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Globe income rises 11% on lower non-operating charges, CREATE law

Globe Telecom, Inc. announced on Friday an 11% increase in its first-quarter attributable net income, owing to a newly signed tax relief law and a decrease in non-operating charges.

Globe’s attributable net income reached P7.31 billion in the first three months, up from P6.58 billion in the same period in 2020, the Ayala-led telco said in a statement to the stock exchange.

“Despite the resurgence of COVID-19 (coronavirus disease 2019) cases in the country and the lingering uncertainties from the pandemic, we are encouraged by the improvements in Globe’s first quarter results,” Globe President and Chief Executive Officer Ernest L. Cu said.

“Looking ahead, we believe that Globe is well positioned to provide more digital solutions and innovative offers to make our services more relevant to our valued customers, especially during this time of crisis,” he added.

The company’s total revenues for the first quarter rose 4% to P42.85 billion from P41.19 billion in the same period in 2020. Service revenues — which include mobile, home broadband, corporate data, and fixed line voice — increased 2.5% to P37.81 billion from P36.88 billion previously.

Expenses increased 14.1% to P35.77 billion from P31.36 billion previously. This item covers general, selling and administrative expenses; depreciation and amortization; cost of inventories sold; interconnect costs; finance costs; and impairment losses.

Globe said its net income was “up 11% relative to the same period of 2020, as the decline in non-operating charges fully offset the hike in depreciation expenses.” Non-operating charges dropped 41.18% to P1.29 billion from P2.2 billion previously.

The company’s first-quarter operating costs, including subsidy and depreciation charges, stood at P28.7 billion, up 15% versus the first quarter of last year. Globe also said the higher equity share in net income of its affiliates resulted in lower non-operating expenses.

The lower taxes following the retroactive impact of Republic Act No. 11534 or the Corporate Recovery and Tax Incentives (CREATE) law resulted in the improvement in Globe’s after-tax income to P7.34 billion from P6.58 billion previously. The recently implemented law reduced the income tax rate to 25% from 30%.

“Excluding the impact of CREATE adjustment, normalized NIAT (net income after tax) would have been P5.0 billion, or 27% lower year on year,” Globe noted. At an online briefing, Globe Chief Finance Officer Rizza Maniego-Eala said the company saved “P330 million” in the first quarter because of the CREATE law. “That is positive for the company to help us reinvest in our massive network buildout throughout the country,” she said.

“Our capex (capital expenditure) for this year is P70 billion, with P19 billion spent in the first quarter,” she also noted.

Globe’s EBITDA (earnings before interest, taxes, depreciation and amortization) was P18.3 billion, down 11% year on year due to higher operating expenses.

“This led to weaker EBITDA margin to end the quarter at 48% from 56% a year earlier,” it noted.

The company’s first-quarter core net income, which excludes the impact of non- recurring charges, and foreign exchange and mark-to-market charges, increased 13.4% to P7.44 billion from P6.56 billion in the same period in 2020.

Globe Telecom shares closed 1.16% higher at P1,831 apiece on Friday. — Arjay L. Balinbin

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