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

[Audio Gap] Analyst briefing of Globe Telecom. We will begin with a video presentation of our performance and a few updates on the Globe group to be followed by the Q&A session.

Welcome, everyone, and thank you for joining us for our Fourth Quarter 2023 analyst briefing. We are pleased to report that Globe again posted sound operating and financial results in 2023. The company achieved a fresh record high quarterly revenue of PHP 41.3 billion, which brought our full year revenues to PHP 162.3 billion, also a fresh all-time high. This performance was made all the more impressive given the challenging economic backdrop the company continues to operate in. The sustained revenue growth was driven by, as usual, growth in mobile and corporate data, complemented by the robust contribution from our non-telco services. Recall that last year, we announced the sale of Globe's 77% stake in ECPay for PHP 2.31 billion to Mynt. This transaction is currently being reviewed by the Philippine Competition Commission. However, the terms and structure of the agreement required the deconsolidation of this business from Globe's books. Even without the revenues from ECPay, however, our consolidated revenues still would have grown by 3% both quarter-on-quarter and in 2023. This top line growth, coupled with our prudent cost management, resulted in EBITDA reaching PHP 81.4 billion for the full year 2023. This is higher by 3% year-on-year. This figure is also another record high for the company, an indication of the company's solid cost management strategies despite the inflationary pressures pushing costs up. Globe's EBITDA margin, which stands at 50% is within our full year guidance. Normalized core NIAT for the fourth quarter of 2023 amounted to PHP 4.3 billion lower on a sequential basis, while for the full year 2023, normalized core NIAT was stable at PHP 19.1 billion. We are also happy to share the following developments within the Globe group, each of which will be discussed in greater detail later in the presentation. Firstly, STT GDC Philippines is at 83% RAC utilization with 22-megawatt IT capacity today and ramping up to 52-megawatts by 2026. This paves the way to a total of 150-megawatt IT capacity. Secondly, Globe's share in Mynt earnings nearly tripled to PHP 2.4 billion in 2023, sustaining its outstanding growth trajectory as GCash expands globally to empower more Filipinos, here and abroad, with digital financial tools and services. Given these results, our Board of Directors approved the fourth quarterly cash dividend of PHP 25 per share, consistent with our declarations over the past few years. And on that note, to further reinforce our commitment to a sustainable dividend policy that delivers value to our shareholders, we are updating our dividend policy to 60% to 90% of prior year's core net income, which we will discuss further later in the presentation. Moving on to our mobile business. The mobile business performed strongly as total mobile revenues likewise stood at an all-time high of PHP 112.4 billion for the full year 2023, improving by 5% versus the same period last year. The strong revenue growth across all our brands is a testament to the relevance of the company's data-centric value for money offers, which allows our customers to enjoy world-class network quality and service, despite the prolonged period of high inflation. Mobile data revenues continued to grow, reporting a strong 9% year-on-year increase during the period and more than offsetting the continuing decline in mobile voice and SMS, which dropped by 9% and 10%, respectively. Mobile data traffic soared to 5,960 petabytes as of end December, improving by 28% year-on-year, driven by the consumption of high-bandwidth online videos and social media content via smartphones. Mobile data ARPU likewise grew surging by 35% year-on-year to 14 gigabytes per month. Our mobile data business now accounts for 81% of mobile revenues, up from 78% last year. On a quarterly sequential basis, total mobile revenues inched up by 3%. Globe's mobile customer base, following the SIM card registration period, stood at 57 million as of December 31, 2023. Recall that the country went through a SIM card registration process earlier in the year and Globe deactivated about 30 million SIMs, most of which were inactive users. Post this registration effort, growth mobile ARPUs for prepaid and TM increased and are now more reflective of the true ARPU levels of Globe. On a year-on-year basis, prepaid ARPU increased by 24% to PHP 120, while TM ARPU increased by 34% to PHP 84. On a comparable basis, if we use only the post SCR sub numbers, ARPU for prepaid will jump up to PHP 154 or close to a 59% increase from last year, and TM ARPUs increased to a PHP 107 or a robust 70% increase against full year 2022 levels. Taking into account the fact that traffic only grew by 28% year-on-year, these high ARPU levels reflect the quality subscriber base of Globe and show the results of the market repair efforts of the company. On the other hand, the home broadband business closed 2023 with PHP 25.1 billion in revenues from PHP 27.1 billion reported in the same period last year. The drop in the fixed wireless product was partly offset by the sustained expansion in postpaid fiber revenues, which grew by 14% and subscribers, which were stable during the period. Fiber revenues are also driven by sustained ARPUs as we focus on quality acquisitions. Meanwhile, the fixed wireless access revenues and operating metrics continue to normalize. Consistent with the company's guidance, the quarterly decline in the fixed wireless subscribers is decelerating and the downward pressure from this business is expected to ease in 2024. On GFiber prepaid, we continue to get positive sentiments from our customers on the fully digital experience, affordability, good network experience as well as the convenience of loading via GCash following our official launch in the second half of 2023. Note that we are approaching this ramp up carefully, taking a more measured approach to customer acquisition and scaling this business properly with quality subscribers and what we internally call, real intenders, or those that will stay active in our fiber network longer. We intend to do this by leveraging on Globe's superior distribution network as well as the group's deep knowledge of the prepaid consumer market. To date, GFiber prepaid has the highest reload rate and loader ARPU among all the prepaid brands of Globe. This is a testament to the services increasing growth momentum all the while maintaining quality subscribers. On the corporate data front, service revenues are still growing healthily as Globe continues to explore optimal solutions to support its enterprise clients and provide more ways to embrace digital transformation. Corporate data revenues posted an unprecedented PHP 18.3 billion, outpacing last year's performance by 7%. This also marked the highest corporate data revenues in the company's history and was mainly spurred by the strong demand for information and communications technology services, which grew 14% year-on-year. Meanwhile, non-telco revenues grew by an impressive 18% year-on-year, reaching PHP 4.9 billion in 2023 as the Globe group continues to deliver life-enabling innovations to solve the everyday pain points of the Filipinos with an unparalleled ecosystem of products and services. Also, our joint ventures and affiliates grew their contribution to the bottom line with our net share in equity gains surging by 86% year-on-year to PHP 2.6 billion. In particular, we want to highlight that Globe's share in Mynt earnings continued its outstanding growth momentum, reaching PHP 2.37 billion in 2023. This is nearly triple compared to the same period last year, spiking by 193% or roughly 2.9x larger than the figure posted in 2022. Mynt continues to increase its positive contribution to Globe's bottom line and now impressively accounts for 7.3% of the group's net income before tax. Moving on to our capital expenditures. Globe invested PHP 70.6 billion in 2023 for network expansion and enhancement. This is lower by a notable 30% year-on-year and is in line with our reinforced guidance of lower spending following the 2022 peak. Furthermore, this PHP 70.6 billion investment is equivalent to just 44% of our total service revenues for the year, significantly lower than the 64% CapEx to revenue ratio we logged in 2022. For 2024, we expect CapEx spending to be equivalent to just about 30%, 35% of total service revenues and even lower in 2025 as we aim to go back to the industry's average level. As mentioned in our previous briefing, the company has reprioritized purchase order issuances beginning 2023, made possible by the CapEx strategy the company employed the past 3 years. Purchase order issuances for 2023 amounted to $600 million, less than half of actual cash CapEx and is also equivalent to just 36% of the average annual PO issuances in the past 5 years. These PO issuances are leading indicators for future CapEx payment levels. And therefore, the significantly low PO issuance in 2023 will enable the planned reduction of CapEx over the next few years. In 2023, the company's efforts shifted from opportunistic capacity expansion to maximizing the utilization of network investments. The company is effectively reaping the benefits of this strategy, which will allow it to return to more sustainable CapEx levels without sacrificing network quality nor capacities. These streamlined PO issuances will likewise allow us to get back to positive free cash flow territory as planned. Of the PHP 70.6 billion spent, about 91% was allocated for data requirements to ensure that our customers will be able to access the best digital solutions and connectivity hassle-free anytime. As a result of the strategy, we have begun reprioritizing our CapEx spending to ensure an efficient network rollout. As mentioned in the past, bulk of these investments were made for our mobile network as we shift our focus on the fiber front from rollout and expansion to port utilization. We are also easing spending on 5G site rollouts given the lack of a viable use case amidst current market conditions. Nevertheless, to ensure quality network customer experience for our 5G users, we fired up 894 more 5G sites across the Philippines, increasing our 5G outdoor coverage to 97.90% of the national capital region and 92.36% of key cities in Visayas and Mindanao. As of December 2023, Globe built 1,217 new cell sites and upgraded 6,975 mobile sites to LTE. Let's now talk about some exciting updates from STT GDC Philippines. In a strategic move that underscores our commitment to the digital economy's infrastructure, we have established 7 data centers across the Philippines. Of these, two are currently under construction, STT Fairview, which promises to deliver an additional 124 megawatts and STT Cavite 2 with 6 megawatts respectively. This expansion not only boosts our operational capacity, but also positions the Philippines as an emerging data center hub in the region. Through these initiatives, we are significantly increasing the available capacity, further cementing our role as a leading provider of cutting-edge digital infrastructure and contributing to the Philippines growing reputation as a sought-after location for data center investments in Asia. An achievement that we hold in high regard is our current RAC utilization rate of 83%, which attests to the efficiency and reliability of our services and the trust that our clients have in our capabilities. In alignment with this, we have set ambitious targets to scale our IT capacity from 22 megawatts to over 150 megawatts. Specifically, we aim to reach 33 megawatts by 2025 and 52 megawatts by 2026, a strategic increase that will power the next phase of our growth and represent a 600% increase in our IT capacity. Our approach to expansion is conscientious with a strong emphasis on minimizing our environmental impact. This is embodied in our adoption of sustainable construction practices, utilizing hollow core slab, HDPE pipe for chilled water piping and recycled steel. Additionally, our state-of-the-art cooling and battery technologies not only serve as evidence of our commitment to innovation, but also reflect our dedication to sustainable development. In the data center colocation sector, we're witnessing an extraordinary growth trajectory with a compound annual growth rate of 14.7%. By 2030, it's anticipated that the market will reach a size of approximately $89.3 billion. This growth isn't just a backdrop for our operations. We are actively shaping the future of this landscape. The retail colocation market is expected to achieve an annual growth rate of about 7.5%, while the wholesale colocation market is on track for an impressive annual growth of about 51% primarily driven by the expanding needs of hyperscale cloud service. These figures extend beyond mere data. They reflect the vibrant and rapidly evolving market environment in which we operate, highlighting the expansive growth opportunities available to STT GDC Philippines. Our strategy is focused on capitalizing on our competitive advantages, accurately anticipating market trends and consistently delivering superior services to our clients. Moving on to the Mynt portion of the presentation. In 2023, GCash remained as the #1 finance app in the country. Over 94 million Filipinos have tried GCash, proving that we continue to be the Filipinos top choice for digital financial services. GCash also continues to lead with the most active user base, miles ahead of the next finance app by as much as 5x in monthly active users and 10x in daily active users based on data.ai December figures. As we maintain ubiquity, we shifted our focus towards quality user engagement and activity. This is supported by the largest cashless ecosystem in the country with the help of our 211 trusted partner local government units, 2.2x more than previous year. According to an external survey by Capstone Intel Corp, 94% of Philippine fintech app users use GCash, proving once again that we have sustained the trust of Filipinos for their everyday transactions. And throughout all this, we are able to sustain a best-in-class 92 Net Promoter Score, or NPS. The key to GCash's success is the trust that our users have placed in our platform. That is why protecting this remains as our #1 priority. We continue to reinforce trust and security across our ecosystem through firstly, enhanced security features with the launch of DoubleSafe and blocking of compromised and modified devices; secondly, ramping up customer education through the GSafe Tayo 2.0 campaign. We doubled down on our efforts to drive awareness on phishing and scams. And lastly, product innovation with products such as Send Money Protect. Beyond innovation, we remain proactive in fostering synergies with the government to lead the fight against scams and fraud. We constantly work with our regulators to further strengthen our partnership to combat scammers and fraudsters. The same goes for the law enforcement as we provide them the necessary aid to clamp down on cybercrime. Lastly, we continue to support our partners in the legislative branch. Recognizing GCash's role in the Philippine digital ecosystem, we offer our expertise and on-ground experience for consumer protection logs, such as the Anti-Financial Account Scamming Act or AFASA bill. By building the most trusted and secure platform, we are able to onboard even more Filipinos with digital financial services. On lending, we have disbursed PHP 118 billion of loans life to date, a 105% growth year-on-year to over 3.9 million unique borrowers. This is all made possible by our proprietary in-house trust score, G-score, which uses digital behavior to generate a credit score that replaces traditional collateral. On wealth management, our GSave registered base has also grown to $9.5 million in 2023. This is supported by the differentiated savings propositions of our GSave partners. Now one in 4 bank Filipinos have a GSave account. We have also seen our GFunds registered base increase to 5.8 million by offering diverse investment options for as low as PHP 50. To supplement the growing interest in savings and investment opportunities, we also launched the Learning Hub. This provides users with beginner-friendly guide to get them started. On insurance, through our GInsure marketplace, we have sold over 16.3 million policies life to date, 172% higher year-on-year to over 4 million registered users. Our new embedded insurance products like Bill and Send Money Protect, help make insurance a part of our users everyday life. We also continue to expand our services to reach underserved Filipinos wherever they are. Currently available in 6 countries, GCash Overseas will soon be present in 10 more countries, which recently received the green light from the BSP. This enables Filipinos abroad to feel more connected with their loved ones back home. With global Scan to Pay, Filipino travelers can use their GCash app to pay in 17 countries across over 3 million merchants while taking advantage of low ForEx rates and 0 service fees. Our continued focus on innovation will help us towards our vision of financial inclusion to deliver better every days for Filipinos. With lending, we launched 2 micro loan offerings [indiscernible] and [ Borrow Load ] that offer as starter loans tied to their everyday transactions. We also teamed up with FarmConnect and Mayani to offer financial literacy training and loans to farmer communities who have historically lacked access to capital. With GCrypto, we launched the GCrypto exclusive collaboration with Apl.de.Ap and Bitto as we aim to make investing more exciting through NFT. Lastly, for international, we launched the GCash Visa card, which can now be used for 100 million merchants in over 200 countries and territories worldwide. In more recent events, we just introduced GCash's newest brand ambassador, international fashion icon, Heart Evangelista-Escudero. Heart is one who strongly believes in GCash and how it makes payments easier and safer. She is one of the millions of Filipinos who have chosen GCash to be a partner in their journey towards financial progress. This is just the start as we join Heart in experiencing the best way to spend, save and invest with GCash. As a company committed to sustainability, we extend our efforts to do the same towards a sustainable country starting with GForest, which now hosts over 15.8 million green heroes. We have been able to plant 2.7 million trees life to date and help avoid over 63.4k tons of carbon dioxide. Through GForest, we have also helped to provide livelihood opportunities to more than 8,600 farmers nationwide. In our efforts to make Filipino's everyday lives better, GCash has been recognized at the prestigious 59th Annual Awards for our campaigns that promote diversity and inclusion within the company and society. We garnered 5 silver awards for GCash Stories, GCash Queer Market and Werk With Pride. We will continue to work towards our vision of financial inclusion and hope of creating a positive impact in the lives of Filipinos whoever and wherever they are. Moving on to the financial portion of our presentation. To summarize the earlier points, gross service revenues for the full year came in at a record high of PHP 162 billion, higher by 3% year-on-year on the back of the sustained solid demand for data-related services and the healthy contribution of our non-telco businesses, coupled with the tempered increase in operating expenses and subsidy, our EBITDA improved by 3% year-on-year to PHP 81.4 billion or 50% of service revenues. Normalized net income for the period stood at PHP 19.1 billion, while core net income, which excludes the impact of nonrecurring charges and foreign exchange and mark-to-market charges amounted to PHP 18.9 billion. On a sequential basis, our fourth quarter revenues grew by 3% with operating expenses growing at the same pace. These had a combined effect of pushing our EBITDA higher by 4% year-on-year. Normalized net income amounted to PHP 4.3 billion for the quarter, while core net income reached PHP 4.1 billion. Note that the 2022 figures are restated to make it comparable with 2023 post-ECPay deconsolidation. Delving a bit further into our costs, total operating expenses and subsidy increased slightly in 2023. With our continued efforts on cost controls, expenses related to marketing and subsidy dropped by 26% year-on-year to PHP 7 billion, while staff costs slid by 1%. These declines, however, were partially offset by the increases in network costs, which were higher by 11%, provisions, which grew by 6% year-on-year and services and other OpEx up by 4%. Interconnect fees for the year remained stable. Nonetheless, the consistent year-on-year increase in our revenues allowed for EBITDA to inch 3% higher. Our EBITDA margin is well within our full year guidance. On a quarter-on-quarter basis, our OpEx remained stable. The increase in staff costs was mostly offset by the PHP 270 million drop in costs related to our network. On top of this, expenses related to our marketing and subsidy likewise declined by 20%, while services and other OpEx contracted by 6%. On the flip side, interconnect charges for the quarter increased by 15% quarter-on-quarter, while provisions grew by 31%. As mentioned earlier in the presentation, these results have been delivered despite significant upward pricing pressures on a lot of our expense line items, in particular, those related to keeping our network up and running. Against this backdrop, the company's cost transformation efforts delivered significant gains and allowed for EBITDA growth both for the quarter and the full year. As an update to the market on our sale and leaseback initiative, the turnover of our tower assets to the buyers continues to progress. To date, we have turned over 4,167 sites. For MIDC, we have turned over 1,194 towers, which is 55% of their portfolio, while we have transferred 2,214 towers or 63% to Frontier. For Phil-Tower, we've turned over in aggregate 8, 10 towers or 60% of its total portfolio. And for Unity, we have transferred 249 towers equivalent to 56% of their total portfolio. As of December 2023, we have collected total gross proceeds of PHP 57.4 billion. As mentioned in the past, we encountered a few unexpected impediments that led to the slowdown of tower closings. These include issues related to the documentation process as well as negotiation with lessors. Nevertheless, we have put in place remedies to fast track the closing for the balance of our tower turnover. Closing of the remaining towers and collection of gross proceeds thereof can be expected within the first half of 2024. In fact, we expect to turn over another 100 towers within the week with gross proceeds amounting to approximately PHP 1.48 billion. This closing would bring our total gross proceeds to PHP 58.9 billion. Regarding dividends, our Board of Directors approved the payout of PHP 25 per share for the first quarter, consistent with our declarations the past few years. In line with the company's commitment to a sustainable dividend policy, we are pleased to announce that our Board of Directors have likewise approved the expansion of the dividend payout range to 60% to 90% of prior year's core net income from 60% to 75%. Through this adjustment, the company has afforded added flexibility with future declarations, particularly given the projected earnings and expected improvements in our cash flow generation as we continue to reduce our capital spending. Finally, this wider payout range allows for the company to maximize value to our shareholders moving forward as well as makes our dividend payout more competitive against our regional peers. Key dates for this declaration are the payment date of March 7, 2024, to shareholders on record as of February 21, 2024. We now move on to our balance sheet. Gross debt level is at PHP 250 billion with unrestricted cash level at PHP 16.6 billion. All ratios are well within our bank covenants and in line with peers despite the challenging macroeconomic environment. These are expected to improve in the near term in accordance with our efforts on shoring up free cash flow and controlling CapEx spending. Lastly, we are happy to share that we have achieved a majority of our 2023 targets. We believe we are weathering the challenging macroeconomic environment quite well as evidenced by our record high revenue and EBITDA figures. We are confident in being able to sustain this growth in our top line despite several external factors such as protracted inflationary pressures, weaker GDP growth and higher for longer interest rates. Furthermore, we maintain our EBITDA margin guidance of 50%. On our sale and leaseback initiative, we reiterate that the closing of our remaining towers and collection of gross proceeds thereof will come in within the first half of this year. We also reiterate our major commitment to shoring up free cash flow, which we target to bring into positive territory by 2025. This guidance will be buoyed by our planned reduction in CapEx spend, enabled by the streamlining of PO issuances for 2024 to USD 600 million or less. Again, this more targeted level of POs is a result of the well-executed CapEx plan of the company and will be a leading indicator of spending over the next few years. This will allow us to drop CapEx to USD 1 billion by 2024 and possibly even lower in the subsequent years. These efforts show the company's commitment to deliver quality results while maintaining financial sustainability. That's ends the presentation. Thank you all very much for listening.

We will begin the Q&A session [indiscernible] by our Chief Executive Officer, Ernest [indiscernible]; [ Rosemarie Maniego-Eala ], Chief Financial Officer; Froilan Castelo, our General Counsel; Mr. Joel Agustin, Head of Network Planning Engineering; Mr. Darius Delgado, Vice President of Consumer Mobile business; [indiscernible] Vice President for B2B; Mr. Danny Theseira, Senior Advisor Broadband business, also will join [indiscernible] and Mr. Carlo Malana, President and Chief [ Information ] Officer [indiscernible] We also like to [indiscernible]. We'll now begin the Q&A session. The questions have come from [indiscernible] is also here with us. The first question is I believe for Darius. The strong [indiscernible] do you this reflects a stronger [indiscernible] is market share driven. If the former were to sustain, will [indiscernible] revenue outlook.

[indiscernible] is improving, especially from [indiscernible] So there are some things importantly on the economy [indiscernible] huge pressure on consumer spending. So that's first. The internal drivers would be -- we have been improving our network experience. In the last 6 quarters or so we have [indiscernible] availability across the territories that we manage in the Philippines. Our IT systems have been relatively stable as well. And that's coupled with the fact that we have been improving our portfolio economics. And what that means is that more and more customers have been upselling or upgrading to the higher SKUs. And that's why you see the ARPUs that we have reflected in Q4, growing double-digit versus Q3. You've seen also our customer base increasing. And lastly, if all of those factors are sustained externally and internally, we expect the same lift in quarter 1.

Thanks, Darius. The second question, I believe, is for [ Resa ]. On the big job in repairs and maintenance in the fourth quarter. What's driving this? And is this normal?

Thank you. The fourth quarter is when we do our annual recon with all our vendors, and that's where we adjust accruals especially for this expense item. But if we look at the normalized year-on-year figure, then the growth rate for repairs and maintenance would be 14%. And this would be reflective of the true growth of this expense item, given that our network is also continuing its expansion.

Thank you, Louisa. The next question is again for Darius on churn. Is this simply a function of the reduced subscriber base or any additional feedback on this?

Definitely, we have purged like 30 million customers from our base in Q3. And therefore, it surfaced the real ARPUs from active customers. What we've seen also after the implementation of the SIM card registration law is that most, if not all, of the new acquisitions or new contenders that we got in the base had higher qualities, and we see that through higher and healthier reload grades. As also disclosed, this is the first time in a long while that you see churn rates of prepaid subscribers at the same level of postpaid. So 1.5 -- we have 1.5 for GP and low postpaid, we have 1.8 for TM. So those are great churn numbers, which are actually a testament of quality of the customers in the base that we have today.

The next question comes from [indiscernible] of Citi, and this is again for Resa. What drove the healthy reduction in selling and admin expenses as well as repairs and maintenance expenses, both Q-on-Q and year-on-year for 2023. Is it the new normal or is this going forward for the rest of the year?

So I think we've been talking about our transformation efforts with respect to costs and 2023 was our third year running into this internal program. And if you look at the drop in marketing costs across the board, this is related to us streamlining certain operations, lowering some commissions, for example, and also using technology to improve both distribution and marketing. Now if you look at our guidance for 2024, we are still keeping with the EBITDA margin level of 50%. So that means the focus of the company is twofold. Number one, to make sure our costs can accommodate the continued increase in repairs and maintenance or to support our network and IT initiatives. Second, and as important, all of our expenses will also focus on revenue growth programs or initiatives. And so, with those being our top key expense items, then the efforts of the whole company is to reduce expenses we no longer need and funnel it through making sure our network IT and revenue costs are supported to keep the 50% EBITDA margin.

Since there are exactly no other questions in the queue, we will now take questions from the floor. So please state your name and company before asking your question.

I am [ Jared ] from AB Capital. I'd just like to ask on GFiber prepaid. If you can provide more color on direction it is heading. I know there was a target of about 200,000 subscribers by the first year. Are we trending in the right direction or something like that?

We launched GFiber prepaid second half of last year. So we're seeing very good momentum, and we're getting very strong positive sentiment with regards to the whole end-to-end features of being a fully digital service. On top of that, we're seeing very strong reload rates and one of the highest ARPU among the prepaid brands of Globe. So in terms of quality, that remains to be the focus because as you go down to the social economic class of penetrating the growth area of a D segment, that's where it comes with its own higher risk with regards to churn. So it's not necessary quantity but rather making sure that you have the right service for the right segment, focusing on quality, and that's how we want to be able to scale and capitalize on that. With regards to that as well, we also have a very strong distribution network of our mobile prepaid customers based on quality, which Darius just mentioned as well. That and the power of GCash, we're hoping to really form the base correctly to be able to really grow carefully.

And just a quick follow-up question. Is there any concerns about cannibalization with regards to your fixed wireless customers?

For fixed wireless customers is also within the same segment. So the goal there is to move fixed wireless segment into wire prepaid, where serviceable. But there's also a segment that do not use that much of data in a single mine, and they choose to remain on fixed wireless as well. And if you look at the country of Philippines, there will all be a ratio of wired and fixed wireless. And for the righter part of the Philippines, there will still be the opportunity to get into fixed wireless for our basic home broadband connection.

[Operator Instructions]

[ Stephen ] here from China Bank Securities. Two questions for me. Africa's your general outlook for your business? Any particular segments that you want to focus in this year?

Well, I guess you saw from the fourth quarter that the results were pretty strong. The mobile business continues to stabilize, market pressure seems to have abated. The intensity of competition is low at the moment and I think that bodes well for the entire industry. And then, on the broadband side, for us, the focus will be on as a gentleman mentioned, prepaid fiber. We are really optimistic about that particular product because it really hits the nail in terms of what customers are looking for lower monthly as well as no commitment. We know that segment very well from our experience in the mobile side, and we designed a product that's really made to suit their payment and buying preferences. For us it's a very broad, you would say, scope in 2024. We look to develop our GCash business even further, particularly our lending business there. And then on the data centers, hopefully, Carlo moves on from being a construction company to a data center company and start generating revenue from the facilities that he's building. And I guess that would be it.

A follow-up question for me is any color you could provide with regard to GCash IPO.

That is a question that's top of our minds. At the moment, obviously, we all know that the company is indeed ready. However, I know that the question of the Philippine market being ready for us is another one you are all involved in that market. We have seen how liquidity has shrunk. I think today, it's about USD 50 million, USD 60 million on average. For a company of our size, I don't know if that is at the right time right now, but definitely, we do think that Philippines would be one of the places we should be really considering given that this is the Philippine champion for fintech. It is the widest use, I would say, app in the sale of local app in the Philippines, not counting the Facebooks or the Instagrams and everybody else and it's a local favorite here. So we would be remiss if we did not do it here. But at the same time, we have to consider what the shareholders need in terms of value maximization. So we're watching the market intently, we're hoping for a rebound back to the USD 100 million, USD 150 million a day in the future. So I hope the PSE, the SEC and all the other agencies will work together to promote our stock market once again.

Lastly for 917 Ventures, any planned ventures that you want to kick start this year?

Well, we're very focused on our health tech business at the moment. I'm quite optimistic that we'll do something significant this year in terms of growth. We've been playing around with that business for a while. We've done some restructuring in the business, and we're going to refocus a lot of Globe's efforts into helping build that the same way to build GCash.

[indiscernible] from Security Bank. Can you provide more color on the performance of Mynt or GCash on the fourth quarter since what's better Q-on-Q? And should we expect that to be sustainable going forward?

Our fourth quarter is also really driven by the continued scale that we've been able to do. As you -- as we recently reported that we have almost 94 million Philippines have tried GCash, and I think we'll continue to scale. But more so, we've diversified more into the financial services sector. Our lending business has continued to kind of are really scale. We disbursed almost PHP 120 million worth of loans like to date and with our NPLs are being very relatively controlled, right? So that's a key component to the continuous growth in the fourth quarter, plus also the seasonality right when you talk about the fourth quarter, people tend to spend -- people tend to use payment channels and we're the most preferred payment channels in the country.

One last call again for people in the audience for any follow up questions.

I am Derrick from CLSA. So several questions. First on GCash. The lending business of GCash, is it more driven by the third-party partner or by internal lending? And are you exploring also offshore listing for GCash. Also on the data center front, if I were a foreign co-locator, why choose the Philippines for data centers? And lastly, on the mobile side, what are your thoughts about the lowest postpaid plan, 388 by competitor seems to be the lowest in the market right now.

I will take the lending question. We have 3 products on the lending side. The first one is GCredit, which is basically a revolving credit line. Then we have GLoan, which is our cash loan, and we have our GGives, which is our buy now pay later product. In the fourth quarter, and I guess, in general, all 3 products are growing. What is powered by our partners is GCredit which is powered by CIMB. But the 2 products, GLoans and GGives are actually being developed and originated by GCash on its own. So in terms of the growth, we've been growing all 3 with a little bit of more scale, at least in the fourth quarter on the GGives side, particularly because, again, as I said, seasonality, people go out, people try to buy big stuff. And I think that's what's been able to kind of sustain the growth in that fourth quarter. On the listing venue, yes, definitely, we are looking at all possible markets given the size of the company today and the liquidity requirements that most institutional investors will be looking at. So I think it's incumbent upon management to do a survey and scan of all possible listing venues outside of the Philippines.

On the data centers, thanks for the question there. Why the Philippines, of course, there's a long explanation on defined for that. But we can probably boil it down to 3 things. One is the Philippines remains the -- from a geographical perspective, very near the center of all the submarine cables that come into Southeast Asia. Quite a number of submarine cable projects are now being diverted or are you starting in the Philippines, increasing our submarine cable capacity [indiscernible]. So at some point, all those connectivity will need to germinate somewhere, and that would be a data center. Secondly, the Philippines has the second largest population in Southeast Asia and also probably the most Internet users and Internet savvy folks in the region. And so, from a volume perspective, we all know how much Filipinos love TikTok and Messenger in Facebook. And then also, the third is that the Philippines has quite a number of renewable energy projects coming in the future. When we talk about data centers, you're not talking about this next month or next year, right? We're talking about a long-term infrastructure build. And we foresee that as the renewable energies become available, we'll be there to take advantage of it using the data centers as well.

So the 388 question, to be honest with you, that's a very confusing offer, confusing because you don't -- we don't understand what the proposition behind it, and we don't understand quite frankly, what segment it attracts and I will explain. The postpaid market actually values not just pricing. It's the overall proposition of the plan. So we're seeing faster network and also the convenience. Now the deeper plan while priced at an SKU similar to prepaid can actually work for some price-sensitive postpaid customers, but their postpaid customers have stayed with us for the longest time, 6 years on average. So I don't think it's going to encroach majorly on the postpaid base that we have, but it's going to compete in the prepaid market. When you look at the price per GB in the market, on prepaid today and compare it with a 25 GB at 388, that's expensive. So I don't think it's going to gain traction, but we are monitoring on ground the traction of that across the regions.

We acknowledge a question sent in by Ms. Katrina [indiscernible] Asia-Pacific. The first 2 questions, I believe, are more housekeeping related, so we'll take that offline. The third question will -- this is for [ Katy ]. So we will read that. What contributed to the 3% year-on-year increase in core accounts under corporate data revenues? And which core services do these pertain to?

Actually, we are seeing a lot of growth in this space from the hyperscalers. As Carlo had said, we are -- we have invested in a lot of subsea cables. So the capacity we have is already very attractive for the hyperscalers coming into the country. The other big driver, I think, is direct Internet. And this is mostly driven by the small and medium business space because they're getting more and more need for data connectivity. So the growth is driven largely by the medium businesses on direct entering.

The next question comes from [indiscernible] of JPMorgan, and this is for Resa. What's the reason behind the Q-on-Q jump in depreciation?

Well, the real reason for the 11% Q-on-Q increase in depreciation of the additional power lease in the quarter. But again, I think if we look at the year-on-year increase, it was at 4%, and that would be a better benchmark if you were looking at how to build in your forecast or update your forecast for depreciation going forward, albeit, I guess if you stack up all of our [indiscernible] related to the cash CapEx, then you can also see the trending of assumed depreciation for your model.

The second question again pertains to the GCash IPO, which was already answered. But there is a follow-up question. Are you not considering listing GCash in the U.S?

Well, the U.S. is part of the different venues that we're looking at, but we all know the hazards as well of listing in the U.S. You've got tremendous compliance requirements like Sarbanes-Oxley. You also have a very, you would say, active this type of community over there as well. So all of these things play into our decisions as to where we will go, but of course, on the contract, deposit, it's a very, very large market, particularly for tech companies like ourselves. So it is part of the listing venue list that we are looking at, but definitely nothing has been decided at this point. And we're not close to any decision at this point in time.

Again, there are no more questions in the queue. Again, you'd like to ask the audience if you have any additional questions that you would like to ask the panel. As there are no further questions, I believe this concludes the Q&A portion. But of course, before we adjourn, I will now turn over the floor to Ernest for his closing remarks.

Well, first of all, thanks, once again, to the face-to-face audience as well as the people on Zoom. I think you've got 100-plus people on Zoom as well. I just wanted to comment about the quarter that just passed and the full year. We were very, very pleased with our performance in 2023, particularly in the telco side. 5% growth on the mobile business is not something to sneeze at. If you look at many global telcos, squeezing out 5% on your mobile in a mature market is a very big achievement. We just hope that the macros continue to improve for the Philippines, inflation abates, interest rates go down and consumer wallets expand in that way, Telco will get its fair share in terms of revenue increases now. Market-wise, like I said earlier in an answer to a question, we're seeing very benign market conditions at the moment. Of course, we're watching all competitors closely, including the third player, who seems to be still breathing. And so, we continue to monitor that situation. On the broadband side, I want to reiterate our focus on prepaid fiber because we do think it really, really hits the spot in terms of what consumers are looking for affordability and flexibility in terms of managing their budgets. We like the uptick we're seeing on the corporate side. Katy and her team have done a great job in writing the ship there and returning that particular segment to growth for us. We also saw our new businesses continue to improve their contributions. Aside from Mynt, the rest of the subsidiaries are doing also quite well and growing on their own. We will continue to feed those businesses. We'll continue to grow those businesses in the hopes of diversifying our revenue stream. But we also know how big the challenges given how large our telco business is. What we have done so far with Mynt and all these hubs actually is already becoming a model for other telcos in the world to follow in terms of being able to build adjacent businesses or leveraging existing assets and capabilities into new businesses. On the GCash side, the tremendous focus on lending. I think Tek spoke about that earlier. There was a fourth product, the small loans, I call it [ factor loans ] is also very, very good. That's a very low number, PHP 100 and up, you can borrow from GCash. But what we didn't talk about, and I don't know if what's mentioned I think it was international. And I'm quite optimistic about international. International, there's about 10 million Filipinos out there. I would say, about 7 million of those are addressable if you remove elderly and dependent and so on. And with PHP 34 billion a year in remittances going into the Philippines, I'm also very quite optimistic that we can hopefully take a share and possibly even disrupt those rails of remittances into the Philippines. The basic problem of the OFW is that they are unable to control the money once they get to the Philippines or the funds get to the Philippines to the [Foreign Language], a trusted person. But having GCash in their hands allow them to actually direct the funds into the right payment pockets that they want, whether it's tuition, utilities, savings into banks and so on and so forth. It's getting really the OFW more control over where the funds are going. And I think given the early indications we're having a sidelight to that is, by the way, we are the largest fintech up in the [ USA ]. We didn't even know that in doing our survey and mostly driven by overseas Filipinos using Philippine cents. What more now with the 16 countries that we think represent more than 80% of the addressable market, where we can now -- they can now use their local numbers to sign up for a GCash account, I think it's significant. That's on the inbound side. On the outbound side, we are empowering the average Filipino who does not have a credit card to pay outside the country using the GCash Visa card program as well as the QR codes. We recently integrated also with the QR code -- National QR codes of Malaysia and Thailand -- Korea and Malaysia, I'm not sure, but 2 countries. Korea and Malaysia, probably. So which means you can now travel to those countries and actually use the QR codes you see in the stores to pay or if the absence of QR codes, use your Visa card at very attractive exchange rates. This is a very big development because as travel budget travel goes on in the Philippines. As we know, Filipinos love to travel. Gone will be the days where they go to a money exchange place to buy their local currency for the destination country and bring cash. They'll be able to load up the GCash wallet. When you open your GCash app in that country, it actually shows you how much money you have in the local currency and you can now scan or use your Visa card to pay. So quite a bit of development and again, once again, really focusing on what our country may need in terms of empowerment financially, which goes hand in hand with the theme of Globe, which is to look at large Filipino problems and provide digital solutions for them. So 2024, we expect will be another good year for us. I expect many more solutions like we said that we're developing that we think Filipinos will like and develop improved lives at the same time, hopefully drive revenues and profitability for Globe. Thank you very much, and have a good morning.

And on that note, we conclude the fourth quarter 2023 Analyst Briefing of Globe Telecom. Wish to thank again all of you who joined us here and on the call. We hope you'll join us again for our first quarter 2024 analyst briefing in early May 2024. Again, we wish everyone a blessed good morning. Stay safe, everyone.