JAIME AUGUSTO ZOBEL DE AYALA

Chairman


2021 proved to be another extremely challenging year as we grappled with the impact of COVID-19, disrupting nearly every aspect of businesses and of people’s lives. For the second time, the majority of the country, in particular the Greater Manila area, underwent several weeks of higher community quarantines, alert levels and lockdowns. These measures were necessary to stem the sharp rise of cases from a new variant of COVID-19.


Taking definitive action to defeat COVID-19, the government, private sector and pharmaceutical companies rolled out the vaccine program which brought new optimism. The flexibility and speed that a collaborative ecosystem can provide is critical not only to addressing the pandemic, but ultimately to achieve overall shared goals for a sustainable and inclusive society. Together with greater public safety and health awareness, daily infection rates at the Greater Metro Manila area and key cities nationwide declined. By year-end 2021, almost 45% of the total population was fully vaccinated. 


This allowed the government to lower public alert levels and enabled more businesses and industries to reopen, which in turn partially addressed unemployment.    Higher public mobility ensued that drove greater consumer and business spending.  Unfortunately, as the country was gearing up for a festive Christmas holiday, in step with a strong and inclusive recovery, Super Typhoon Odette struck Visayas and Mindanao. Many lives were lost and left hundreds of thousands of families’ homeless, not to mention the massive damage to infrastructure, agricultural land, fishing communities and livelihoods. 


True to our culture of malasakit, Globe was resolute in bridging the gap for its customers and communities, helping mitigate the impacts of COVID-19 and Odette. Globe put into place a comprehensive package of services not only to keep customers connected and safe but also to help them cope with the effects of the disaster.  We released free voice and data packages, extended temporary credit waivers, provided life essentials like telehealth consultations with KonsultaMD, while conducting several relief operations especially in the hardest hit areas.  Globe's digital channels such as GCash, GlobeOne, TM and Globe At Home apps available 24/7 have become reliable go-to channels for our customers.  The disruption experienced in the Visayas and Mindanao region was massive but our technical teams worked hard to restore mobile and data services at the soonest time possible.  


Having seen the massive business potential of digital solutions,  Globe ramped up new products and services beyond telco such as KonsultaMD, HealthNow, GInsure, and PureGo in order to help address the needs of Filipinos to uplift their lives through technology. These efforts set the stage for Globe’s strategy to become a digital solutions platform, leveraging its flagship telco business as a launching pad for new ventures to tap the shifting consumer landscape, which is being heavily influenced by digital adoption. Within its portfolio are high-growth enterprises in fintech, healthtech, adtech, edutech, and e-commerce among others. 


Overall, the country’s economy began to improve as GDP grew by 5.6% in 2021 versus the 9.6% contraction in 2020. Also, the unemployment rate for 2021 fell to 7.8% versus 10.4% the prior year. The total number of unemployed declined to 3.27 million, lower than 4.5 million in 2020, with the labor force participation rate improving to 65.1% versus 59.5% last year. Overseas remittances reached a record US$31.4 Billion, surpassing the previous high of US$30.1 Billion set in 2018 and boded well for our consumption-driven economy. 


Relative to other sectors, telecommunications, being an essential service during the pandemic, remained in great demand as it enabled people to connect with each other and businesses to thrive. Under stricter levels of community quarantines and alert levels, the home remained the place for work, learning, entertainment and business. Digital payments and solutions grew aggressively as businesses pivoted to the digital space this year.


Against this economic and social backdrop, the country persevered and so did Globe. The company closed 2021 with record consolidated service revenues, 4% higher than last year and surpassing 2019’s pre-pandemic level by 2%. In line with the continuing shift to digital, total data revenues across mobile, broadband and corporate data accounted for 80% of total service revenues compared to 76% last year. Our mobile and home broadband customer base reached 86.8 million and 3.7 million, respectively.


With its mission to deliver #1stWorldNetwork connectivity to Filipinos, Globe invested an all-time high ₱92.8 billion in capital expenditure (capex) in 2021, besting last year’s record level spending by 54%. Total capex for 2021 represented 61% of gross service revenues and 124% of EBITDA. About 86% of the capex went to data-related requirements in order to serve the rising demands of Filipinos consumers who access the internet to carry on with their daily activities, maintain business operations and deliver critical services.


Our successful network rollout would not have been possible without the support of the Department of the Interior and Local Government (DILG) and other concerned agencies behind the implementation of the Joint Memorandum Circular No. 01 of the Anti-Red Tape Authority (ARTA and Republic Act No. 11494 or the Bayanihan to Recover As One Act, which addressed the laborious permitting process. By fast tracking the release of permits, we were able to build 1,407 new cell sites nationwide, including both 4G LTE and 5G, upgraded over 22,300 mobile sites, and installed over 2,000 5G outdoor sites and in building solutions (IBS) as of end-December of 2021. While on the fixed line front, we installed over 1.4 million FTTH lines, even surpassing our revised target for the year.


In the field of digital financial services, fueled by its vision of Finance for All, GCash enjoyed a banner year in terms of user growth and activity. Sustaining its market leadership as the leading Finance App in the Philippines,  GCash reached 55 million registered users, 4.5 million merchants and social sellers, 290 GLife merchant partners and around 174,000 cash-in, cash-out agents. GCash also more than tripled its gross handled to ₱3.8 trillion in 2021 from ₱1.2 trillion reported in 2020. GCash reached positive full-year EBITDA and already achieved profitability three years ahead of its target. As of 2021, GCash is the only double unicorn in the Philippines, after its latest equity funding round last November where it raised more than US$300 Million from investors led by Warburg Pincus, Insight Partners and Bow Wave Capital.


As part of Globe’s commitment to sustainable development, Globe remains a signatory to the UN Global Compact that is committed to uphold the ten principles on Human Rights, Labor, Environment and Anti-Corruption. At the beginning of 2021, the company also committed to support the Task Force on Climate-Related Financial Disclosures to increase transparency on climate governance, strategy, risk management, and targets.


To assist in developing the company’s science-based targets for 2030 and the implementation roadmap to achieve Net Zero GHG Emissions by 2050, Globe  partnered with South Pole, a Greenhouse Gas (GHG) Emissions and Climate Action expert, together with the rest of the Ayala Group of companies. Globe likewise onboarded AON UK Limited, a Task Force on Climate-Related Financial Disclosures (TCFD) expert, to help integrate climate-related risk and opportunities into the company’s Climate Action strategy. Lastly, Globe  invested in a sustainability software through DNV-Synergi Life, to automate data collection of the company’s ESG metrics, especially the company’s GHG emissions, offsets, and progress against its targets.


With respect to Globe’s ESG ratings, the company continues to create a Globe of Good, achieving several milestones for the year. Globe maintained its rating of “A” from MSCI and an improved rating from the CDP of “B” for environmental transparency. The FTSE4Good Index Series continues to recognize the company for six straight years since 2016. Likewise, Sustainalytics accorded Globe a medium risk rating. Vigeo Eiris, which is part of Moody's ESG Solutions, recognized Globe as a member of its Top 100 Best Emerging Market Performers ranking.


Globe was also awarded Best Corporate Governance in Asia for the second consecutive year by London’s Ethical Boardroom under the Telecoms category, with Globe emerging as the only Philippine company to make it to the list of awardees. And finally, the company received the coveted Four Golden Arrow Award during the ASEAN Corporate Governance Scorecard (ACGS) recognition from the Institute of Corporate Directors (ICD) for its outstanding domestic performance at the ACGS Assessment. The Four Golden Arrow Award is currently the highest award to be given to assessed Philippine companies.


Staying true to our mission of generating sustained value for our shareholders, we also paid out ₱14.4 billion in common share dividends. This represents about 74% of 2020 core net income, in line with our dividend policy of 60% to 75% of prior year’s core net income.


In closing, I am proud of the way the Globe leadership team and the entire organization handled the many challenges in 2021. It also proved to be an extraordinary time of learning and unity for the whole organization and our various stakeholders as we adjusted to unprecedented changes in our social and economic environment. This also reinforces our belief that a deeper engagement with society is indispensable to the survival and success of private enterprises. I also want to thank our Board for its engagement and advice during this challenging year.

A Message from
Ernest Cu


For the President and CEO, the road ahead is certainly not without challenges. However, he is convinced more than ever, that the Globe Group is very strongly positioned for the future.

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