Globe Telecom, Inc.

2003 Results

Disclaimer
This
presentation
contains
certain
forward-looking
statements. These forward-looking statements generally can
be identified by use of statements that include words or
phrases such as Globe or its management believes,
expects, anticipates, intends, plans, foresees, or other
words or phrases of similar import. Similarly, statements that
describe Globes objectives, plans or goals are also forwardlooking statements. All such forward-looking statements are
subject to certain risks and uncertainties that could cause
actual results to differ materially from those contemplated by
the relevant forward-looking statements.

Presidents Message

2003: Exceptional Year

Increased service affordability drives market growth:
!

SIM prices fell 75%

Low denomination reloads will expand market penetration

More affordable SIMs and reload options improve retail trade

penetration

Lower priced and second-hand handsets

Continued Robust Performance of Wireless Market

Total Wireless Market (in 000)

25,000

27%

30%

19%

20%

15,000

14%
10,000

"

25%

20,000

15%

8%

10%

5,000

5%
6,357

10,957

15,171

22,460

0%
2000

2001

LHS Wireless Subscribers (

(000)
* Company Estimates

2002

2003*

RHS Penetration Rate

5

Penetration level at
27%
Breached initial
target of 25% by
2005

May reach 33-40% by

2005

Record subscriber take-up and postpaid dominance

Cumulative Wireless Subscribers (000)

10,000

8,860

8,000

6,572

6,000
4,000
2,000

Postpaid Market Share*

Others
25%

6,014

4,588
3,590

2,661

2,876

1,878
1,984

1,927

1,607

2,288

0
2000
Postpaid

2001

Prepaid

2002

Gross Adds

Globe
75%

2003
Net Adds

* Company Estimates

75% share of the postpaid market despite competition

Total wireless base reached 8.9 million at end-2003, total net additions of
2.3 million
6

Wireline: Improved overall efficiency

Wireline Data

The potential of corporate

data is more visible
"

Wireline Voice

Captured close to 50% of

Call Center and BPO
sector

2003

2002

Service Revenues

3,502

3,492

EBITDA

1,710

1,590

49%

46%

(820)

(1,331)

EBITDA Margin
EBIT

Prices of bandwidth
stabilizing
"

(in P mn)

Dropping prices enabled

customer growth
7

Improvement in Financial Performance

(in P mn)

2003

2002

Service Revenues

47.5

39.8

EBITDA

27.9

26.7

59%

67%

10.3

6.9

Consolidated

EBITDA Margin
Net Income
(P bn)

Wireless

Wireline

Service Revenues

42.6

4.9

EBITDA

25.6

2.2

Net Income

11.9

(0.7)

C2C Provision

(0.9)

Capex to Revenue Ratio at 33%

Capex Peaked in 2001

Capex over Service Revenues

577

US$ in millions

33%

2003

52%

2002

100%

2001

384
284

114%

2000
0%

50%

100%

150%

Capex to Revenue Ratio at 33%

Capex at US$284 million

2001

2002

2003

Capex per Sub Continues to Decline

Capex per Sub (in US$)
250

170

100
80

2001

2002
10

2003

2004

2004 Capex
Capex:: US$350 Million
!

Includes around US$90m carry-over from 2003

93% of capex is for wireless expansion

Goal is to keep our capex to service revenue ratio within 30-35%

Capex program to position ourselves to be more competitive in the mass

market arena
2004 Capex Breakdown per SBU

New Projects/CarryProjects/Carry-over Breakdown

Others
7%
Carry-Over
26%

New
Projects
74%

Wireless
93%
11

Starting 2004 with a Bang

Prepaid: Introduced flat rate for Globe
Handyphone

New postpaid flat rate structure

Touch Mobile
P5.50 per min. (lowered from P6.50)

"

stimulate peak usage

"

provide one-rate convenience

offered to prepaid

New consumable plans

Globe Handyphone
P6.50 per minute

12

"

targeting specific customer segment

"

providing greater flexibility

Opportunities and Key Imperatives

Opportunities

Key Imperatives

"

Greater affordability

"

Strategic shift to more focus on the greater masses of

the population

"

Continue building our network

"

Intensify marketing efforts and expand aggressively

outside Metro Manila

"

Further improve cost effectiveness

"

Develop and introduce more innovative products

13

Operational Performance

14

Key Wireless Drivers

Quarterly Gross ARPU (P)
2,500
2,000

2,233

2,062

2,124

2,172

2,176

603

541

551

504

496

367

340

322

265

334

4Q02

1Q03

2Q03

3Q03

4Q03

1,500
1,000
500
GHP Postpaid

GHP Prepaid

TM

Postpaid ARPU remains above P2,100 level

Globe Prepaid Plus and Touch Mobile ARPUs steady around the P500
and P300 mark, respectively
15

Key Wireless Drivers

Quarterly Churn
7.5%

8.0%

7.5%
6.8%

6.6%

7.0%
6.0%
5.0%

4.4%

4.0%
3.0%

2.5%

2.0%

2.3%

3.4%

3.4%

2.4%

2.6%

2Q03

3Q03

3.7%

2.8%
2.8%

2.9%

1.0%
0.0%
4Q02

1Q03

GHP Postpaid

GHP Prepaid

4Q03
TM

GHP Postpaid and Prepaid churn stable at 2.9% and 3.7% respectively

Touch Mobile churn improved to 6.8% in 4Q03

16

Key Wireless Drivers

Quarterly SAC (P)
14,000

12,262

12,000
9,335

10,000

9,802
8,761

8,000
6,000
4,000
2,000

2,503
335
456

4Q02

264
109

1Q03

307
207

2Q03

GHP Postpaid

GHP Prepaid

305
219

3Q03

286
183

4Q03

TM

" Acquisition costs maintained

" Postpaid reached P12,000 in 4Q03; P9,800 for FY2003
" Prepaid flat with P286 for Globe and P183 for Touch Mobile
17

Wireless Data
Wireless Data (4Q03)

Average Daily Volume SMS (m)

60
Intl SMS

Enhanced SMS

12%

55
47

50

5%

39

40
30
20

83%
Regular SMS
slowly

20

Enhanced SMS
contribution

Regular SMS still main contributor

10

increasing

0
2000
18

2001

LHS Wireless Data Rev

2002

2003

RHS % Wireless Service Rev

Wireline Services
Wireline Voice

Wireline Data Revenues (P m)

2003
Subscribers

2002

As of

261,254 223,249

2003

2002

Internatl Lease

555

421

ARPU (P)

1,164

1,197

Domestic Lease

544

438

Bus/Res Mix

20:80

24:76

Internet

308

214

% Prepaid & Payphones 34%

24%

Others

33

11

Monthly churn

2.6%

Total

1,440

1,084

1.6%

" 2003 subscribers up 17% y-o-y

"

" Wireline Voice ARPU flat

19

Data revenues up 33% y-o-y due to

rise in international lease and
internet contribution

ILD Services
Quarterly ILD Minutes (m)
600
540
480
420
360
300
240
180
120
60
0

412

4Q02

ILD Revenues
(P m)
"
"

4Q02
3,124

447

439

423

409

1Q03

2Q03

3Q03

4Q03

1Q03
3,125

2Q03
3,220

3Q03
3,322

4Q03
3,475

16% increase in full year minutes

28% of 2003 total service revenues
20

NLD Services
Quarterly NLD Minutes (m)
150

119

4Q02

120

126

114

116

118

1Q03

2Q03

3Q03

4Q03

1Q03
519

2Q03
509

3Q03
519

4Q03
483

90
60
30
0

NLD Revenues
(P m)
"
"

4Q02
650

11% decrease in full year minutes

4% of 2003 total service revenues
21

Financial Performance

22

Income Statement
(P m)

2003

2002
! 20%

Service
Non-service

47,535
1,943

39,761
6,039

Net Operating Revenue

49,478

45,800

Operating Cost & Expenses

(21,619)

(19,096)

EBITDA
Depreciation & Amortization

27,853
(12,161)

26,704
(10,888)

EBIT
Non-operating Expense - net

15,692
(4,835)

15,816
(6,616)

EBT
Provision for Income Tax

10,864
(519)

9,200
(2,282)

Net Income

10,345

6,918

EBITDA Margin (on Service Revenue)

59%

23

67%

growth in
service revenues
"

Strong EBITDA
margin at 59%

"

50% increase in
Net income

Balance Sheet
(P m)
Current Assets

2003

2002

37,316

39,231

101,178

96,270

Other Assets

3,393

3,692

Total Assets

141,886

139,193

9,280
26,942

7,430
23,269

Property and equipment - net

Current Liabilities
Short-term debt
Other current liabilities
Long-term Liabilities
Long-term debt
Other long-term liabilities

47,109
7,701

51,144
6,494

Shareholders' Equity

50,854

50,856

141,886

139,193

Total Liabilities and Equity

24

Total Asset base at P142bn

!

Consolidated cash & cash

equivalents at P15bn

Net Receivables at P18bn

Net subscriber receivable

days at 48

PPE rose to P101bn with

continuous expansion

Total Liabilities at P91bn

!

Total Debt at P56 bn, 49%

effectively in pesos

30% of net revenues is US$linked

Total Stockholders Equity at

P51bn

Leverage Profile
Gross Debt / EBITDA (x)
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00

Debt / Equity (x)

3.55
2.98

2000

2001

2.19

2.02

2002

2003

1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
-

5.00
4.00
3.00
2.00

6.19

6.18

2002

2003

70%

59%
52%

54%

52%

2001

2002

2003

40%

3.20

30%
20%
10%
0%

2000

"

1.10

50%

1.00
-

"

2001

1.15

Debt / Total Capitalization

60%

4.64

1.07

2000

EBITDA / Gross Interest (x)

7.00
6.00

1.44

2001

2002

2003

2000

Improvement in leverage profile as EBITDA and Equity growth outpaced debt

25
Interest Cover decline due to higher interest
expense in 2003

2004 Funding Requirements

!

Around 50% of planned capex for 2004 will be funded with

internally-generated cash flow

Funding requirements
"

US$30m drawdown from existing term facilities

"

US$150m new facilities

"

US$100m refinancing

26

Debt Repayment Profile

Debt Maturity Schedule (in US$ millions)

600
438
400

200

162

144

158

2005

2006

108

0
2004

"

"

2007

20082012

Average principal repayment over the next 3 years (2004-2006) is

US$155 million
Call Option in 2004 and 2007 on US$220m and US$200m bonds,
respectively
27

First Semi
-Annual Cash Dividend: P18 per share
Semi-Annual

Record Date:

Payment Date: 15 March 2004

18 February 2004

Dividend Policy
!

To declare cash dividends to common shareholders on a

regular basis

Payout rate of about 50% of prior years net income

" Payable semi-annually in March and September

Subject to annual review by Board of Directors

28

THANK YOU

29