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1Q 2017 Analysts’ Briefing10 May 2017 | The Globe Tower BGC
1Q17 Performance Highlights: Record revenues and EBITDA offset by higherdepreciation and interest, and share of charges from SMC deal
• Increase in revenues pared by higher operating expenses• EBITDA margin of 43%, slightly lower than 1Q16’s 44%
• Decline caused by higher depreciation and interest, and Globe’s share ofcharges from SMC deal
• Excluding SMC-related charges, normalized NIAT would be P4.2 Billion, orlower by 4% YoY
• Core Net Income at Php3.7Bn, lower by 12% YoY
• Momentum continues, driven by data-related services which now generate53% of total service revenues
• Beginning 2017, revenues from premium content services (where Globe isacting as principal to the contract) will be reported gross of the licensors'fees.
Service Revenues
31.1YoY
+4%
EBITDA
13.3 +2%
Net Income After Tax
-13%3.8Cash Dividend
• Record Date: 23 May 2017• Payment Date: 07 June 2017
222 .75/sh
3%
Revenue growth remains broad-based as market continues shift towards data
Mobile 1 Home Broadband 1
Fixed Line Voice
Corporate Data
Total
Δ1Q16 +3% +9% +7% -2% +4%
3• Beginning 1Q17, Globe to report prepaid subscribers which exclude
those who do not reload within 90 days of the second expiryperiod versus the previous cut-off of 120 days.
• Increase in subscriber base due to strong grossacquisitions for fixed wireless service (LTE)
+8%+2%57.3million
58.6million
Mobile Subscribers Home Broadband Subscribers
1Q16 1Q17
1.1million
1Q16 1Q17
1.19million
Postpaid Prepaid TM Wireless Wired
1 Beginning 2017, revenues from premium content services (where Globe is acting as principal to the contract) will be reportedgross of the licensors' fees. Revenues for similar services reported in 2016 have also been restated for purposes of comparison.
Petabytes
50%
Data-related businesses now account for 53% of total service revenues
Home Broadband1
In Php Billions
Corporate DataIn Php Billions
Mobile Data1
In Php Billions
Total Data Revenues as a Percentage of Total Service Revenues1
53%
1Q16 1Q17+35% 131
Petabytes
+85%
Mobile Data Users as a % of Mobile Subscribers
Mobile Data Traffic1Q171Q16
54%1Q171Q16 +35%+8
ppts
Total Revenues Data Revenues
10.0
1 Beginning 2017, revenues from premium content services (where Globe is acting as principal to the contract) will be reportedgross of the licensors' fees. Revenues for similar services reported in 2016 have also been restated for purposes of comparison.
3.8 2.5+8% +9% +7%
4
71
46%
Deployment of new LTE sites and Home Broadband service in Metro Manilaand key cities nationwide continue to face headwinds from permitting issues
LTE 700 and LTE 2600 Sites
• For 1Q17, Globe has deployed a total of 445 new LTE sites for increasedcapacity and coverage.
• With build preparations undertaken in 1Q17, deployment will ramp upprogressively in succeeding quarters, targeting sites with high demand.
• Per Opensignal’s latest report on Philippine operators, Globe registered thehighest LTE service availability.
• Globe recently deployed new massive MIMO technology which utilizes LTEspectrum to accommodate more users at higher data rates with betterreliability.
• For 1Q17, completed 24,000 lines with remainder to be deployed progressively
Home Broadband Service
5
New products, partnerships and events that enrich the Filipino digital lifestyle.
6
Globe Digital Ventures and Ayala Sureseats.com Partnership
Globe and Disney’s Disney Princess: I Dare to Dream Digital Reality Contest
Palau and Micronesia interconnect with Globe for SEA-
US Cable System
Enjoy WiFi on your own terms with Globe Prepaid Home WiFi
Globe and Singtel launch Trustwave Managed Security Services
Create the life you want with Globe’s ThePLAN
Financial Highlights
(in Php Mn)
3M17
Reported
3M16
Reported YoY %
VTI Impact
(3M17)
3M17
Normalized YoY%
Gross Service Revenues 31,122 30,004 4% 31,122 4%
OPEX & Subsidy* (17,807) (16,937) 5% (17,807) 5%
EBITDA 13,315 13,067 2% 13,315 2%
EBITDA Margin 43% 44% 43%
Depreciation (6,437) (6,215) 4% (6,437) 4%
EBIT 6,878 6,852 0% 6,878 -
Non-Operating Charges (1,320) (577) 129% (483) (837) 45%
Provision for Income Tax (1,798) (1,940) -7% 77 (1,874) -3%
Net Income 3,760 4,335 -13% (407) 4,167 -4%
Core Net Income** 3,680 4,185 -12% (407) 4,087 -2%
* OPEX & Subsidy includes interconnect charges** Core Net Income excludes forex, mark-to-market gains and losses, and non-recurring items
Consolidated Financial Highlights: Revenue growth at 4% though higheroperating expenses, depreciation, and non-operating charges contributed to adecline in NIAT
8
Note: Beginning 2017, revenues from premium content services (where Globe is acting as principalto the contract) will be reported gross of the licensors' fees. Revenues for similar servicesreported in 2016 have also been restated for purposes of comparison. Licensors' fees will bereflected as part of maintenance expense.
13,067 13,315
1,118 220
-
244
--
-
428 659
247
3M16 EBITDA Inc. in
Revenues
Dec. in
Interconnect
Charges
Inc. in Staff
Costs
Dec. in
Marketing &
Subsidy
Inc. in Network
Costs
Inc. in
Provisions,
Services &
Other OPEX
3M17 EBITDA
+2%
YoY Change in EBITDAIn Php Millions
9
EBITDA growth driven by the Php 1.1 Billion increase in revenues but wastempered by increased staff and network costs, particularly repairs andmaintenance charges
4,335 4,361 3,760 3,760 4,167
248
142
407 222 743
3M16 Reported
Net Income
Change in
EBITDA
Inc in
Depreciation
Inc in Non-
operating
Expenses
Dec in Tax 3M17 Reported
Net Income
SMC Impact 3M17
Normalized
Net Income
Modest 2% growth in EBITDA outpaced by increased depreciation and non-operatingcharges, leading to 13% decrease in net income. Non-operating charges include the impact ofthe SMC deal. Normalized net income would have only declined by 4%
YoY Change in Reported Net IncomeIn Php Millions
10
-13%
-4%
21.2
32.1
36.7
8.6
2014 2015 2016 3M17
* Based on FX rate of Php49.38
Capital expenditures at approximately Php8.6 billion or USD175 million*, with81% related to data requirements
Capex* In Php Billions
11
15% 15% 15% 11% 8%
15% 10% 8% 10% 10%
36%27% 30%
14%1%
35%49% 48%
65%81%
2013 2014 2015 2016 3M17
Business Support Others Core Data
Capex Breakdown
37.0
1.512.15 2.19
2015 2016 3M17
Despite the SMC transaction, debt levels remain comfortably within covenantratios.
Gross Debt In Php Millions
Gross D/E RatioCovenant = 2.5:1
Gross Debt/EBITDACovenant = 3:1
12
Cash Dividend per Common Share:
Php22.75
Record Date: 23 May 2017
Payment Date: 07 June 2017
2Q17 Dividends
72,229
105,729 108,100
2015 2016 3M17
1.221.67 1.68
2015 2016 3M17
C R E A T E . W O N D E R F U L .
Appendices
Appendix 1Historical Consolidated Gross / Net Service Revenues and EBITDA Margin
(In Million Pesos) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
Mobile 21,635 22,826 23,052 23,730 23,148 22,779 22,577 23,753 23,799
Mobile Voice 9,191 9,556 9,315 9,065 8,181 8,471 8,752 8,662 7,901
Mobile SMS 6,807 6,757 6,641 6,192 5,763 5,577 5,704 6,155 5,930
Mobile Data 5,636 6,513 7,096 8,472 9,203 8,731 8,121 8,936 9,969
Fixed Line & Broadband 4,585 4,784 6,475 6,593 6,856 7,089 7,079 7,308 7,322
Home Broadband 2,300 2,419 3,127 3,474 3,534 3,615 3,738 3,793 3,844
Corporate Data 1,543 1,603 2,349 2,204 2,367 2,496 2,443 2,567 2,540
Fixed Line Voice 742 762 999 916 955 978 898 949 938
Total 26,220 27,610 29,527 30,323 30,004 29,868 29,656 31,061 31,122
EBITDA 11,043 11,672 12,073 11,174 13,067 12,531 11,912 12,468 13,315
EBITDA Margin 42% 42% 41% 37% 44% 42% 40% 40% 43%
(In Million Pesos) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
Net Service Revenues 24,162 25,438 27,565 28,084 27,689 27,537 27,423 28,933 29,065
Interconnection Settlement
Costs2,057 2,173 1,962 2,238 2,316 2,330 2,233 2,129 2,057
2015 2016
2014 2015 2016
2017
CONSOLIDATED SERVICE REVENUES
15
Appendix 2Mobile Subscribers, Net Adds, Churn Rates and Gross ARPUs
Subscribers 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
Globe Postpaid 2,458,045 2,517,215 2,561,290 2,597,027 2,564,148 2,521,218 2,508,800 2,489,719 2,467,069
Globe Prepaid 22,214,373 23,287,012 24,391,990 25,915,096 25,452,193 27,381,884 29,409,827 28,433,793 26,678,674
TM 23,745,018 25,195,520 26,130,002 27,670,555 29,249,341 31,408,346 33,444,153 31,875,346 29,434,517
Total 48,417,436 50,999,747 53,083,282 56,182,678 57,265,682 61,311,448 65,362,780 62,798,858 58,580,260
Net Adds 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Globe Postpaid 9,361 59,170 44,075 35,737 (32,879) (42,930) (12,418) (19,081) (22,650)
Globe Prepaid 1,071,443 1,072,639 1,104,978 1,523,106 (462,903) 1,929,691 2,027,943 (976,034) (1,755,119)
TM 1,248,151 1,450,502 934,482 1,540,553 1,578,786 2,159,005 2,035,807 (1,568,807) (2,440,829)
Total 2,328,955 2,582,311 2,083,535 3,099,396 1,083,004 4,045,766 4,051,332 (2,563,922) (4,218,598)
Churn Rate 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Globe Postpaid 3.5% 2.9% 3.3% 3.2% 3.7% 3.7% 3.1% 2.8% 2.8%
Globe Prepaid 5.9% 6.2% 6.1% 5.2% 7.7% 5.7% 5.3% 8.2% 10.0%
TM 6.7% 6.6% 6.8% 6.1% 6.1% 6.0% 5.2% 8.8% 10.5%
Blended 6.1% 6.2% 6.3% 5.5% 6.7% 5.8% 5.2% 8.3% 9.9%
Gross ARPU 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Globe Postpaid 1,116 1,130 1,088 1,122 1,105 1,123 1,143 1,168 1,158
Globe Prepaid 128 130 124 117 116 109 99 104 111
TM 74 76 73 70 65 61 57 60 64
Blended 153 154 146 141 136 128 119 123 130
HOME BROADBAND 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Revenues 2,300 2,420 3,126 3,474 3,534 3,615 3,738 3,793 3,844
Subscribers 779,590 826,001 1,026,466 1,068,920 1,101,189 1,136,608 1,147,951 1,130,750 1,191,261
Gross Adds 100,387 111,152 139,094 137,417 144,543 158,130 159,041 144,515 157,401
Churn Rate 2.7% 2.7% 3.6% 3.5% 3.4% 3.6% 4.2% 4.7% 2.9%
2017
2015
2015
2015
2015
2015
2016
2016
2016
2016
2016
16
Appendix 3Reconciliation of Net Income to Core Net Income
(in Million Pesos) 1Q17 1Q16 % Change 4Q16 % Change
Reported Net Income After Tax 3,760 4,335 -13% 4,174 -10%
Deferred Tax on Unexercised
Stock Options(44) (28) 59% 47 -195%
Add (deduct) Forex loss (gain) (64) (174) -63% 9 -805%
Other Adjustments –
(including acc. depreciation)28 52 -46% 36 -22%
Core Net Income 3,680 4,185 -12% 4,266 -14%
17
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