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

Good morning, and welcome to the Virtual Fourth Quarter 2021 Analyst Briefing of Globe Telecom. Per usual, we will start with a short presentation from our management team. At this point, we'll now hand over the virtual floor to our President and Chief Executive Officer, Sir Ernest Cu, who will kick off this morning's presentation.

Thank you, Jomari. And I believe today, we have with us our CFO, Ms. Eala; our CCO, Issa Cabreira; our General Counsel, Froi Castelo; our Head of Network Planning and Engineering, Joel Agustin; and President/CEO of Mynt, Martha Sazon. So again, thank you all for joining us and being with us today for our briefing. Service revenue for 2021 came in at a record PHP 151 billion. This is up 4% versus 2020 but once again driven by growth in data-related services. I'm pleased to note that revenue has not only grown year-on-year but has even surpassed our prepandemic high of PHP 149 billion in 2019. EBITDA likewise grew 2% year-on-year to PHP 75 billion or 49% of revenue. Excluding the impact of Odette, EBITDA margins would have been at PHP 76 billion and 50%, respectively, in line with our guidance. Full year net income is at PHP 24 billion, up 27% to a record high, aided in part by Mynt achieving positive full year EBITDA for 2021. Due to Mynt's strong performance in 2021, Globe's share of net loss for that year declined by 93% versus the previous year. Excluding the impact of Odette, NIAT would have been up 37% to PHP 25 billion. The group's outperformance was achieved despite the ongoing pandemic and the PHP 2 billion pretax impact from Odette, which truly speaks to the resilience of the company and our ability to deliver results despite less-than-favorable conditions. Given the strong performance, I'm pleased to announce that our Board has approved the first quarterly cash dividend of PHP 27 per share. On an annualized basis, this represents 68% of full year 2021 core net income. I will now turn the floor over to Issa, our Chief Commercial Officer, to discuss our performance in greater detail. Issa?

Thank you, Ernest. Similar to recent quarters, our top line performance was driven by our data-related products and services, which account for 80% of our gross service revenues. Mobile data revenues grew 7% to PHP 78 billion, a record high for the company. This growth was more than enough to offset the sustained decline in traditional mobile voice and SMS services, leading to growth in the mobile segment as a whole. Our mobile data traffic for the year grew by 48% to 3,733 petabytes, bolstered by the 4% growth in the fourth quarter as mobility restrictions were eased. Similarly, we also see mobile data monthly ATPU growing by 47% year-on-year to now 8.4 gigabytes, evidencing a continued reliance on mobile data services. This is also an effect of our improving network, which has greatly increased in capacity and speed of service. There are now 40.1 million mobile data users in our base, almost half of our 86.8 million mobile subscribers. I'm also pleased to report that the 2 other pieces to this data story, home broadband and corporate data, also reported record-high revenues for the year, driven by the accelerated adoption of digital services and solutions brought about by the ongoing pandemic. I'd now like to provide more detail on the home broadband segment. Fixed wired subscribers grew by 31% year-on-year to now over 964,000 customers, leading to a 26% improvement in fixed wired revenues. On the other hand, fixed wireless subscribers declined 11% year-on-year as we see our users continuing to shift out of the fixed wireless services to the more consistent and reliable wired service. This is in line with the changing habits and needs which we've observed from our customers, which prompted us to quickly pivot towards fiber. Fixed wireless revenue likewise declined year-on-year, driven by softer fourth quarter performance, which was impacted by the typhoon. Moving forward, the focus is to acquire and retain high-quality subscribers. Notwithstanding the decline in the fixed wireless segment, our total home broadband revenue grew 10% year-on-year to a record PHP 29 billion. Fiber in particular continues to see great traction with our customer base growing by 208% and revenue improving by 183% year-on-year. This was enabled by our rollout of over 1.45 million fiber lines in 2021. And moving forward into 2022, we remain optimistic that our strategic pivot and accelerated build trajectory will position us to better compete and gain more ground in this growing market. Let me also provide you some detail on our corporate data segment, which also posted double-digit growth, now at a record high of PHP 14 billion. Corporate data services had been seeing growing demand in recent years but was interrupted with the arrival of the COVID-19 pandemic, which saw our clients cutting their leased line subscriptions. I am pleased to note that core account services have been recovering, growing by 5% year-on-year, driven by growth in both domestic and international core accounts. Moreover, our average revenue per circuit has improved 19% versus last year. While the majority of our corporate data revenue is still generated by leased circuits, we are seeing accelerated growth in the ICT segment, especially now that businesses are rapidly adopting digital solutions and services to ensure business continuity. ICT revenue improved 43% year-on-year, driven by multiple services such as cloud solutions, business applications, cybersecurity, data center services, big data and IoT. With our end-to-end portfolio of products and services, we aim to be the trusted adviser of every business' digital journey. Before I end my portion, let me provide you with some quick updates on our most recent offerings. We continue to provide our mobile and broadband customers with relevant freebies, discounts and promos to enable their lifestyle. And true to our aim of being the digital lifestyle partner of our customers, we launched the Globe EasyHub, a multichannel retail experience where customers can conveniently and safely fulfill transactions through digital kiosks while also exploring new products and offerings through interactive experiences. As the Globe Group grows, we can enable and empower even more aspects of our customers' lives, whether through financial inclusion with GCash, access to health care with HealthNow and KonsultaMD and many more under the Globe Group of Companies. Beyond customers, we also extend care for our environment by launching the first-ever Eco-SIM in Asia for our mobile postpaid customers. Globe partnered with Thales, a global leader in advanced technologies, to deploy Eco-SIM cards starting November of 2021. The carbon-neutral Eco-SIM card is made from 100% recycled materials, using polystyrene from refrigerator waste that would have otherwise gone to landfills. This forms part of our commitment to UN SDG No. 12, which aims to ensure sustainable consumption and production patterns to contribute to a circular economy. And with that, I end my portion of the presentation. And now I turn you over to Joel, who will provide updates on our network.

Thank you. Thank you, Issa. Good morning. For the full year 2021, we have built over 1,400 cell sites, an 8% improvement versus the previous year. We have also upgraded over 22,000 mobile sites, almost double of last year's upgrade of 11,000. I'm pleased to report that these builds and upgrades have contributed to significant improvements in our network, as measured by Ookla. Compared to the first quarter of 2021, download speeds and upload speeds have improved by 51% and 24%, respectively. This also contributed to our speed score improving to 18.51, up from 12.27 the first quarter. Consistency score likewise improved from 70.59 to 78.82, at par with global benchmarks. On our 5G rollout, we now have over 2,000 sites nationwide, providing outdoor coverage for 96% of NCR and 84% of key cities in Visayas and Mindanao. For our fiber rollout, as Issa earlier mentioned, we have rolled out over 1.45 million FTTH lines. I'm happy to note that we exceeded not only our initial target of 1 million but also our revised target of 1.4 million. I now turn you over to Martha to discuss Mynt's performance.

Thank you, Joel, and good morning, everyone. I'm here to share with you the highlights of Mynt's strong performance in Q4 and for the year 2021. Fueled by our vision of finance for all, 2021 was another banner year for GCash in terms of user growth and activity, helping us improve our bottom line and achieve sustainability. Sustaining our market leadership as the #1 finance app in the Philippines, we are the gold standard in fintech in the country and possibly even in the region. With 55 million Filipinos placing their trust in GCash, we have almost doubled our registered users since the start of 2021. This means that 70% of adult Filipinos have a GCash account. We've seen the role of GCash evolve from being an everyday wallet to becoming the Filipinos' personal digital life hack, as shown by our high user engagement, where our daily log-ins and daily transactions have peaked at 26 million and 17 million, respectively. The increase in usage helped us shoot past our initial PHP 3 trillion annual GTV outlook as we ended the year at PHP 3.8 trillion. That's more than -- that's around 25% more than our initial projection and more than tripling our 2020 GTV performance. With millions of Filipinos relying on GCash for their daily routines, we further scaled up merchant acquisition and partnerships to widen our robust digital ecosystem. Our merchant and social seller base has grown to 4.5 million, 4.3x larger than at the start of the year. We've expanded our cash-in and cash-out outlets to 174,000, offering more touch points for users. To help usher in the digital lifestyle, we have onboarded more than 290 GLife merchants in 2021 versus just 8 when we started in December 2020, with our expansion into new categories like content, health, insurance and e-government. As we made digital financial service as part of the daily lives of Filipinos, we have also proven our ability to scale and create a sustainable business. We are proud to announce that we reached positive full year EBITDA and have achieved profitability 3 years ahead of target, making Mynt one of the few fintechs in the world that is able to make money. Through digital innovation, we were able to make some headway into demystifying financial services for the Filipino public. Our goal is to let people know that these services are not just for the privileged but for everyone. With GSave, we encourage Filipinos, especially the unbanked, to open a digital savings account, growing our AUM by 1.9x year-on-year. GSave now has around 20% penetration or 20% market share in terms of the number of banked adults in the Philippines as we provide them with one of the best savings interest rates in the country. Our investment marketplace, GInvest, gave our users access to a total of 7 local and global funds with 2 new funds in partnership with BPI Investments Management Inc., or BIMI. We now have around 77% market share of the total UITF accounts in the country as we experienced 6x growth in our new investors year-on-year. Lastly, GInsure helps protect Filipinos and their families from breaking the bank in times of emergency. We provide easy access to 20 insurance offerings, ranging from health insurance to vehicle and lifestyle insurance. With these new products, we sold 5x more policies year-on-year. Now around 1/3 of new life and non-VUL insurance policies in the country are conducted through our platform. At GCash, we want to help address a real concern of unbanked Filipinos, that of having money readily available whenever they need it, especially during emergencies. Powered by our strong in-house trust platform called GScore, we aim to solve this through our 3 lending products. As our first foray into digital lending, GCredit has already provided 1 million users with an accessible credit line. In order to battle predatory rates of informal lenders, we launched GLoans as our quick cash loan offering with affordable and fair rates. In the 6 months since launch, we were able to disburse up to PHP 1 billion worth of loans. We will scale up lending even further by focusing on our most recent product, GGives. This is our buy-now-pay-later proposition to provide credit to more than 2% of the population with accessible installment options. To round out 2021, we've launched more customer-first initiatives through various campaigns and events. We were able to digitize celebrations, helping people connect and spread joy throughout the holidays. Last October's birthday -- GBirthday celebration was our first foray into creating our very own spending occasion. As we celebrated with millions of GCash users, this campaign proved to be a success, helping us smash some social media records. Through Merry GCash, GCash became a channel for gift-giving, Christmas shopping and even online caroling. For the first time, we also launched our own Christmas jingle with the country's top P-Pop boy band, SB19. As we work every day towards financial inclusion, it helps us to know that we are not alone in this cause. We've strengthened our partnerships with both government and nongovernment agencies in order to build trust and transparency for GCash and ultimately for the financial services sector as a whole. To recognize and honor our public sector partners for going digital, we launched our very first Digital Excellence Awards event with the participation of BSP Governor Diokno. To crack down on fraudsters and online scammers, we strengthened our ties with the PNP, NBI and CIDG. Through our collaboration, we've had 7 successful entrapment operations and have helped in catching 10 fraudsters. As an easy donation platform, we've enabled digital bayanihan that allows our kababayans to securely send through our own donation drives or those of our various NGO partners. Beyond our growth and key financial wins, what makes us truly proud is the meaningful impact that GCash has on our community. On the environment aspect, we've made huge strides with GCash Forest, helping turn 9.7 million users into green heroes. With their help, we were able to plant 1 million virtual trees with 915,000 actual trees already planted through our various partners. As a fun fact, we calculated the GForest users saved a total of 21 billion grams of carbon emissions by going digital. This is enough to fuel over 25 trips around the world by plane. We provide Filipinos -- on social aspect, we provide Filipinos a better shot at a bright future by democratizing financial services. Now 1 in 3 of our users has already availed of at least one of our financial services. We've also helped our users connect and reach out to their loved ones wherever they are in the world as GCash remittance is available in over 200 international markets. On the governance aspect, through constant collaboration, the public sector now recognizes digital as a standard for good governance. With their partnership, we were able to distribute cash aid to 2.4 million Filipinos in a few days, which would have taken them 952 days if done via physical distribution. GCash has also been instrumental in the tax collection efforts of the government by making over 100 tax payment types accessible through our app. For GCash, sustainability is working for positive change so that we can leave the world a better place. We are united in our desire to impact our community because at the heart of our company is our purpose, making Filipinos' everyday lives better, and this purpose drives and gives life to all our sustainability initiatives. That ends my segment. After such a banner year, we are excited for what's to come in 2022 and the ways in which we can further impact the community around us. Thank you.

Thank you, Martha. Aside from GCash, I'd also like to highlight the performance of the 2 health tech companies in the 917Ventures family. KonsultaMD and HealthNow continue to fill the growing demand for access to health care. I'm proud to share that KonsultaMD is likewise exhibiting strong growth, reaching over 1 million members and growing its revenue by 140% year-on-year. KonsultaMD is currently available across 50,000 retail outlets nationwide. To further expand its reach, it is partnering with over 60 brands and utilizing the social media app, TikTok. Likewise, HealthNow has administered over 1 million COVID-19 vaccinations for the Ayala Group employees as well as their dependents and household members. HealthNow has been growing at a healthy pace and has reached 800,000 registered users and is now processing 15,000 to 20,000 medicine delivery orders daily. 917Ventures also continues to scale and accelerate other companies in its portfolio like AdSpark, RUSH and PureGo. AdSpark is an award-winning, locally based digital media and creative agency that has reported over PHP 1 billion in revenue, up 32% year-on-year from the launch of over 2,800 digital campaigns. With almost 4 million registered users, loyalty solutions provider, RUSH, has doubled its full year 2021 revenue versus last year. They have been enabling SMEs with e-commerce and connectivity bundles for as low as PHP 2,500 per month. Online grocery shopping platform, PureGo, is now available in 28 cities and has reported a 78% growth in sales since January of 2021. 917Ventures continues to cultivate and enable new innovations focusing on fintech, digital health, e-commerce, entertainment, adtech and edutech. Kickstart, for its part, our corporate venture capital firm, now manages $255 million in assets, funding 55 investments across 7 countries. Kickstart now funds 2 unicorns, Xendit and Dialpad. Xendit is an Indonesian fintech company and a leading payment gateway in Southeast Asia. It recently raised $150 million in fresh capital last September 2021, bumping valuation up to $1 billion, thus achieving unicorn status. Dialpad, an AI communications cloud platform company, likewise raised an additional $117 million last December, increasing its valuation to $2.2 billion, achieving double unicorn status. Prior to the latest round of funding, Dialpad achieved unicorn status in October of 2020 amidst the COVID-19 pandemic. Lastly, local social entertainment platform, Kumu, became the first independent Philippine startup to raise a Series C round led by General Atlantic, a leading global growth equity firm with more than 40 years of experience in scaling disruptive businesses internationally. Kumu was launched in 2018 and has risen to become one of the highest-grossing social apps in the world in terms of revenue. Before I turn you over to Rizza, I would like to provide updates on our relief and restoration efforts following Typhoon Odette, which you all know devastated the Visayas and Mindanao regions last December 16, 2021. It has caused extensive damage to our network infrastructure and even more so than Typhoon Yolanda back in 2013. In the aftermath of a typhoon, while mobile and broadband services were affected by power outages, damaged towers, numerous fiber cuts among others, Globe immediately set out to restore services and provide relief in the form of free promos, plans, rebates and Libreng Tawag and Libreng Charging Stations across Visayas and Mindanao. Our field operations teams once again selflessly and tirelessly worked hard to restore services in areas affected by the typhoon. Their efforts have resulted in 82.3% network restoration in Visayas and 91% restoration in Mindanao as of January 18 of this year. I would also like to thank the efforts of our subscribers who have generously donated their Globe and TM Rewards points to help the survivors of Typhoon Odette. I'm proud to note that as of January 20, our customers have raised close to PHP 2 million to assist over 10,000 families in Palawan, Visayas and Mindanao. With that, I'll turn the floor over to Rizza to discuss our financial highlights in better detail, including a more detailed breakdown of the impact of Typhoon Odette on our P&L. Rizza?

Thank you, Ernest, and good morning, everyone. As earlier mentioned, we are reporting over PHP 151 billion in service revenues, a 4% growth versus the PHP 146 billion in 2020, a record performance on its own but even more impressive considering the headwinds we faced in 2021. EBITDA also improved by 2% to PHP 71 billion and translating to a 49% EBITDA margin. Net income grew significantly by 27%, benefiting from the impact of the CREATE law as well as significantly lower nonoperating charges. On a quarterly basis, fourth quarter performance was impacted by Odette, which resulted in revenue losses, additional operating expenses and impairment losses for the period. This resulted in a lower-than-expected EBITDA margin of 47% for the quarter. Fourth quarter net income, on the other hand, grew by 17% to PHP 6 billion, mostly from a net positive for nonoperating items for the period. I will provide more color on this in a later slide. On my next slide, breaking down our operating expenses. Bulk of the 5% increase is due to a PHP 3 billion increase for services and other expenses. This was mostly driven by higher subscriber line installation services, cloud and security services, NTC spectrum fees and miscellaneous taxes and licenses. Staff costs also contributed a PHP 2 billion increase due to the higher average headcount for the year. Now these were partly offset by a decline in provisions, which is mostly due to last year's elevated provisions from accumulated uncollected receivables. Under network costs, administrative costs and repairs and maintenance costs also grew from higher electricity and power gen consumption as well as higher maintenance costs for subscriber lines. However, there were -- these were offset by a large decline in lease expenses due to contract reassessment in the fourth quarter that resulted in various short-term leases being accounted for using the ROE model according to PFRS 16. In total, network costs declined by PHP 102 million year-on-year. On a quarterly basis, for the same reason, there is a PHP 948 million decline in network costs. These aside, repairs and maintenance costs also increased quarter-on-quarter with impact from Odette. The typhoon likewise contributed to the PHP 1 billion increase in service and other OpEx for the fourth quarter, along with higher expenses on cloud services, contracted services and professional and advisory fees. Marketing and subsidy expense also rose quarter-on-quarter from higher ads and promo expenses for the holiday season. Now going below EBITDA, depreciation costs are up by PHP 6 billion year-on-year and PHP 1 billion quarter-on-quarter from heightened CapEx spend. Nonoperating costs have declined significantly year-on-year, owing to the impact of CREATE as well as a PHP 4 billion gain from the deemed sale of Mynt following the infusion of Warburg Pincus, Insight Partners and existing investors last November. Our share in equity gains from our joint ventures also continues to improve with 2021 reporting a net gain versus a net loss in 2020. These were able to fully offset the impairment losses incurred in the fourth quarter due to Odette, leading to a net income improving by 27% year-on-year and 17% quarter-on-quarter. I'd now like to provide a more detailed breakdown of the total impact of Typhoon Odette on our operations. Revenue was negatively impacted by around PHP 450 million from rebates given to customers affected by outages and loss of services. Operating expenses saw an increase of PHP 659 million on additional repairs and maintenance as well as services and other expenses related to the typhoon. This resulted in a PHP 1 billion impact to EBITDA, which softened full year margin to 49%. Excluding the impact of the typhoon, full year EBITDA margin would have been at 50%. Below EBITDA, we also recorded PHP 1.2 billion in impairment losses on infrastructure damaged by the typhoon, bringing total pretax impact to PHP 2.2 billion and an after-tax impact of PHP 1.7 billion. Combined with the retroactive impact of CREATE in the first quarter of the year, net income would have been at PHP 23 billion. Moving on to our gearing ratios and our balance sheet. Our balance sheet remains healthy with ample cash reserves as of end of 2021 from the issuance of our perp cap securities and proceeds from borrowings. Gross debt level is currently at PHP 210 billion, and gross debt to equity has improved from 1.84x versus 2x last year, again from increased equity. Gross debt to EBITDA, on the other hand, has increased from 2.65x from 2.4x, owing to the elevated debt level and marginal improvement in EBITDA. Despite the increase, we are still comfortably within the covenant of 3.5x, and debt service coverage ratio improved from (sic) [ to ] 4.5x from 3.3x. Now on my last slide, let me discuss our outlook and guidance for this year. We are guiding low single-digit revenue growth versus 2021, while for EBITDA margin, we are maintaining guidance of 50%. For CapEx, we are committing to PHP 89 billion or around $1.7 million for the year as we continue to ramp up our efforts for cell site builds, 4G and 5G expansion, LTE upgrades and fiber rollouts. Other items we also would like for the analyst and investor community to consider would be higher depreciation charges from the elevated CapEx spending and higher interest charges from debt. Before we move on to the Q&A portion, I will now turn you over to Attorney Froi, who will discuss the regulatory developments affecting the Globe Group.

Thank you, Rizza. Good morning to everyone. Overall, we have said time and again that Globe supports the government's efforts to introduce new legislation that would ultimately benefit the public. Also, Globe's stance has always been that of being open to competition and willing to compete on the basis of service and network quality and overall customer experience. With respect to the latest regulatory developments, Congress recently passed the Amended Public Service Law, which removes telcos from the public utility classification. Effectively, the 60%, 40% Filipino versus foreign ownership under the Philippine Constitution shall no longer apply to telcos, which are classified now as a public service with critical infrastructure. Foreign ownership in critical infrastructure can go up to 50% and can be higher if the country of the foreign company provides reciprocity of investment by Philippine nationals. However, for critical infrastructure and public utilities that may be organized in the future, entities controlled by foreign governments or foreign state enterprises are prohibited from owning capital in them. This will not affect though existing telcos, but no additional capital investments will be allowed. Sovereign wealth funds also and independent pension funds may own up to 30%. The President of the Philippines may suspend or prohibit any proposed merger or acquisition or any direct or indirect investment in a public service by a foreigner or a foreign corporation. We will await implementing rules of NEDA on this matter. From a telco standpoint, the Amended Public Service Law will bring in more foreign investments and augment the sector's efforts to deliver better telco services to more Filipinos nationwide and speed up the nation's recovery. Moreover, we appreciate the government's efforts in building adequate safeguards to protect national security and sovereignty. The SIM Card Registration Act, the same was also passed recently by Congress, wherein PTEs shall be required to register SIM cards at the point of sale or before the activation of the SIM card. Likewise, social media providers are required to register real names and telephone numbers of social media account users upon creation of the account. Within 180 days from effectivity, existing and active subs are required to register their SIMs with a possible extension of 120 days. PTEs are authorized to automatically deactivate unregistered SIMs after the deadline. As a PTE, Globe supports the implementation of the SIM Card Registration Act as part of our commitment to support the government in its fight against fraud, terrorism and other crimes. Through this bill, we hope to further strengthen government and private sector cooperation towards protecting mobile phone users against text scams and crimes perpetrated in anonymity. The NTC shall formulate the guidelines for the implementation of this law, and we are ready to collaborate with the government to make registration process safe and convenient for customers. On GCash/Mynt, the Financial Consumer Act, which was also recently passed by Congress and awaiting signature of the President, provides more powers to the Bangko Sentral ng Pilipinas to conduct surveillance and examination of the operation of fintech companies, including their subsidiaries and affiliates engaged in allied activities, and order fintech companies from collecting any unreasonable interests, charges or fees; to cease and desist an activity for fraud or irreparable injury cases; an accounting and disgorgement of profits if obtained or losses avoided; and suspension of operations. On this note, GCash complete ecosystem of services provides users with affordable and fair fees that are better or competitive with the current rates of other financial institutions. There will be little to no impact to GCash given that it's always been fully compliant with the BSP and all regulators. Mynt/GCash is committed to continuously evaluate its products and services, treat its customers fairly and respectfully, establish safe and secure cybersecurity mechanisms and further strengthen its compliance values. That ends the presentation, and I turn you over to Jomari, who will open the floor for questions. Thank you.

Thank you, Froi. Before we begin with the Q&A session and for the benefit of our viewers who joined us during the session, we'd like to acknowledge again the presence of our management panel. We have Mr. Ernest Cu, President and Chief Executive Officer; Ms. Rizza Maniego-Eala, Chief Financial Officer; Ms. Issa Guevarra-Cabreira, Chief Commercial Officer; Attorney Froilan Castelo, General Counsel; Mr. Joel Agustin, Head of Network Planning and Engineering; Ms. Martha Sazon, President and CEO of Mynt; Mr. Darius Delgado, Consumer Mobile Business Head; and Mr. Tek Olaño, Chief Finance Officer of Mynt. We'll open the Q&A session beginning with questions sent via e-mail to Investor Relations team at globe.com.ph prior to the start of the briefing. It will be followed by additional questions also sent to the same e-mail address during the course of the presentation.

Our first question comes from Ken Gotianse of ATRAM. Question reads, "Just have a question regarding GCash. How would the loans from different banks be offered? For example, if BPI eventually offers their loan products, can they offer the same products as CIMB? Or will it be classified as a different product so that there's only one product for, say, a mortgage loan, auto loan, et cetera?"

We are open to explore partnerships with different financial institutions that can help us expand our loan products using different business models, of course. Our intent is to be able to offer the best option for our consumers.

Thank you, Martha. The next set of questions come from Arthur Pineda of Citi. The first question is, "Can you elaborate on the revenue guidance? Why the low single-digit revenue growth considering that the economy is finally reopening and 2021 revenues were artificially weighed down by Odette? Is the softness owing to weaker expectations on mobile?"

Let me take this question, Jomari. Go ahead, Rizza.

Go ahead, Issa, if you want to take it.

No, please.

Rizza, go ahead, and then we can...

Thanks, Arthur, for that question. We had a slow takeoff from the starting block in 2021 given Odette and Omicron in the tail end or specifically late December and early January. So that is one of the reasons. We do expect also the economy to open up, but the full impact of 2 years' worth of the pandemic will have a long-term impact on the purchasing power of consumers, particularly the masses. Furthermore, we took a stab at the situation in Visayas and Mindanao, and Odette did have a significant impact in that area and will require time to recover in our early opinion. So in fact, we may need another month of rebates in many parts of Visayas given the difficulty in restoring services in some areas. Given all this, we opted to be a bit more conservative in our guidance. Now of course, there are quite a number of upsides. Well, on broadband, we are cautiously optimistic given the inventory that we have spent for last year, which Joel had explained in his presentation. This build momentum puts us in a much better position to compete and capture more of the market and continue with our increasing growth trajectory. Next, Issa also in her presentation shared that we had a record performance in our enterprise business. And we are well positioned to continue this growth in 2020 given our expansive portfolio of core and ICT products. Finally, mobile data business continues to see stable growth and will benefit from less movement restrictions. And of course, we're seeing potentially a little bit more upside from the elections given campaigning this time around, more than any election, shifted to online. So hopefully, this sort of like gives a little bit more flavor on our current guidance. And throughout the next few quarters, we will give updates on how we are with respect to this low single-digit revenue guidance.

Thank you, Rizza. Are there any additional inputs from the management? Okay. The next question is, "Can you elaborate on your targets for fixed broadband for 2022? How do you see net adds accelerating? And what are your targets for Fiber-to-the-Home lines rollout?"

Issa, you want to cover that?

Yes. Sure. We don't disclose specific targets for our broadband business, but our intention is to maintain our growth trajectory, particularly for fiber, which is a key focus area for us. As mentioned -- as I mentioned in my presentation, we have more than tripled our subscriber count in fiber and revenues growing close to 200%, and that's only the beginning. As mentioned as well in my presentation, we've laid out 1.45 million fiber lines already back in 2021. And clearly, for 2022, we're going to build more. So we like our prospects, where we are today, our position. It is -- 2021 was clearly a transition year for us as we pivoted from a wireless broadband strategy to a wired -- or to fiber. So we are expecting another record year in 2022, hopefully, just like we had in 2021. So we will continue to execute based on what we've shared as our focus area in broadband.

Okay. Thank you, Issa. The third question from Arthur is, "How will the Financial Consumer Act impact Mynt? How are unreasonable charges or fees defined? It seems that the take rate against your GTV of PHP 3.8 trillion is very low to begin with."

So those are 3 questions. So first is on the FCPA impact. Well, GCash has always been compliant with BSP and our other regulators. But we will continue to collaborate and dialogue with them, especially as these new regulations play out, and we'll fortify our legal and compliance as needed. On the reasonableness of fees definition, pending the IRR, we cannot ascertain the definition of unreasonable fees or charges. But we remain committed to offer competitive fees that can be within what is defined as reasonable. And lastly, on the take rate, yes, our principle is to make the experience in GCash as frictionless to the other -- to our users as possible. As such, our monetization initiatives are geared towards creating value from our ecosystem. And in those situations where we have fees for users, we ensure that these fees are competitive across the market.

Okay. Thank you for that, Martha. The next set of questions come from Rachelleen Rodriguez of Maybank. The first question is, "Do you have insurance in your network equipment and towers impacted by Odette? If so, can you share with us what percentage of the loss you may be able to recoup?"

So yes, we do have insurance coverage. And due to the extent of the damage, we are still in the process of capturing all losses incurred from the typhoon. However, based on the initial reports, we are already coordinating with our insurers and are looking at claiming a portion of our restoration costs already. So we are working on getting advanced claims to help us with the resourcing of our continuous restoration efforts, and we will update the market once we have more definitive numbers we can share in terms of the claims.

Okay. Thanks for that, Rizza. The next question also pertains to CapEx. "Can you share with us the reason for the very high CapEx in 2021 versus the PHP 76 billion target? What percentage of this goes to tower builds and Fiber-to-the-Home lines?"

I can take this up, Rizza, if it's okay.

Go ahead, Joel.

Yes. So this was very optimistic for us in Globe. We were able to keep the momentum in the last few months of the year. And so rather than delaying our build-out, we opted to maintain this momentum to be able to give us a much better base to jump off from for 2022. So as mentioned in the past, we look at our network as a shared network. But what I can say is that the PHP 93 billion CapEx delivered a record build of 1,400 towers and 1.45 million fiber ports.

Okay. Thank you, Joel. The third and final question from Rachel is, "What drove the strong growth in mobile subscribers year-on-year at 13%?"

I can take that. So it's mainly driven by the prepaid brands where we had sustained efforts across all channels, including digital and on-ground, continuing to innovate with our offerings, and we saw increased mobility in the market essentially helping that, too. These prepaid brands include our digital brand, GOMO, which had a substantial increase in net additions and appears to be lockdown-proof given its unique proposition that sticks out in the market and for which we saw significant and sustained performance overall. All these, coupled with improving network experience, we are able to sustain our subscriber growth.

Thanks, Darius. The next set of questions come from Rodd Vagilidad of BDO Securities. The first question is, "Does management expect the 69 to 31 revenue split between mobile and fixed line and broadband to sustain moving forward? Or will broadband begin to account for a larger chunk?"

Happy to take that, Jomari. We do see broadband clearly growing faster given that it is still in its nascent stage. And so we do expect its contribution to total business to still grow over time. Home Internet today in the Philippines is not yet saturated. There are still many more homes, millions of homes, in fact, to be connected with faster and reliable Internet, while our mobile business will remain steady and will clearly continue to grow at a relatively stable rate with some growth opportunities still related to increasing mobile data usage, especially with the entry of a wider 5G coverage.

Thank you, Issa. The next question is, "Can management provide color in the 3% year-on-year decline in cumulative broadband subscribers?"

As I mentioned in my presentation, this was expected as we are going through a strategic pivot from a wireless strategy to a more fiber-centric strategy. And so we did expect some heightened churn as it relates to our fixed wireless business. We are likewise going through our migration program from our legacy DSL technology to fiber, and so we are very calculated in terms of ensuring that we keep the most valuable subscribers in our base.

Thank you, Issa. The third and final question is regarding GCash. "By how much does Mynt expect GCash GTV to grow in 2022?" Martha, would you like to answer that question?

Say that again -- question again.

Sorry, we don't disclose our GTV, although we remain focused in the growth -- in continuing the growth trajectory and momentum of the business.

Okay. Thank you, Martha. The next set of questions, well, these are questions from Ken Gotianse of ATRAM. "Could you update us on your talks of a sale and leaseback of your towers? Are there any potential or existing bidders? And how significant will this be in terms of cost savings?"

Thanks for the question, Ken. We are not in discussion with any company with respect to either sale or sale and leaseback of our towers. What we have are arrangements with the power companies for build-to-suit. So we have agreements with about 13 tower companies at this point who are on a BTS arrangement for towers.

Okay. Thank you, Rizza. The second question is, "How much of your 2022 CapEx will be allocated to your fiber infrastructure?"

Let me pick that up, Rizza. So as shared earlier, network infra is a shared infra by both wireless and wired services. So the 2022 CapEx does include -- the 2022 CapEx does include our target of 2 million fiber ports, as mentioned earlier, which is almost 2x of our 2021 target and more than 40% higher than the 1.45 million that we were able to accomplish end of 2021.

Okay. Thank you, Joel. The next question comes from Gabryle Aguila of Unicapital. "With regards to Typhoon Odette damage, would you have any revenue breakdown of Luzon, Visayas and on a Mindanao basis? Seeing that Visayas is only 82% restored, could you show some more upside in the next quarters?"

We need a bit more time to give additional color. I think we tried to be as transparent as we could be in our disclosure around the impact of the typhoon.

Thank you, Rizza. The next question comes from Joseph Ziller of Maple-Brown Abbott. "How should we think about how much CapEx is to grow revenue versus how much is to service current revenue?"

How do you break it up? I don't know if we actually break it up that way though. It's kind of hard, right? I mean capacity versus expansion. Because it's -- it goes into -- it's a mix, right? Like I tell you, in mobile, in my own view, a lot of it is really on capacity building and upgrades versus more coverage areas, right? So I don't know. I don't know how to do that. Rizza, do we have a way of doing that?

Well, we would have some ways, but not comfortable to probably disclose and discuss externally.

Okay. Thank you, Ernest and Rizza. The next question comes from Jonathan Latuja of PNB. "I would just like to ask management's outlook regarding the ARPU of fixed broadband subscribers. By my estimate, implied ARPU of fixed broadband fell by 15% year-on-year in 2021. When does the company expect ARPU to improve, especially since the company has been aggressive in rolling out fiber in 2021? And how does the company plan to make that improvement?"

Sure. Let me take this, Jomari. Again, 2021 is a transition year for us in broadband. We do expect ARPUs to improve as we are shifting subscribers from wireless and from DSL to the higher-priced plans of fiber. So we should be seeing some impact already beginning 2022 given the shift. Today, the massive wireless base, which is, as we all know, a much, much lower ARPU base, clearly, is what weighed down 2021. So clearly, 2022 will show an uptick for us.

Okay. Thank you, Issa. The next question comes from German de la Paz of Abacus Securities. "What are you seeing in terms of mobile top-ups year-to-date and since the start of the month?"

Can I answer that?

Yes, Darius. Go ahead.

Yes. So just to explain first December, our quarter 4, so post the easing up of quarantine restrictions, we saw a progressive recovery in top-ups and revenues due to increased mobility as we've seen more active loaders across our prepaid brands come back, especially those customers who previously offloaded to broadband while predominantly at home. However, what we've seen also is that recovery is much slower this time given increasing financial constraints from a significant portion of our base relating to the mass segment whose incomes or spending capacity have been highly affected by the prolonged pandemic. And we see that in the 2% drop in blended ARPUs quarter-on-quarter that we have disclosed. The recovery in performance was peaking in December leading up to the Christmas season, but unfortunately, this has been significantly muted by the impact of Typhoon Odette. However, again, we've been seeing continued improvement in 2022 of our mobile revenues given easing up of restrictions.

Okay. Thanks, Darius. The next question comes from Cristina Ulang of First Metro Securities. "Is there any change in strategy given the Public Sector Act from the standpoint of strategic partnerships, product offerings, fiber rollout, CapEx in target markets and for GCash as well?"

Jomari, can I take that and then later on the business side of it? With respect to the amended Public Service Law, this will be still subject to the formulation of implementing rules, which we will closely monitor and participate. I'm pretty sure that the implementing rules by the NEDA and other government agencies will be pro foreign investment.

No. I think also given the fact that the Public Service Act has little effect on Globe, we expect everything to remain status quo. All of our strategies, initiatives will remain the same and consistent. You've heard them before, focus on continuing to build up and provide better service for our mobile subscribers in order to maintain and gain market share. We want to play a very important role in the fixed line rollout of broadband in this country. We're cementing our position as the gold standard in fintech in the Philippines and then continue to build more digital solutions for the public through our incubator 917Ventures. And none of that is going to change with this Public Service Act.

Thank you, Ernest and Froi. The next set of questions come from Thomas Wang of Sun Life. "May I know what is driving the sequential postpaid ARPU decrease and plans to address this?"

Sorry, the question is about postpaid mobile, right?

Yes.

Okay. So we have seen across the quarters of 2021 that we have continuously declining ARPUs, and it's a factor of 2 things. Number one is the increasing incidence of broadband penetration in the postpaid base where, versus the prepaid brands, we have the highest broadband incidents in our postpaid base. And then secondly, and consequentially, we are losing on top revenues because of that because all of our plans in the market on a postpaid perspective actually already have bundled into the plans all of the connectivity services. So it's actually a subscriber growth game.

Okay. Thanks, Darius. The next question comes from -- it's regarding GCash. "Since the entity has started loaning out in-house loans, are there any insights on when they will need additional capital? What are the initial thoughts on funding sources?"

Well, we continue to monitor the performance and are in constant talks with partners and potential partners. We're very open to partnering with those who are interested and legitimate, right? So that's where we are.

I think also to add more color, I think there's enough funding in the entity to execute whatever plans we have in place. When we need more cash, I'm sure there will be cash available in the private markets as well. As we could glean from the last round of fundraising we did, there's a lot of unsatisfied demand. So we'll take it as it comes, right? But right now, lending is scaling. And so far, the results are quite good, encouraging. And let's see what happens.

Okay. Thank you, Ernest and Martha. Third question is on fixed broadband. "On fixed broadband subscriber adds, what initiatives is the company taking to accelerate this? Is it feasible to align to competitor quarterly trends? If so, how fast can the acceleration occur?"

So let me take that, Jomari. As we've all expressed, the continuous investment in our builds will continue. At the same time, our go-to-market executions are clearly well in place. And just as Globe has executed excellently in its mobile business, clearly, we will put that into play as we go to market and try to win the hearts of the customers in the fixed broadband space, specifically on fiber. And we know that, that segment, the ones who are high value, is a segment that Globe knows very, very well. So very excited to actually offer this -- offer Globe this time for the broadband customers.

Okay. Thank you, Issa. There is a follow-up question from Arthur regarding GCash, but this was already asked -- answered earlier. Just share the answer with Arthur Pineda offline. There are currently no questions in queue, and maybe we can already end the Q&A session. Before we adjourn, Ernest, do you have any final message?

I just want to say thank you once again. And I just want to highlight the fact that despite the conditions that were brought on by typhoon and Omicron during the last month of the year, I think the company functioned really well and performed really well. We were on the road to a record-breaking performance had it not been for the provisions we took for damage as well as rebates that we will be offering our customers to help them out during this pandemic. I think it'd be great for the analysts to continue to study a lot of the digital moves that we're making, for example, like what's happening in Mynt and also the other areas we're exploring in the 917 ecosystem. I think those will also become very significant creators of shareholder value moving forward. If there's any interest, I'd like to offer meetings between our IR teams for you guys to discuss and understand those activities a little bit better. So thank you very much for your participation this morning.

Thank you, Ernest, and...

Thank you.

We conclude the virtual Fourth Quarter 2021 Analyst Briefing of Globe Telecom. We should thank again all of you who joined the call. Hope you'll join us again for our first quarter 2022 analyst briefing in early May. Again, we wish everyone a pleasant good morning. Stay safe, everyone.

Thank you.

Thank you.