PHILIPPINE ECONOMIC PERFORMANCE
While the Philippine economy grew by 6.2%, falling below the 6.7% level of 2017, it marked the seventh consecutive year of economic growth in excess of 6%, a level that many countries seek to achieve.
Domestic demand once again led the economy’s growth, buoyed by consumer spending and the government’s infrastructure program. Consumer spending was supported by overseas remittances which reached $32 billion compared to$31.29 billion in 2017.
The Bangko Sentral ng Pilipinas (BSP) was forced to raise policy rates in the second half of 2018 after inflation began to rise due to higher global fuel prices, domestic bottlenecks that affected food prices, a weaker peso, and the one-off effects of the tax reform program.
Despite a slowdown in the country’s economic growth, Globe posted favorable results with consolidated revenues climbing 10% to P140.2 billion.1 Our EBITDA margin rose to 49% from last year’s 42%, bringing total EBITDA to ₱65.1 billion. This translated to a net income of ₱18.45 billion, which grew 22% from a year ago.
Data-related services again accounted for the majority of service revenues, now at61% of revenues versus 54% a year ago. Moving forward, we will continue to expand our data network to meet robust customer demand. This is consistent with our intent to deliver first world internet connectivity to support our country’s digital aspirations and take the Philippines to the level of its more progressive regional neighbors.
GLOBE WELCOMES THE NEW MOBILE PLAYER
Globe welcomes the entry of the new mobile player to the local telecommunications industry as this fosters a healthy competitive environment to the benefit of the consumer. As we have previously and continuously stated, we hope that the government will support not only the new entrant but all the existing operators under this new industry structure. As an important contributor to this industry, Globe now provides services to over 75 million customers.
In support for the government’s efforts to improve internet service, Globe took the step of announcing plans to divest its tower assets with the incorporation last July 2018 of a separate tower holding company. This initiative will encourage new providers of capital to join our infrastructure rollout while allowing other industry players to pool resources for the important deployment of assets to achieve coverage.
COMMITMENT TO CREATING SHAREHOLDER VALUE
We remain committed to creating value for our shareholders with a total payout of ₱12 billion in common share dividends for the year 2018, similar to what we had in the previous year. This represents about 89% of 2017 core net income, in line with our dividend policy of 75% to 90% of prior year’s core net income. This also translates to a 4.9% dividend yield, which is more competitive than the yields of otherPhilippine listed companies.
Our commitment to 10 of the UN Sustainable Development Goals have been our Sustainability compass, guiding us in our strategies for inclusive and sustainable development for the country.
Globe aims to ensure inclusive and equitable quality education for all through our Global Filipino Schools (GFS) program. Our GFS program is now available across 17regions in the country, enabling 218 public schools across the Philippines with ICT tools and methodologies that will equip them for a 21st-century education.
We continue to strengthen our partnership with the Department of Education and other stakeholders as we further expanded our network coverage within school vicinities to provide these schools with digital equipment, internet connectivity, and intensive teacher training. We also help inculcate content-responsible digital citizenship among young Filipino learners within the program.
In our effort to save the environment, we collaborated with the Manila WaterFoundation for the long-term rehabilitation program in Boracay. We provided SitioIlaya, Barangay Balabag a communal septic tank and over 4,000 households withVigormin solution. This is a low-cost organic solution to boost the removal rate of pollutants in septic tanks and improve the quality of used water to avoid contaminants or untreated water to enter the waterways leading to the sea. To complement this, we partnered with Save Philippine Seas (SPS), an independent non-government, non-profit organization that aims to protect the country’s rich marine resources through citizen-led initiatives. We have rolled out marine biodiversity programs in Boracay and Siargao, equipping the community and business stakeholders with modules on best practices on sustainability and biodiversity.
OUR VISION FOR THE COUNTRY
With the digital revolution taking place across many industries, Globe is aggressively broadening its business mandate to address societal challenges by leveraging its business know-how, its innovation initiatives, and its resources in order to engage and add value to society in more relevant ways.
True value can be realized when we work to build more inclusive businesses.Companies can harness innovation and creativity by moving beyond traditional models and use them to empower the markets that have sustained our businesses.
A prime example of our efforts in fostering inclusivity can be seen in our fintech business under Mynt. A joint venture with Ant Financial and Ayala, Mynt operates two other companies: GCash, the leading mobile wallet in the Philippines, and Fuse, a micro-lending company that extends small loans to Filipinos for as small as ₱1,000 viaGCash through GCredit. These services are readily available to any Filipino that has a bar phone or smartphone that will register to the service.
Recognizing the challenges faced by the unbanked, Mynt set out to develop and sustain GCash ecosystems around the country. GCash now has over 50,000 QRmerchants in the Philippines, scattered around malls, independent establishments,sari-sari stores, and even ambulant vendors.
GCash is now the country’s leading mobile wallet, growing exponentially to 15 million registered users nationwide in just three years. It has been awarded the Best MobilePayment App of the Year in 2017 by The Asian Banker, and the Best Mobile PaymentService Award by the Telecom Asia Awards in 2018. It is also the leading finance app in the Google Play Store since 2015.
In closing, let me thank our Board of Directors, the management team, and all our employees for their untiring commitment and dedication to serving our customers.Our board members remained engaged across a variety of governance committees throughout the year and our employee and executive teams work tirelessly to improve our standards, to innovate, and to enhance our customers’ experience. I would also like to also thank our business partners for their support, our customers for their loyal patronage, and our fellow shareholders for their trust and confidence in our ability to build and create stakeholder value in the years ahead.
1Excluding the impact of PFRS 15 adjustments