Globe Telecom Inc. · PSE:GLO
Globe Telecom — Investor Day (December 2011)
29 slides from Globe Telecom's investor day presentation, Dec 2, 2011
Slide 1: Globe Telecom, Inc. – SingTel Regional Mobile Investor Day 2011
Globe Telecom, Inc. SingTel Regional Mobile Investor Day 2011 2 December 2011
Slide 2: Presentation Outline
Presentation Outline 9 Globe Telecom, Inc. (GLO) 9 Macro-Economic & Telco Industry Overview 9 Highlights of 9M 2011 Performance 9 Network and IT Transformation: Program and Investment Highlights 9 9M 2011 Financial Results 2 2
Slide 3: Globe Telecom, Inc. (GLO)
Globe Telecom, Inc. (GLO) Service Revenue Profile — 9M 2011 Broadband - 1% Mopne —" Fixed Line 7 : | Voice - 4% Fixed Line Data - 6% Consolidated Service Revenues (in Php Bn) 632 62.9 62.4 2007 2008 2009 2010* 9M10 omti1 % Ownership — Common Shares Ayala Corp 30.5% Public 22.2% Singapore Telecom 47.
Slide 4: Philippine Economy: Decelerating GDP growth amid government underspending
Philippine Economy: Decelerating GDP growth amid government underspending but personal consumption still rising fueled by sustained remittance growth 2012 GDP Forecast 6.0% 5.3% 5.0% aN 4.9% 8.9% YoY Growth eve 4.0% 10% 2.4% World ADB IMF Barclays Citi Credit UBS Global 2Q10 3Q10 4a10 1Q11 2011 Bank
Slide 5: Mobile Industry Backdrop: Industry revenues have recovered from declines of 2010
Mobile Industry Backdrop: Industry revenues have recovered from declines of 2010. Globe with sustained revenue market share improvements. Subscriber & Industry Revenues Revenue Market Share • SIMs at 93Mn with penetration at 96.5%; multi- 57.8% 58.9% 58.3% 58.9% 57.7% 56.5% 55.5% 55.1% SIM usage sti
Slide 6: Broadband: Continued industry growth, enabled by more affordable devices
Broadband: Continued industry growth, enabled by more affordable devices and operators’ sustained coverage expansion using wireless access technologies Subscriber & Industry Revenues Revenue Market Share* • 4.3 Mn subscribers as of 9M 2011, up 25% from 78.9% 76.5% 75.6% 72.6% 71.0% 69.4% 68.5% 68.2%
Slide 7: Presentation Outline
Presentation Outline 9 Globe Telecom, Inc. (GLO) 9 Macro-Economic & Telco Industry Overview 9 Highlights of 9M 2011 Performance 9 Network and IT Transformation: Program and Investment Highlights 9 9M 2011 Financial Results 7
Slide 8: 9M 2011 Performance – Maintaining momentum, extending our gains
9M 2011 Performance – Maintaining momentum, extending our gains Highlights Php Mn 9M 2011 Growth as of Growth as • 3Q 2011 revenues at new 9M 2011 of 6M 2011 record high – Up 3% Q/Q, against expectations of a Service seasonally lean quarter Revenues 49,987 9% 7% • Compared to 3Q10, 3Q11 revenues hig
Slide 9: Growth across all key product groups, despite negative impact of strong currency
Growth across all key product groups, and despite negative impact of strong currency Service Revenues by Product Category Service Revenue Growth in Php Mn YoY % change + 35% Reported +7% +16% +9% growth Growth at +9% +18% +11% constant fx + 9% + 9% 1,575 (682) 49,987 + 7% 3,279 45,815 Mobile Fixed L
Slide 10: Mobile: Revenue growth accelerating, with 3Q bucking seasonality trends
Mobile: Revenue growth accelerating, with 3Q bucking seasonality trends. New record for postpaid subscriber additions in 3Quu... Revenue Growth vs Same Period LY Subscriber Base (in Thousands) 0 13 %o YoY QoQ 9MI11 change _ change Globe Postpaid 1,368 39% t 9% 5% Globe Prepaid 15,055 13% t 2% 4% ™ 1
Slide 11: Broadband: Subscribers and service revenues up 36% and 35% respectively
Broadband: Subscribers and service revenues up 36% and 35% respectively Subscribers (in 000) 1,364 1,006 9M 2010 9M 2011 ME Wired Wireless Revenue Growth — YoY {in ‘Php Mn) 5,557 4,104 ra gM 2010 gM 20n Quarterly Revenues {in ‘Php Mn} 1,788 1,861 3QI10 4Q10 1QN 2QN 1,908 / I / | 3Q1 Blended Churn Ra
Slide 12: Sustaining growth by innovating, differentiating, and delivering value to our customers
Sustaining growth by innovating, differentiating, and delivering value to our customers Basta International Calls, SUPER IDD - . THE BEST SA GLOBE! Unlimited IDD calls "First to deploy ROADM and 4oG LUNES tosidestinations 9s network for improved services to PER Jog enterprise customers & the only te
Slide 13: Sustaining growth by innovating, differentiating, and delivering value to our customers
Sustaining growth by innovating, differentiating, and delivering value to our customers Compelling device offers Blackberry Bold Blackberry PlayBook CloudFone Ice – The most Samsung Galaxy Y Apple iPad2 9900 affordable Android phone Globe Prepaid “Go lang nang go” Campaign • Strengthening Globe Prep
Slide 14: Progress report on our 2011 key priorities
Progress report on our 2011 key priorities… 2011 Priorities as outlined Progress to Date during Feb 2011 Analysts’ Call • Expansion of new concept stores into other cities • Improvements to IVR systems & call center operations Create step change in customer • 2-year BSS transformation project with A
Slide 15: Presentation Outline
Presentation Outline 9 Globe Telecom, Inc. (GLO) 9 Macro-Economic & Telco Industry Overview 9 Highlights of 9M 2011 Performance 9 Network and IT Transformation: Program and Investment Highlights 9 9M 2011 Financial Results 15 15
Slide 16: We will dramatically transform Globe's mobile network and IT systems
We will dramatically transform Globe’s mobile network and IT systems to enhance customer experience and remain competitive in the future 1 Network Modernization 2 IT Transformation • Entails change-out of existing mobile network • Involves replacement of ~90% of Business equipment, optimization of n
Slide 17: Network modernization is Globe's largest investment to date
Network modernization is Globe’s largest investment to date, 1 spanning all wireless network elements across all layers & regions Objectives of Network Modernization Expected Benefits • Significantly improve network service quality & • Increase revenue - From improved network quality customer experi
Slide 18: We will build a modernized, scalable, and future-proof network
We will build a modernized, scalable, and future-proof network 1 that is responsive to the future needs of our customers Where we are today… • Our current mobile network infrastructure is increasingly challenged in meeting the future needs of our customers in terms of robustness and scalability • We
Slide 19: Likewise, we will transform our IT systems in response to changing business demands
Likewise, we will transform our IT systems in response to changing 2 business demands and better support our marketing objectives Where we are today… We have customer segmentation, analytics, and campaign capabilities that need to be expanded Our products have limited convergence, and could bene
Slide 20: Financial implications of transformation initiatives
Financial implications of transformation initiatives: Lower near-term profits from non-cash, accelerated depreciation of non-useable assets but core earnings and operating cash flows remain strong and well-positioned to grow given the significantly improved capabilities PnL, Cash Flow, Balance Sheet
Slide 21: Lower near-term profits from non-cash, accelerated depreciation of non-useable assets
Lower near-term profits from non-cash, accelerated dep’n of non-useable assets but core earnings and operating cash flows remain strong and well- positioned to grow given significantly improved capabilities Non-cash, accelerated depreciation of non-useable assets • Network and IT transformation prog
Slide 22: Dividend Policy Change: Pay-out rate now based on core net income
Dividend Policy Change: Pay-out rate now based on core instead of reported net income. This ensures that regular dividend payments will be sustained and will remain competitive despite expected near-term decline in net income Change in dividend policy • Board of Directors has approved change in divi
Slide 23: Presentation Outline
Presentation Outline 9 Globe Telecom, Inc. (GLO) 9 Macro-Economic & Telco Industry Overview 9 Highlights of 9M 2011 Performance 9 Network and IT Transformation: Program and Investment Highlights 9 9M 2011 Financial Results 23 23
Slide 24: Consolidated Financial Highlights
Consolidated Financial Highlights *Core NIAT excludes forex, mark-to-market gains and losses, and non-recurring items 24
Slide 25: Continued improvements in operating margins
Continued improvements in operating margins… EBITDA (in Php Bn) 5% 9% 23.3 24.5 24.8 27.0 76% 2.6 1.5 EBITDA Margin 25
Slide 26: Operating Expenses & Subsidy
Operating Expenses & Subsidy YoY Change OPEX Growth – YoY in % (in Php Mn) 463 22,960 721 332 418 Staff Costs 11% 21,026 Marketing & Subsidy 19% +9% Network Costs 4% Others 10% Total 9% QoQ Change OPEX Growth – QoQ in % (in Php Mn) 45 7,997 161 159 Staff Costs 2% 7,602 30 Marketing & Subsidy 11% Net
Slide 27: Financial position remains strong, with conservative gearing levels
Financial position remains strong, with conservative gearing levels. Return on equity higher... Debt to EBITDA Debt to Equity Return on Equity 1.50 1.30 1.35 FYo7 FYo8 FYo9 FY1o 6° ooMn FYo7 1.0 1.0 7 4 24% 26% 21% 1.00 23% 21% FYo8 —- FYog FYIo | ' gMn FYo7 FYo8 =‘ FYog FYio °ogMn Capex (Php Mn) an
Slide 28: Forward Looking Statements – Disclaimer
Forward Looking Statements – 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,” “pla
Slide 29: Thank You
29 THANK YOU 455) Globe