The Leading Lights of Telecoms - Globe Telecom
Globe Telecom (www.globe.com.ph) operates as a full service provider for
telecoms services, such as wireline, digital wireless, international telephony, data communications and Internet services, in the Philippines. Under the steady hands of Gerardo Ablaza Jr, president and CEO, the operator is emerging as the fastest growing telecoms company in the country, becoming the leading challenger to incumbent Philippine Long Distance Telephone (PLDT). Ablaza reveals its future plans.
Which area of your business requires greater attention next year? Why?
We believe that Globe’s wireless business, contributing 83% of total operating revenues in 1H’01 will continue to be a primary driver of revenues and therefore the area that will require our greatest attention. In this business, we will continue to look beyond simple marketshare considerations and focus on profitability. We believe our company’s performance for 1H’01 is the result of management’s focus on this objective. We will be persistent in improving our subscriber portfolio as a key driver to enhancing shareholder value.
Who are your main technology/ equipment partners?
For Globe’s wireless network, our company’s main equipment suppliers have been Nokia/Ericsson and CMG Wireless Data Solutions. For our wireline (voice and data) business, our primary equipment partners include Lucent Technologies, Fujitsu and Cisco Systems.
However, we have also sourced our equipment from many countries including Finland, Germany, Sweden, France, Malaysia, Israel, Canada, and Japan.
Can you give us an indication of the Asia-Pacific telecoms scene in 2002. What do you expect it to be like?
In general, we believe that the Asia-Pacific telecoms sector will continue to exhibit excellent long-term growth potential.
In the Philippine context, the growth prospects of the telecoms sector remains strong despite the economic uncertainty surrounding our country. Firstly, wireless penetration is currently estimated at 11.2% with significant room for growth. Secondly, the wireless sector has demonstrated considerable resilience to economic challenges and has continued to grow. Furthermore, wireless subscribers in the Philippines have demonstrated high consumption of wireless data services, as reflected by the high [usage of] SMS per capita of between 10–12 messages per day. We believe that the high data usage in the Philippines and the introduction of GPRS (general packet radio service) in the coming months create an ideal position for Globe to further expand its wireless data business.
The above notwithstanding, we are also keen in understanding the full impact of the devastating tragedy that occurred in the US on a global scale, and on the Asia-Pacific telecoms sector in particular. We are closely monitoring the investment appetite of the international capital markets, given the recent developments and how it will impact the Asia-Pacific telecoms sector in pursuing their long-term expansion plans.
Despite these market-moving events, we take comfort in the fact that Globe is backed by committed shareholders, Ayala, SingTel, and Deutsche Telekom which, combined, provide financial support, global reach and help provide local, technological and management expertise.
What is the latest on the acquisition of Islacom? Do we see more mergers or acquisitions in the future?
As of end-2000, Globe and Islacom had substantially aligned back-office processes, including billing, credit, information systems, cash management, and accounting policies and procedures. Clean-up activities have also been substantially completed with respect to Islacom’s balance sheet which includes a clean-up of the subscriber base and planning for recapitalisation.
How about your wireline operations?
The take-up rate is slow and your landlines are very much under-utilised. Although advances in subscriber take-up for the wireline business pales in comparison to the phenomenal growth in the wireless arena, we have seen modest growth. Wireline voice subscribers grew 12.5% to 157,582 as of Dec 31, 2000 from 140,130 a year before. Our overall objective to improve our subscriber portfolio for both services has been successful and we have increased the percentage of business subscribers in the mix. In 2000, business subscribers comprised 27% of the total, up from 23% as of end of 1999.
Unfortunately, several factors have led to the state of under-utilisation suffered by the entire wireline industry—not the least of which is the 300,000–400,000 rollout commitments that accompanied the awarding of the international gateway and cellular licences to the country’s “new” telecoms operators.
Furthermore, the revenue model for residential wireline services is weak, as the current tariff regime precludes the use of metering which would enable a more equitable balance of resources vis-à-vis revenue. We are in the process of orienting our strategy towards building a more robust corporate data strategy that would maximise the utilisation of the wireline infrastructure.
How is your relationship with the dominant operator PLDT? Are all your interconnection problems things of the past?
The Philippine telecoms industry continues to be highly competitive, and our competitive engagement with PLDT will continue to be intense. However, I believe our companies have made significant strides towards a more professional and objective relationship on issues such as interconnection. We are committed to do our part in keeping our lines of dialogue open and to putting reason as the primary basis for the resolution of issues. I believe that the PLDT leadership is prepared to do the same.
Frost & Sullivan’s take on: Globe
Globe Telecom has become an important player in the Philippines wireless market. Despite the fact that Globe has a diverse portfolio, wireless services accounted for 78% of its revenue last year. At the end of the 1H’01, its wireless subscriber base was nearly 3.5 million—reflecting a year-on-year growth of 103%.
Today, Philippines’ short message service (SMS) volume rivals those of European countries. Globe has been the nation’s pioneer in introducing SMS, which has been a very popular means of communications. All these have translated to strong revenue growths—which have doubled every year over the last four years, reaching a high of about 21 billion pesos (US$413.8 million) for last year.
Having launched its general packet radio service (GPRS) in early 2001, Globe is now re-evaluating its 3G plans as the technology’s applicability is fairly limited in the archipelago.
With the acquisition of Islacom in Jun 2001, Globe intends to re-launch the new Islacom brand in the very near future.
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