Globe 2008 net income drops on low revenues

ABS-CBN News

Posted at Feb 03 2009 05:45 PM | Updated as of Feb 04 2009 01:45 AM

Globe Telecom Inc., the country's second-biggest telecoms firm, reported Tuesday a 15 percent drop in its net income last year as lower consumer spending hit its revenues and expenses went up.

In a financial statement, Globe said it recorded a net income of P11.28 billion in 2008 against P13.3 billion in 2007.

Service revenues coming from its wireless and wireline businesses fell slightly from P63.2 billion to P62.9 billion while operating expenses and subsidy rose 11 percent to P25.5 billion.

Globe said the increase in operating expenses stemmed from maintaining a larger broadband and cellular network and subscriber base.

Globe, a unit of Ayala Corp. and Singapore Telecommunications, will cut its capital spending this year by up to 16 percent, to $350-$400 million from about $420 million in 2008.

It said the spending budget in 2009 would fund investments in broadband for residential consumers, network enhancements and maintenance of its core 2G business.

Globe expects growth to continue in its broadband business despite a slowing economy, largely on account of the country's small population of broadband clients. The company ended 2008 with 234,000 broadband subscribers, up 84 percent from 2007.

On the other hand, its wireless subscriber base jumped 22 percent to 24.7 million last year. The wireless business accounts for nearly 90 percent of the group's service revenue.

The company said it would maintain this year a dividend ratio of 75 percent of the prior year's net income, adding its board had approved the payment of a first interim dividend of P32 per share on March 10.

Rival Philippine Long Distance Telephone Co. is due to announce its 2008 earnings on March 3. With a report from Reuters