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Globe Telecom Q4 2008 Preliminary Results
In advance of full-year disclosure for 2008, Philippine operator Globe Telecom has released preliminary results for the fourth quarter of the year. These show the weakest quarterly performance of 2008, with net additions falling to 0.95m, after 0.96m, 1.46m and 1.01m in the previous three periods. In fact, looking back, in absolute terms the performance was the weakest since Q3 2006, when the Philippine market was recovering from the fallout of the SIM-swap era.
Proportionately speaking, growth was the lowest seen since Q4 2005 - when the operator was shedding customers due to the disconnections associated with SIM-swapping. However, the figure of 4.01% recorded for the quarter was hardly in mature-market territory. The Philippine market is not short of growth potential: penetration stood at around 73% at the end of 2008, with multiple SIM ownership increasing and churn still high.
It was that churn which was Globe's downfall in the fourth quarter. The monthly disconnection rate both at Globe's prepaid service rose to its highest level in three years of 6.3%, as did that at its mass-market "Touch Mobile" brand, which rose to 7.5%. Put another way, at these rates around 76% of Globe's prepaid base and 90% of the Touch Mobile base would disconnect in the course of a year. In previous periods, Globe's churn rates have been in excess of those recorded by its major competitors, and this latest development in the trend is unlikely to have done anything to improve its relative position. Saying this, the company continues to do a good job balancing the churn with new subscriber growth: 70% of the 4.4m net additions in 2008 came from the Touch Mobile service, despite an 81% disconnection rate over the year as a whole.
The ARPU statistics for the quarter slightly redeem the picture for Globe, with all metrics rising quarter on quarter, sending wireless service revenues 5% up. At 1.5%-2.5% the increases were not large, but they represented the first upwards movement for some time - in the case of Touch Mobile for more than three years - despite economic uncertainty and "intense" competition. Nevertheless the cost of this small improvement was considerable, as SACs rose by 40-70% in the prepaid base, pushing overall costs 18% higher and depressi ng the EBITDA margin from 60% to 55%.
Posted to the site on 12th February 2009
This article was extracted from The Mobile World Briefing, the weekly newsletter from The Mobile World.
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