Message from the President & CEO

Globe once again produced a banner year in 2015 as business momentum continued. Consolidated service revenues topped the P100 billion mark for the first time in the company's history, reaching a new record of P113.7 billion, up a robust 15% from the previous year's P99 billion, outpacing the industry's growth in 2015. The strong revenue performance was driven by broad-based growth, particularly the data-related product segments, and complemented by the consolidation of Bayan Telecommunications, Inc. ("Bayan") in the second half of 2015. Even excluding the second semester results of Bayan, consolidated service revenues would have still improved by a solid 12%. On the back of record revenues, EBITDA also registered a record high, reaching P45.8 billion in 2015, up a strong 17% year-on-year. Net income likewise posted an all-time high of P16.5 billion, a 23% increase from the P13.4 billion last year. This was mainly driven by the 9% EBITDA growth and non-recurring gains related to two transactions executed in 2015 – the sale of a 51% stake in Yondu, Inc. ("Yondu") to Xurpas, Inc. and the acquisition of 98.6% equity stake in Bayan. Lastly, consistent with the commitment to shareholder value, our Board of Directors declared dividends in 2015 amounting to P83 per common share, a robust increase of 11% year-on-year from the P75 dividend declared in 2014.


Broad-based, Data-driven Revenue Growth Marked by Outperformance in Mobile 
The 15% growth in revenues remained broad-based across all businesses spurred by the demand for data. Total data-related revenues accounted for 42% of consolidated services in 2015, as compared to only 33% in 2014.


Mobile revenues were up 9% to P85 billion from the P78 billion recorded a year ago with mobile subscribers improving 20% year-on-year to 52.9 million. We again dominated the postpaid segment with revenues up a solid 7% year-on-year to P31.9 billion from P29.9 billion in 2014 and now contributes 38% of mobile revenues. It is worth noting that our dominance in postpaid has led to gains in the prepaid segment as well. Notwithstanding the high mobile penetration and multi-SIM incidence in the market, we have outperformed the industry with double digit growths both in terms of prepaid revenues and prepaid subscribers. Prepaid revenues grew to P53.1 billion in 2015, up a solid 10% on the back of a 21% increase in prepaid subscribers and ending the year with 50.5 million prepaid subscribers. As of the fourth quarter of 2015, we are now the number 1 brand in terms of revenues for both the postpaid and prepaid segments.


Mobile data services again proved to be a key catalyst for mobile revenue growth, reaching P22.1 billion in 2015, a 55% increase against the P14.3 billion in 2014. With smartphone penetration in our network reaching over 40%, our continued efforts to seed mobile adoption through market-relevant offers and the growth of our nomadic broadband subscriber base, total wireless data traffic surged by 82% year-on-year. Broadband service revenues, following the increasing demand for internet and data connectivity, reached P17.5 billion, 38% higher than P12.7 billion in 2014. Meanwhile, fixed line data services reached P7.7 billion in 2015, a 40% increase from 2014, driven by rising demand for corporate connectivity, managed service solutions and cloud-based services.


These trends are indicative of the prevalence of data-enabled applications in our subscribers' digital lifestyles.


Consistent with our thrust of pursuing collaborative partnerships with global giants in the world of content, we announced our partnership with Walt Disney Southeast Asia last May to offer a complete suite of entertainment experiences to its customers. The collaboration aims to give Filipino customers access to video-on-demand, interactive content, promotions and other related services across multiple devices and affirms the relationship of Globe with Disney whose brands include Disney, Pixar, Marvel, Star Wars and the global leader in short-form video, Maker Studios. As an initial salvo, coinciding with the premier of the highly-anticipated and much awaited seventh installment of the Star Wars film series, Star Wars: The Force Awakens, the company launched a series of memorable Star Wars events in the country last December.


We likewise expanded its partnership with Google by offering Chromecast, which allows media streaming from data-capable devices onto audio or video devices such as high definition TVs or home audio systems via WiFi. It is also important to mention that our partner HOOQ, a Singtel joint venture which was the first in Asia to offer video-on-demand service, recently won in the GSMA GLOMO Awards as the Best Mobile App for TV or Film Video Content, besting similar product offerings of other global telcos.


We also opened our first 2-storey Generation 3 (GEN3) Store in Greenbelt in August, extending GEN3's world-class retail experience to more subscribers. The Globe GEN3 stores are home to various lifestyle zones with stories and exciting features for customers to experience and enjoy. These zones feature latest trends in product, people and even in business. Various lifestyle vignettes illustrate mobile and broadband technologies as connected solutions—featuring the latest devices, apps, digital connectors, gadgets and services that contribute to the total interactive customer experience.


Complementing the suite of digital lifestyle products and services that we offer, we further enhanced the customer experience by continuously developing our network ahead of the anticipated growth in data traffic. Our foresight in changing out our legacy network and back-office system to a now-modernized data-ready network and integrated business support system proved to be the right move. As of end-December 2015, we have a total of 28,336 base stations, with over 18,300 for 4G to support the service requirements of our customers. Last March 2015, we also partnered with Huawei to deliver SingleSON or "Self Optimizing Network" technology, allowing automatic diagnosis and optimization of the Globe network, to continuously provide seamless customer experience. Globe is the first telco in the world to deploy the SingleSON technology. And last November, this partnership was further strengthened by a 5-year deal that aims to expand and enhance the mobile network and create a mobile innovation center.


Acquisition of 98.6% of Bayan and Sale of 51% of Yondu 
The year 2015 also marked the completion of our acquisition of Bayan. We completed in July 2015 the acquisition of 98.6% equity stake in Bayan through a combination of conversion of debt into equity and the acquisition of existing shares previously held by the Lopez Group. Our acquisition of control in Bayan likewise allowed Bayan to exit rehabilitation last November 2015, which in turn will enable Globe and Bayan to further realize synergies for both companies. Bayan likewise provides us access to its fixed line voice, broadband and fixed line data customers for potential up-sell and cross-sell of Globe services.


In September 2015, we also solidified our partnership with Xurpas through the sale of 51% of Yondu, consistent with our track record of partnering with leading companies in the internet and digital space. Apart from enabling Yondu to transform into a regional arm for digital content distribution and other technology-driven services, the sale also allowed Globe to partially realize the significant increase in the value of Yondu.


These two transactions resulted in one-time gains, which boosted net income in 2015. The net gain resulting from these two transactions amounted to over P1.6 billion in non-recurring income, coming from fair value adjustments and recognized gains on the sale. Adjusting for the said one-time income, Our normalized net income would have been P14.8 billion, still a robust 11% improvement against the reported net income of P13.4 billion in 2014. Core net income, which adjusts for non-recurring items as well as foreign exchange and mark-to-market items, grew by 4% year-on-year to P15.1 billion from the P14.5 billion the previous year.


Culture of Sustainability Driven by an Engaged Workforce
We remain committed to our philosophy of Circle of Happiness, where engaged employees result in delighted customers and happy stakeholders. In this light, we continue to invest in our people. Last October, Globe University officially opened its doors to all our 6,800-plus employees. With the largest classroom capable of sitting 200 participants, the Globe University program serves as a platform in which employees can take different courses on sales & marketing, technical, professional development and leadership to further hone their respective skills and improve the service to our customers.


As we continue to work together in transforming our culture, measurement of employee engagement continues to evolve as well. Moving beyond employee satisfaction, we look for engaged, enabled, and energized employees to deliver their best performance, and sustain it over time. In the recent employee engagement survey conducted by Towers Watson, we registered a Sustainable Engagement Score of 89%, higher than the overall engagement scores of 84% from global high performance norm, 82% from global telco norm, and 85% from Philippine national norm.


Apart from the fruits delivered by employee engagement in terms of customer service, we have likewise received recognition from various groups in line with its thrust in employee engagement. We won the Silver Stevie award for the Human Resource Department for the year for the telecommunications category while our Chief Human Resource Officer, Mr. Renato Jiao, also bagged the 2015 People Manager of the Year for Globe in the recent People Management Association of the Philippines awards. These are only a few of the several international and domestic awards that we received in 2015 including the telco service provider of the year, corporate governance awards, customer service awards, and new products and innovations awards.


The record breaking performance, the increasing number of partnerships, the growing investment in network development and the high employee engagement score - these are all testament to our commitment to create shared value to all its stakeholders. We are confident that we will continue to be an aggressive industry challenger moving forward, sustain the growth momentum, and create a wonderful world.


Ernest Cu
President & CEO