656,102 1,321,555
Net Book Value at December 31 P=1,129,624 P=1,100,727 P=944,265
Intangible assets pertain to software license costs and other VAS software applications that are not
integral to the hardware/equipment.
10. Investments in an Associate and a Joint Venture
2006 2005
(In Thousand Pesos)
2004
Investments carried at equity
Acquisition cost:
Bridge Mobile Pte. Ltd. (BMPL) P=56,332 P=56,332 P=56,332
Globe Telecom Holdings, Inc. (GTHI) – 98 98
Accumulated equity in net earnings (losses):
At January 1
56,332 56,430 56,430
BMPL (13,166) – –
GTHI – 167 229
Add equity in net losses:
(13,166) 167 229
BMPL (5,834) (13,311) –
GTHI – (23) (62)
At December 31
(5,834) (13,334) (62)
BMPL 37,332 43,021 56,332
GTHI – 242 265
37,332 43,263 56,597
Other investments in shares of stock carried at cost – – 35,328
P=37,332 P=43,263 P=91,925

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Investment in BMPL
On November 3, 2004, Globe Telecom and other leading Asia Pacific mobile operators
(JV partners) signed an Agreement (JV Agreement) to form a regional mobile alliance, which will
operate through a Singapore-incorporated company, BMPL. The joint venture company is a
commercial vehicle for the JV partners to build and establish a regional mobile infrastructure and
common service platform and deliver different regional mobile services to their subscribers.
The other joint venture partners with equal stake in the alliance include Bharti Tele-Ventures
Limited (India), Maxis Communications Berhad (Malaysia), Optus Mobile Pty. Limited
(Australia), Singapore Telecom Mobile Pte. Ltd. (Singapore), Taiwan Cellular Corporation
(Taiwan), PT Telekomunikasi Selular (Indonesia) and Hongkong CSL Ltd. (Hongkong).
Under the JV Agreement, each partner shall contribute US$4.00 million based on an agreed
schedule of contribution. Globe Telecom may be called upon to contribute on dates to be
determined by the JV. As of December 31, 2006, Globe Telecom has paid US$1.00 million
(P=56.33 million) as initial subscription. BMPL started commercial operations in April 2005.
Investment in GTHI
GTHI is a special purpose vehicle incorporated in the Philippines, owned 32.67% each by Globe
Telecom and Ayala Corporation (AC), 33% by Singapore Telecom International Pte. Ltd. (STI) [a
wholly owned subsidiary of Singapore Telecom (ST)], and 1.66% by its directors and officers. On
December 26, 2002, GTHI, having completed and concluded its only business activity related to
Philippine Deposit Receipts (PDR), filed with the SEC a request for the revocation of its permit to
sell PDRs. On December 8, 2003, the Philippine SEC approved the revocation of the Order of
Registration and Certificate of Permit to Sell Securities to the Public issued to GTHI. On
December 15, 2004, the BOD of GTHI approved the dissolution of GTHI, which was
subsequently approved by the Philippine SEC on December 13, 2005. The remaining assets of
GTHI have been fully liquidated as of August 14, 2006.
11. Other Noncurrent Assets
This account consists of:
Notes 2006 2005 2004
(In Thousand Pesos)
Deferred input VAT
Advance payments to suppliers and
P=938,513 P=92,264 P=–
contractors
355,959 279,206 418,677
Miscellaneous deposits 340,134 342,492 251,547
Prepaid pension
Revaluation of foreign currency swaps and
18 247,437 264,024 309,226
unamortized premium
AFS investment in equity securities
– – 1,116,414
at cost - net – – –
Others - net 126,065 36,594 272,634
P=2,008,108 P=1,014,580 P=2,368,498

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AFS Investment in Equity Securities at Cost
Innove had a 4.25% ownership in C2C Holdings, Pte. Ltd. (C2C Holdings) consisting of
20 million Class A common shares at an acquisition cost of P=894.55 million. C2C Holdings is the
holding company for the equity investments of all the cable landing parties in C2C Pte. Ltd.
(C2C). C2C, a related party of STI is a private cable company with a network reaching 17,000
kilometers that links China, Hong Kong, Japan, Singapore, South Korea, Taiwan, Philippines and
the US. A full provision was recorded on this investment in 2003.
The creditors of C2C appointed receivers in October 2005 and in January 2006, manifested their
intention to take over the management of C2C. C2C’s creditors subsequently served notice to
C2C Holdings that it was taking ownership of the shares of C2C Holdings in C2C due to the
failure to achieve agreement on the restructuring of C2C’s debt. On August 7, 2006, the C2C
shares were finally transferred to C2C Group Limited, the Company formed by the creditors to
take ownership of the C2C shares (see Note 24).
12. Accounts Payable and Accrued Expenses
This account consists of:
Notes 2006 2005 2004
(In Thousand Pesos)
Accounts payable 16 P=5,855,423 P=5,744,393 P=4,903,175
Accrued project costs 24 4,548,838 2,444,114 3,454,285
Accrued expenses 16 4,378,534 4,101,400 4,084,200
Traffic settlements - net 4 1,501,931 1,544,657 1,104,861
Output VAT 6 135,870 69,324 150,379
Dividends payable 17 64,669 68,334 75,128
P=16,485,265 P=13,972,222 P=13,772,028
Traffic settlements payables are presented net of traffic settlements receivables amounting to
P=5,135.88 million, P=7,478.60 million and P=3,761.56 million as of December 31, 2006, 2005 and
2004, respectively.
As of December 31, 2006, 2005 and 2004, Globe Telecom reported a net output VAT amounting
to P=135.87 million, P=69.32 million and P=150.38 million, net of input VAT of P=156.16 million,
P=207.07 million and P=224.74 million, respectively.
13. Provisions
Provisions relate to various pending regulatory claims and assessments. The information usually
required by PAS 37, Provisions, Contingent Liabilities and Contingent Assets, is not disclosed on
the grounds that it can be expected to prejudice the outcome of these claims and assessments. The
provisions include those related to Globe Group’s wireless and wireline business amounting to
P=131.05 million, P=114.19 million and P=165.05 million as of December 31, 2006, 2005 and 2004,
respectively. As of February 5, 2007, the remaining pending regulatory claims and assessments
are still being resolved.

- 44 -
The balance of the provisions also includes Innove’s provision relating to NTC permit fees
amounting to P=117.26 million, which were assessed by NTC on March 27, 1996 as required under
Section 40 (g) of the Public Service Act. Innove, together with other telecommunications
companies, particularly the members of the Telecommunications Operators of the Philippines,
had decided not to pay the assessed permit fees. Innove has retained these provisions pending the
resolution of the ongoing Supreme Court (SC) case on the matter. The expected timing of the
settlement of the permit fees cannot be anticipated pending resolution of these matters.
14. Long-term Debt
This account consists of:
2006 2005 2004
(In Thousand Pesos)
2012 Senior Notes P=14,768,630 P=16,386,579 P=17,387,378
Banks:
Foreign 9,365,119 15,973,138 22,121,664
Local 8,475,367 10,137,664 5,975,162
Corporate notes 3,607,000 4,109,000 3,070,000
Retail bonds 2,990,741 2,983,743 3,000,000
Suppliers’ credits – 103,264 663,747
39,206,857 49,693,388 52,217,951
Less current portion 6,271,601 7,858,150 9,018,650
P=32,935,256 P=41,835,238 P=43,199,301
The maturities of long-term debt at nominal values excluding unamortized debt premium and
issuance costs as of December 31, 2006 follow (in thousand pesos):
Due in:
2007 P=6,475,004
2008 4,823,881
2009 7,409,844
2010 3,586,812
2011 and thereafter 16,548,613
P=38,844,154

- 45 -
The interest rates and maturities of the above loans follow:
Maturities Interest Rates
2012 Senior Notes 2012 9.75%
Banks:
Foreign 2007-2011 4.20% to 8.62% in 2006
2.17% to 12.45% in 2005
1.16% to 6.83% in 2004
Local 2007-2010 6.22% to 11.02% in 2006
7.36% to 11.73% in 2005
2.50% to 11.73% in 2004
Corporate notes 2010-2012 6.22% to 16.09% in 2006
7.36% to 16.00% in 2005
8.40% to 16.00% in 2004
Retail bonds 2007-2009 6.57% to 11.83% in 2006
7.26% to 11.70% in 2005
7.79% to 11.70% in 2004
Suppliers’ credits 2006 4.70% to 6.48% in 2006
4.39% to 6.69% in 2005
2.71% to 6.88% in 2004
Unamortized debt premium and issuance costs included in the following long-term debt as of
December 31, 2006 are as follows (in thousand pesos) (see Note 27):
Premium on 2012 Senior Notes (net of related debt
issuance cost) P=371,961
Unamortized debt issuance costs on retail bonds (9,258)
P=362,703
Senior Notes
Pertinent terms of Globe Telecom’s Senior Notes follow:
2012 Senior Notes
Date of issue April 4, 2002
Maturity April 12, 2012
Interest rate 9.75% p.a.
Interest payments Semi-annual in arrears on April 15 and October 15 of each year. Interest accrues from the
date of original issuance or, if interest has already been paid, from the date it was most
recently paid. Interest is computed on the basis of a 360-day period comprised of twelve
30-day months.
Eligible holders Bondholders of record on April 1 or October 1 immediately preceding each interest
payment date.

- 46 -
Redemption Options
The 2012 Senior Notes are redeemable in whole or in part at the option of Globe Telecom at the
redemption dates set forth below, after giving the required notice under the indenture, and, if at the
time of such notice the Notes are listed on the Luxembourg Stock Exchange, by publishing a
notice in the Luxembourg Wort. The 2012 Senior Notes may be redeemed at the following prices
(for Senior Notes redeemed during the 12-month period commencing on each of the years below,
expressed as percentages of the principal amount), plus accrued and unpaid interest and additional
amounts thereon, if any, to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment date):
Redemption date On or after April 15, 2007
Redemption price 2007 104.875%
2008 103.250%
2009 101.625%
2010 and thereafter 100.000%
On August 22, 2006 and September 1, 2006, Globe Telecom repurchased US$6.46 million in face
value of its 2012 Senior Notes. Bond redemption costs (included in “Financing costs” account)
incurred in 2006 amounted to P=23.24 million.
On January 12, 2007, the Bangko Sentral ng Pilipinas (BSP) approved Globe Telecom’s
application to redeem the 2012 Senior Notes in 2007. Globe Telecom plans to issue a formal call
to the trustee after refinancing has been secured.
Covenants
The 2012 Senior Notes are unsecured obligations, equal in ranking among themselves and with all
of the existing and future unsecured and unsubordinated debt, subject to Article 2244 (14) of the
Civil Code of the Philippines, and senior in right of payment to all future subordinated debt.
Secured debt of Globe Telecom will be effectively senior to the Senior Notes to the extent of the
value of the assets securing such debt and also to the extent any such indebtedness is incurred by a
restricted subsidiary. In addition, under the laws of the Philippines, in the event a borrower
submits to insolvency or liquidation proceedings in which the borrower’s assets are liquidated,
unsecured debt of the borrower that is evidenced by a public instrument as provided in
Article 2244 (14) of the Civil Code of the Philippines will rank ahead of unsecured debt of the
borrower that is not evidenced by a public instrument.
The 2012 Senior Notes provide certain restrictions, which include among others, incurrence of
additional debt, certain dividend payments, liens, repayments of certain debts,
merger/consolidation and sale of assets in general.
Bank Loans and Corporate Notes
Globe Telecom’s unsecured corporate notes, which consist of fixed and floating rate notes and
peso-denominated bank loans, bear interest at stipulated and prevailing market rates. The US
dollar-denominated unsecured loans extended by commercial banks bear interest based on US
Dollar London Interbank Offered Rate (USD LIBOR) or Commercial Interest Reference Rate
(CIRR) plus margins.

- 47 -
The loan agreements with banks and other financial institutions provide for certain restrictions and
requirements with respect to, among others, maintenance of financial ratios and percentage of
ownership of specific shareholders, incurrence of additional long-term indebtedness or guarantees
and creation of property encumbrances.
Retail Bonds
In February 2004, Globe Telecom issued P=3,000.00 million unsecured retail bonds locally with
fixed and floating interest rates based on MART 1 plus margins. The retail bonds have maturities
ranging from 3 to 5 years. The retail bonds may be redeemed in whole, but not in part, at any time,
by giving not less than 30 nor more than 60 days prior notice, at a price equal to 100% of the
principal amount of the bonds, together with accrued and unpaid interest to the date fixed for
redemption, if Globe Telecom will pay additional amounts due to change in tax and/or other
regulations. The agreements covering the retail bonds provide restrictions with respect to, among
others, maintenance of certain financial ratios, sale, transfer, assignment or disposal of assets and
creation of property encumbrances.
Suppliers’ Credits
Unsecured suppliers’ credits accrue interests that are either fixed or based on USD LIBOR plus
margins.
15. Other Long-term Liabilities
This account consists of:
Notes 2006 2005 2004
(In Thousand Pesos)
ARO P=1,316,612 P=907,053 P=769,795
Noninterest bearing liabilities to
an affiliate 16c 1,062,635 1,235,810 2,262,283
Advance lease and service revenues 16c 114,094 137,925 164,209
Accrued lease obligations and others 24 470,331 548,082 473,317
P=2,963,672 2,828,870 3,669,604
Less current portion 93,422 269,737 292,589
Other Long-term liabilities P=2,870,250 P=2,559,133 P=3,377,015
The maturities of other long-term liabilities at nominal amounts as of December 31, 2006 follow
(in thousand pesos):
Due in:
2007 P=93,177
2008 99,400
2009 107,185
2010 115,674
2011 and thereafter 2,548,236
P=2,963,672

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The rollforward analysis of Globe Group’s ARO follows:
Note 2006 2005 2004
(In Thousand Pesos)
At January 1 P=907,053 P=769,795 P=519,309
Capitalized to property and equipment during
the year - net of reversal 29 281,557 44,433 182,363
Accretion expense during the year 128,002 92,825 68,123
At December 31 P=1,316,612 P=907,053 P=769,795
16. Related Party Transactions
Globe Telecom and Innove, in their regular conduct of business, enter into transactions with their
principal shareholders, AC and STI, and certain related parties. These transactions, which are
accounted for at market prices normally charged to unaffiliated customers for similar goods and
services, include the following:
Globe Telecom
(a) Globe Telecom has interconnection agreements with STI. The related net traffic settlements
receivable (included in “Receivables” account in the consolidated balance sheets) and the
interconnection toll income (included in “Service revenues” account in the consolidated
statements of income) earned follow:
2006 2005 2004
(In Thousand Pesos)
Traffic settlements receivable - net P=61,061 P=335,766 P=31,212
Interconnection toll income 1,028,552 1,422,249 1,083,859
(b) Globe Telecom and STI have a technical assistance agreement whereby STI will provide
consultancy and advisory services, including those with respect to the construction and
operation of Globe Telecom’s networks and communication services, equipment procurement
and personnel services. In addition, Globe Telecom has software development, supply, license
and support arrangements, lease of cable facilities, maintenance and restoration costs and other
transactions with STI.
The details of fees (included in repairs and maintenance under “General, selling and
administrative costs and expenses” account in the consolidated statements of income) incurred
under these agreements are as follows:
2006 2005
(In Thousand Pesos)
2004
Lease of cable facilities, maintenance and restoration
costs and other transactions P=240,542 P=266,793 P=137,111
Software development, supply, license and support 29,467 143,450 44,360
Technical assistance fee 78,872 35,652 40,409

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The net outstanding balances due to STI (included in “Accounts payable and accrued expenses”
account in the consolidated balance sheets) arising from these transactions are as follows:
2006 2005
(In Thousand Pesos)
2004
Lease of cable facilities, maintenance and
restoration costs and other transactions
Software development, supply, license and
P=24,203 P=13,738 P=62,675
support 31,004 11,940 21,322
Technical assistance fee 25,606 81,019 8,899
(c) Globe Telecom reimburses AC for certain operating expenses. The net outstanding liabilities
to AC related to these transactions as of December 31, 2006 were not material.
(d) Globe Telecom has preferred roaming service contract with BMPL. Under this contract, Globe
Telecom will pay BMPL for services rendered by the latter which include, among others,
coordination and facilitation of preferred roaming arrangement among JV partners, and
procurement and maintenance of telecommunications equipment necessary for delivery of
seamless roaming experience to customers. Globe Telecom also earns or incurs commission
from BMPL for regional top-up service provided by the JV partners. As of December 31,
2006, balances related to these transactions were not material.
The summary of consolidated outstanding balances resulting from transactions with related parties
follows:
Notes 2006 2005
(In Thousand Pesos)
2004
Traffic settlements receivable - net (included in
“Receivables” account) 4 P=61,061 P=335,766 P=31,212
Other current assets 6 1,651 927 946
Accounts payable and accrued expenses 12 100,413 129,420 122,959
Globe Group’s compensation of key management personnel by benefit type follows:
Note 2006 2005 2004
(In Thousand Pesos)
Short-term employee benefits P=308,039 P=296,191 P=261,174
Share-based payments 18 161,628 161,731 134,769
Post-employment benefits 21,682 32,938 35,667
P=491,349 P=490,860 P=431,610
There are no agreements between Globe Group and any of its directors and key officers providing
for benefits upon termination of employment, except for such benefits to which they may be
entitled under Globe Group’s retirement plans.

17. Equity
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Globe Telecom’s authorized capital stock consists of:
2006 2005 2004
Shares Amount Shares Amount Shares Amount
(In Thousand Pesos and Number of Shares, Except Per Share Figures)
Preferred stock - Series “A” -
P=5 per share 250,000 P=1,250,000 250,000 P=1,250,000 250,000 P=1,250,000
Common stock - P=50 per share 179,934 8,996,719 179,934 8,996,719 200,000 10,000,000
Globe Telecom’s issued and subscribed capital stock consists of:
2006 2005 2004
Shares Amount Shares Amount Shares Amount
(In Thousand Pesos and Number of Shares)
Preferred stock 158,515 P=792,575 158,515 P=792,575 158,515 P=792,575
Common stock 132,080 6,603,989 131,900 6,595,022 151,905 7,595,272
Subscriptions receivable (46,910) (53,856) (64,824)
P=7,349,654 P=7,333,741 P=8,323,023
Preferred Stock
Preferred stock - Series “A” has the following features:
(a) Convertible to one common share after 10 years from issue date at not less than the prevailing
market price of the common stock less the par value of the preferred shares;
(b) Cumulative and nonparticipating;
(c) Floating rate dividend (set at MART 1 plus 2% average for a 12-month period);
(d) Issued at P=5 par;
(e) With voting rights;
(f) Globe Telecom has the right to redeem the preferred shares at par plus accrued dividends at
any time after 5 years from date of issuance; and
(g) Preferences as to dividend in the event of liquidation.
Preferred “A” shares were listed on July 29, 2001 with the PSE.
The dividends for preferred shares are declared upon the sole discretion of the Company’s BOD.
As of December 31, 2006, the Globe Group has no dividends in arrears to its preferred
stockholders.

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Common Stock
The rollforward of outstanding common shares follows:
2006 2005 2004
Shares Amount Shares Amount Shares Amount
(In Thousand Pesos and Number of Shares)
At January 1 131,900 P=6,595,022 139,904 P=6,995,200 139,904* P=6,995,200
Acquisition of treasury shares – – (8,064) (403,211) – –
Exercise of stock options 180 8,967 60 3,033 – –
At December 31 132,080 P=6,603,989 131,900 P=6,595,022 139,904 P=6,995,200
* Net of 12.00 million treasury shares acquired in 2003
Treasury Stock
On February 1, 2005, the BOD approved an offer to purchase one share for every fifteen shares
(1:15) of the outstanding common stock of Globe Telecom from all stockholders of record as of
February 10, 2005 at P=950.00 per share. On March 15, 2005, Globe Telecom acquired
8.06 million shares at a total cost of P=7,675.66 million, including incidental costs.
On April 4, 2005, Globe Telecom’s stockholders approved the cancellation of the 20.06 million
treasury shares consisting of the 12.00 million shares acquired from Deutsche Telekom (DT) in
2003 and the 8.06 million shares acquired during the March 2005 share buyback, and the
amendments of the articles of incorporation of Globe Telecom to reduce accordingly the
authorized capital stock of the corporation from P=11,250.00 million to P=10,246.72 million. The
SEC approved Globe Telecom’s application for the retirement and cancellation of the existing
treasury shares on October 28, 2005. Accordingly, Globe Telecom cancelled the existing treasury
shares at cost. The difference between the par value and cost of treasury stock was charged to
“Additional paid-in capital” and “Retained earnings” accounts amounting to P=5,179.35 million
and P=9,685.80 million, respectively.
Cash Dividends
Information on Globe Group’s BOD declaration of cash dividends follows:
Per share Amount Date Payable
(In Thousand Pesos, Except Per Share Figures)
Preferred stock dividends declared on:
December 15, 2004 P=0.47 P=75,128 March 15, 2005
December 13, 2005 0.43 68,334 March 15, 2006
December 11, 2006
Common stock dividends declared on:
0.41 64,669 March 15, 2007
January 29, 2004 18.00 2,518,270 March 14, 2004
August 2, 2004 18.00 2,518,269 September 15, 2004
February 1, 2005 20.00 2,798,077 March 15, 2005
August 2, 2005 20.00 2,637,940 September 14, 2005
February 7, 2006 20.00 2,638,072 March 15, 2006
July 31, 2006 30.00 3,961,745 September 12, 2006

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On January 29, 2004, the BOD of Globe Telecom approved a dividend policy to declare cash
dividends to its common stockholders on a regular basis as may be determined by the BOD from
time to time. The BOD had set out a dividend payout rate of approximately 50% of prior year’s
net income payable semi-annually in March and September of each year. This will be reviewed
annually, taking into account Globe Group’s operating results, cash flows, debt covenants, capital
expenditure levels and liquidity.
On July 31, 2006, the BOD of Globe Telecom amended the dividend policy increasing the
dividend payout rate at approximately 75% of prior year’s net income to be implemented starting
2006’s second semi-annual cash dividend.
Cash Dividends Declared After Balance Sheet Date
On February 5, 2007, the BOD approved the declaration of the first semi-annual cash dividend in
2007 of P=4,358.63 million (P=33.00 per common share) to common stockholders of record as of
February 19, 2007 payable on March 15, 2007.
Restrictions on Retained Earnings
The retained earnings include the undistributed net earnings of consolidated subsidiaries and the
accumulated equity in net earnings of associates and JV accounted for under the equity method
totaling P=6,431.54 million as of December 31, 2006. This amount is not available for dividend
declaration until received in the form of dividends from subsidiaries, associates and JV. The Globe
Group is also subject to loan covenants that restrict its ability to pay dividends (see Note 14).
18. Employee Benefits
Stock Option Plans
Globe Group has various stock-based compensation plans. The number of shares allocated under
the plans shall not exceed the aggregate equivalent of 6% of the authorized capital stock.
The Employees Stock Ownership Plan (ESOWN) for all regular employees (granted in 1998 and
1999) and the Executive Stock Option Plan 1 (ESOP1) for key senior executives (granted in 1998
and 2000) provide for an initial subscription price for shares covered by each grant equivalent to
85% of the initial offer price. Any subsequent subscription for the ESOP1 shall be for a price
equivalent to 85% of the average closing price for the month prior to the month of eligibility.
These options are settled in equity once exercised. The qualified officers and employees shall pay
for the shares subscribed under the ESOWN and ESOP1 through installments over a maximum
period of 5 years and 10 years, respectively. The shares of stock have a holding period of five
years and the employees must remain with Globe Telecom or its affiliates over such period. The
plans also provide restrictions on sale or assignment of shares for five years from date of
subscription. The number of exercised shares under ESOP1 totaled 1.71 million shares with a
weighted average exercise price of P=196.75 per share. The remaining unexercised stock options
under ESOWN and ESOP1 expired in 2004.

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Following are the additional stock option grants to key executives and senior management
personnel of the Globe Group under Executive Stock Option Plan 2 (ESOP2) from 2003 to 2006:
Date of
Number of
Options Exercise
Grant
Granted
Price Exercise Dates
April 4, 2003 680,200 P=547.00 per share 50% of options
exercisable from April 4, 2005
to April 14, 2013, remaining
50% exercisable from April 4,
2006 to April 4, 2013
July 1, 2004 803,800 P=840.75 per share 50% of options
exercisable from
July 1, 2006 to June 30, 2014,
remaining 50% from July 1,
2007 to June 30, 2014
June 30, 2006 749,500 P=854.74 per share 50% of the options become
exercisable from March 24,
2008 to March 23, 2016,
remaining 50% become
exercisable from March 24,
2009 to March 23, 2016
Fair Value
of each Fair Value
Option Measurement
P=283.11 Black-Scholes
option pricing
model
P=357.94 Black-Scholes
option pricing
model
P=292.12 Trinomial option
pricing model
The exercise price is based on the average quoted market price for the last 20 trading days
preceding the approval date to offer the stock options.
ESOP2 required the grantees to pay a nonrefundable option purchase price of P=1,000.00. In order
to avail of the privilege, the grantees must remain with Globe Telecom or its affiliates from grant
date up to the beginning of the exercise period of the corresponding shares.
A summary of Globe Group’s stock option activity and related information follows (in number of
shares):
2006 2005 2004
Outstanding, at January 1
ESOP2 granted on:
1,281,350 1,450,600 643,782
April 4, 2003 – – 41,000
July 1, 2004 – 8,000 795,800
June 30, 2006 749,500 – –
Exercised (435,810) (149,000) (2,700)
Expired/forfeited/cancelled (4,100) (28,250) (27,282)
Outstanding, at December 31 1,590,940 1,281,350 1,450,600
Exercisable, at December 31 447,540 172,350 –
The weighted average share price of the options amounted to P=647.80 in 2006 and P=547.00 in
2005 and 2004.
The average share price at date of exercise of stock options in 2006, 2005 and 2004 amounted to
P=989.03, P=807.08 and P=909.17, respectively.

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As of December 31, 2006, 2005 and 2004, the weighted average remaining contractual life of
options outstanding is 8.17 years, 8.03 years and 8.94 years, respectively.
The following assumptions were used to determine the fair value of the stock options at effective
grant dates:
June 30, 2006 July 1, 2004 April 4, 2003
Share price P=930.00 P=835.00 P=580.00
Exercise price P=854.75 P=840.75 P=547.00
Expected volatility 29.51% 39.50% 34.64%
Option life 10 years 10 years 10 years
Expected dividends 5.38% 4.31% 2.70%
Risk-free interest rate 10.30% 12.91% 11.46%
The expected volatility measured at the standard deviation of expected share price returns was
based on analysis of share prices for the past 365 days.
Cost of share-based payment in 2006, 2005 and 2004 amounted to P=161.63 million,
P=161.73 million and P=134.77 million, respectively.
Pension Plans
The Globe Group has a funded, noncontributory, defined benefit pension plan covering
substantially all of its regular employees. The benefits are based on years of service and
compensation on the last year of employment. The information below represents the additional
disclosures required under the amendments to PAS 19.
The components of pension expense (included in staff costs under “General, selling and
administrative costs and expenses”) in the consolidated statements of income are as follows:
2006 2005 2004
(In Thousand Pesos)
Current service cost P=92,191 P=93,305 P=98,332
Interest cost on benefit obligation 67,443 81,207 68,752
Expected return on plan assets (108,839) (112,833) (91,790)
Net actuarial loss (gain) (3,732) (2,454) 133
Total pension expense P=47,063 P=59,225 P=75,427
Actual return on plan assets P=191,848 P=80,456 P=97,940
The funded status and amounts recognized under “Other noncurrent assets” for the pension plan of
Globe Telecom and Innove are as follows:
2006 2005 2004
(In Thousand Pesos)
Benefit obligation P=1,267,209 P=648,825 P=603,622
Plan assets (1,255,588) (1,066,441) (1,018,309)
11,621 (417,616) (414,687)
Unrecognized net actuarial gains (loss) (259,058) 153,592 105,461
Asset recognized in the consolidated balance sheets (P=247,437) (P=264,024) (P=309,226)

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The following tables present the changes in the present value of defined benefit obligation and fair
value of plan assets:
Defined benefit obligation
2006 2005 2004
(In Thousand Pesos)
Balance at January 1 P=648,825 P=603,622 P=622,508
Interest cost 67,443 81,207 68,752
Current service cost 92,191 93,305 98,332
Benefits paid (62,354) (69,980) (36,721)
Actuarial (gains) losses 521,104 (59,329) (149,249)
Balance at December 31 P=1,267,209 P=648,825 P=603,622
Fair value of plan assets
2006 2005 2004
(In Thousand Pesos)
Balance at January 1 P=1,066,441 P=1,018,309 P=920,989
Expected return 108,839 112,833 91,790
Contributions 28,907 14,023 28,015
Benefits paid (62,354) (69,980) (36,721)
Actuarial gains (losses) 113,755 (8,744) 14,236
Balance at December 31 P=1,255,588 P=1,066,441 P=1,018,309
The Globe Group does not expect to make any contributions to its defined benefit pension plan in
2007.
The allocation of the fair value of plan assets of Globe Telecom follows:
2006 2005 2004
Investments in debt securities 72.00% 84.00% 84.00%
Investments in equity securities 25.00% 15.00% 13.00%
Others 3.00% 1.00% 3.00%
The allocation of the fair value of plan assets of Innove follows:
2006 2005 2004
Investments in debt securities 74.00% 89.00% 87.00%
Investments in equity securities 17.00% 7.00% 9.00%
Others 9.00% 4.00% 4.00%
As of December 31, 2006, the pension plan assets of Globe Telecom and Innove include shares of
stock of Globe Telecom with total fair value of P=32.76 million, and shares of stock of other related
parties with total fair value of P=84.79 million.

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The assumptions used to determine pension benefits of Globe Telecom and Innove are as follows:
2006 2005 2004
Discount rate 6.25-7.00% 13.75% 13.75%
Expected rate of return on plan assets 10.30% 10.50% 10.50%
Salary rate increase 6.50% 8.50% 8.00%
The overall expected rate of return on plan assets is determined based on the market prices
prevailing on that date, applicable to the period over which the obligation is to be settled.
Amounts for the current and previous three years are as follows:
2006 2005 2004 2003
(In Thousand Pesos)
Defined benefit obligation P=1,267,209 P=648,825 P=603,622 P=622,508
Plan assets (1,255,588) (1,066,441) (1,018,309) (920,989)
Surplus 11,621 (417,616) (414,687) (298,481)
As of December 31, 2006, experience adjustments on plan liabilities amounted to P=72.59 million
loss, while experience adjustments on plan assets amounted to P=102.01 milion gain.
19. Interest Income
Interest income is earned from the following sources:
2006 2005
(In Thousand Pesos)
2004
Short-term placements P=582,497 P=460,986 P=303,868
Cash in banks 131,274 48,074 100,385
Others 1,566 10,588 49,785
P=715,337 P=519,648 P=454,038
20. General, Selling and Administrative
This account consists of:
Notes 2006 2005 2004
(In Thousand Pesos)
Staff costs 18 P=3,564,239 P=3,518,910 P=2,874,338
Selling, advertising and promotions 3,524,546 4,697,406 3,753,134
Repairs and maintenance 16b 2,122,192 1,877,425 1,325,098
Utilities, supplies and other administrative
expenses 2,121,369 1,982,396 1,714,677
Rent 24 2,080,746 1,839,999 1,420,069
Insurance and security services 1,441,091 1,477,739 1,034,835
Professional and other contracted services 1,394,191 1,495,634 1,295,369
Taxes and licenses 756,313 831,629 616,257
Others 1,076,244 1,421,124 1,370,186
P=18,080,931 P=19,142,262 P=15,403,963

21. Financing Costs
This account consists of:
- 57 -
Notes 2006 2005 2004
(In Thousand Pesos)
Interest expense - net of amortization of bond premium P=4,213,976 P=4,657,748 P=4,368,716
Foreign exchange loss (gain) - net 27 (1,706,387) (2,303,327) 213,995
Loss on derivative instruments - net 27 338,061 104,301 –
Swap and other financing costs 14, 27 426,712 681,871 1,744,168
P=3,272,362 P=3,140,593 P=6,326,879
Interest expense is incurred on the following:
Notes 2006 2005 2004
(In Thousand Pesos)
Long-term debt P=3,982,743 4,389,733 4,210,778
Accretion expense 15 228,768 216,437 75,777
Suppliers’ credit 1,993 47,512 75,910
Others 472 4,066 6,251
P=4,213,976 P=4,657,748 P=4,368,716
22. Impairment Losses and Others
This account consists of:
Notes 2006 2005 2004
(In Thousand Pesos)
Impairment losses on:
Receivables 4 P=422,834 P=615,729 P=1,052,222
Property and equipment 7 88,673 925,772 11,726
Inventory obsolescence and market decline (61,392) 80,049 72,388
Other probable losses 84,833 (12,694) (500,889)
P=534,948 P=1,608,856 P=635,447

23. Income Taxes
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The significant components of the deferred income tax assets and liabilities of the Globe Group
represent the deferred income tax effects of the following:
2006 2005
(In Thousand Pesos)
2004
Deferred income tax assets on:
Allowance for impairment losses on receivables
Unearned revenues and advances already
P=954,927 P=1,664,166 P=1,646,573
subjected to income tax 484,780 518,293 1,022,142
ARO 212,967 154,956 121,647
Cost of share-based payments
Accumulated impairment losses on property and
155,520 31,370 99,554
equipment 144,164 223,562 143,744
Provision for other probable losses 94,973 42,984 66,991
Accrued rent expense 91,212 70,328 36,705
Accrued vacation leave
Allowance for inventory obsolescence and
57,591 47,583 9,182
market decline 47,374 101,345 74,034
Deferred charges 14,525 51,868 96,010
Net unrealized foreign exchange losses – 400,440 1,329,102
MCIT – – 255,215
NOLCO – – 32
Deferred income tax liabilities on:
Excess of accumulated depreciation and
amortization of equipment for tax purposes
2,258,033 3,306,895 4,900,931
(a)
over financial reporting purposes (b) Capitalized borrowing costs already claimed
5,077,030 4,815,995 4,542,588
as deduction for tax purposes 1,369,788 1,352,303 1,319,288
Net unrealized foreign exchange gain
Unamortized discount on noninterest bearing
241,894 – –
liability 164,094 194,060 –
Gains on derivative transactions 74,072 136,650 –
Prepaid pension cost 69,291 70,554 100,534
Gain on sale of land – 6,257 –
6,996,169 6,575,819 5,962,410
Net deferred income tax liabilities
(a)
Sum-of-the-years digit method
(b)
Straight-line method
P=4,738,136 P=3,268,924 P=1,061,479
Net deferred tax assets and liabilities presented in the consolidated balance sheets on a net basis
by entity are as follows:
2006 2005 2004
(In Thousand Pesos)
Net deferred tax assets (Innove and GXI) P=801,863 P=1,163,943 P=2,413,253
Net deferred tax liabilities (Globe Telecom) 5,539,999 4,432,867 3,474,732

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The details of Innove and GXI’s NOLCO follows:
Inception Year Amount Application Balance Expiry Year
2003 P=331,315 (P=331,315) P=– 2006
2004 101 – 101 2007
2005 18,176 – 18,176 2008
2006 36,889 – 36,889 2009
P=386,481 (P=331,315) P=55,166
The remaining balance of unexpired NOLCO relates to GXI. GXI has not recognized deferred
income tax assets on its NOLCO.
The reconciliation of the provision for income tax at statutory tax rate and the actual provision for
income tax follows:
2006 2005 2004
(In Thousand Pesos)
Provision at statutory income tax rate P=6,110,708 P=4,609,234 P=4,071,339
Add (deduct) tax effects of:
Effect of tax rate difference arising from the
change in expected timing of deferred tax
assets’/liabilities’ reversal (263,414) (222,142) –
Income subjected to lower tax rates (186,738) (103,462) (124,864)
Equity in net losses of an associate and joint
venture 2,042 4,334 20
Changes in unrecognized deferred tax assets – – (2,058,254)
Additional deferred tax liability on wireline
assets transferred due to different tax rates – – 167,373
Income under income tax holiday – (254,486) (1,074,326)
Unearned revenues under ITH – (365,344) (98,418)
Others 41,894 198,368 443,822
Actual provision for income tax P=5,704,492 P=3,866,502 P=1,326,692
The Globe Group is enfranchised under RA No. 7229 and its related laws to render any and all
types of domestic and international telecommunications services. The Company is entitled to
certain tax and nontax incentives and has availed of incentives for tax and duty-free importation of
capital equipment for its services under its franchise.
RA No. 9337
RA No. 9337 was enacted into law amending various provisions in the existing 1997 National
Internal Revenue Code. Among the reforms introduced by the said RA, which became effective on
November 1, 2005, are as follows:
• Increase in the corporate income tax rate from 32% to 35% with a reduction thereof to 30%
beginning January 1, 2009;
• Increase in VAT rate from 10% to 12% effective February 1, 2006 as authorized by the
Philippine President pursuant to the recommendation of the Secretary of Finance;
• Revised invoicing and reporting requirements for VAT;

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• Expanded scope of transactions subject to VAT;
• Provide thresholds and limitations on the amounts of VAT credits that can be claimed; and
• Increase in unallowable interest rate from 38% to 42% with a reduction thereof to 33%
beginning January 1, 2009.
24. Agreements and Commitments
Lease Commitments
(a) Operating lease commitments - Globe Group as lessee
Globe Telecom and Innove lease certain premises for some of its telecommunications facilities
and equipment and for most of its business centers and cell sites. The operating lease
agreements are for periods ranging from 1 to 10 years from the date of the contracts and are
renewable under certain terms and conditions. The agreements generally require certain
amounts of deposit and advance rentals, which are shown as part of “Other noncurrent assets”
account in the consolidated balance sheets. The Globe Group’s rentals incurred on these leases
(included in “General, selling and administrative costs and expenses” account in the
consolidated statements of income) amounted to P=2,080.75 million, P=1,840.00 million and
P=1,420.07 million in 2006, 2005 and 2004, respectively.
As of December 31, 2006, the future minimum lease payments under this operating lease
follows (in thousand pesos):
Not later than one year P=1,089,123
After one year but not more than five years 3,021,826
After five years 1,272,263
P=5,383,212
(b) Operating lease commitments - Globe Group as lessor
Globe Telecom and Innove have certain lease agreements on equipment and office spaces. The
operating lease agreements are for periods ranging from 1 to 14 years from the date of
contracts. These include Globe Telecom’s lease agreement with C2C (see related discussion
on Agreements with C2C).
Total lease income amounted to P=182.02 million, P=194.01 million and P=200.08 million in
2006, 2005 and 2004, respectively.
The future minimum lease receivables under these operating leases are as follows (in thousand
pesos):
Within one year P=175,051
After one year but not more than five years 700,204
After five years 743,966
P=1,619,221

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Innove entered into a lease agreement covering the lease of office space at the Innove IT Plaza
to a third party. The lease has a remaining term of less than one year renewable under certain
terms and conditions. As of December 31, 2006, the future minimum lease receivables under
this operating lease amounted to P=30.34 million which is due within one year.
(c) Finance lease commitments - Globe Group as lessee
Globe Telecom and Innove have entered into finance lease agreements for various items of
property and equipment. The said leased assets are capitalized and are depreciated over its
estimated useful life of three years, which is also equivalent to the lease term.
As of December 31, 2006, the consolidated present value of the net minimum lease payments
due within a year amounted to P=1.15 million. The present value of the minimum lease
payments under finance leases is included under “Other long-term liabilities” account in the
consolidated balance sheets.
(d) Finance lease commitments - Globe Group as lessor
Innove has existing finance lease arrangements with a lessee for Innove’s office equipment.
As of December 31, 2006, the gross investment and the present value of the net minimum
lease payments receivable included under “Prepayments and other current assets” account in
the consolidated balance sheets are P=2.05 million and P=2.02, respectively. No collections were
received from the lessee as of December 31, 2006.
Agreements and Commitments with Other Carriers
Globe Telecom and Innove have existing correspondence agreements with various foreign
administrations and interconnection agreements with local telecommunications companies for
their various services. Globe and Innove also have international roaming agreements with other
operators in foreign countries, which allow its subscribers access to foreign networks. The
agreements provide for sharing of toll revenues derived from the mutual use of interconnection
facilities.
Arrangements and Commitments with Suppliers
Globe Telecom and Innove have entered into agreements with various suppliers for the delivery,
installation, or construction of their property and equipment. Under the terms of these agreements,
delivery, installation or construction commences only when purchase orders are served. Billings
are based on the progress of the project installation or construction. While the construction is in
progress, project costs are accrued based on the billings received. When the installation or
construction is completed and the property is ready for service (see Note 2), the balance of the
related purchase orders is accrued. The consolidated accrued project costs as of December 31,
2006, 2005 and 2004 included in “Accounts payable and accrued expenses” account in the
consolidated balance sheets amounted to P=4,548.84 million, P=2,444.11 million and
P=3,454.29 million, respectively. As of December 31, 2006, the consolidated expected future
payments amounted to P=2,359.75 million. The settlement of these liabilities is dependent on the
payment terms agreed with the suppliers and contractors.

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Agreements with C2C
In 2001, Globe Telecom signed a cable equipment supply agreement with C2C, a related party of
STI. In March 2002, Globe Telecom entered into an equipment lease agreement for the same
equipment obtained from C2C with GB21 Hong Kong Limited (GB21). Subsequently, GB21, in
consideration of C2C’s agreement to assume all payment obligations pursuant to the lease
agreement, assigned all its rights, obligations and interest in the equipment lease agreement to
C2C. As a result of the said assignment of receivables and payables by GB21 and C2C under the
two agreements, Globe Telecom’s liability arising from the cable equipment supply agreement
with C2C was effectively converted into a noninterest bearing long-term obligation accounted for
at net present value under PAS 39 starting 2005.
Globe Group entered into agreements with C2C for the purchase of IRUs in its network. The
aggregate cost of capacity purchased from C2C amounted to P=1,133.79 million.
In July 2002, Globe Telecom received advance service fees from C2C amounting to US$1.60
million, which will be offset against its share in the operations and maintenance costs of the cable
landing facilities of Globe Telecom. Also, in January 2003, Globe Telecom received advance lease
payments from C2C for its use of a portion of Globe Telecom’s cable landing station facilities
amounting to US$4.11 million.
The parties have agreed on a lease amortization schedule and application of a portion of the
advance service fees for C2C’s share in the operations and maintenance costs of the cable landing
facilities. Accordingly, Globe Telecom recognized lease income amounting to P=13.97 million,
P=15.06 million and P=16.32 million in 2006, 2005 and 2004, respectively. Globe Telecom also
recognized service fees amounting to P=2.33 million and P=43.76 million in 2005 and 2004,
respectively.
As of December 31, 2005 and 2004, C2C was still a related party of Globe Group until the transfer
of its shares to C2C Group Limited on August 7, 2006 (see Note 11). As of December 31, 2006,
C2C ceased to be a related party.
The current and noncurrent portions of the said advances shown as part of “Other long-term
liabilities” account in the consolidated balance sheets follow:
2006 2005 2004
(In Thousand Pesos)
Current P=13,389 P=14,759 P=17,760
Noncurrent 100,705 123,166 146,449
P=114,094 P=137,925 P=164,209

25. Contingencies
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Globe Telecom and Innove are contingently liable for various claims arising in the ordinary
conduct of business and certain tax assessments which are either pending decision by the courts or
are being contested, the outcome of which are not presently determinable. In the opinion of
management and legal counsel, the eventual liability under these claims, if any, will not have a
material or adverse effect on the Globe Group’s financial position and results of operations. There
are no new material legal claims and no developments on previously disclosed legal cases for the
year.
NTC Memorandum Circular No. 13-6-2000
Globe Telecom is an intervenor in and Innove (formerly Isla Communications Co., Inc.) is a party
to Civil Case No. Q-00-42221 entitled “Isla Communications Co., Inc. et. al. versus NTC, et. al.”
before the Regional Trial Court (RTC) of Quezon City by virtue of which Globe Telecom and
Innove together with other cellular operators, sought and obtained a preliminary injunction against
the implementation of NTC Memorandum Circular No. 13-6-2000. NTC Memorandum Circular
No. 13-6-2000 sought, among others, to extend the expiration of prepaid call cards to two years.
The NTC appealed the grant of the injunction to the Court of Appeals (CA) which subsequently
dismissed the case before the RTC for lack of jurisdiction. The SC subsequently reversed the
decision of the CA and declared the RTC as having jurisdiction over the case. The SC remanded
the case to the RTC for further hearing. As of February 5, 2007, Globe Telecom is still awaiting
the resumption of proceedings before the RTC.
In the event, however, that Globe Telecom and Innove are not eventually sustained in their
position and NTC Memorandum Circular No. 13-6-2000 is implemented in its current form, the
Globe Group would probably incur additional costs for carrying and maintaining prepaid
subscribers in their networks.
NTC Administrative Case No. 2005-18
On February 11, 2005, Innove filed a case against Digitel Mobile Philippines, Inc. (Digitel) for
predatory pricing and violation of NTC Memorandum Circular No. 07-06-2002 on service
performance standards. The case has been consolidated with NTC Administrative Case
No. 2005-18 entitled PILTEL vs. Digitel. A hearing was conducted on April 5, 2005 and NTC was
requested to conduct a drive test measurement on Digitel’s performance which will be witnessed
by NTC and signed-off by representatives of the parties involved. This is pending resolution by
the NTC. During the April 26, 2005 hearing, Digitel manifested that it will no longer present
evidence. On August 3, 2005, the NTC issued an order that states that carriers are free to provide
whatever service quality they wanted on innovative price plans for so long as they advertised their
service quality. Certain service quality improvements and minimum standards should, however, be
provided over time. The order is not yet final and Innove is still considering its options to deal
with the said order.

26. Earnings Per Share
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Globe Group’s earnings per share amounts were computed as follows:
2006 2005 2004
(In Thousand Pesos and Number of Shares,
Except Per Share Figures)
Net income attributable to common shareholders for
basic earnings per share P=11,690,004 P=10,246,174 P=11,321,114
Add dividends on preferred shares
Net income attributable to common shareholders for
64,669 68,334 75,128
diluted earnings per share
Weighted average number of shares for basic
11,754,673 10,314,508 11,396,242
earnings per share
Dilutive shares arising from:
131,998 133,520 139,904
Convertible preferred shares 800 982 872
Stock options
Adjusted weighted average number of common
301 146 297
stock for diluted earnings per share 133,099 134,648 141,073
Basic earnings per share P=88.56 P=76.74 P=80.92
Diluted earnings per share P=88.32 P=76.60 P=80.78
27. Financial Instruments
Financial Risk Management Objectives and Policies
The main purpose of the Globe Group’s financial instruments is to fund its operations and capital
expenditures. The main risks arising from the use of financial instruments are liquidity risk,
foreign currency risk, interest rate risk, and credit risk. Globe Telecom also enters into derivative
transactions, the purpose of which is to manage the currency and interest rate risk arising from its
financial instruments.
The BOD reviews and approves the policies for managing each of these risks. The Globe Group
monitors market price risk arising from all financial instruments and regularly reports financial
management activities and the results of these activities to the BOD.
The Globe Group’s risk management policies are summarized below:
Interest Rate Risk
The Globe Group’s exposure to market risk for changes in interest rates relates primarily to the
companies’ long-term debt obligations.
Globe Telecom’s policy is to manage its interest cost using a mix of fixed and variable rate debt.
Globe Telecom’s policy has been revised, to target a ratio of between 31-62% fixed rate USD debt
to total USD debt, and between 44-88% fixed rate PHP debt to total PHP debt. To manage this
mix in a cost-efficient manner, the Globe Group enters into interest rate swaps, in which the Globe
Group agrees to exchange, at specified intervals, the difference between fixed and variable interest
amounts calculated by reference to an agreed-upon notional principal amount.

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As of December 31, 2006, after taking into account the effect of currency and interest rate swaps,
74% of the Globe Group’s peso borrowings are at a fixed rate of interest, while 66% of the Globe
Group’s USD borrowings are at a fixed rate of interest.
Foreign Exchange Risk
The Globe Group’s foreign exchange risk results primarily from movements of the Philippine
Peso (PHP) against the United States Dollar (USD) with respect to USD-denominated financial
assets (such as cash and cash equivalents and short-term investments) and USD-denominated
financial liabilities. Majority of revenues are generated in PHP, while substantially all of capital
expenditures are in USD. In addition, 62% of debt as of December 31, 2006 was denominated in
USD.
The Globe Group recently revised its foreign exchange risk management policy to hedge its
foreign currency denominated debt such that it maintains a fully hedged balance sheet position,
after taking into account expected USD cash, USD swaps and expected USD revenues. Globe
Telecom enters into short-term foreign currency forwards and long-term foreign currency swap
contracts in order to achieve this target. As of December 31, 2006, the amount of USD debt that
has been swapped to PHP and PHP-denominated loans amounted to approximately 59% of the
total debt.
Credit Risk
Applications for postpaid service are subjected to standard credit evaluation and verification
procedures. The Credit Management unit of Globe Group continuously reviews credit policies and
processes and implements various credit actions, depending on assessed risks, to minimize credit
exposure. Receivable balances of postpaid subscribers are being monitored on a regular basis and
appropriate credit treatments are applied at various stages of delinquency. Likewise, net receivable
balances from carriers of traffic are also being monitored and subjected to appropriate actions to
manage credit risk.
With respect to credit risk arising from the other financial assets of the Globe Group, which
comprise cash and cash equivalents, available-for-sale financial assets and certain derivative
instruments, the Globe Group’s exposure to credit risk arises from default of the counterparty,
with a maximum exposure equal to the carrying amount of these instruments. The Globe Group
has a counterparty credit risk management policy which allocates investment limits based on
counterparty credit ratings and credit risk profile.
Liquidity Risk
The Globe Group seeks to manage its liquidity profile to be able to finance capital expenditures
and service maturing debts. To cover its financing requirements, the Globe Group intends to use
internally generated funds and available long-term and short-term credit facilities. As of
December 31, 2006, Globe Group has available uncommitted short-term credit facilities of
US$35.00 million and P=5,200.00 million. The Globe Group also has P=5,800.00 million in
committed long term facilities which remain undrawn.

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As part of its liquidity risk management, Globe Group regularly evaluates its projected and actual
cash flows. It also continuously assesses conditions in the financial markets for opportunities to
pursue fund raising activities, in case any requirements arise. Fund raising activities may include
bank loans, export credit agency facilities and capital market issues.
Hedging Objectives and Policies
The Globe Group uses a combination of natural hedges and derivative hedging to manage its
foreign exchange exposure. It uses interest rate derivatives to reduce earnings volatility related to
interest rate movements.
It is the Globe Group’s policy to ensure that capabilities exist for active but conservative
management of its foreign exchange and interest rate risks. The Globe Group does not engage in
any speculative derivative transaction. Authorized derivative instruments include currency
forward contracts (freestanding and embedded), currency swap contracts, interest rate swap
contracts and currency option contracts (freestanding and embedded). Certain currency swaps are
entered with option combination or structured provisions.
Financial Assets and Liabilities
Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of each class of
financial instrument for which it is practicable to estimate such value:
Non-derivative Financial Instruments
The fair values of cash and cash equivalents, AFS investments, short-term investments,
subscribers receivables, traffic settlements receivable, accounts payable and accrued expenses are
approximately equal to their carrying amounts considering that these accounts are currently due
and realizable.
The fair value of AFS investments are based on quoted prices. Unquoted AFS equity securities are
carried at cost, subject to impairment.
The fair value of Globe Telecom’s outstanding Senior Notes due 2012 is based on the quoted
market price of the Notes. The price of the Notes (after bifurcating the value of the embedded
prepayment option) is 115.90%, with an effective interest rate of 6.18%. The fair value of other
fixed rate interest bearing loans is based on the discounted value of future cash flows using the
applicable rates for similar types of loans. The discount rates used range from 5.16% to 6.21% (for
PHP loans) and 5.64% (for USD loans).
For variable rate loans that reprice every three months, the carrying value approximates the fair
value because of recent and regular repricing based on current market rates. For variable rate loans
that reprice every six months, the fair value is determined by discounting the principal amount
plus the next interest payment using the prevailing market rate for the period up to the next
repricing date. The discount rates used range from 4.83% to 5.36% (for USD loans). The variable
rate PHP loans reprice every three months. For noninterest bearing obligations, the fair value is
estimated as the present value of all future cash flows discounted using the prevailing market rate
of interest for a similar instrument.

- 67 -
Derivative Instruments
The fair value of forward exchange contracts is calculated by reference to current forward
exchange rates for contracts with similar maturity profiles.
The fair value of embedded foreign exchange derivatives in notes that have been purchased by the
Globe Group is calculated by reference to the current price of the note and the change in the
foreign exchange rate that is linked to the note.
The fair values of interest rate swaps, currency and cross currency swap transactions are
determined using valuation techniques with assumptions that are based on market conditions
existing at balance sheet date. The fair value of interest rate swap transactions is the net present
value of the estimated future cash flows. The fair values of currency and cross currency swap
transactions are determined based on changes in the term structure of interest rates of each
currency and the spot rate. The fair values of structured swaps transactions are determined based
on quotes obtained from counterparty banks.
Embedded currency options and forwards in non-financial contracts are valued using the simple
option pricing model of Bloomberg. The embedded call option on the 2012 Senior Notes is also
valued using Bloomberg models.
The table below presents a comparison by category of carrying amounts and estimated fair values
of all the Globe Group’s financial instruments:
2006
Carrying Value Fair Value
(In Thousand Pesos)
Financial assets:
Cash and cash equivalents P=7,505,715 P=7,505,715
Receivables - net 5,527,905 5,527,905
Derivative assets (including current portion) 1,626,667 1,626,667
AFS investments 293,614 293,614
HTM investments 857,563 857,825
Short-term investments
Financial liabilities:
6,155,349 6,155,349
Accounts payable and accrued expenses
Derivative liabilities (including current
16,485,265 16,485,265
portion) 1,086,123 1,086,123
Long-term debt (including current portion)
Other long-term liabilities (including current
39,206,857 40,758,312
portion) 1,532,966 1,561,973

- 68 -
2005
Carrying Value Fair Value
(In Thousand Pesos)
Financial assets:
Cash and cash equivalents P=10,910,961 P=10,910,961
Receivables - net 6,764,130 6,764,130
Derivative assets (including current portion) 1,548,891 1,548,891
AFS investments 1,220,318 1,220,318
HTM investments
Financial liabilities:
33,441 33,404
Accounts payable and accrued expenses 13,972,222 13,972,222
Derivative liabilities (including current portion) 731,746 731,746
Long-term debt (including current portion)
Other long-term liabilities (including current
49,693,388 53,550,632
portion) 1,783,892 2,219,844
The fair value of HTM investments is calculated by reference to current forward exchange rates
for contracts with similar maturity profiles.
Traffic settlements receivable account included as part of the “Receivables – net” account and
traffic settlements payable account, included as part of “Accounts payable and accrued expenses”
accounts in the above table, are presented net of any related payable or receivable balances with
the same telecommunications carriers only when there is a legal right of offset under the traffic
settlement agreements and that the accounts are settled on a net basis.
Derivative Financial Instruments
Globe Group’s freestanding and embedded derivative financial instruments are accounted for as
hedges or transactions not designated as hedges. The table below sets out the information about
Globe Group’s derivative financial instruments and the related fair value:
2006
Notional Notional Derivative Derivative
Amount Amount
(In Thousands)
Assets Liabilities
Derivative instruments designated as
hedges:
Cash flow hedges:
Currency and cross currency
swaps $55,807 P=– P=– P=574,654
Interest rate swaps
Derivative instruments not
designated as hedges:
12,098 – 8,644 –
(Forward)

Notional
Amount
- 69 -
Notional
Amount
Derivative
Assets
Derivative
Liabilities
Freestanding:
Currency swaps and cross
currency swaps P=73,742 P=– P=– P=402,365
Nondeliverable forwards 74,000 – 23,526 66,633
Interest rate swaps 17,000 2,000,000 139,178 17,705
Sold currency call options
(including premiums
receivable) 3,000 – – –
Embedded:
Call option on 2012 Senior Notes* 293,540 – 1,425,270 –
Embedded forwards 6,416 – 30,029 24,766
Embedded options 898 – 20 –
Net P=1,626,667 P=1,086,123
* The call option on the 2012 Senior Notes are classified as current derivative assets as the option to redeem in whole or in part starts on or after
April 15, 2007 (see Note 14).
2005
Notional Notional Derivative Derivative
Amount Amount
(In Thousands)
Assets Liabilities
Derivative instruments designated as
hedges:
Cash flow hedges:
Currency and cross currency
swaps $91,944 P=– P=16,657 P=431,320
Interest rate swaps
Derivative instruments not
designated as hedges:
Freestanding:
Currency swaps and cross
56,162 – 57,491 –
currency swaps 83,061 – 19,863 249,007
Interest rate swaps
Sold currency call options
(including premiums
5,000 1,000,000 69,112 18,763
receivable)
Embedded:
27,700 – 15,013 2,330
Call option on 2012 Senior Notes 300,000 – 1,268,712 –
Embedded forwards 11,720 – 101,808 30,326
Embedded options 1,080 – 235 –
Net P=1,548,891 P=731,746
The subsequent sections will discuss Globe Group’s derivative financial instruments according to
the type of financial risk being managed and the details of derivative financial instruments that are
categorized into those accounted for as hedges and those that are not designated as hedges.

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Foreign exchange and interest rate risks
Information on Globe Group’s foreign currency-denominated monetary assets and liabilities and
their Philippine peso equivalents are as follows:
2006 2005 2004
US Peso
US Peso US
Dollar Equivalent Dollar Equivalent Dollar
(In Thousands)
Peso
Equivalent
Assets
Cash and cash equivalents $140,518 P=6,891,688 $78,901 P=4,186,627 $173,563 P=9,778,713
Short-term investments – – – – 9,574 539,409
Receivables 53,849 2,641,048 50,162 2,661,691 38,516 2,170,045
Other current assets 750 36,774 5,238 277,948 2,490 140,289
Liabilities
Accounts payable and accrued
195,117 9,569,510 134,301 7,126,266 224,143 12,628,456
expenses 88,118 4,321,763 53,534 2,840,690 70,964 3,998,197
Long-term debt 492,199 24,139,882 611,487 32,446,723 713,258 40,185,669
Other long-term liabilities 23,679 1,161,337 25,889 1,373,734 48,197 2,715,467
Net foreign currency-denominated
603,996 29,622,982 690,910 36,661,147 832,419 46,899,333
liabilities $408,879 P=20,053,472 $556,609 P=29,534,881 $608,276 P=34,270,877

2006
- 71 -
The following table shows information about the Globe Group’s financial instruments that are exposed to interest rate risk and presented by
maturity profile. The table also sets out information about the Globe Group’s derivative instruments that were entered into to manage interest
and foreign exchange risks (in thousands).
1-2-3-4-5 years
Total
(In USD)
Total
(in PHP)
Premium and
Issuance Carrying Value
Costs (In PHP)
Fair Value
(in PHP)
Liabilities:
Long-term debt
Fixed rate
USD notes $18,383 $11,116 $6,140 $– $– $293,540 $329,179 P=16,144,584 P=371,961 P=16,516,545 P=18,829,694
Interest rate 6.55% 6.44% 6.44% – – 10.83%
Philippine peso P=1,306,400 P=2,249,800 P=4,700,000 P=– P=520,000 P=1,087,000 – 9,863,200 (9,258) 9,853,942 11,488,488
Interest rate
Floating rate
10.18%-10.47% 10.18%-10.47% 10.47%-11.70% 0.00% 16% 13.79%
USD notes $69,902 $28,254 $23,822 $22,222 $11,111 $– 155,311 7,617,204 – 7,617,204 5,220,964
Interest rate Libor+.45% Libor + 3.20% Libor+1.20% Libor + .85% Libor +.85%
Libor+1% Libor+1.75% Libor + .85%
Libor+1.20% Libor+1.20%
Libor+1.375%
Libor+2%
Libor+2.05%
Libor+3.2%
Libor only; Libor
+ .85%
Libor + .85%
Philippine peso P=797,447 P=684,423 P=1,240,373 P=2,496,923 5,219,166 – 5,219,166 5,219,166
Interest rate Mart 1 + 1.3%
margin;
Mart 1 + 1%
margin
(Forward)
Mart 1 + 1.3%
margin;
Mart 1 + 1%
margin
Mart 1 + 1.3%
margin;
Mart 1 + 1%
margin
Mart 1 + 1%
3 mo Mart +
1.30%
3 mo Mart1 +
1.75%
Mart 1 + 1%
margin
P=38,844,154 P=362,703 P=39,206,857 P=40,758,312

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1-2-3-4-5 years
Total
(In USD)
Derivatives:
Currency Swaps:
Notional amount $13,879 $10,000 $10,000 $5,000 $15,000 $65,000 $118,879
Weighted swap rate P=53.524
Pay fixed rate
Cross-Currency Swaps:
Floating-Fixed
4.62%-10.25%
Notional amount $6,094 $417 – – – – $6,511
Pay-fixed rate 11% - 15.23%
Receive-floating rate USD Libor
Weighted swap rate
Floating-Floating
P=51.520
Notional amount $3,742 $417 – – – – $4,159
Pay-floating rate Mart + 1.25% -
1.90%
Receive-floating rate USD Libor
Weighted swap rate
Interest Rate Swaps
Fixed-Floating
P=51.028
Notional Peso – – P=1,000,000 – – – $20,389
Notional USD – – – – – $5,000 $5,000
Pay-floating rate Libor+ 4.23%-
Mart+1.375%
Receive-fixed rate
Floating- Fixed
9.75%-11.7%
Notional Peso – – P=1,000,000 – – – $20,389
Notional USD $24,098 – – – – – $24,098
Pay-fixed rate USD 2.3% -
7.1%
Receive-floating Rate USD Libor
Mart+1.375%

2005
- 73 -
1-2-3-4-5 years
Total
(In USD)
Total
(in PHP)
Premium and Carrying Value
Issuance Costs (In PHP)
Fair Value
(in PHP)
Liabilities:
Long-term debt
Fixed rate
USD notes $20,329 $18,383 $11,116 $6,140 $– $300,000 $355,968 P=18,888,369 P=467,979 P=19,356,348 P=21,870,614
Interest rate 4.81% -6.55% 4.81% -6.55% 6.44% 6.44% – 10.83%
Philippine peso P=876,400 P=1,347,650 P=2,208,550 P=5,002,000 P=– P=1,607,000 – 11,041,600 (16,256) 11,025,344 12,201,003
Interest rate
Floating rate
10.37% - 10.72% 10.37% - 10.72% 10.37% - 10.72% 10.47% - 13.79% – 13.49% - 16%
USD notes $91,695 $69,902 $28,254 $23,822 $22,222 $11,111 $247,006 13,106,632 − 13,106,632 13,273,951
Interest rate Libor only; Libor Libor only; Libor Libor + .6755% - Libor +1.20% - Libor +1.63% Libor +1.63%
+ .45% - Libor + + .45% - Libor + Libor +1.63% Libor + 1.63%
3.20%
3.20%
Philippine peso P=985,898 P=797,447 P=684,423 P=1,240,373 P=2,496,923 P=– P=– 6,205,064 − 6,205,064 6,205,064
Interest rate Mart 1 + 1.3%
margin;
Mart 1 + 1.5%
margin;
Mart 1 + 1%
margin
3 mo Mart + 1%
margin
3 mo Mart +
1.38% margin
(Forward)
Mart 1 + 1.3%
margin;
Mart 1 + 1.5%
margin;
Mart 1 + 1%
margin
3 mo Mart + 1%
margin
3 mo Mart +
1.38% margin
Mart 1 + 1.3%
margin;
Mart 1 + 1.5%
margin;
Mart 1 + 1%
margin
Mart 1 + 1%
3 mo Mart +
1.375%
3 mo Mart + 1%
3 mo Mart1 +
1.75%
Mart 1 + 1%
margin
P=49,241,665 P=451,723 P=49,693,388 P=53,550,632

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1-2-3-4-5 years
Total
(In USD)
Derivatives:
Currency Swaps:
Notional amount $21,548 $13,880 $10,000 $10,000 $5,000 $80,000 $140,428
Weighted swap rate P=53.16
Pay fixed rate
Cross-Currency Swaps:
Floating-Fixed
4.62% - 10.25%
Notional amount $13,755 $6,094 $417 – – – $20,266
Pay-fixed rate 11% - 15.23%
Receive-floating rate USD Libor
Weighted swap rate
Floating-Floating
P=51.64
Notional amount $10,152 $3,742 $417 – – – $14,311
Pay-floating rate Mart + 1.25% -
2.85%
Receive-floating rate USD Libor
Weighted swap rate
Interest Rate Swaps
Fixed-Floating
P=51.34
Notional Peso – – – P=1,000,000 – – $18,846
Notional USD – – – – – $5,000 $5,000
Pay-floating rate Libor+ 4.23%-
Mart+1.375%
Receive-fixed rate
Floating- Fixed
9.75% - 11.7%
Notional USD $32,065 $24,098 – – – – $56,163
Pay-fixed rate USD 2.3% - 4.2%
Receive-floating Rate USD Libor
Globe Group’s other financial instruments that are exposed to interest rate risk are cash and cash
equivalents, AFS investments and HTM investments. These mature in less than a year and are
subject to market interest rates.
Derivative Instruments Accounted for as Hedges
The following sections discuss in detail the derivative instruments accounted for as cash flow
hedges.
• Currency and Cross-Currency Swaps
As of December 31, 2006, Globe Telecom has outstanding US$6.51 million foreign currency
swap agreements with certain banks, under which it effectively swaps the principal of certain
USD-denominated loan exposures into fixed PHP-denominated loan exposures with semiannual
payment intervals up to 2008.
Globe Telecom also has outstanding foreign currency swap agreements with certain banks,
under which it effectively swaps the principal of US$49.30 million loans into PHP up to April
2012. Under these contracts, swap costs are payable in semi-annual intervals in PHP or USD.

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As of December 31, 2006, the fair value of the outstanding swap amounted to P=574.65 million
loss of which P=185.62 million (net of tax) is reported as “Cumulative translation adjustment”
in the equity section of the consolidated balance sheets.
Notional Notional
Swap
amount amount
(In Thousands)
Maturities rates
Floating-fixed cross-currency swaps $6,511 P=335,438 2007 – 2008 51.520
Principal-only swaps 49,296 2,709,494 2007 – 2012 54.963
• Interest Rate Swaps
As of December 31, 2006, Globe Telecom has US$12.10 million in notional amount of interest
rate swap that has been designated as cash flow hedge. The interest rate swap effectively fixed
the benchmark rate of the hedged loan at 2.305% to 4.205% over the duration of the agreement,
which involves semi-annual payment intervals up to August 2007.
As of December 31, 2006, the fair value of the outstanding swap amounted to P=8.64 million
gain, of which P=12.07 million (net of tax) is reported as “Cumulative translation adjustment” in
the equity section of the consolidated balance sheets. Accumulated swap income for the period
ended December 31, 2006 amounted to P=18.31 million.
Other Derivative Instruments not Designated as Hedges
Globe Telecom enters into certain derivatives as economic hedges of certain underlying
exposures. Such derivatives, which include embedded and freestanding currency forwards,
embedded call options, and certain currency swaps with option combination or structured
provisions, are not designated as accounting hedges. The gains or losses on these instruments are
accounted for directly to the consolidated statements of income. This section consists of
freestanding derivatives and embedded derivatives found in both financial and nonfinancial
contracts.
Freestanding Derivatives
Freestanding derivatives that are not designated as hedges consist of currency forwards, options,
swaps and interest rate swaps entered into by Globe Telecom. Fair value changes on these
instruments are accounted for directly in the consolidated statements of income.
• Currency Swaps and Cross-Currency Swaps
Globe Telecom also has outstanding foreign currency swap agreements with certain banks,
under which it swaps the principal of US$69.58 million USD-denominated loans into PHP up
to April 2012. Under these contracts, swap costs are payable in semi-annual intervals in PHP
or USD. Of the US$69.58 million, US$2.08 million is in combination with sold out-of-themoney
USD call options with a strike price of P=62.50, while another US$20.00 million
provides Globe Telecom the option to reset lower to a certain minimum the foreign exchange
rate used to determine PHP equivalent amounts to be net settled by Globe Telecom upon
maturity or termination. The reset option has been exercised.

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Globe Telecom also entered into cross-currency swap agreements with certain banks, under
which it swaps the principal and interest of certain USD-denominated loans into Philippine
peso with quarterly or semi-annual payment intervals up to June 2008. As of December 31,
2006, the total outstanding notional amounts of the cross-currency swaps amounted to
US$4.16 million.
The fair values of the outstanding currency and cross-currency swaps as of December 31,
2006 amounted to a loss of P=402.37 million.
• Nondeliverable Forwards
Globe Telecom entered into short-term nondeliverable currency forward contracts to fix the
peso cash flows from coupon and redemption of certain Dollar-Linked Peso Note (DLPN)
issued by the Republic of the Philippines (ROP). These currency forward contracts with a
notional amount of US$74 million will mature in April 2007. The unrealized loss amounted to
P=43.11 million.
• Interest Rate Swaps
Globe Telecom has an outstanding interest rate swap contract which swaps certain floating
rate USD-denominated loans into fixed rate with semi-annual payment, intervals up to
August 2007. The swap has an outstanding notional amount of US$12.00 million as of
December 31, 2006. The Company also has an outstanding interest rate swap with a notional
amount of US$5.00 million under which it effectively swapped the 9.75% coupon on its
outstanding 2012 Senior Notes into a floating rate of interest based on LIBOR. The swap has a
constant maturity swap (CMS) component that is intended to reduce swap costs. The interest
rate on one leg of the CMS is being reset periodically subject to a cap, while the interest rate
on the fixed leg of the swap is subject to a daily range accrual that is linked to the difference
between the 30-year and 10-year USD swap rates.
Globe Telecom also has an outstanding interest rate swap contract with a notional amount of
P=1,000.00 million, which effectively swaps a fixed rate PHP-denominated bond into floating
rate, with quarterly payment intervals up to February 2009.
Globe Telecom also has outstanding interest rate swap contracts which were entered into to
subsidize the cost of the outstanding currency swap contracts. The total notional amounts of
these interest rate swaps amounted to P=1,000.00 million, with quarterly payment intervals up
to February 2009.
The fair value of the interest rate swaps as of December 31, 2006 amounted to a net
mark-to-market gain of P=139.18 million and losses of P=17.71 million.

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• Sold Currency Options
As of December 31, 2006, Globe Telecom has a sold currency option with an outstanding
notional amount of US$3.00 million at an average strike price of P=61.25/USD maturing up to
March 2007. This was entered into to subsidize the cost of outstanding currency swap
contracts. The currency option has a zero fair value as of December 31, 2006.
Embedded Derivatives and Other Financial Instruments
Globe Group’s embedded derivatives include embedded currency derivatives noted in both
financial and nonfinancial contracts and embedded call options in debt instruments.
• Embedded Call Option
Globe Telecom’s 2012 Senior Notes contain embedded call options which give Globe
Telecom the right to prepay the notes at a certain call price per year. As of December 31,
2006, the embedded call options have a notional amount of US$293.54 million and
fair value of P=1,425.27 million.
• Embedded Currency Forwards
As of December 31, 2006, the total outstanding notional amount of currency forwards
embedded in nonfinancial contracts amounted to US$6.42 million. The nonfinancial
contracts consist mainly of foreign-currency denominated purchase orders with various
expected delivery dates. The fair value of the embedded currency forwards as of
December 31, 2006 on the embedded currency forwards amounted to P=5.26 million.
• Embedded Currency Options
As of December 31, 2006, the total outstanding notional amount of currency options
embedded in nonfinancial contracts amounted to US$0.90 million. The fair value of the
embedded currency options as of December 31, 2006 on the embedded currency options
amounted to P=.02 million.
Fair Value Changes on Derivatives
The net movements in fair value changes of all derivative instruments are as follows:
2006 2005
Balances at January 1 P=817,145 P=1,266,411
Net changes in fair value of derivatives:
Designated as accounting hedges (254,589) (429,336)
Not designated as accounting hedges 45,462 27,006
608,018 864,081
Less fair value of settled instruments 67,474 46,936
Balances at December 31 P=540,544 P=817,145

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Hedge Effectiveness Results
As of December 31, 2006, the effective fair value changes on Globe Telecom’s cash flow hedges
that were deferred in equity amounted to P=197.69 million, net of tax. Total ineffectiveness
recognized immediately in the consolidated statements of income for the period then ended
amounted to P=1.72 million.
The distinction of the results of hedge accounting into “Effective” or “Ineffective” represents
designations based on PAS 39 and are not necessarily reflective of the economic effectiveness of
the instruments.
28. Segment Reporting
The Globe Group’s reportable segments consist of:
Wireless Communications Services - represents cellular telecommunications services that allow
subscribers to make and receive local, domestic long distance and international long distance and
roaming calls to and from any place within the coverage area. Revenues principally consist of onetime
registration fees, fixed monthly service fees for postpaid, subscription fees for prepaid,
revenues from value-added services such as text messaging and content downloads, proceeds from
sale of handsets and other phone accessories, one-time allocation of upfront fees for the excess of
selling price of SIM packs over the preloaded airtime and per minute airtime and toll fees for basic
services which vary based primarily on the monthly volume of calls and the network on which the
call terminates.
Wireline Communications Services - represents fixed line telecommunications services which
offer subscribers local, domestic long distance and international long distance services in addition
to a number of value-added services in various service areas covered by the PA and Franchise
granted by the NTC. Revenues consist principally of fixed monthly basic fee for service and
equipment, one-time fixed line service connection fee, value-added service charges, and toll fees
for domestic and international long distance traffic usage for voice and data services and internet
subscription fees of wireline subscribers. This also includes a variety of telecommunications
services tailored to meet the specific needs of corporate communications such as leased lines, Very
Small Aperture Terminal (VSAT), international packet-switching services, broadband, and
internet services.

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The Globe Group’s segment information follows (in thousands):
2006
Wireless Wireline
Communications Communications
Services Services Eliminations Consolidated
Service revenues P=50,671,825 P=6,361,794 P=– 57,033,619
Nonservice revenues 2,888,850 26,539 – 2,915,389
Intersegment revenues 385,475 117,467 (502,942) –
Interest income 611,271 104,066 – 715,337
Other income - net 1,173,530 3,492 (731,839) 445,183
Total revenue 55,730,951 6,613,358 (1,234,781) 61,109,528
General, selling and administrative (15,653,285) (3,670,489) 1,242,843 (18,080,931)
Depreciation and amortization (14,211,642) (2,574,042) (351,869) (17,137,553)
Cost of sales (4,535,197) (84,479) 941 (4,618,735)
Financing costs (3,180,896) (91,466) – (3,272,362)
Impairment losses and others (243,778) (291,170) – (534,948)
Equity in net earnings of an associate and
a joint venture (5,834) – – (5,834)
Income (loss) before income tax 17,900,319 (98,288) (342,866) 17,459,165
Provision for (benefit from) income tax (5,737,483) 32,991 – (5,704,492)
Net income
Other segment information
P=12,162,836 (P=65,297) (P=342,866) P=11,754,673
Capital expenditure P=12,598,828 P=2,281,624 P=– P=14,880,452
2005
Wireless Wireline
Communications Communications
Services Services Eliminations Consolidated
Service revenues P= 48,481,323 P= 6,415,490 P=– 54,896,813
Nonservice revenues 3,747,553 103,235 – 3,850,788
Intersegment revenues 645,090 361,265 (1,006,355) –
Interest income 475,453 44,195 – 519,648
Other income - net 3,345,545 (3,611) (2,764,458) 577,476
Total revenue 56,694,964 6,920,574 (3,770,813) 59,844,725
General, selling and administrative (17,542,682) (3,578,904) 1,979,324 (19,142,262)
Depreciation and amortization (12,920,623) (2,449,546) (363,790) (15,733,959)
Cost of sales (5,927,286) (142,936) 45,511 (6,024,711)
Financing costs (3,037,812) (102,781) – (3,140,593)
Impairment losses and others
Equity in net earnings of an associate and a joint
(1,455,431) (153,425) – (1,608,856)
venture (13,334) – – (13,334)
Income (loss) before income tax 15,797,796 492,982 (2,109,768) 14,181,010
Provision for (benefit from) income tax (3,718,528) (147,974) – (3,866,502)
Net income
Other segment information
P=12,079,268 P=345,008 (P=2,109,768) P=10,314,508
Capital expenditure P=13,822,541 P=1,266,973 P=– P=15,089,514

2004
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Wireless Wireline
Communications Communications
Services Services Eliminations Consolidated
Service revenues P=47,054,481 P=5,686,877 P=– P=52,741,358
Nonservice revenues 2,848,766 18,856 – 2,867,622
Intersegment revenues 563,129 309,780 (872,909) –
Interest income 383,374 70,707 (43) 454,038
Other income - net 1,501,376 109,280 (1,203,366) 407,290
Total revenue 52,351,126 6,195,500 (2,076,318) 56,470,308
General, selling and administrative (13,655,870) (2,887,998) 1,139,905 (15,403,963)
Depreciation and amortization (11,569,616) (2,379,011) (757,198) (14,705,825)
Cost of sales (6,781,260) (81,224) 187,286 (6,675,198)
Financing costs (6,345,332) 18,410 43 (6,326,879)
Impairment losses and others
Equity in net earnings of an associate and a joint
(369,379) (266,068) – (635,447)
venture (62) – – (62)
Income (loss) before income tax 13,629,607 599,609 (1,506,282) 12,722,934
Provision for (benefit from) income tax (1,409,121) 82,429 – (1,326,692)
Net income
Other segment information
P=12,220,486 P=682,038 (P=1,506,282) 11,396,242
Capital expenditure P=20,438,301 P=3,235,056 P=– P=23,673,357
The segment assets and liabilities as of December 31, 2006, 2005 and 2004 are as follows (in
thousand pesos):
2006
Wireless Wireline
Communications Communications
Services Services Eliminations Consolidated
Segment assets
Investments in an associate and a joint venture
P=125,242,295 P=17,463,845 (P=18,965,502) P=123,740,638
under equity method 37,332 – – 37,332
Consolidated total assets [1] P=125,279,627 P=17,463,845 (P=18,965,502) P=123,777,970
Consolidated total liabilities [1] P=63,070,580 P=1,974,920 (P=2,953,817) P=62,091,683
2005
Wireless Wireline
Communications Communications
Services Services Eliminations Consolidated
Segment assets
Investments in an associate and a joint venture
P=122,852,929 P=18,921,175 (P=17,878,920) P=123,895,184
under equity method 43,263 – – 43,263
Consolidated total assets [1] P=122,896,192 P=18,921,175 (P=17,878,920) P=123,938,447
Consolidated total liabilities [1] P=64,854,937 P=6,416,199 (P=2,220,423) P=69,050,713

2004
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Wireless Wireline
Communications Communications
Services Services Eliminations Consolidated
Segment assets P=131,229,612 P=25,076,643 (P=29,107,505) P=127,198,750
Investments in an associate and a joint venture
under equity method 91,925 – – 91,925
Consolidated total assets [1] P=131,321,537 P=25,076,643 (P=29,107,505) P=127,290,675
Consolidated total liabilities [1] P=74,328,551 P=2,738,543 (P=5,344,800) P=71,722,294
[1] Consolidated total assets and liabilities do not include deferred income taxes.
29. Notes to Consolidated Statements of Cash Flows
The principal noncash transactions for the years ended December 31, 2006, 2005 and 2004 are as
follows:
Note 2006 2005
(In Thousand Pesos)
2004
Increase (decrease) in liabilities
related to the acquisition of
property and equipment P=2,246,424 P=1,163,860 P=935,909
Capitalized ARO 15 281,557 44,433 182,363
Dividends on preferred shares 64,669 68,334 75,128
The cash and cash equivalents account consists of:
2006 2005 2004
(In Thousand Pesos)
Cash on hand and in banks P=2,861,698 P=736,200 P=1,967,695
Short-term placements 4,644,017 10,174,761 11,614,147
P=7,505,715 P=10,910,961 P=13,581,842
Cash in banks earn interest at respective bank deposit rates. Short-term placements are made for
varying periods of up to three months depending on the immediate cash requirements of the Globe
Group and earn interest at the respective short-term placement rates.

ANNEX II
Globe Telecom, Inc. and Subsidiaries
Balance Sheet Accounts Variance Analysis (December 31, 2006 vs. December 31, 2005)
Assets
Current
a) Cash and Cash Equivalents– Decreased by P3.41 billion due to the additional capital expenditures,
settlement of loans and payments of dividends during the year, net of cash provided by operating
activities due to better operating performance.
b) Available-for-sale investments, Held-to-maturity investments and Short-term investments – Increased
by P6.05 billion mainly due to Globe group’s higher amount of money market placements of beyond
90 days.
c) Receivables - net – Down by 18% or P1.24 billion as compared to same period last year due to higher
traffic receivable collections from various carriers.
d) Inventories and Supplies – Declined by 28% or P378.96 million due to the net issuance of handsets and
phonekits as a result of Globe’s various promotional offers cushioned by higher units purchased over
sales of CDMA telephone sets and modem for Innove’s wireless broadband and telephone services.
e) Derivative Assets – Increased by P149.41 million due to gain on MTM value changes mainly coming
from the valuation of bond options on the Senior Notes.
f) Prepayments and other current assets – Up by 12% or P139.21 million attributable to the advance
payment made to BIR for VAT and other taxes.
Noncurrent
g) Property and Equipment - net – Decreased by 3% or P2.48 billion due to depreciation, net of the
purchases and project accruals for the additional network assets placed into service and the 3G sites
rollout.
h) Investment Property - net – Increased by 21% or P54.97 million due to the additional area in Innove IT
Plaza leased to third parties, net of the related depreciation.
i) Intangible Assets - net – Up by 3% or P28.90 million due to the additional acquisitions of various
computer software and telecom equipment licenses and other value added software applications in
support of the expanded network and subscriber base, net of the related depreciation.
j) Investments in an Associate and a Joint Venture – Down by 14% or P5.93 million mainly attributable
to Globe Group’s equity in net loss on Bridge Mobile Alliance.
k) Deferred Income Tax - net – Pertains to adjustment on Innove’s reversal of certain deferred income tax
items which have been realized.
l) Derivative Assets –Have zeroed out in 2006 as cross-currency swap instruments that used to be in this
category were reclassified to derivative liability due to significant decrease in MTM gain (resulting to
MTM loss) coupled with interest rate swap instruments reclassed to current portion since maturities are
scheduled in 2007.
m) Other Noncurrent Assets – Up by 98% or P993.53 million due to Innove’s deposit in Escrow in
compliance with the conditions set by SBMA in February 2006 and the net increase in deferred VAT
and advances to suppliers and contractors for the additional equipment bought for network expansion
and 3G rollout.

Liabilities
Current
n) Accounts payable and Accrued Expenses – Up by 18% or P2.51 billion due to the accrual of highvalue
3G equipment shipments cushioned by net payments to local and foreign suppliers in support of
the network expansion and 3G rollout and to assist current operations.
o) Provisions – Increased by 7% or P16.86 million attributable to the additional accrual made on probable
regulatory claims and assessments.
p) Income Taxes Payable – Increased by 185% or P540.03 million mainly attributable to higher taxable
revenues during the fourth quarter this 2006 compared to the same period in 2005.
q) Unearned Revenues – Declined by 2% or P31.61 million caused by the faster consumption of prepaid
airtime and landline credits as a result of the on-going promos being offered during the period (text
unlimited, lower call rates, etc.).
Noncurrent
r) Deferred Tax Liabilities – Pertains to adjustment on Globe’s provision for deferred income tax mainly
coming from higher depreciation claims under sum-of-the-years digit method used for tax reporting
versus straight-line depreciation used for financial reporting.
s) Long-term Debt – Decrease of P10.49 billion is mainly attributable to the partial redemption of 2012
Senior Notes coupled with the scheduled loan installment repayments to foreign and local creditors
during the year.
t) Derivative Liabilities – Increased by P354.38 million due to the additional loss recognized on MTM
value changes on swaps and free-standing forward contracts.
u) Other Long-term Liabilities – Up by P134.80 million due to the additional accrual and accretion of
asset retirement obligation cushioned by amortized settlement of long-term liability.
Equity
v) Paid-up Capital – Increased by 1% or P168.95 million mainly attributable to the issuance of Globe
shares due to exercised stock options triggered by favorable increases in Globe’s share price during the
year.
w) Cost of Share-Based Payments – Increase represents additional compensation expense net of the value
of the stock options exercised during the year.
x) Cumulative Translation Adjustment – Lower translation loss by 18% or P42.10 million is caused by
the favorable fair value changes on derivatives designated as cash flow hedge coupled with valuation
gain on available for sale investments (Investment in Peso T-bills).
y) Retained Earnings – Increased by 28% or P5.09 billion attributable to 2006’s net income of P11.76
billion reduced by the P6.67 billion dividends declared to common and preferred shareholders.

Globe Telecom, Inc. and Subsidiaries
Aging of Accounts Receivable as of December 31, 2006
Trade Receivables (In Thousand Pesos)
Current P2,624,532
More than 90 days past due 276,492
More than 120 days past due 241,690
More than 150 days past due 205,618
More than 180 days past due 2,599,571
5,947,903
Traffic Settlement Receivables 1,959,169
Other Receivables 305,615
Total Receivables 8,212,687
Less: Allowance for doubtful debts (2,684,782)
Receivables - net P5,527,905
Breakdown of Liabilities
12/31/2006 12/31/2005
A. Accounts Payable 5,855.42 5,744.39
Accrued Project Cost 4,548.84 2,444.11
Accrued Expenses 4,378.53 4,101.40
Traffic Settlements 1,501.93 1,544.66
Output VAT payable 135.87 69.33
Dividends Payable 64.67 68.33
16,485.26 13,972.22
B. Provisions 248.31 231.46
C. Income Taxes Payable 831.38 291.35
D. Unearned Revenues 1,270.08 1,301.68
E. Long Term Debt (LTD)
Current Portion of LTD
Banks 6,218.45 7,703.27
Suppliers - 103.27
Corporate Notes - -
Current portion of unamortized bond premium and
issuance costs - 2012 Senior Notes and Retail Bond 53.15 51.61
6,271.60 7,858.15
LTD - net of current portion
Banks 11,622.03 18,407.53
Suppliers - -
Corporate Notes 3,607.00 4,109.00
15,229.03 22,516.53