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GLOBE
TELECOM, INC.
GLOBE
TELECOMMUNICATIONS, INC.
Since time immemorial technological advancement has been bringing about a significant
change to a country’s economy. One of the sectors that continues to bring such change is the
telecommunications industry. It is a ginormous industry made up of all telecommunications
companies selling service and non-service products to their customers. Since the growth in the
mobile industry and the increasing demand for wireless internet connections has been dramatic by
virtually any measure, it continuous to be one of the drivers of growth and innovation in a country’s
economy.
In the Philippines, one of the major providers of digital wireless communication services
is Globe Telecom, Inc., a successor of Globe-Mackay Cable and Radio Corporation that was
incorporated in January 16, 1935. For many years Globe Telecom Inc. has partnered with a lot of
telecommunication companies and has improved its services since then. One of the catalyst of its
improvement in the earlier years, enfranchised under Republic Act (RA) No. 7229 and its related
laws, was dated way back in 1992 when Globe Telecom, Inc. merged with Clavecilla Radio
Corporation which gave it the capability to provide all forms of telecommunications to address the
international and domestic requirements of its customers. In 2017, Globe Telecom took a big step
with its improved PH mobile internet services with the help of its deal with San Miguel. It was at
that time when Globe deployed a newly enhanced Long-Term Evolution (LTE), a standard for
high-speed wireless communication for mobile devices and data terminals, which was originally
launched in 2012. Such improvement, according to Globe Telecom’s president and CEO, made
the network more robust and resilient to cater the growing data requirements of customers and
improve their digital lifestyle.
With Globe Telecom’s objective to delight their customers at all times, it has assimilated
the value of innovation in providing products and services to the market. Postpaid and prepaid
services, mobile data services, broadband services and IT-enabled services are some of the services
that Globe provides. It also sells products like popular brands of mobile devices and accessories,
SIM packs, WIFI devices, apparel, nomadic broadband sticks, call cards, modems and many more.
In the ever-changing business world, competition is high. Apropos to that, more
specifically in the Philippines’ telecommunication industry, Globe Telecom has always stood its
ground. It has always adapted to changes in its business environment that Globe Telecom is
considered as one of the major telecommunication carriers in the country. Its contender of the same
title is PLDT. Philippine Long Distance Telephone (PLDT) has always diversified the services it
provides through its mobile group, SMART Communications and Sun Cellular. According to an
online article by Miguel Camus, PLDT controls 70% of the mobile market leaving Globe with
30% control.
II. TABLES
HORIZONTAL ANALYSIS
Shareholder’s Equity
Paid-up capital 44,505,703.00 44,486,976.00 18,727.00 0%
Cost of share-based payments 584,586.00 338,008.00 246,578.00 73%
Other reserves (1,072,925.00) (1,211,513.00) 138,588.00 11%
Retained earnings 19,422,402.00 15,778,557.00 3,643,845.00 23%
Equity attributable to equity holders
63,439,766.00 59,392,028.00 4,047,738.00 7%
of the Parent
Non-controlling interest 36,536.00 5,754.00 30,782.00 535%
Total Equity 63,476,302.00 59,397,782.00 4,078,520.00 7%
Total Liabilities and Equity 249,863,110.00 195,679,751 54,183,359.00 28%
HORIZONTAL ANALYIS
TREND ANALYSIS
TREND ANALYSIS
PROFITABILITY RATIOS (Amounts in Percentage Form, Except for the last two profitability ratios)
Return on Sales 13 14 13
Gross Profit Rate 91 89 90
Return on Total assets 8 10 9
Return on Shareholder's Equity 26 29 28
Return on Ordinary Shareholder's Equity 34 36 33
Operating Leverage 4 4 4
Times preferred dividend earned 29 30 47
LIQUIDITY RATIOS
Operating turnover n/a n/a n/a
Inventory turnover 3 4 3
Inventory days 122 91 122
Receivable turnover n/a n/a n/a
Collection period n/a n/a n/a
Payable turnover n/a n/a n/a
Payable days n/a n/a n/a
Material turnover n/a n/a n/a
Work-in-process turnover n/a n/a n/a
Finished goods inventory n/a n/a n/a
Cash turnover n/a n/a n/a
Days to pay operating expenses n/a n/a n/a
Working capital turnover -4 -6 -8
Assets turnover 57 64 61
Current assets turnover 3 3 3
Net working capital ₱(29,379,243) ₱(18,457,461) ₱(13,607,651)
Current ratio (In percentage form) 64 72 77
Quick assets ratio (In percentage form) 59 65 72
Defensive-interval ratio n/a n/a n/a
Earnings per share ₱116 ₱120 ₱99
GROWTH RATIOS (Amounts in Percentage Form, Except Per Share Figures)
Price-earnings ratio 9 18 17
Dividend yield ratio 8 4 4
Dividend payout ratio 76 69 76
Book value per share 478.13 447.46 410.88
LEVERAGE RATIOS
Debt-to-equity ratio (In percentage form) 150 108 108
Debt-to-assets ratio (In percentage form) 38 33 33
Equity-to-assets ratio (In percentage form) 25 30 30
Equity multiplier 4 3 3
Times interest earned 4 6 6
Financial leverage 1 1 1
Total leverage 5 4 4
Fixed charges rate n/a n/a n/a
Total-assets-to-total liabilities ratio (In percentage form) 134 144 144
Non-current assets-to-long-term liabilities ratio (In
percentage form) 189 210 205
III. INTERPRETATIONS
GROWTH
Price earnings ratio allows us to measure the number of years before investment in stock
can be recovered by the investors in relation to the earnings it receive from the company and
with this, we can say that most investors prefer to have a lesser price earnings ratio. In the year
2015 in reference to year 2014, the said ratio of Globe Telecommunication has a slight increase
due to the increase of the company’s market share, which was driven by the myLifestyle Plan
when it recorded 12.2 million net additions. The said myLifestyle Plan was a significant growth
driver of postpaid revenues and customer base for it perfectly caters to their customers’ digital
lifestyle. In year 2016, it has a decreased due literally to the decrease in the market value of the
company’s shares. Nevertheless, if the investors foresee the use of this ratio as a measure to the
profitability of the company, then they will prefer to have a higher result of P/E ratio, which
would make 2016’s result be on disadvantage.
Dividend yield ratio of the company measures the percentage return on a particular stock
that has resulted from current operation of the company through the issuance of dividend. This
ratio is important for those investors who purchase shares to earn dividend income. In the above
table, we could see that Globe Telecommunication has a less than 10% of dividend ratio even
though the said company is earning more compared to its competitors in telecommunication. As
for the year 2016, the company only increased its dividends to common shareholders for about
6.03%; minimal increased but doubled the rate of dividend yield ratio due to its corresponding
decrease in market price per share.
Dividend payout ratio measures the percentage of earnings that have been paid out to
shareholders as dividends. This helps the investors in establishing predictions on dividends will
be paid in the future using the measures provided in the past. Globe Telecommunications has a
76%, 69% and 76% dividend payout ratio for the year 2014, 2015, and 2016, respectively.
Making year 2014 as a reference, the number of outstanding shares amounts increased by
0.00734% in 2015. The dividend payout ratio in 2015 decreased by 12.66% because of the
21.11% increase in its earnings per share (EPS). In year 2016, its dividend payout ratio increased
back to 76% because of the increase of its dividend payments. In average for the 3-consecutive
year, Globe Telecommunications has a 73.67% of dividend payout ratio which nears to 100%
may mean that the company’s cash reserves is used to pay dividends to its investors.
PROFITABILITY
LEVERAGE
Earnings per share measure the amount of money each share of stock would receive if all
of the profits were distributed to the outstanding shares at the end of the year. In the given liquidity
ratio table, Globe has an increasing earnings per share. This means that it is becoming more
profitable each year. Thus, it has more profits to distribute to its shareholders and making its market
value increase each year.
Equity multiplier is a financial leverage ratio that measures the amount of a firm's assets
that are financed by its shareholders. It shows the percentage of assets that are financed or owed
by the shareholders.
VERTICAL ANALYSIS
For the year ended December 31, 2016
(Amounts in Philippines Peso and in Thousands, Except for Figures in Percentages)
The table shows a comparison between the financial performance of Globe Telecom and
PLDT. Globe telecom shows amounts lesser than PLDT’s because Globe only controls 30% of the
mobile market, based on the PLDT’s 70% control. PLDT got its insurmountable lead because it
was focusing on acquiring businesses to increase its market shares, a recent acquisition was its
massive acquisition of Digital Telecommunications Philippines, Inc. (Sun Cellular) in 2011. On
the other hand, Globe has been focusing on providing data services that it had been catching up
with PLDT’s market shares in the recent years.
Based from the data obtained from each of the company’s annual reports, Globe’s financial
performance in terms of net income is lesser by 1% than that of PLDT’s which is disadvantageous
because a slight difference would mean an opportunity for its rival to rise above. Globe’s financial
performance in terms of total costs is lesser by 4% than that of PLDT’s, this would mean that
Globe is much more effective and efficient in controlling its cost than PLDT. The difference
between Globe and PLDT’s total gross income is due to factors such as but are not limited to (1)
the number of subscribers it caters (2) the strategies they made in selling their products and
services, and (3) customer satisfaction.
The opportunities of Globe Telecom are but are not limited to the following: (a) continuous
development of modern technology that will help aid in providing a much faster and suffice the
user’s needs (b) expected increase in smartphone penetration will influence more people in seeking
high-speed (c) internet services demand is set to skyrocket in the coming years, and accordingly
(d) the company’s income is expected also to increase.
As of now, the threat that Globe Telecom must consider is the plan of San Miguel
Corporation. The president of the said company announced earlier in 2015 that they are planning
to launch a “better” mobile broadband service, a known threat that is yet to come. Overall, Globe
Telecom is expected to continue experiencing a harmonious business operations in the near future.
V. REFERENCES
[1] Globe Telecom, Inc. (2016). Annual Report 2016. Retrieved from https://annual-
report.globe.com.ph/content/dam/multi-microsites/docs/annual-report/2016/GLOBE-
AR2016-APRIL17-MICROSITE-LOW-RES.pdf
[2] Globe Telecom, Inc. (2015). Annual Report 2015. Retrieved from https://annual-
report.globe.com.ph/content/dam/multi-microsites/docs/annual-
report/2015/GLOBE.pdf
[3] Globe Telecom, Inc. (2014). Annual Report 2014. Retrieved from https://annual-
report.globe.com.ph/content/dam/multi-microsites/docs/annual
report/2014/GLOBE.pdf
[4] PLDT Inc. (2016). Annual Report 2016. Retrieved from http://www.pldt.com/docs/default-
source/financial-results/fs/2016/pldt-audited-2016-fs.pdf
[5] Globe Company Information. Retrieved from http://edge.pse.com.ph/companyInformation
/form.do?cmpy_id=69
[6] Globe products. Retrieved from https://shop.globe.com.ph/products
[7] Camus, Miguel. 2016. Telcos seen facing tougher times ahead. Retrieved from
http://business.inquirer.net/205851/telcos-seen-facing-tougher-times-ahead
[8] Dividend Payout Ratio. Retrieved from
http://www.investopedia.com/terms/d/dividendpayoutratio.asp#ixzz4upMJDmZK
[9] Bilant, Sarah. Dividend Payout Ratio: Definition, Formula & Analysis. Retrieved from
http://study.com/academy/lesson/dividend-payout-ratio-definition-formula-
analysis.html
[10] Dividend Yield Ratio. Retrieved from http://www.accountingformanagement.org/dividend-
yield-ratio/