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The Globe and PLDT numbers

Sir LitoGlobe Telecom’s aggressive play is paying dividends, as its nine-month financial performance has beaten that of erstwhile telephone monopoly Philippine Long Distance Telephone Co. (PLDT) by a wide margin. PLDT’s legacy businesses as well as that of its wireless business have shown a frightening drop of 6 percent from P91.2 billion to P85.5 billion, and that alone was no comforting thought for market strategists who looked at the numbers. 

In the case of Globe Telecom, the financial results show robust growths on all fronts, with core net income up by 9 percent to P12.6 billion; mobile subscriber base rising by 17 percent to 50.1 million; and new partnerships that spell big dividends down the road in what analysts attribute to a company thrust that focuses on improving the company’s growth trajectory.

It is possible that there is a sense of foreboding on the part of PLDT’s board, which a while back announced a revamp in its management. But still, the numbers continue going down. We received a commentary from one of the chief strategists of a stock-brokerage firm and that sums up to us the state of affairs at PLDT whose corporate culture has long been that of an era long gone: a monopoly.

“The wireless and legacy businesses (of PLDT) are being eroded by competition from Globe and being devoured by (PLDT’s) own data/broadband solutions, “ said the chief strategist. And then, the market analyst warned of lower dividend payouts as well as higher capital expenditures. Imagine PLDT’s own businesses eating into its very own? It is almost a zero-sum game, only in this case, what PLDT earns from one sector of its business, it loses from its very own.

There is something amiss in the PLDT play, and if one were to look at the recent strategic partnerships that Globe and PLDT have announced, the stark contrast is manifest. Consider PLDT’s Voyager Innovations, which the company announced has generated consolidated revenues of about P900 million, up by a huge 25 percent. Then there is the PLDT Capital that the company formed as an innovation gateway and then the $10-million investment in Phunware, a US based mobile-platform business.

For Globe, what it did was to cement further its partnership with Japan’s Brastel Co. Ltd., with the business arrangement hinged on a co-branded reloadable calling card for call to Globe and TM numbers in the Philippines at a preferential rate. Then there is that Globe subsidiary G-Xchange, which entered into a partnership with four key technology-retail companies in the country. There is also that partnership with Xurpas, the tech darling in the stock market, which bought out 51 percent of Globe’s ownership stake in Yondu, a mobile content developer and IT service provider.

It would seem that PLDT’s thrust does not have a seamless ring to it, probably due to the failure of its management to discard its old corporate culture when anything the company did translated into tons of money at the tills. The new businesses the company is going into are so varied it would be difficult to make sense of it. It is so much like the company’s pension-fund investment in Channel 5 that has bled the employees’ pension fund of upwards of P25 billion.

In contrast, Globe does not mind losing control of Yondu so that it could further increase its earnings. For the synergy that would arise with the team-up of Xurpas and Yondu, the future holds bright for Globe’s dividend payouts. One must remember that Xurpas, whose IPO debut broke all records, and Yondu have similar business offerings, and with the strategic partnership, that means higher revenues on a per-employee basis since duplications would be removed.

And Xurpas, which started out with just a capital of P62,500 just 14 years ago and is now worth P28.7 billion, is into the development of casual games, messaging and other social-media applications. No wonder, Globe President and CEO Ernest Cu said of the partnership: “Xurpas’s track record in building businesses centered on consumer content will round out the technical and innovative capabilities of Yondu.”

For Cu, the company remains “focused in our efforts to create a wonderful experience for our customers by providing relevant products and services that cater to the growing demand for connectivity and quality digital content.” And that probably explains why Globe has better financials than PLDT subscibers.

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