Globe Telecom, Inc. (GLO) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Second Quarter 2021 Virtual Analyst Briefing of Globe Telecom. Allow me to introduce our management panel for today's briefing. We have Mr. Ernest Cu, President and Chief Executive Officer; Ms. Rizza Maniego-Eala, Chief Finance Officer; Ms. Issa Guevarra-Cabreira, Chief Commercial Officer; Atty. Froilan Castelo, General Counsel; Sir Joel Agustin, Senior Vice President for Program Delivery; and Ms. Martha Sazon, President and CEO of Mynt. Mr. Cu will present the highlights of the company's performance for the first half of 2021, to be followed by Ms. Cabreira who will discuss performance in greater detail. Afterwards, Mr. Agustin will provide updates on our network, after which Ms. Sazon will discuss the latest developments concerning Mynt and GCash. Then we will return to Mr. Cu who will discuss developments of select subsidiaries and ventures. Finally, Ms. Eala will present the financial results. Afterwards, we will open the Q&A session beginning with the questions sent via e-mail to [email protected] prior to the start of the briefing, to be followed by additional questions also sent by e-mail during the course of the presentation. We will now hand over the virtual floor to Mr. Cu for his presentation.

Thank you, Jomari. Good afternoon to everyone joining us for our second quarter briefing today. As normal, I'll give you an overview of the overall company performance and then turn it over to the respective executives for their portions related to their respective areas. So service revenues for the first half of 2021 came in at PHP 75.5 billion, improving by 4% versus last year. This was bolstered by the performance of data services. Quarter-on-quarter, service revenues remained steady, sustaining the first quarter revenue performance despite the reimposition of ECQ and MECQ in the Greater Manila area for almost half of the second quarter. EBITDA, on the other hand, was weighed down by higher operating expenses and declined by 3% to PHP 37.4 billion, equivalent to a 50% EBITDA margin. Sequentially, operating expenses for the second quarter came in lower versus the previous quarter. This led to a 4% improvement in EBITDA and a 51% EBITDA margin for the second quarter. Finally, net income for half of 2021 registered at PHP 13 billion, a 13% improvement year-on-year mostly due to the impact of the CREATE law, which happened in the first quarter, as well as a lower share in equity losses of our subsidiaries. Sequentially, second quarter net income dropped by 22% from the high NIAT in the first quarter. Decline notwithstanding, second quarter net income of PHP 55.7 billion is higher than the comparative NIAT in 2Q 2020 and even in the pre-pandemic at 2Q 2019. I'm also pleased to announce that our Board of Directors approved the third quarterly cash dividend of PHP 27 per share. On an annualized basis, this represents 74% of full year 2020's core net income. I will now turn over the floor to Issa to discuss our performance in greater detail.

Thank you, Ernest. As in previous quarters, performance continues to be driven by data-related products and services, which now total PHP 59.8 billion or around 79% of our service revenues. Mobile data, the largest contributor at PHP 38.6 billion, grew 7% year-on-year, spurred by increased take-up of data promos as evidenced by the growing mobile data monthly ATPU of 8.1 GB, up 55% against last year and up 9% against last quarter. Likewise, mobile data traffic continues to rise, now at 1,761 petabytes, a 59% growth year-on-year. Home broadband grew 16% year-on-year to PHP 14.5 billion from the sustained demand for our home Internet. Corporate data services likewise grew by 8% year-on-year from higher ICT and domestic core services. More and more, we are seeing our customers, individual and corporates alike, becoming increasingly reliant on data services and digital tools to help them navigate through this ongoing pandemic, presenting us with an opportunity to further penetrate the market. Exciting as these opportunities are, it does come with its own difficulties. From March 29 to May 1, ECQ was reimposed in the Greater Manila area, which once again limited mobility to a certain extent. Despite these headwinds, there was increased pickup of our prepaid brands with both Globe Prepaid and TM subscribers growing 2% year-on-year to 39.6 million, respectively. Mobile ARPU also saw improvements across all our brands with Globe Postpaid improving by 1%, Globe Prepaid improving by 13% and TM improving also by 13%. Home broadband likewise saw increased take-up across both fixed wired and fixed wireless, growing by 47% year-on-year to 4.2 million subscribers. Fixed wireless subscribers grew 54% year-on-year to almost 3.4 million versus last year's just 2.2 million. Traffic for Home Prepaid Wi-Fi also saw significant growth, up 132% to 423 petabytes from last year's just 182 petabytes. Fixed wired subscribers have also been trending well, going from 677,000 last year to over 830,000, a 22% increase. This comes as a result of our accelerated broadband rollout, which as of the first half of 2021 has seen over 600,000 high-speed broadband lines installed, already surpassing now our 2020's full year build. Performance was enabled by our execution across all our brands: from postpaid to prepaid and mobile to home broadband. Leveraging on our rapidly expanding 5G coverage, we offer all new unli 5G plans, promos and devices for our mobile customers so they can enjoy 5G's unbeatable speeds and almost real-time latency. We also gave our postpaid customers the power to earn bonus Globe rewards points beyond just their pure spending but rewarding their special actions or efforts. We continue to delight our customers with freebies, discounts and exclusives such as BLACKPINK merchandising. We also enabled our distance learners through special packages for e-learning essentials like laptops and prepaid Wi-Fi modems. These are just a few of our efforts to empower customers with choice and enrich their lives with relevant products and services. Our customers are at the heart of everything we do, and we are constantly striving to attune ourselves to their needs so we can bring them the best experience. This ends my portion of the presentation, and I now turn you over to Joel, who will provide updates on our network.

Thank you, Issa. I'm pleased to report that for the first half of 2021, we have put up 641 cells -- new cell towers, upgraded 8,175 mobile sites and expanded 5G across 1,759 sites nationwide. All these have enabled us to improve our customers' experiences like VoLTE, which has been made available to postpaid customers in 94% of all towns in the country. Globe has also enhanced accessibility of 5G, reaching 92% outdoor coverage in NCR and expanding further in Cebu, Boracay, Bacolod, Iloilo, Davao, CDO and more. And as Issa mentioned earlier, we have also rolled out over 600,000 high-speed broadband lines, well on our way to our target of 1 million lines for the year. I'm also happy to report that according to Ookla, Globe remains the most consistent mobile network in the second quarter of 2021. Our consistency score even improved to 75.98 from 70.43 in the first quarter, inching closer to the global benchmark of 80. In order to provide our customers with a first-world Internet experience, we strive not just for faster speeds but also consistent network quality and reliable service. Our efforts on the ground also contributes to the overall improving network experience of the Philippines. As of June 2021 data from Ookla, the Philippines is among the top 100 globally in mobile and fixed download speeds. Improving significantly in the past year, average mobile download speed is now at 32.4 Mbps from 16.17 Mbps a year ago, rising 40 places up the global ranking. Average fixed download speed is now at 66.55 Mbps from 23.46 Mbps a year ago, jumping 47 places to 62nd globally. Upload and latency speeds for both mobile and fixed broadband likewise showed significant improvements year-on-year. Our efforts on 5G has also contributed to the Philippines' 5G download speed being among the highest in the Asia Pacific region. According to an Opensignal report, Philippine 5G download speed is at 141 Mbps, beating Hong Kong and Thailand. That ends my portion, and I now turn you over to Martha, who will discuss the latest developments in Mynt and GCash.

Thank you, Joel, and good afternoon to everyone. Thanks for allowing me to share with you exciting news about GCash's growth for the first half of 2021. As GCash continues to embed itself in the everyday lives of our users, we have cemented our status as the undisputed market leader. GCash is recognized as the #1 finance app in the country based on third-party platform App Annie, with active users 3.8x that of other e-wallets and 4.4x that of other banking apps. GCash even surpassed global social media and entertainment apps like Instagram, Netflix and Viber, among others. We have seen tremendous growth based on the following stats. We now have around 46 million registered users as of July 2021, up from 44 million in June, that's around 60% of Filipinos over the age of 15 now have a GCash account. Beyond consumers, our merchant and social sellers base has grown to over 2.5 million accounts as they continue to accept payments via QR codes and P2P. Active users have grown 2.8x year-on-year with daily log-ins going as high as 15 million and daily active transactions peaking at 10 million. We are on track to end 2021 with PHP 3 trillion in full year gross transaction, which is 3x last year's GTV. Lastly and more importantly, we have made strides towards our path to sustainability, achieving positive EBITDA and NIAT in the month of June 2021. This is an important milestone for GCash as we look to further scale and grow other pillars of the business like financial services and data monetization. In a country with a large unbanked and underserved population, GCash is a first mover and the only mobile wallet to provide a full suite of accessible financial services. Today, over 1/3 of GCash active users have used at least one of our financial services products. To help our users grow and manage their money, we have GSave and GInvest. As we continue to provide users with easy access to a savings account and one of the best savings interest rates in the country, GSave now has over PHP 9 billion assets under management. For GInvest, we have democratized investment for our users by providing ease of access to local and even global funds. Serving as a platform for these game-changing innovations, we now have almost 70% market share of the total UITF accounts. Our GInsure platform continues to grow with the relevance of our COVID-19 health coverage product and the launch of the new products that cover personal accident and cash or income loss. Around 1/3 of total new insurance policies in the country are conducted through our platform. We continue to innovate the lending landscape in the country. Our GCredit product, closed-loop credit line that allows users to defer payment for bills and purchases online and offline, has already disbursed a total of PHP 15 billion worth of loans life to-date. On top of this, we continue to collaborate with other financial institutions so that they can offer their products to our 46 million and growing digitally savvy user base. Lastly, we recently launched GLoan, where we preapprove users based on their GScore, and they can borrow as much as PHP 25,000 and pay over 12 months. This is a game-changing initiative that allows fast, accessible and simple credit to qualified users. As consumers shifted online to purchase their essentials during this pandemic, GCash is now a purveyor of digital lifestyle with our end-to-end app experience by GLife. We have a curated in-app e-commerce experience, allowing trustworthy merchants on our platform across various industries like food, lifestyle, gaming, et cetera. GLife goes beyond shopping and lifestyle. We also give users access to e-government partners and health services marketplace. Currently, we have more than 100 key merchants on our platform, a number that keeps growing day by day because of our ability to use data analytics and increase conversion rate of brand promos, which is best in class. We are fulfilling our promise of finance for all by being able to serve not just the affluent and digitally savvy but also our enterprising Pinoys. We've launched new products like GCash Padala and GCash PO with this promise in mind. GCash Padala is our domestic remittance product where GCash users can send money to non-GCash users to be picked up at our GCash partner outlets. During this ECQ, we are also making GCash Padala free of charge to give an extra helping hand during these more uncertain times. We have also just launched GCash PO or GCash Pera Outlets. This is a new proposition for sari-sari stores to convert into a GCash cash-in and cash-out partner and hub for other services, providing extra income and livelihood opportunities for our partner sari-sari stores. Beyond the launch of these products, we continue to innovate for the good of all Filipinos. Recently, many stories have gone viral wherein fishermen in the coasts are now accepting GCash as payment. We want to continue to empower our enterprising Pinoys, working with more riders, sari-sari stores, tricycle drivers and wet market vendors. At GCash, we are changing the mindset that financial services are only for the wealthy by making our digital products more accessible, affordable and easy to understand across our base. Lastly, in line with the current uncertain environment Filipinos face today, we launched our [ G Pa Rin! ] campaign as we continue to serve as a lifeline to Filipinos. This ends my segment, and we at GCash are excited to deliver more digital services to make more Filipinos' everyday lives better. I now turn you back over to Ernest.

Thank you, Martha. Allow me now to provide updates on some of the other ventures and subsidiaries we have in the Globe Group. Including GCash, 917Ventures is currently scaling and accelerating 8 companies. Our health service platforms include KonsultaMD and HealthNow, which both reported significant growth in consultations during this pandemic. HealthNow is also leading the COVID vaccination program for the Ayala Group and its partners. AdSpark also doubled its revenue growth for the first half of 2021 as it provided digital marketing solutions for businesses across the country that were impacted by the pandemic while AdSpark helped build over 18 new businesses and launched 2,300 digital campaigns. We are also seeing traction in our subsidiaries, particularly those that provide digital solutions and services like Yondu, which reported a banner year in 2020 and sustained its momentum for the first half of 2021. In addition, EC Pay is quickly expanding its reach, now enabling 22,000 general trade retailers, which also serve as instant GCash cash endpoints. Moreover, I'd like to provide updates on our venture capital firm, Kickstart. Starting from a PHP 2.4 million fund in 2012, Kickstart is now managing around PHP 240 million of aggregate assets under management. Of the many companies under Kickstart portfolio, some big wins include the likes of Dialpad, an AI-powered cloud communications platform, which reached unicorn status amidst COVID-19; Wattpad, a leading social storytelling platform, which was recently acquired by South Korea's Naver for $600 million; and Coins.ph, a fintech company utilizing blockchain and -- blockchain-enabled platform that was acquired by Go-Jek in 2019. It doesn't end there. Through 917Ventures and Kickstart, Globe is able to extend its reach, planting even more seeds of growth for the future. 917Ventures is constantly on the lookout for business around fintech, ad tech, health tech and e-commerce, ideating internally and through its venture builder program, Velocity. Kickstart is currently managing 2 funds, including Ayala's $180 million ACTIVE Fund, which focuses on fintech, e-commerce, construction tech and others. Recent investments include the likes of Edamama, an e-commerce site from mothers; NextPay; Kumu; Intelligent Video Solutions; Xendit; and Transcelestial. As it stands now, these companies' contributions are marginal relative to core -- to Globe's core business, but we do believe that they provide great value for the Globe Group in the future, though this value has yet to be reflected in our share price today. Our decision to diversify beyond our core business is not unlike regional player Emtek from Indonesia, which at its core is a legacy media business but has been investing heavily in digital. Despite deriving the majority of its revenue from its traditional media segment, Emtek is valued like a tech stock and is now 1 of the top 10 companies in Indonesia in terms of market capitalization. Their ownership and e-commerce site, Bukalapak, I think, is one of the key and marquee assets on their portfolio. Bukalapak, I think, recently set the record for IPOs in the Indonesian stock exchange. We envision something similar for Globe, where we leverage our existing assets, expertise and network of partners to go beyond telco to become a platform for building a robust digital ecosystem. That ends the portion of my presentation, and I'll turn it over to Rizza to discuss the detailed financial highlights.

Thank you, Ernest, and good afternoon to everyone. Service revenues improved 4% year-on-year to PHP 75.5 billion. Despite the on and off reimposition of various lockdowns with restrictions in Greater Metro Manila during the first part of the second quarter, revenues Q-on-Q remained flat. EBITDA declined by 3% year-on-year to PHP 38 billion from higher operating expenses. Nonetheless, EBITDA margin for the first half registered at a comfortable 50%. Second quarter operating expenses declined 5%, bringing EBITDA up 4% to PHP 19 billion and improving EBITDA margin to 51%. Net income for the first half stood at PHP 13 billion, up 13% year-on-year, benefiting from the impact of the CREATE Law recognized in the first quarter. For the same reason, we saw a steep 22% drop quarter-on-quarter. Breaking down our OpEx. Marketing and subsidy posted the largest increase, up 63% year-on-year from higher spend on ads and promotions as well as increased commissions from acquisitions. This is also due to the lower spend last year when bulk of marketing costs were deferred due to ECQ. Network costs also rose by PHP 1.4 billion or 13% in line with the accelerated pace of our rollout. Service expenses likewise grew from higher cloud fees, managed service fees and installation services. Staff costs also saw an increase in line with the growing head count of over 8,300 employees. Provisions on the other hand declined by PHP 1.4 billion since last year's figures had the impact of a onetime provision set up related to credit we extended our customers at the onset of the pandemic last year. Taken altogether, EBITDA for the first half of the year stood at PHP 37.4 billion, a 3% decline versus last year. Below EBITDA, depreciation grew by PHP 1 billion or 6% year-on-year, in line with our growing CapEx investments and ongoing network rollout. On the other hand, nonoperating charges and tax provisions declined year-on-year, contributing to a 13% NIAT growth. Recall though that the retroactive impact of the CREATE Law buoyed the first quarter net income, which is also why second quarter net income declined by 22% quarter-on-quarter. Impact of the tax law aside, we continue to see significant improvements in our share in equity losses, especially in NIM, which, as mentioned earlier, achieved positive NIAT last June. As of the first half of 2021, our share in equity losses in NIM declined by 68% versus the same period last year. Cash CapEx for the first half of the year is at PHP 43.3 billion or 62% of our guidance for 2021 as our build programs progress ahead of schedule. As in previous periods, bulk of the spend is for data-related requirements in line with our accelerated network rollout. Now despite the difficulties posed by the ongoing pandemic, we are cognizant of the need for a more robust network infra, a sentiment acknowledged by our Board who recently approved additional CapEx availment of close to PHP 18 billion. This is in line with our strategy of building more towers, upgrading capacity, expanding 5G and rolling out FTTH. The cash impact of this newly approved CapEx in year is estimated to be PHP 6 billion, increasing our 2021 CapEx guidance from PHP 70 billion to PHP 76 billion. Our cash balance stood at close to PHP 15 billion at end June. Gearing-wise, debt level has increased to PHP 186 billion, but credit ratios remained comfortable within prescribed covenants. Net debt to equity was at 1.9x and net debt to EBITDA at 2.5x. The approved third quarter cash dividends of PHP 27 per share is payable on September 3 to stockholders of record as of August 19. This concludes my report, we now open the floor for questions. As Jomari mentioned, we will start with the questions sent prior to the briefing, to be followed by any additional questions during this call. Back to you, Jomari.

Thank you very much, Rizza. Before we begin with the Q&A session, we would also like to acknowledge the presence of the following Globe Group executives who will be joining the management panel. We have Mr. Darius Delgado, Vice President and Consumer Mobile Business Head; Ms. Minette Navarrete, President of Kickstart Ventures; and Ms. Yoly Crisanto, Chief Sustainability Officer, Senior Vice President and Head of the Corporate Communications Group. We would like to request Darius, Minette and Yoly to open your videos for the duration of the Q&A session.

Okay. We will now begin with the Q&A session. Our first set of questions comes from Marc Espino of CLSA. The first question is as follows. Congratulations to the GCash performance. GTV or gross transaction value is showing tremendous growth. Could you talk about how the group was able to break even for the period? How have the use cases changed in the last 18 months? What were the key drivers for monetization? And finally, what were the drivers for GTV?

Martha, do you want to handle that?

Yes. Thank you for the question. So the strength of GCash performance is bannered by the increased scale and use case diversity and prudent cost management. For scale, we continue to grow our base given the relevance of GCash to our users, and we already comprise 60% -- or we've penetrated 60% of 15-years-old and above consumers. Active users are growing 2.8x a year, year-on-year, and there's increased engagement, meaning they use GCash more often. In terms of use case diversity, 1/3 of our base use financial services. Buy load, send money, send and receive money, online payment and pay bills continue to grow as well as GLife. Recently, we launched game-changing innovations, which is GInvest, GCash Padala, GLoans and GCash PO. On cost management, we're controlling costs through optimization of channels and tactical negotiations, optimization of marketing and acquisition costs. We don't do inorganic -- a lot of the inorganic incentivized acquisitions anymore. So we are very reliant on organic or the real demand-driven acquisitions. Purposeful marketing initiatives aimed at increasing usage and retention is also done quite regularly and also, negotiations with various partners. Of course, with scale, terms are now different. And we also try to let go of unnecessary costs. The combination of these initiatives have provided Mynt the levers to improve its profitability.

Thank you very much, Martha. The second question reads as follows. Paytm in India was valued in the private markets at USD 16 billion in 2019, very similar to GCash, but the only difference is digital banking license that Paytm has. What's interesting is that revenue levels for both GCash and Paytm are roughly the same at USD 400 million in 2020. That's price-to-sales of 40x for Paytm against a USD 16 billion valuation 2 years ago. With the IPO, valuations have doubled closer to USD 30 billion. Now could management share their thoughts on the widespread invaluation that Bow Wave entered in 2020 with post-money of close to $1 billion, which was around 2 to 3x price-to-sales based on revenue base of USD 400 million in 2020?

We note that the Bow Wave transaction was negotiated and concluded in the middle of 2020, prior to the sustained growth that occurred during the year. So without disclosing the actual metrics related to that particular transaction, management believes that the Bow Wave transaction reflects the appropriate valuation at that point when the transaction was negotiated and completed. Given the continued growth of GCash throughout the year in terms of operating metrics and revenues, there are expectations of continued increase in valuation -- significantly increase in valuation. So although we recognize the valuation of Paytm and the other wallets in the region, we also note that there are various parameters for valuation, including country-specific considerations; competition; business models; and even the number of unicorns a particular country has, i.e., the more unicorns, more investor interest in the country, of course, the higher the valuation for most. Having said that, we continue to work towards ensuring that valuations are optimized and definitely expect exponential growth in valuation.

Yes. I'm going to add also on the Bow Wave transaction. That was actually done very early during the first ECQ or pandemic. And actually, those fundraising cycles started back in January of 2020, so it's a very, you would say, long time coming. And Bow Wave had the fortitude to continue to put money to work during the time when uncertainties surrounded the whole economy. We didn't know what is going to happen, but they continued on. However, as Martha stated, the results are very different now. We have attained profitability as one. So -- and also, the growth has been exponential in terms of users, in terms of gross transaction value, in terms of use cases. So as Martha said, you can expect continuous increases in value. However, I would hesitate to compare ourselves to a market like India, which is a market with 1 -- over 1 billion people, which just produced many, many unicorns, as Martha stated; or even a country like Indonesia, which has 300 million or so population base and also a very active investor activity. Philippines tends to be a lagger when it comes to the interest level. And achieving this kind of status for a fintech like Mynt, sponsored by telco, I think, is already commendable at this stage. We note that there is no company today in the start-up phase, I think, that's approaching the kind of metrics that Mynt/GCash has been posting up there as well.

Thank you, Martha and Ernest. And maybe just to add on Paytm. I recall also that in the case of India, there was a demonetization of the larger currency -- I mean the larger currencies that again spurred the adoption. Okay. The next set of questions come from Gio de la Rosa of Regis Partners. Actually, Gio's first question, I think, was already answered quite comprehensively by Martha earlier. This is providing color on how Mynt or GCash was able to reach EBITDA and profit positive levels in June. Maybe we'll share it again with Gio later after the call. Now maybe the second question is something that the team can answer. Is this level of EBITDA and profit sustainable for the rest of the year?

Well, on the sustainability of the profitability, the management team is very methodical in ensuring that we continue to scale while opportunistic in creating monetization initiatives. What the profitability in June shows is our ability to pull levers when necessary and the ability to monetize on revenues and control costs. And really, more than anything, it's a trend that it keeps on improving month on month. There may be months maybe that we will go back to losses because we will become more aggressive in investing in new ventures, but the idea there is we have a good grasp of our P&L. We know which levers to pull and what causes them to go up and down. But as we scale, it makes our P&L even more resilient and more -- there will be more buffer when this up and down in costs -- fluctuations in costs happen. Yes, that's my answer to that.

Okay. Thank you, Martha. Again, we noticed that there were several participants who asked questions in the chat box. Again, we'd like to request everybody to send in their questions to the e-mail account [email protected]. We'll get to your questions as soon as possible. So the next question comes from German de la Paz of Abacus Securities. I think this was also already answered by Martha earlier and was already discussed in the presentation itself because this question is if it Mynt already profitable in June and/or July so...

It was profitable in June.

Thank you, Martha. Now moving on from Mynt. The next set of questions come from Ranjan Sharma of JPMorgan. What is the competitive impact from DITO? Do they present a meaningful risk to industry ARPUs?

Let me take that, Ernest. At the moment, DITO's competitive impact remains quite muted. They still need to improve their network coverage. Per their rollout commitment, as we have expressed, they will only achieve close to 84% population coverage after 3 years. They have yet to work on their product distribution and even their handset compatibility. So for now, despite the noise, their impact is still quite limited.

Thank you, Issa. The next question is could 2021 be the year of peak CapEx for build?

Thanks for the question. Hard to say at this point. I mean we all know that the PHP 76 billion that I just discussed earlier is a record for us and quite a positive note for the company that we are allowed to continue our investment towards serving more of our customers and also capturing the investment opportunity around our business. And we will give you more guidance after -- maybe in the next couple of months of what our 2022 CapEx will be. But I think it will remain elevated over the next few years because of the need to increase overall mobile infrastructure build. And we also need to fast track our high-speed wired broadband rollout, basically taking advantage of the low industry penetration rates, and bring our coverage closer to our competitors.

Okay. Thank you, Rizza. The third and final question is on OpEx. Are there any one-offs which reduced OpEx? Or have there been any delays in recording cost items? The example is that services and others operating expenses is down 13% quarter-on-quarter to PHP 0.7 billion.

There are no delays in recording of OpEx. So quarter-on-quarter drop in service expenses is due to lower migration costs as we moved a lot of our customers from our 3G to 4G network in the first quarter and coupled with higher capitalizable costs in the second quarter.

Okay. Thank you, Rizza. The next question comes from Janelle Bunagan of UBS. I think this was already answered in your presentation, Rizza, regarding the CapEx target for FY '21, following the additional approval of the projects of PHP 18 billion in second half of 2021. Just maybe share that again with Janelle if she needs it. The next set of questions are basically follow-ups from Mr. German de la Paz. GCash's prospects of doing a public listing is getting brighter as it has already recorded a profit in June. Can management already give a time line for the planned public listing? Also, may I ask for this management plan to list Mynt?

Maybe I'll take that question on. Today, we recognize there's a lot of interest and a lot of push to do a public listing. But obviously, there's a lot of options available for us, a lot of considerations as well. We want to ensure that profitability is indeed well in place, which it looks like it's going to be. We want to make sure that we have a good diversity of use cases and revenue sources coming, which is developing as well. And so there are still areas I think we can do more development on. Lending, for instance, is coming. That's going to be a very large play, and we want that to be in place prior to creating the monetization event. With regard to the monetization event, we have been -- every option is on the table at the moment. There have been proposals to do a SPAC leaseback process, listing locally originally. Obviously, today, there is no need and no push to go public and raise money because we have enough interest as we go raising money as a private entity. We'll see what happens. We will be releasing information as we go around. And let's see what happens after this year and see what the results will be, what Martha's team can produce in terms of another outstanding year, hopefully.

Thank you, Ernest. The second and final question is, "I saw a recent news article that said another round of fundraising for Mynt is targeting a valuation of USD 2 billion. May I ask if management has any target on Globe's pro forma stake on Mynt post IPO?"

Well, like anything, Globe's objective is to get as a high a valuation and get as low an amount of dilution in its ownership. Obviously, we are running the company. Obviously, we would want to have a large stake in the company, and we're not about to give away that stake for a small valuation. So we'll continue to push. I think like I said, we have seen the company continue to progress quarter-on-quarter. And I am very confident that -- we've been saying that by the end of the year, you will see a vastly different and lean company once again.

Thank you, Ernest. The next set of questions come from Sevi Sevidal of BPI Securities. The first question is can we offer an update on how Globe's first half performance stacks up versus its targets for migration from DSL and fixed wireless to fiber? And how has been the pace of migration to fiber?

I can take it, Ernest, actually. Yes. So we actually saw significant increase in migration in 2Q this year. Our 2Q wired base migration actually grew by 27% versus 1Q. We're not going to stop. We're going to continue ramping up, and we are able to migrate all or -- if not most of our ADSL customers by year-end so that we can actually get to the customers fairly fast and give them the best experience as soon as possible. So as mentioned earlier in my portion of the presentation, just this first half, we've already hit the full year fixed broadband builds. So we're well on our way to migrating our customers to the best experience possible.

Okay. Thank you very much, Issa. The next question is related to one of the tower assets. In relation to the tower assets, how is Globe looking at a potential spin-off in the near term with the development of the common tower policy? Is a potential REIT on the table?

Ernest, do you want me to take that?

Yes, please, Rizza.

Okay. We actually have started looking at monetizing some of our passive assets, including the towers way back as 2018. But this year, we've decided to take a pause with respect to selling our tower assets. And it's because we have felt and we continue to feel that tower companies are not ready. They need to scale up, and they need to really set up more solidly so that confidence level on our end will be there in terms of them operating and owning our towers. Whether it's because of the pandemic or other issues that have delayed their setup here in the Philippines, basically, I guess you guys can talk to them. But for our case, I think we have paused that initiative for now given that. Now as I mentioned, monetizing our passive assets is always being studied, so whether it's through a REIT, through sales, through JVs and other sort of like structures. At this point, there's nothing to be disclosed. But just wanted to answer that question, Jomari.

Thank you very much, Rizza. The next set of questions -- follow-up questions, rather, come from Arthur Pineda of Citi. On Mynt, you flagged that the company has turned near positive in June. Is this a new baseline for the company? And should we expect this to be profit accretive by the second half of 2021?

Well, as I mentioned earlier, it's more of a trend that the financial position is improving. There could be months where we go back to being negative if and when we invest more and we turn into new ventures or we increase marketing investments. But the idea here is that we know that the financial position of the company is improving, and we know what levers to pull, whether it's on the revenue side or on the cost side.

Maybe I can add a little bit more. What actually this proves is that with the current set of use cases, we can be profitable if we need to grow profits. However, it is -- it has to be said as well that profitability is still not the #1 sort of objective here. There's still a lot of growth in the market. And I think companies -- there are companies and start-ups that actually move to go to profitability as a priority too early. And if we go and leave a lot of growth in the table, certainly, that's not what we're going after with Mynt. We've got a lot of areas to go into. I mentioned lending as one. Investments continue to scale. And Martha just started their remittance program. So there's things that we will spend on. We're not going to be shy on spending and growing those particular cases and use cases as we go into them. We have our e-commerce marketplace, GLife that's continuing to grow as well and growing nicely. So we will take it one step at a time and see how we manage and balance it. If we can keep growing while remaining profitable, that will be fantastic. But I'd like to reiterate that growth is going to be the #1 objective given the fact that there's so much opportunity that abounds in the Philippines today.

Thank you, Martha and Ernest. The second question pertains to mobile competition. Are you seeing any difference in competition, particularly from the new entrant in 2Q? Are you seeing any traffic changes in the areas where they may have launched?

Issa, I think you mentioned something like that, but...

Yes, I did answer that already earlier, Jomari, with regards to DITO. So they did claim very recently the 2 million subscriber base. But I do -- we do think that their impact to the market remains quite muted and limited at the moment given their network limitation. At the same time, their portfolio has yet to be developed further, and of course, they're struggling with the handset compatibility that they have yet to work on.

Yes. I would also say subscriber count is an interesting benchmark but not for a mature industry like telco. Really, what matters is revenue. I said that many times before. If you recall, just to put evidence to my statement being one of fact, in 2009, I believe -- or in 2008 and 2009, when I came to Globe, we actually reduced the number of subscribers we had on our roster. It was because we had a lot of useless subscribers or people keeping numbers on our SIMs that we're not really producing revenue. At Globe, we think revenue is the key, not subscriber count. If you notice, also in my early years at Globe, we never focus on subscriber count. We're not belittling what DITO has done with 2 million, but what I'd like to say is I'd like to see the revenue behind the 2 million and see what kind of ARPU that really produces and see if it really paid back for the network spend that they have actually incurred. So let's see what happens. I don't know when they're reporting or if ever they do report. That's, I think, when the reckoning will happen and we're seeing that they're truly progressing and creating revenue out of those subscribers.

Thank you, Issa and Ernest. The third and final question is what is driving the quarter-on-quarter decline in fixed broadband revenues?

Okay. A big chunk of our base today in broadband, as you all know, is actually our Home Prepaid Wi-Fi or what we call HPW. And the big chunk of our base is clearly the prepaid mass market who have been unfortunately hardly hit by the pandemic. We see this softening across all of our prepaid businesses -- or the whole industry has been very much affected, specifically this particular segment. So it's clearly the economic hardships that's taking its toll on the prepaid segment and their spending today. However, we continue to enable this segment with connectivity and life-enabling needs -- or services that we have. So that decline is really our HPW business, specific to the segment that's hardest hit by the pandemic. But nonetheless, we're seeing a massive growth in our fixed line as we see also people wanting to shift to high speed and more reliable services as more and more they shift their lives and have their dependency more towards the digital connectivity. So it's really a shift from prepaid to fixed -- or HPW to the fixed business.

Okay. Thank you, Issa. The next question comes from Jennifer Passmoor of HSBC Global Asset Management. What is the current data subs in fiber? And then what's the split between copper and fiber?

So today, our ADSL, our copper subscribers, just now represent a little over 10% of our total home broadband subscriber base, which was coming from 1/3 from last year. So it's massively come down, and as mentioned, as they all shift to fiber.

Okay. Thank you, Issa. The next set of questions come from [ Mike Gandionco ] of First Metro Investment Corporation. First question is can you please talk about the company's CapEx plans for the next few years?

Just one question, Jomari?

Yes, that's the first question.

I think I also alluded that or I already replied to that in one of the earlier questions. So we're not prepared to give any guidance outside the PHP 76 billion cash CapEx for 2021. But hopefully, towards the end of the year or early next year, then we can give you guidance for 2022.

Thank you for that, Rizza. The second question actually is also -- I think it was already answered earlier by -- this is on the status of the sale of the company's towers. So I will skip that as well. The next question comes from Miguel Ong of Papa Securities. Just want ask if you can provide net ad figures for GOMO for the second quarter of 2021 and the first half of 2021.

Darius?

Can I answer the question? More than about 3 quarters post launch, GOMO is approaching an active customer base of 1 million. So we were expecting that to happen by the end of this month. The brand has been very successful in both acquiring and engaging customers as evidenced by increasing ARPUs. Channel expansion, improvements in the app experience, lifestyle plays and its upcoming first anniversary celebration are just some of the things to look forward to.

Thank you, Darius. Incidentally, that was Darius Delgado, the Consumer Business Head of Globe. Again, thank you, Darius. The next question comes from Ken Gotianse of ATR Asset Management. The first question, this relates to the mobile business. Can you provide some color as to where you see mobile ARPUs trending in the next year or 2?

Okay. I'll take that question. So the Delta variant has been a growing concern and has led the government to reimpose region-wide lockdowns, and multiple localities are also imposing stricter measures. As we have all experienced last year, lockdowns impact the livelihood of Filipino families, which also impact customer spending. This will undoubtedly be a hurdle for mobile in July and August. So we expect more spending challenges in the market. With that said, however, Globe is focused on helping the customers succeed in these trying times. That has been our focus since day 1 of the pandemic and moving forward, ensuring network consistency as they shift their activities online, providing value choices to lessen the financial burden and integrating life enablers that matter in our product offerings and also providing reliable self-service platforms and channels for easier transactions for the customers. We will continue to find ways to help and remain relevant to our customers and not play the pricing game, which is not sustainable and shall tend to deprive existing customers the right network experience they deserve.

Thank you again, Darius. The second question pertains actually to the valuation of Mynt, and I think this was already answered earlier by Martha. So we'll skip that. The next set of questions come from John Te of Merrill Lynch. Congratulations on the great prepaid numbers. Glad if you can provide more color as to why postpaid was soft this quarter, Q-on-Q decline in both ARPUs and subs.

Sorry, I'll take that question. So in the last quarter, which is quarter 2, we have seen an upsurge in terms of the low plans in terms of acquisitions because a lot of households today and a lot of individuals are actually struggling in terms of spend. So they gravitate towards the low plans. And for Q3, we are actually fixing the portfolio so we prevent most of the downgrades that we have seen happen in the base and therefore, provide more value to our customers.

Thank you, Darius, again for your inputs. So the second question is regarding tower assets, which, again, was answered earlier by Rizza. The next question comes from [ Carlos Navarro ]. What is your current monthly active users for GCash? And what is the projected MAUs by year-end?

I don't think I can disclose that, but all I can say is we have 15 million daily log-ins, 10 million transactions daily, used twice a day every day.

Okay. Thank you, Martha. The next set of questions come from Rachelleen Rodriguez of Maybank ATR. Congratulations on the results. Here are my questions -- actually, her first question, again, is on competition in the mobile data space, especially pricing, given the entry of DITO. I think that was already answered earlier by Issa. The second question is on mobile. Again, can you share with us the reason behind the mobile ARPU improvement across all products?

So let me take that, Darius. So it's very specific to our prepaid brands, both Globe Prepaid and TM. We've seen, well, good ARPU increases in 2Q, which is great because what we've seen is that customers more and more are really using mobile data. We have an amazing portfolio of offers. Our network performance has also tremendously increased. We've seen our NPS improve, so we've got happy customers using more mobile data in our brands. So we are just very happy to serve that customer who today are actually choosing very wisely. They are less and less having the ability to do multi SIM-ing given the economic pressures that they have, and happy to note that we are taking the share of wallet in terms of their prepaid spend.

Okay. Thank you, Issa. Thank you very much. The third and final question pertains to the fixed lines installed in first half. Yes, Rachelleen, we confirm that these are all wired -- on the wired side. So you can just review again the presentation that we had earlier. The next question comes from [ Sherwin Rasco ], again on GCash. Is management still considering to make GCash as a crypto-currency trading platform?

There are -- we are considering carrying crypto, partnering with vendors and other entities out there so we can enable trading inside our platform.

Thank you very much, Martha. The next question, again, is a follow-up question from John Te of Merrill Lynch. Are you also starting to see peaking subscriber acquisitions on fixed wireless? Just commenting on the rather steep decline in the second quarter, as the same also with revenues.

So our fixed -- sorry, can you repeat that again, fixed wireless?

Yes, it's pertaining to fixed wireless.

Yes. I think I also answered that, our fixed wireless. Customers are actually preferring wired already because they're demanding that their quality -- more stability. They're doing mostly everything on broadband already. So more and more, even the lower-income segment, if only they had the money to spend, would really want to get wired. So we're seeing the migration from wireless to wired.

Yes. And just to add, we've seen that most prominent in the urban areas versus the rural areas.

Okay. Thank you, Issa and Darius. The next set of questions come from -- again from German de la Paz with Abacus. Does management have a profit guidance for fiscal year 2021 for the telco business excluding Mynt?

Let me take that. So our guidance for 2021 remains the same, and we've had 3 points with respect to what we might be looking at for full year 2021. So first is low single digit for revenue growth. Second would be an EBITDA margin of 50%. And third, we just increased our CapEx guidance from PHP 70 billion to PHP 76 billion.

Thank you, Rizza. I think the second question is what is management's outlook on earnings for 2022 for the telco business? I think this may be to...

Premature.

Yes, premature, quite it is. Thank you, Ernest.

Not quite ready to do that yet.

Yes. The next question comes from Miguel Ong of Papa Securities. What -- oh, sorry, we will be answering that offline. Okay. There are currently no more questions on the queue. Again, if you would like to ask a follow-up question, please send it to [email protected]. Thank you.