Globe Eyes Lift From IPhone; May Spend $300 Million in '09

MANILA -(Dow Jones)- Globe Telecom said Wednesday it will start selling Apple's third-generation iPhone later this month - a key initiative that the Philippines' second-largest cellular service provider by subscribers hopes will boost revenue amid soaring inflation and stiffer competition.

Globe said it will begin selling the much-awaited iPhone locally on Aug. 22, and has started taking reservations from clients on Wednesday.

"As both a consumer and a part of Globe, I'm very excited" about the iPhone, said Globe President and Chief Executive Gerardo Ablaza.

Apple said in July that it sold its first one million units of the iPhone 3G just three days after it went on sale in 21 countries.

Globe will sell the 8-gigabyte iPhone 3G at PHP41,899 ($952) and the 16-gigabyte model for PHP48,899. A subscriber can get an iPhone for free if he agrees to a two-year subscription plan of at least PHP4,999 a month, it added.

"The iPhone should generate customer interest for Globe and provide excitement to what has otherwise been a lackluster marketing campaign" so far to boost sales, said Ricardo Puig, a telecommunications analyst at ATR-Kim Eng Securities.

Ablaza is hopeful iPhone will help in reversing Globe's bearish outlook for the rest of 2008.

Globe expects full-year revenue growth to be at a "low single-digit rate" after a first half that saw service revenue falling to PHP31.11 billion ($710 million) from PHP31.62 billion in the year-earlier period due to intense competition and surging inflation. Last year's results also received a boost from the elections.

Net profit in the January-June period slipped 3% on year to PHP6.21 million even as Globe, the bulk of whose earnings come from its cellular operations, posted its strongest subscriber growth in the second quarter.

"Revenues reflect a changing pattern in consumer spending given the current market environment. As consumers opt for lower-cost alternatives, voice revenues were down and short-messaging revenues up," Globe said.

It added that a stronger peso in the first half also offset the impact of higher international call traffic on revenue.

Meantime, Globe's Chief Financial Officer Delfin Gonzalez told reporters that the company is considering a capital expenditure of $300 million to $350 million for 2009. He said the most of the funds would go to the expansion of Globe's broadband network.

He said the capital spending for next year will be lower than the $450 million planned for 2008 since this year's expenses include Globe's share in a submarine cable project undertaken with foreign telecommunications companies.

-By Cecilia E. Yap and Cris Larano, Dow Jones Newswires; (632) 848-5051; cecilia.yap@dowjones.com

(END) Dow Jones Newswires

Posted to the site on 6th August 2008