The Philippines was not spared from the impact of the pandemic as the nation’s capital and the rest of Luzon was placed under enhanced community quarantine (ECQ) on March 15, 2020, resulting in the closure of the majority of business establishments, massively displacing jobs and sending the rest of the workforce to a new work from home set-up. The impact was so large that it almost crippled our health sector, affecting frontliners who were brought to the brink of a breakdown.
Like the rest of the world, the Philippines slipped into recession with a record GDP contraction of 9.5% for 2020 as the economy stalled under ECQ, which lasted until the end of May. The slowdown reached its peak with a 16.9% contraction of the economy in the second quarter of 2020 before gradually tapering off in the second half of the year as the economy partially reopened when the National Capital Region (NCR) shifted to general community quarantine (GCQ) starting in June.
Based on the latest government survey, the country’s unemployment rate last January 2021 was estimated at 8.7% or the equivalent of 4.0 million people unemployed. This situation was further exacerbated by the government’s repatriation of over 327 thousand overseas Filipinos who lost their jobs. Notwithstanding the global mass layoffs, repatriations, and lockdowns, remittances by overseas Filipinos totaled USD33.2 billion in 2020 or slightly lower by 0.8% versus the previous year, as workers found ways to send home much-needed funds to help support their families in the Philippines.
Against this economic backdrop, the telecommunications industry was fortunate to be spared from a severe demand shock as consumer demand shifted and our services became a key technology driven solution to connecting with each other. Our homes became a place for work, learning, entertainment and business. Digital payments and solutions grew aggressively as businesses pivoted to the digital space this year. Given these changing social and economic dynamics, and the changing demand for our services, the company recorded only a slight 2% decline in overall service revenues. Consistent with past year trends, data-related revenues accounted for 76% of total service revenues, up from 71% the previous year. Our mobile and home broadband customer base reached 76.6 million and a record 3.8 million, respectively.
As the nation was forced to stay in their homes, the need for fast, dependable telecommunication services has never been more important. Even in the face of the pandemic and the inherent challenges of building, maintaining, and repairing the network onsite, Globe delivered on its commitment to provide reliable mobile and internet services to enable the Filipino digital lifestyle. Globe implemented various business continuity and disaster preparedness initiatives that enabled the company to ensure the safety of its employees, particularly the critical skeletal frontline force as they continued servicing customers at home, safely. This strong commitment to deliver essential services strengthened our brand reputation, earning customer loyalty and preference.
The company invested a total of ₱60.3 billion in capex in 2020, even surpassing the previous year’s record level spending by 18%. About 86% of our capex went to data-related infrastructure and fast tracking the rollout of fiber lines to homes – our commitment to meeting the demands of our customers for high-speed, broadband services. As we expanded fiber to homes, we also upgraded the mobile network with 4G/LTE and 5G to improve our customers’ voice and data experience. We encouraged our customers to update their SIMS to 5G enabled and 4G LTE SIMs for free and offered highly affordable 4G LTE device plans. Likewise, we strategically rolled out 5G mobile services in various areas across the country.
None of these could have been achieved without the support of the government by implementing the Joint Memorandum Circular No. 01 of the Anti-Red Tape Authority (ARTA) with the Department of the Interior and Local Government (DILG) and other concerned agencies. In addition, Republic Act No. 11494 or the Bayanihan to Recover As One Act truly paved the way to lifting the debilitating effects of delayed releases of permits at the local government level. By fast-tracking the release of permits, we were able to put up 1,300 new cell sites and towers; up from 1,100 the previous year and 600,000 broadband lines were rolled out, or an increase of 55%, against the previous year.
Financial services, driven by shifts in technology, also faced continuing disruption. Individuals moved away from cash as part of their safety protocols. Filipinos shifted to digital payments to buy and sell goods online. We are proud that it was GCash that led the shift towards digital payments adoption in the country, allowing for safe and convenient transactions amidst the various levels of quarantines. GCash became the most downloaded app and the number one finance app in the country, breaching ₱1 trillion in gross transaction value for 2020 in the early part of December last year.
Given its popularity and seamless customers experience, GCash was able to raise its value as a company this year. It was able to complete its fund-raising needs, with an aggregate investment of USD175 million from its existing shareholders and from Bow Wave, at a post-money valuation of close to one billion dollars. The investments were completed in multiple tranches in 2020, with the capital infusion of Globe and Ant predating the Bow Wave investment.
With the increasing economic inequality created by the pandemic, the emphasis on the social responsibility by Globe grew, together with the cooperation of the rest of the private sector, in working with several stakeholders to lessen the impact of the pandemic across vulnerable communities, most especially those communities that were marginalized. The social impact of the pandemic was felt in the areas of food security, small and medium enterprises, education and health. On this front, Globe provided renewed assistance to its stakeholders, by providing its employees with a holistic COVID-19 support package; free RT-PCR tests for its critical skeletal force; financial support for vendor partners; zero-rated access to key government websites; PPE and communications support for medical frontliners and; offered flexible payment solutions to our customers. Globe has likewise contributed to the collective support of the Ayala Group of Companies to help alleviate the impact of the COVID-19 pandemic. P18 million was invested in initiatives such as the construction of the AC Health employee facility for Covid, relief support to partner communities via the Ayala Foundation's Project Pananagutan, and the conversion of the World Trade Center as a quarantine facility. We also recognize the contribution of Singtel in terms of direct monetary assistance, which was used to procure PPEs for Covid hospitals and provide test kits to partner LGUs.
Aligned with the initiatives, the company also achieved several milestones in its sustainability practice this year. Globe earned a rating upgrade of “A” in the MSCI and a first time rating from the CDP of B- for environmental transparency. The FTSE4Good Index Series continues to recognize the company for five straight years since 2016. In addition, Sustainalytics accorded Globe a medium risk rating.
Continuing on the theme of sustainability, Globe continuously supports the United Nations Sustainable Development Goals, particularly UN Sustainable Development Goal (UN SDG) No. 9 which highlights the roles of infrastructure and innovation as crucial drivers of economic growth and developments. As a signatory to the UN Global Compact, the company commits to align with its 10 Principles on Human Rights, Labor, Environment and Anti-Corruption and continues its commitment to 10 of the 17 UN SDGs.
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 64% of 2019 core net income, in line with our dividend policy of 60% to 75% of prior year’s core net income.
On behalf of the other board members of Globe, I would like to also acknowledge the significant contributions of our outgoing director, Mr. TG Limcaoco, who has served as an active member of our Executive Committee since 2016 and who will continue as a member of our Mynt Board. I wish him continued success as the incoming President and CEO of the Bank of the Philippine Islands and as part of Ayala’s senior management team.
I also take this opportunity to welcome Mr. Cezar Consing to our board given that he will be voted in during this meeting. I am certain Mr. Consing’s global experience and strong corporate leadership will contribute significantly to the governance and management of our company.
In closing, I am proud of the way the Globe leadership team and the entire organization handled the many challenges in 2020. It also proved to be an extraordinary time of learning and unity for the whole organization as we adjusted to unprecedented changes in our social and economic environment. I also want to thank our board for its engagement and advice during this challenging year.