Globe Telecom to invest $640 million in 2012-13

Telecom Lead Asia:  Globe Telecom, leading mobile
operator in the Philippines, is on an expansion spree. The mobile service
provider has 12,714 base stations and 7,060 cell sites nationwide to support
its 2G, 3G, 4G and WiMAX services. Albert de Larrazabal, chief financial
officer of Globe Telecom talks about the company’s strategy and expansion plans
along with performance and market challenges.

What is the strategy to improve market share of Globe

Competition remained intense with recent changes in the
telecommunication industry structure that has redefined its competitive
dynamics. With this, Globe is stepping up efforts on various aspects of its
business to create excellent value for its customers and thereby, further
increase its market share.

In order to stay competitive in the market, Globe has
offered customization of plans.

To keep its postpaid subscribers loyal, Globe introduced
an array of customizable plans suited for any lifestyle via its loyalty
offers.  To draw new prepaid customers, Globe came up with attractive and
innovative service offerings such as a self-service menu that provides
customers an easy way to subscribe to promos and avail of other Globe services
and new services for calls, texts, and mobile browsing. 

TM, the company’s brand for the value-conscious segments,
had a refreshed campaign which highlights the key service features of the brand
such as the rewards obtained every time a subscriber re-loads, the various
unlimited on-net and all-network offers, the low-denominated service offers,
and recently, the launch of mobile browsing.

For the broadband business, Globe launched a lifestyle
website that features the coolest and latest offers, downloads, and
subscriptions over 50 partner websites and establishments.  Together with
this was the debut of Tattoo Prepaid Lifestyle Sticks which are especially
designed with the subscriber’s passions in mind.

 What were the reasons behind dipping of net income
during past quarter?

Like most telcos around the world, the core revenue
streams of voice and SMS are under pressure of thinning margins. To build
service revenues, Globe re-invested part of its revenue gains in additional
marketing and subsidy spend in order to acquire new subscribers, re-contract
open postpaid customers, and defend its market position through various
brand-building initiatives. The Q1 results also reflect continued
investments in the company’s network infrastructure, including charges related
to its massive network modernization and IT transformation programs.



What measures has the company taken to improve the
network quality and quality of service?

Globe is undergoing a massive $790-million network
modernization and IT transformation program in the next five years that will
dramatically enhance customer experience and competitiveness. The future­-proof
network will cater to the increase in voice and SMS traffic and the expected
surge in mobile data traffic with the popularity of social networking and the
increase in smart phone penetration.  This is a far- reaching
transformation resulting in vast improvements in customer experience quick
and reliable call connections, instantaneous text messaging, blazing fast
internet browsing, and proactively intelligent spot-on customer support,
further strengthening. Altogether, Globe believes that through its
comprehensive network modernization and IT transformation program the company
is advantageously positioned to become the most preferred brand among
telecommunication service providers.

Which new IT tools has the company implemented to improve
its operations? Kindly share new technology deployments?

To reform Globe’s business processes, the back-office
support systems (BSS) component of the IT transformation program will
streamline business procedures to prepare the company to meet changing market
and business demands.  Amdocs was tapped as innovation partner to
spearhead the business process reformation.  The transformation program will
involve the re-engineering of business and operating systems procedures which
will increase efficiencies in our current billing systems and improve response
time to customer queries and service requests, bringing Globe Telecom’s
customer service to world-class standards.  Globe
invested approximately $90 million in its IT transformation program.

What are the steps Globe Telecom plans to take for the
modernization of its network?

Globe Telecom invested on a $700 million network
modernization program to upgrade and improve its mobile network nationwide.
Network modernization paves the way for future-ready technologies to embrace
the surge of mobile data and broadband usage, as well as allow increased demand
for voice and SMS service.

The Philippines has never seen a network
modernization program upgrade of this scale. Once completed, the Globe network
will boast of greater network availability, impressive quality on voice calls,
instantaneous delivery of SMS, improved call set-up rates and faster browsing with
minimal buffering of multimedia content streaming.


With network modernization, Globe aims to be
disaster-ready with greater resiliency. The Globe network will have a
self-healing core network architecture, weather proof sites and enhanced backup
power systems to ensure service availability even during prolonged commercial
power outages. In addition, the new Globe network employs green technology – more efficient in power usage and more nature friendly.


HSPA+ (4G) is currently being rolled out in select areas
in the country as the bulk of the pre-work required to set-up the end-to-end
network modernization has been completed. Globe is also deploying its first
batch of LTE in the nation’s capital.

 What are your future investments and expansion

The network modernization and IT transformation program
represents a huge investment commitment – about $790 million in total Capex
spending over the next five years with a total of about $640 million to be
spent this year and in 2013.

 What are the emerging challenges in the market?

Globe expects a tough competitive environment going
forward and peaking mobile penetration rates. Also, with the popularity of
social networking among Filipinos and the increase in smartphone penetration,
Globe anticipates the significant increase in subscriber data consumption. This
is a challenge today as the company prepares its network for data
explosion.  However, it also presents an opportunity to build new revenue
streams for the company.  Competition in Philippine telco will remain
fierce and the possibility of having a new entrant is not remote.

What are the new Value added services that
Globe Telecom plans to launch?

Expect Globe to introduce more innovative value added services
that will further differentiate it from competition. Mobile data services will
be at the forefront, loyalty programs will be revisited.  Also, 
Globe will continue to make it easier for customers to deal with the company
through better support services including online sales channels, self-service
bills payments, Stores, and distribution channels. Related to this, Globe
recently launched Kickstart Ventures, a pioneering business incubator designed
to provide aspiring technopreneurs with the needed support mechanisms to start
their own business and help nurture the mobile ecosystem.

Danish Khan
[email protected]