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GLOBE ANNOUNCES 1ST

HALF RESULTS:

CONSOLIDATED SERVICE REVENUES OF P44.5 BILLION, UP 9% YoY;

REVENUE GROWTH BROAD-BASED, WITH IMPROVEMENTS IN MOBILE,

BROADBAND AND FIXED LINE DATA;

CORE NET INCOME AT P6.4 BILLION, UP 13% YoY;

NETWORK AND IT MODERNIZATION PROGRAMS ON TRACK FOR COMPLETION

Globe Telecom, Inc. closed the first half of 2013 with consolidated service revenues of P44.5 billion, up

9% from P40.8 billion in the same period last year. The sustained topline growth was broad-based, with

the mobile, broadband and fixed line data businesses growing by 8%, 25% and 12%, respectively, from

last year.

Mobile revenues for the first semester of 2013 reached P35.8 billion, a P2.6 billion improvement from the

first half of 2012 and even higher than the seasonally strong second half of last year. The solid results

were achieved despite the continuous decline in yields brought by the market’s preference for value-based

offers, increasing multi-SIM incidence and the complexity of our network and IT modernization

initiatives currently ongoing. The growth was largely driven by the continued expansion of our Globe

Postpaid and TM brands, while Globe Prepaid held its ground, backed by the success of our customizable

and value-based product offerings, the rising demand for mobile browsing services and the introduction

of new mobile devices from Apple, Samsung and Blackberry. Total subscriber base reached 36.1 million

at the end of the first half of the year, 14% higher than the same period last year.

The broadband and fixed line businesses likewise grew in the first semester of the year. Broadband

revenues reached P5.1 billion in the first half of the year, fueled by the healthy demand for both wireless

and wired broadband offerings. Globe closed the first semester of the year with over 1.8 million

broadband subscribers, up by 15% from same period last year. Fixed line data revenues reached P2.3

billion for the first six months of the year, mitigating the decline in traditional fixed voice services.

Consolidated EBITDA for the six month period ending June stood at P18.9 billion against the prior year’s

P17.7 billion as the revenue gains fully covered the increase in subsidy and operating expenses.

Operating expenses and subsidy increased by 11% year-on-year from P23.1 billion to P25.6 billion, due

to the continued reinvestments in new subscriber acquisitions and re-contracting of existing postpaid

subscribers, and support for various products and services launched during the period. Increases in this

year’s operating expenses such as outsourced and contracted services, taxes and licenses, interconnect

charges, provisions and staff costs, combined with the additional charges related to the network

modernization and IT transformation partially offset the top line growth, resulting in EBITDA margin

remaining flat at 43% year-on-year.

As the Company goes through its network modernization and IT transformation program, the accelerated

depreciation charges related to the change-out of network assets and IT systems have become more

pronounced, reaching P7.1 billion pesos in the first six months of the year. Excluding said non-recurring

charges and foreign exchange and mark-to-market gains and losses, core net income was up 13% from

last year’s P5.7 billion to P6.4 billion.

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“We are pleased with our first half performance despite the ongoing network and IT modernization

initiatives we are undertaking to serve our customers better,” Ernest L. Cu, President and CEO of Globe

Telecom, Inc. said. “We anticipate competition to escalate in the second semester given the gains we’ve

realized in the past, and anticipated launches of in-demand mobile devices from Apple and Samsung in

the second half of the year. We’ve built up great momentum during the first semester, and we need to

strive harder to sustain it in this very competitive and fast paced environment. We remain confident that

with the modernized Globe network and IT infrastructure that is nearing its completion, we’ll be able to

deliver superior value and differentiated customer experience to our subscribers.”

In the first semester of 2013, Globe completed the first phase of the network modernization, changing out

all of the network’s legacy access radios to state-of-the-art software defined radios (SDRs). As a result of

the change-outs, the increase in the accelerated depreciation charges related to the transformation

projects, coupled with non-recurring transformation-related operating expenses incurred during the

period, completely negated the year-on-year gains in EBITDA, resulting in consolidated net income after

tax of P1.4 billion. Globe now continues to embark on building more sites to be able to adapt to the

changing landscape of the country’s key business districts, boosting capacity and enhancing the overall

network performance. To date, 73% of the network is already on 4G HSPA+ providing faster mobile

browsing experience for the customers. As of end-June, Globe had a total of 15,670 base stations, with

over 6,000 for 4G, to support the service requirements of its subscribers.

The Company also completed the Submarine Fiber connection towards Coron Island last May 2013,

complementing its existing Submarine Fiber Optic links towards Boracay and Palawan. More than 8,000

km. of fiber optic cable have been added to Globe’s existing Fiber Optic Cable infrastructure as the

Company continues to expand its Optical and all IP Transport network nationwide. Globe continues to

enhance its Service Quality with the continuing optimization and capacity upgrade of its modern network.

In relation to the IT transformation efforts, the first phase involving the migration of postpaid subscribers

into the new business support system or BSS is currently under stabilization management. Given the

complexity of the undertaking, we have taken appropriate measures to ensure minimal disruption in the

billing of our subscribers and to address possible concerns from affected customers. Succeeding phases

of the modernization program, covering prepaid and broadband, remain on track for completion

progressively up to the earlier part of next year.

Following the success of the customizable MySuper Plan and Fully Loaded deals from postpaid, the

Company introduced during the period its next generation postpaid plan, the Best Ever MySUPERPlan,

which combines the suite of menus and options in the previous plans while offering the subscribers

almost double the value of a regular prepaid load when they get a plan. Subscribers can now take full

control of their plan and fully customize and personalize it even further as it now comes with flexible

contract periods of 6, 12, 18, 24 and 30 months. Each plan has a corresponding “peso value” that can be

converted to avail of a combination of call, text, or surf services, free or discounted gadgets, and a

monthly consumable amount for more calls, texts and surfing.

To further boost postpaid acquisition in line with the new postpaid plan launch, the BlackBerry® Z10

LTE, the Samsung Galaxy S4® and the Blackberry

®Q10 LTE now come free at Best Ever MySuperPlan

1499, Best Ever MySuperPlan 1599 and Best Ever MySuperPlan 1499, respectively, which are up to two

plans lower than what they were initially offered. Similarly, the Company introduced the newest

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smartphones from Huawei, the Huawei Ascend W1, Huawei P6 and Huawei Mate as new additions to the

selection of affordable smartphone options with the Best Ever MySuper Plan.

During the quarter, Globe, in partnership with Viber, launched several value-for-money service offerings

in order to give its Prepaid subscribers a richer mobile experience. GoUnli25, which offers the all-time

favorite unlimited on-net voice and texts was made even better with FREE unlimited Viber Chat offered

at the same price of P25, available for Globe Prepaid subscribers only. Meanwhile, Globe and TM

Prepaid subscribers who want a full Viber experience with unlimited high-definition voice calls and

unlimited chat can avail of Viber20 for P20 a day and for those who want unlimited Viber chat only can

either avail of Viber10, a one day variant for only P10 or Viber30 for five days unlimited Viber chat for

P30.

The Company’s mass market brand TM, on the other hand, enhanced the existing AstigCombo15, which

gives its subscribers unlimited on-net texts and 30 minutes on-net calls for P15 a day with the “Extend”

feature giving their subscribers the chance to extend the offer for another 24 hours for just an additional

P5.

On the international front, to further strengthen Globe’s thrust to provide Filipinos overseas with

innovative and affordable services, The Company recently launched Globe Duo Canada and Globe Duo

UK. Globe Duo Canada & Globe Duo UK assigns a Canadian or UK number to a Globe/TM mobile

number in the Philippines which subscribers use to call friends and loved ones in Canada and UK directly

while enjoying local (Canada/UK) domestic calling rates. In the same manner, incoming calls from

Canada and UK to Duo numbers registered in the Philippines are also charged at local Canadian and UK

rates. Globe Duo Canada and Globe Duo UK are available to Globe Postpaid, Globe Prepaid, and TM

subscribers.

Other ground-breaking products that Globe recently introduced to the OFW community are the Filipino

Seafarer SIM and the Globe Local UK SIM card. The Filipino Seafarer SIM enables Filipino seafarers

around the world to keep in touch with their loved ones back home at cheaper rates for as low as US$0.20

per minute while sending SMS for only US$0.10 per sms. Subscribers who will avail of the SIM will get

two numbers in one SIM – an international mobile number and a Philippine Globe mobile number. Globe

and TM subscribers calling the Globe Seafarer SIM are only charged at local rates. The Globe Local UK

SIM card alternatively gives Filipinos one affordable rate of only 10 pence for each call or text sent to

Globe or TM number in the Philippines as well as calls and text to all UK networks. Subscribers also pay

only 10 pence for every MB of mobile internet. This was made possible with the collaboration between

UK GlobeTel Limited, a member of Globe group of companies, and France-based Transatel.

The broadband business on the other hand, continues its drive for market growth with various Tattoo

offerings introduced during the second quarter of the year. Tattoo@Home launched FREE broadband

1MBPS or 3GB per month for every Landline Plan 799 plus free unlimited calls to Globe/TM. Tattoo

Postpaid, on the other hand, strengthens its lifestyle positioning with the unveiling of Tattoo-Enjoy Card

which allows new Tattoo Postpaid subscribers access to perks and discounts to over 240 brand partners

nationwide. In addition, Tattoo Prepaid Lifestyle sticks with surfing speed of up to 12 Mbps are now

available for only P1,295 and comes with more freebie samples, deals and discounts from over 200

partner merchants nationwide.

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During the second quarter of 2013, Globe also achieved another milestone with its partnership with

Home Development Mutual Fund (HDMF) or the PAG-IBIG Fund to allow their over 12.6M members to

transact with Pag-ibig via GCash, making it easy and more convenient for them to facilitate their Pag-Ibig

transactions. Pag-Ibig members can now easily pay their monthly mandatory savings and housing loans

anytime, anywhere using their GCash wallets linked to their Globe or TM phones, eliminating the need to

go to a Pag-Ibig office or an accredited payment center.

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2Q 2013 FINANCIAL SUMMARY

Globe Group's consolidated service revenues for the first half of the year increased by 9% to P44.5

billion from P40.7 billion last year following the robust gains on mobile, broadband, and fixed line

data business. Mobile revenues remained fundamentally strong at P35.8 billion, 8% above the same

period of 2012 notwithstanding intense competition on both the postpaid and prepaid segments, due

to strong subscriber growth of 14% for the first semester as against the same period last year.

Broadband and fixed line data revenues were likewise up by 25% and 12% against last year's levels,

respectively, as the cumulative customer base continued to expand year-on-year.

For the second quarter, consolidated service revenues reached P23.2 billion, 8% or P1.8 billion above

the previous quarter, and even surpassed the seasonally strong fourth quarter last year. The main

contributor for the remarkable performance is the mobile business which registered P18.7 billion

revenues for the second quarter of 2013, 9% higher than last quarter’s. The Company's broadband

business, likewise, sustained its growth momentum, up 7% with revenues of P2.7 billion this period.

Fixed line data segment also contributed P1.1 billion in revenues, 3% higher than last quarter.

Total operating expenses and subsidy for the first six months of 2013 increased by 11% year-on-year

to P25.6 billion from P23.1 billion, following the aggressive postpaid subscriber acquisitions with the

launch of the new customizable plans, and re-contracting of existing postpaid subscribers who availed

of high-end gadgets such as the Apple™ iPhone 5,Samsung S4 and Blackberry Z10. Year-on-year

growth in operating costs were likewise driven by the increase in charges for outsourced and

contracted services, taxes and licenses, higher interconnect charges, provisions and staff costs. On a

sequential basis, operating expenses and subsidy rose by 3% to P13.0 billion from P12.6 billion in the

first quarter, due mainly to higher re-contracting costs and marketing spend for various brand building

initiatives for both the mobile and broadband businesses and higher interconnect charges, partially

covered by lower subsidy.

2Q 1Q QoQ 1H 1H YoY

Change Change

(%) (%)

Service Revenues 23,164 21,368 8% 44,532 40,767 9%

Mobile 18,717 17,124 9% 35,841 33,281 8%

Broadband 2,659 2,486 7% 5,145 4,106 25%

Fixed line Data 1,148 1,111 3% 2,259 2,017 12%

Fixed line Voice 640 647 -1% 1,287 1,363 -6%

Operating Expenses and

Subsidy13,000 12,592 3% 25,592 23,088 11%

EBITDA 10,164 8,776 16% 18,940 17,679 7%

EBITDA Margin 44% 41% 43% 43%

Depreciation 8,664 7,407 17% 16,071 9,783 64%

Affected by network modernization 4,056 3,062 32% 7,118 1,155 516%

Others 4,608 4,345 6% 8,953 8,628 4%

Net Income After Tax (NIAT) 754 656 15% 1,410 4,960 -72%

Core Net Income 3,340 3,086 8% 6,426 5,662 13%

In Million Pesos

Globe Group

Quarter on Quarter Year on Year

2013 2013 2013 2012

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Consolidated EBITDA of P18.9 billion for the first six months of the year was up by 7% or P1.3

billion against the same period last year, as the overall revenue gains fully covered for the increase in

operating costs and subsidy. The Company continued its efforts to reinvest in subscriber acquisitions

to lock in subscribers and defend its market position against competition particularly on the postpaid

segment. On a sequential basis, consolidated EBITDA was up by 16% following the decline in

subsidy, repairs and maintenance charges and services, resulting to improvement in EBITDA margin

from 41% to 44% this period. The decline in subsidy during the quarter is partially driven by slower

gross additions for the quarter, as the Company slowed down efforts in light of the migration of

postpaid subscribers into the new business support system (BSS), which happened at the tail-end of

the first quarter of this year.

Total depreciation expenses increased 64% year-on-year and 17% quarter-on-quarter, driven mainly

by the accelerated depreciation charges related to the ongoing network modernization and IT

transformation programs. Excluding the accelerated depreciation charges related to the network

upgrade, depreciation expenses would have only increased by 4% against same period a year ago and

by 6% versus last quarter.

Non-operating charges grew by 20% or P177 million driven by foreign exchange and mark-to-market

losses which reversed the gains posted in the same period last year. These were partially mitigated by

interest income from our loan receivables from Bayan Telecommunication, Inc., and lower interest

expenses following lower interest rates on debt. Quarter-on-quarter non-operating charges likewise

increased by 15% with higher foreign exchange losses and increased interest expenses alongside the

lower interest income recognized during the period.

The Company closed the first half of the year with consolidated net income after tax of P1.4 billion,

72% below last year's level as the year-on-year improvement in EBITDA was not enough to cover for

the increase in the accelerated depreciation charges related to the transformation projects. However,

excluding the non-recurring accelerated depreciation charges and foreign exchange and mark-to-

market gains and losses, core net income after tax reached P6.4 billion in the first six months of 2013,

up 13% from P5.7 billion in the same period last year. On a quarterly basis, net income after tax

increased to P754 million, up by 15% from P656 million driven mainly by the robust revenue gains

which fully covered for the increase in operating expenses and decline in net interest expenses. As a

result, second quarter core net income after tax also increased by 8% to P3.3 billion from last

quarter's P3.1 billion.

As of end June 2013, total capital expenditures stood at about P19.4 billion, 66% above last year's

level of P11.7 billion. Globe continues to embark on its network and IT modernization programs,

building more sites to adapt to the changing landscape in the country’s key business districts,

boosting capacity and enhancing the overall network performance. To date, 73% of the network is

already on 4G HSPA+ providing faster mobile browsing experience for the customers. To support the

requirements of its subscribers for 2G, 3G, 4G and WiMax services, Globe has a total of 15,670* base

stations, including over 6,000 4G base stations. *

Total of all available technologies in Globe

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Mobile Business

* 2012 voice and data revenues have been restated for comparability.

Despite the increasing incidence of multi-SIM usage, the market’s preference for lower-yield, value-based

offers and the complexity of the network and IT transformation programs currently ongoing, mobile

revenues, which accounted for 80% of consolidated service revenues as of end-June, increased to P35.8

billion, up by 8% from last year’s level of P33.3 billion. The mobile business’ sustained growth

momentum was driven by higher revenue contributions from unlimited SMS, mobile browsing and other

value-added services. Likewise, growth was complemented by the strong subscriber growth in the first

half of the year, stemming from the aggressive acquisitions in the TM and Postpaid brands. On a

quarterly basis, mobile revenues posted a 9% increase to P18.7 billion from P17.1 billion last period.

Mobile data revenues which accounted for 56% of total mobile service revenues increased to P19.9

billion as of the first half of the year, up 16% from P17.2 billion a year ago, driven by increases from

unlimited SMS subscriptions, mobile browsing, as well as other value-added services which fully covered

for the decline in regular, bucket SMS and international SMS. On a sequential basis, mobile data

sustained its double digit growth with the continuous quarter-on-quarter increases from unlimited SMS

subscriptions, mobile browsing, regular and international SMS, mitigating the decline in bucket SMS and

value-added services.

Mobile voice revenues which accounted for 44% of total mobile service revenues, posted a slight decline

in the first half of 2013, driven by the drop in international long distance, voice-over-internet protocol

(VOIP), regular domestic voice and roaming services, and partly offset by the increase in unlimited and

bulk domestic voice subscriptions. Quarter-on-quarter results, on the other hand, showed an improvement

of 8% on mobile voice revenues coming from the growth in unlimited voice subscriptions, international

long distance and roaming.

2Q 1Q QoQ 1H 1H YoY

2013 2013

Change

(%) 2013 2012

Change

(%)

Service Revenues *

Data 10,449 9,454 11% 19,903 17,189 16%

Voice 8,268 7,670 8% 15,938 16,092 -1%

Mobile Service Revenues 18,717 17,124 9% 35,841 33,281 8%

In Million Pesos

Quarter on Quarter Year on Year

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Key Drivers for the Mobile Business

1As of 2Q 2013, Globe had a total of 2.27 million wireless postpaid subscribers which include 1.90 million mobile telephony and 0.37 million

wireless broadband customers. This is higher compared to the 2.20 million wireless postpaid subscribers as of 1Q 2013. Mobile telephony

revenues are reflected under “Mobile Service Revenues” while wireless broadband revenues are included under “Broadband.”

2 ARPU is computed by dividing recurring gross service revenues (gross of interconnect expenses) segment by the average number of the

segment’s subscribers and then dividing the quotient by the number of months in the period.

The Company’s total mobile subscriber base as of first half of 2013 reached 36.1 million, up 14% and 3%

from last year and last quarter, respectively.

The second quarter’s gross subscriber acquisitions remained strong at 7.4 million subscribers, over 85,000

SIMs higher than previous quarter’s level, which came mostly from the Company’s mass market brand

TM. However, net incremental subscribers declined by 53% from over 2.0 million to over 950,000 in the

second quarter as blended churn rate grew from 5.1% last quarter to 6.0% in the second period. On a

year-to-date basis, gross acquisitions increased by over 2.4 million subscribers or 20% above the same

period last year resulting from the Company’s aggressive acquisitions in TM and Postpaid brands.

Despite the elevated churn in the second quarter, the blended churn rate for the first half of 2013

improved slightly from 5.7% in the first semester of last year to 5.6%.

2Q 1Q QoQ 1H 1H YoY

2013 2013

Change

(% ) 2013 2012

Change

(% )

Cumulative Subscribers (or SIMs) –

Net End of Period36,092,177 35,141,918 3% 36,092,177 31,726,343 14%

Globe Postpaid 1 1,895,183 1,857,342 2% 1,895,183 1,599,603 18%

Prepaid 34,196,994 33,284,576 3% 34,196,994 30,126,740 14%

Globe Prepaid 16,946,052 16,946,327 - 16,946,052 16,109,634 5%

TM 17,250,942 16,338,249 6% 17,250,942 14,017,106 23%

Ave. Revenue Per Subscriber

(ARPU)2

Globe Postpaid 1,274 1,105 15% 1,206 1,189 1%

Prepaid

Globe Prepaid 141 141 - 142 152 -7%

TM 88 86 2% 88 98 -10%

Subscriber Acquisition Cost (SAC)

Globe Postpaid 5,981 7,972 -25% 7,145 9,130 -22%

Prepaid

Globe Prepaid 42 20 110% 31 -4 -875%

TM 23 21 10% 22 12 83%

Ave. Monthly Churn Rate (%)

Globe Postpaid 2.2% 1.6% 1.9% 1.8%

Prepaid

Globe Prepaid 6.1% 5.1% 5.7% 5.6%

TM 6.4% 5.6% 6.0% 6.3%

Quarter on Quarter Year on Year

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Fixed Line and Broadband Business

Tattoo launched several new and innovative products during the quarter and semester in order to drive

market growth. Tattoo@Home launched FREE broadband 1MBPS or 3GB per month for every Landline

Plan 799 plus free unlimited calls to Globe/TM. Exclusive online promos with Cosmo/Yes magazine

readers were also done during this time giving away as much as 15% Monthly Service Fee (MSF)

discount for six (6) months to subscribers who apply for any broadband bundles via tattoo.globe.com.ph

by entering the promo code T@HPROMO.

On the other hand, Tattoo Postpaid further strengthened its lifestyle positioning with the launch of Tattoo-

Enjoy Card which allows all new Tattoo Postpaid subscribers with a Tattoo-Enjoy Card that will give

them access to perks and discounts to over 240 brand partners in 700 locations nationwide. Aside from

this, with the demand for lower-priced tablets, Tattoo Postpaid launched this quarter quality Android

tablets Skyworth S7 and Skyworth S8 at affordable rates bundled with its plan offers. Moreover, Tattoo

Prepaid Lifestyle sticks with surfing speed of up to 12 Mbps are now available for only P1,295.

As a result, Tattoo Broadband continued to soar with double-digit growths in both revenues (+25%) and

subscriber base (+15%). Quarter-on-Quarter result showed P2.7 billion or 7% incremental revenues for

Tattoo Broadband which was mainly due to the continuous growth in subscriber base from both Tattoo-

At-Home and Tattoo-On-The-Go to 1,814,011 from 1,740,951 last quarter.

1 Includes fixed wireless and fully mobile broadband subscribers

The Fixed Line Data segment sustained its revenue growth for the first half of the year with P2.3 billion,

12% higher year-on-year while compared to previous quarter, the increase was 3%. The continued

growth of Fixed Line Data was mainly attributed to the increasing demand for high-speed data nodes,

transmission links, and bandwidth capacity to serve the requirements of business and enterprise clients,

including those in the financial services, retail, offshoring and outsourcing industries.

2Q 1Q QoQ 1H 1H YoY

2013 2013

Change

(%) 2013 2012

Change

(%)

Service Revenues

Broadband 2,659 2,486 7% 5,145 4,106 25%

Fixed Line Data 1,148 1,111 3% 2,259 2,017 12%

Fixed Line Voice 640 647 -1% 1,287 1,363 -6%

Fixed Line & Broadband

Service Revenues4,447 4,244 5% 8,691 7,486 16%

In Million Pesos

Quarter on Quarter Year on Year

2Q 1Q QoQ 1H 1H YoY

2013 2013

Change

(% ) 2013 2012

Change

(% )

Cumulative Broadband Subscribers

Wireless 1 1,445,363 1,388,649 4% 1,445,363 1,267,112 14%

Wired 368,648 352,302 5% 368,648 316,884 16%

Total (end of period) 1,814,011 1,740,951 4% 1,814,011 1,583,996 15%

Quarter on Quarter Year on Year

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Year on year, traditional fixed line voice revenues declined to P1.3 billion from P1.4 billion in the

previous year caused primarily by lower international airtime rates. Compared to the prior quarter,

revenues were slightly down by 1% from P647 million in the first quarter, driven by continued decline in

subscribers.

For questions, please contact:

Tek O. Olaño Jose Mari S. Fajardo

Financial Planning and Analysis Investor Relations

(632) 730-3463 (632) 730-2820

Email: joolano@globetel.com.ph Email: ir@globetel.com.ph