MANILA, Philippines – Ayala-led Globe Telecom Inc. is looking at better earnings this year as the amount of one-time write-downs arising from its $790-million network and information technology modernization and transformation program is expected to be completed in the first quarter of the year.
Ernest Cu, president and chief executive officer of Globe, said in an interview with reporters that the accelerated depreciation arising from its transformation program is expected to be completed within the first quarter of the year.
“There will some more left because I believe we still have in the first quarter some things to write off… The strength in the core business remains.
It has been that way over the past three years and we expect it to continue that way,” Cu said.
The company’s net income plunged 28 percent to P4.96 billion last year from P6.85 billion as accelerated depreciation charges related to assets affected by the modernization program jumped 78 percent to P9.06 billion resulting in a 17-percent rise in depreciation charges to P27.48 billion.
However, Cu said the focus should be on the core income that measures the underlying financial performance of a company.
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“The core net income of the company shows you the underlying performance is outside of these one time extra ordinary events of transformation. Transformation means we took away the old equipment, we threw them out or sold them at salvage value and we have to write them down. But it does not really affect the cash position and it does not affect our ability to generate cash and create profits so the core net income of Globe has been growing every year,” he said.
Globe’s core net income that excludes the impact of non-recurring accelerated depreciation charges related to assets affected by the company’s network and IT transformation programs grew 13 percent to P11.6 billion last year from P10.3 billion in 2012.
Globe reported that its consolidated service revenues grew nine percent to P90.5 billion last year from P82.74 billion in 2012 driven by the continued growth in the demand for data connectivity across the mobile, broadband and fixed line data businesses.
The company sees a mid to high single-digit growth in revenues this year as its subscriber base jumped 16 percent to 38.5 million last year from 33.1 million in 2012.
