Globe sees more core business growth and sustainable free cash flow generation this year
Mar 21, 2023
Leading digital solutions platform Globe sees more core business growth as it expects mid-single digit growth in overall service revenues versus the record level of 2022. Likewise, the company is focusing its efforts on free cash flow sustainability by slowing down on capital spending and optimising network utilisation, as it makes the most out of network investments made in the last three years.
Globe Chief Finance Officer Rizza Maniego-Eala said the company is also looking at maintaining its 50 percent margin for earnings before interest, taxes, depreciation, and amortisation (EBITDA) this year.
“We have a guidance of revenue growth of mid-single digit in 2023. It is the same guidance that we had in 2022, despite the major macroeconomic headwinds we are facing this year. We likewise gave guidance of maintaining our 50 percent EBITDA margin, which we will deliver by following through on our cost management initiatives” she said.
Globe’s EBITDA inched up by six percent to an all-time high of 79.1 billion Philippine peso (₱) last year from ₱74.9 billion in 2021, with an EBITDA margin of 50 percent from 49 percent in 2021.
The company also booked a four percent rise in service revenues to a record high of ₱158 billion in 2022 from ₱152.3 billion in 2021, driven by mobile and corporate data services and increased revenue contribution of non-telco subsidiaries. Globe’s revenues in the fourth quarter surpassed the ₱40 billion level for the first time in the company’s history.
On the bottomline, the company reported a 46 percent jump in net income, to end the year at ₱34.6 billion from ₱23.7 billion in 2021. This increase was brought about by the gains the company recognised for the partial sale of its datacentre business, as well as the execution of the first few tranches of the sale and leaseback of its tower assets.
Globe is expecting more proceeds from the tower sale and leaseback initiative this year, with the balance of the towers to be turned over progressively over the next few quarters. Last August, Globe decided to sell more than 7,000 towers to MIESCOR Infrastructure Development Corp. (MIDC), Frontier Tower Associates Philippines, and PhilTower Consortium Inc. to improve its balance sheet health and finance its capital expenditures. It has so far raised around P39.0 billion from the transactions.
To strengthen free cash flow generation starting this year, Globe is committing to a lower capital expenditure level of $1.3 billion in 2023 and aims to further reduce this to $1 billion in 2024. This optimisation of capital spending and improvement in free cash flow will not be at the expense of service quality as the company will continue with its commitment to deliver a world-class network and an industry-leading customer experience.
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