Globe Telecom profit dips as customers spend less

MANILA--Philippine telecommunications giant Globe Telecom reported a 15 percent drop in profits, citing higher costs in maintaining its operations and decreased consumer spending.

Globe Telecom said in a stock exchange filing, its consolidated net income dropped to 11.3 billion pesos (US$238 million) in 2008, from 13.3 billion pesos (US$280 million) in 2007.

Wireless revenues fell 1 percent to 55.63 billion pesos (US$1.17 billion) last year, from 56.41 billion pesos (US$1.17 billion) in 2007, Globe Telecom added. This segment is the company's main revenue generator, accounting for 88 percent of its total service revenues.

According to local media reports, the service provider cited weaker consumer spending as a factor for the earnings drop.

It was further quoted to say that consolidated revenues from both its wireless and wireline services fell to 62.9 billion pesos (US$1.32 billion) from 63.2 billion pesos (US$1.33 billion) in 2007.

The provider of a slew of telecommunication services, however, reported that the drop in its wireless revenues was offset by growth in wireline data and broadband earnings.

Globe Telecom noted that an expansion of its broadband subscriber base and increase in corporate data revenues boosted the company's wireline service revenues by 7 percent to 7.3 billion pesos (US$154.2 million) last year, from 6.8 billion pesos (US$143.5 million) in 2007.

It garnered net 55,000 new subscribers in the wireless broadband segment, closing the year with a broadband subscriber base of 234,000, almost double that of 2007, the company added.

Its total capital expenditures rose 46 percent to 20.4 billion pesos (US$431 million) in 2008, which included costs in expanding its broadband offerings as well as other infrastructure investments.

Joel D. Pinaroc is a freelance IT writer based in the Philippines.