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

Good morning, everyone, and welcome to the Fourth Quarter 2024 Analyst Briefing of Globe Telecom. We will begin with a video presentation of our performance and a few updates on Globe, to be followed by the Q&A. [Presentation] Welcome, everyone, and thank you for joining us for our fourth quarter 2024 Analysts' Briefing. We are happy to report that Globe ended 2024 with strong results, setting a new record for consolidated gross service revenues at PHP 165 billion, reflecting a steady 3% improvement compared to the prior year, in line with company guidance. This milestone was achieved despite headwinds from Home Broadband normalization, the ECPay deconsolidation and the prolonged impact of inflation made even more material by the devastating typhoons in the latter half of the year, which weighed on consumer spending. This business resiliency resulted in EBITDA reaching an all-time high of PHP 86.8 billion in 2024, higher by 7% year-on-year. This record figure is also an indication of the company's effective cost management strategies despite the inflationary pressures still pushing costs up. Globe's EBITDA margin improved to 53%, surpassing the full year guidance. Buoyed by the company's stellar EBITDA performance and further driven higher by our equity share in affiliates, Globe's core net income spiked by 16% year-on-year to PHP 21.5 billion for 2024, the second highest in Globe's history. And with that, we are happy to share the following developments within Globe, each of which will be discussed in greater detail later in the presentation. First, Globe's equity share in Mynt accounted for a substantial 12% of net income before tax, reflecting the strong growth trajectory of Mynt as it continues to expand and grow its business as the dominant cashless ecosystem in Philippines. Second, STT GDC Philippines is on track to achieve 33 megawatts of capacity by 2025, aligning with the company's commitment to meeting market demand while providing reliable world-class infrastructure. STT Fairview is progressing on schedule with structural completion achieved in November 2024. STT Cavite 2 is on track to open in the third quarter. And lastly, given the company's 2024 results, our Board of Directors has approved the first quarterly cash dividend for 2025 of PHP 25 per share, consistent with our declarations over the past few years and reinforcing our commitment to a sustainable dividend policy. Getting the ball rolling with the wireless segment. The company's mobile business generated a robust PHP 116.7 billion in revenues for the full year, surpassing the previous high of PHP 112.4 billion in 2023. This was supported by the effective data monetization and market repair efforts that remained one of Globe's priorities during the period. This was also bolstered by the company's continued network enhancements, leading to increased competitiveness and stronger proposition as part of our customer-centric strategy. Mobile data revenues continued to grow, hitting a record high of $97 billion for 2024, an improvement of 7% year-on-year. This was largely driven by Filipinos' growing preference for the use of mobile applications to perform their various online activities. Mobile data now constitutes a larger portion of total mobile revenues rising from 81% in 2023 to 83% in 2024, more than offsetting the naturally declining mobile voice and SMS segments, which shrank by 6% and 16%, respectively for the full year. On a sequential basis, mobile revenues were slightly weaker, owing to the compounded impact of multiple typhoons during the period which affected consumer spending patterns, with households prioritizing essential and recovery efforts amid rising inflationary pressures. For context, there were 6 recorded typhoons in the country in the fourth quarter, further straining mass market households with numerous disruptions in mobility and livelihood following the 9 typhoons in 3Q. Nevertheless, mobile data traffic soared to 6,351 petabytes compared to 5,960 petabyte in 2023, driven by the consumption of online videos and social media content mainly via smartphones. Mobile data monthly average traffic per user likewise grew, surging by 8% year-on-year to 15.1 gigabytes per month. The Filipinos' consistent and continuous data habituation led to a 3% increase in Globe's mobile data users to 37.4 million. Meanwhile, the company's total mobile subscriber base expanded to 60.9 million by the end of 2024 from 57 million a year ago. Globe's ARPUs have likewise been improving, reflective of our quality subscriber base, choosing to stay on the Globe network, notwithstanding external pressures and a pressured macroeconomic environment. Notably, the 7% increase in mobile data revenues came from a similar increase in mobile data traffic, underscoring the company's successful market repair and data monetization strategies. Moving on to the Broadband business. We are excited to report that GFiber Prepaid, or GFP, maintained its steadfast momentum and continued to gain market traction in the second half. It remains growing Prepaid fiber brand in the country, with total subscribers hitting 260,000 as of end December 2024. This 74% sequential improvement led to Globe surpassing its initial target of 200,000 GFP subscribers by year-end. GFiber Prepaid continues to build strong customer loyalty and trust, highlighted by high customer engagement with reload rates of 78%, the highest across all prepaid brands and world-class NPS. This growing demand for flexible and affordable prepaid fiber services underscores the effectiveness of Globe's customer acquisition strategy and its commitment to providing seamless connectivity solutions. Such services of the company are integral to our planned rightsizing of broadband offerings and subscriber base management, which are proving to be effective as total Home Broadband revenues showed positive sequential performance by the end of the year. This is consistent with what the company had guided early on, as we initially expected the segment to start recovering by the second half of 2024. This effectively marks the first sequential growth in 13 quarters since the third quarter of 2021. The Home Broadband business generated $23.8 billion in revenues, implying just a 5% decrease year-on-year. Note that this is slower than the prior year's decline and is indicative of decelerating normalization. Globe's fiber business continued to grow as the last few tranches of fixed wireless customers migrated to wired connectivity. Total fiber revenues rose by 2% year-on-year, while total fiber subscriber count increased by 16%, fueled by the strong adoption of GFP. This strategic transition delivered positive results as evidenced by the 13% year-on-year fixed-wired subscribers. Globe's Home Broadband business ended the year with 1.74 million subscribers compared to last year's 1.75 million. Corporate data revenues, meanwhile, continue to be one of Globe's fastest-growing segments posting a record PHP 20.4 billion in revenues, an 11% on year-on-year. This was driven by the 15% increase in ICT and 9% spike in core data services. Business application solutions and cybersecurity services were key drivers to ICT revenue performance, posting year-on-year improvements of 29% and 4%, respectively. These results are a testament to the company's continuous commitment to excellence in delivering cutting-edge digital solutions tailored to the evolving needs of its business client. Non-telco revenues, on the other hand, decreased falling 12% year-on-year to PHP 2.6 billion in 2024. This figure already reflects the deconsolidation of ECPay from Globe's books. Meanwhile, the company's total equity share in affiliates surged by an impressive 61%, ending the year at PHP 4.5 billion. This was power Mynt's remarkable growth trajectory as it contributed 12% of Globe's net income before tax in 2024. Globe's full year cash capital expenditures for 2024 reached approximately PHP 56.2 billion, reflecting a 20% decline compared to 2023. This strategic reduction is in line with our guidance of measured spending and improved capital utilization. The company's cash CapEx to revenue ratio decreased from 44% in 2023 to 34% in 2024, closer to the industry's average levels. These efforts are also aligned with Globe's continued focus on optimizing capital deployment. In previous years, the company accelerated CapEx spending to expand capacity, leading to elevated payments from 2020 to 2022. Since then, we have shifted our approach, moving from aggressive expansion to maximizing our network and capacity utilization. This has allowed Globe to return to more sustainable CapEx levels without compromising network quality or service reliability. This gives the company more flexibility to achieve positive free cash flows by year-end since lower spending translates to reduced cash CapEx outflows, improving cash flow efficiency. To demonstrate, as of the end of 2024, Globe's free cash flow after interest payments amounted to PHP 13.9 billion. If we were to exclude the proceeds from the tower sale and leaseback initiative, free cash flow would still have improved significantly to negative PHP 13.9 billion compared to the negative PHP 28.9 billion reported in 2023, showing meaningful progress toward a more sustainable cash flow position. Similar to prior years, the bulk of our spending was allocated for data-related requirements to ensure that our customers will be able to access the best digital solutions and connectivity hassle-free, any time. Majority of these investments were made for our mobile network as the company shifts its focus on the fiber front from rollout and expansion to port utilization. In 2024, Globe constructed 1,212 new cell sites and upgraded 4,613 mobile sites to LTE. To ensure quality network customer experience for our 5G users, we also fired up 587 more 5G sites across the Philippines, increasing our 5G outdoor coverage to 98.69% of the National Capital Region and 96.95% of key cities in Visayas and Mindanao. This expansion now brings 5G connectivity to approximately 106 towns. The company's efforts have resulted in over 9 million devices connected to its 5G network for the month of December 2024. Moving on to Globe's other businesses. We are excited to share the latest updates on STT GDC Philippines and its strategic initiatives as we continue to drive growth innovation in the data center industry. Let's start with our overall progress. Currently, STT GDC Philippines operates with an IT capacity of 22 megawatts. The company is on track to achieve 33 megawatts by 2025, scaling further to 52 megawatts by 2026. This growth aligns with our commitment to meeting market demand while providing reliable world-class infrastructure to our clients, with over 3,200 racks and an impressive 75% utilization rate, including contracted space, our operational performance reflects strong market confidence and robust sales pipelines. The company's vision as an AI Now data center is clear. STT GDC Philippines is at the forefront of supporting AI workloads. To complement this, we are thrilled to announce the launch of our AI direct-to chip liquid cooling showroom in STT Makati on February 20, 2025. This state-of-the-art showroom will showcase cutting-edge cooling technology, positioning STT GDG Philippines as a leader in innovative and sustainable solutions for the evolving needs of our clients. Now let's move on to our major projects. STT Fairview and STT Cavite 2. STT Fairview is progressing on schedule with structural completion achieved in November 2024. Phase Ib is currently underway with critical long-lead equipment already in the country. The site will launch in the second quarter of 2025, starting with an anchor tenant. By the end of the year, the company expects to deliver 12 megawatts of IT load, fully committed based on our strong sales pipeline. With the growing momentum and customer interest, we are already seeing demand that spans beyond 28 megawatts of the STT Fairview Phase 1 project. This demand signals a long opportunity to expand capacity further, ensuring we can support the Philippines' digital transformation and the increasing adoption of AI-driven workloads well into the future. Turning to STT Cavite 2. Construction is advancing as planned. Structural completion was achieved this January 2025, and the site is set to be ready for service by late 2025. This development will further enhance our ability to meet client demand and solidify our position as a market leader in the Philippines. Together, these projects represent a significant milestone, underscoring our readiness to scale operations and support emerging technologies. Beyond capacity expansion, sustainability is at the core of our strategy. STT GDC Philippines remains fully powered by 100% renewable energy, even with the additional capacity, a significant achievement that highlights our commitment to environmentally responsible operations. By integrating advanced green technologies across our facilities, we ensure that our growth is aligned with global ESG standards and the increasing demand for sustainable infrastructure. In summary, STT GDC Philippines is well positioned to lead the market with its investments in infrastructure, technology and sustainability. The demand we are seeing not only validates our thesis that global knowledge combined with local expertise is the winning recipe, but also demonstrates the strength of our approach to delivering tailored world-class data center solutions. This synergy between the company's global expertise and deep understanding of the local market enables us to respond effectively to the rapidly evolving needs of our clients. Ensuring operational excellence, innovation and sustainability remain at the forefront of everything we do. Onto the Mynt portion of the presentation. 2024 was another banner year for GCash as it underscored its role as a fintech leader. For 20 years now, GCash has been at the forefront of promoting financial inclusion in the country, with 8 in 10 Filipinos having already tried the service. True to its mission, GCash has now enabled financial access for those who need it the most. Now 92% of GCash users are from low income brackets, while 78% are from outside of Metro Manila. Beyond financial inclusion, GCash has also established its status as a leader in the fintech space, following a record valuation that made GCash the first and only $5 billion unicorn in the Philippines. The additional investment further boosts GCash's commitment to uplift Filipinos' everyday lives with digital financial services. GCash has further cemented its leadership position even in the region, having been recognized in Fortune's FinTech Innovators Asia 2024 list and having earned the #1 spot in Campaign Asia, Southeast Asia's list of top financial brands in 2024. At GCash, our goal has always been to empower Filipinos with the financial services that will help them to thrive today as well as prepare for their future. Starting with payments, GCash continues to widen its ecosystem, ending 2024 with cash-in, cash-out outlets up by 17% year-on-year and with small-scale community merchants up 21% year-on-year. We continue to innovate the payment space with the launch of SoundPay, a new payment confirmation solution designed to make transactions convenient and stress-free for MSMEs. Through our lending products, GCash continues to provide Filipino's easy access to fair loans. Today, GCash has already seen an 85% year-on-year growth in extended credit and loans life to date, while unique borrowers have seen an increase of 101% from last year. This is powered by our in-house credit score, GScore, which continues to be best-in-class in identifying eligible borrowers. In the wealth management space, we continue to change the industry, providing more Filipinos a better way to save and invest. GSave recorded a 32% year-on-year growth in users benefiting from our partner bank products with exclusive offers of earning interest up to 25% last December. GStocks posted a 401% year-on-year growth in registered users, enabling more Filipinos to easily participate in the Philippine stock market. GFunds meanwhile recorded a 27% year-on-year jump in users who can easily schedule their investments with the Auto Invest feature. Meanwhile, GCrypto continues to gain traction with a 172% year-on-year growth in users having access to different cryptocurrencies through their GCash account. Finally, through GInsure, our sold policies life-to-date have grown by 171% year-on-year, while users have grown by 256% year-on-year, helping them become financially resilient in case of an emergency. Smart Flight Delay Insurance is the most recent addition to GInsure. In case of flight delays, covered travelers will get access to airport lounges with possible cash benefit depending on coverage. Beyond digital financial services, GCash continues to banner inclusion locally and globally as an industry change maker. In line with our purpose, we continue to drive initiatives to help uplift Filipino lives. We launched GCash Pera Talks in 2024 to equip underserved Filipinos with the tools and information to manage their finances digitally and responsibly. This initiative spans across Luzon, Visayas and Mindanao. In support of the BSP's inclusion agenda, we continue to take part in their Paleng-QR Ph Plus to onboard more public market vendors nationwide. To help more Filipinos thrive every day, we have expanded GJobs to offer more opportunities for freelancers, blue collar and task-based workers to earn additional income. Our efforts locally have also not gone unnoticed, allowing GCash to elevate our story of impact and digital transformation to the world stage. Last November, GCash participated in the Singapore FinTech Festival, where multiple leaders showcase the role of digital in transforming financial services, especially the impact of easy access to credit for MSMEs. Most recently, GCash bannered the Philippines at the World Economic Forum Annual Meeting in Davos as the first and only Philippine company part of the WEF Unicorn community. Here, we took center stage in sharing how AI-powered innovations can help address financial gaps. GCash is excited to continue innovating and empowering more Filipinos as we pursue our vision of finance for all. Moving on to the financial portion of our presentation. To summarize the earlier points, Globe's consolidated gross service revenues for the year amounted to PHP 165 billion, higher by 3% against the same period last year. This resilient business performance coupled with lower operating expenses and subsidy, led to a 7% year-on-year expansion in EBITDA to PHP 86.8 billion. This is equivalent to 52.6% of top line, which is above the company's EBITDA margin guidance. Depreciation and amortization expenses rose to $50.5 billion in 2024 due to continuous capital expenditures, investments and capitalized leases. But if we break down our depreciation expenses further, network and non-network related depreciation increased by just 3% year-on-year, while capitalized leases surged 30% year-on-year to PHP 8.9 billion. Nonoperating charges stood at PHP 6 billion versus last year's reported PHP 1.7 billion. This was attributed to lower tower sale gains in 2024 and increased net interest expenses. However, the company's expansion of equity share in affiliates offset this decline. As such, core net income for the full year 2024, which excludes the impact of nonrecurring charges and foreign exchange and mark-to-market charges stood at PHP 21.5 billion, growing by an impressive 16% year-on-year. Meanwhile, on a sequential basis, revenues for the fourth quarter reached PHP 41 billion, with operating expenses and subsidy shrinking by 4% quarter-on-quarter. The company's EBITDA for the fourth quarter remained stable at PHP 21.9 billion. This is equivalent to a 53.5% EBITDA margin. Depreciation expenses increased by 5% on a quarter-on-quarter basis. Nonoperating charges closed at PHP 3.8 billion versus last quarter's expenses of PHP 2.4 billion. And lastly, core net income for the fourth quarter amounted to PHP 3.9 billion. Looking at our costs now. Total operating expenses in subsidy saw a 2% year-on-year reduction from PHP 79.5 billion in 2023 to PHP 78.2 billion in 2024. This was primarily attributed to Globe's effective cost-saving measures for the year. Staff costs saw a PHP 873 million decline to PHP 17.9 billion. Provisions dropped by 23% year-on-year or PHP 1.1 billion to PHP 3.7 billion. Marketing and subsidy expenses on the other hand, shrank by 2% or PHP 96 million. These more than offset the minimal upticks in interconnect charges, which increased by PHP 253 million. Network costs up by PHP 156 million and services and other OpEx, which increased by PHP 355 million in 2024. These lower operating expenses, coupled with the resiliency of our business, led to EBITDA growing by 7% year-on-year to PHP 86.8 billion for the full year 2024. On a quarterly basis the company's total OpEx and subsidy contracted by 4% or PHP 825 million sequentially. Interconnect charges grew by 4%, marketing and subsidy expenses inched 3% higher, provisions climbed by 1% and services and other OpEx grew by 8%. These increases were nonetheless more than offset by the PHP 896 million decline in staff costs and PHP 463 million drop in network costs. This ultimately led to the company's EBITDA remaining stable at PHP 21.9 billion with a margin of 53.5%. Turning to our balance sheet. Globe's financial position remained healthy with ample headroom against bank covenants. Total debt improved slightly from PHP 250 billion in 2023 to PHP 249.5 billion in 2024. The company's key gearing ratios for the full year stood at gross debt to EBITDA of 2.66x, net debt to EBITDA of 2.43x and debt service coverage ratio of 3.42x. As a result of the foregoing, our Board of Directors has approved the dividend payout of PHP 0.25 per share for the first quarter of 2025. This reflects Globe's commitment to a sustainable dividend policy aligned with our earnings and cash flow generation as well as our dedication to delivering value to shareholders. Key dates for this declaration are the payment date of March 7, 2025 to shareholders on record as of February 20, 2025. And finally, we are pleased to report that we have successfully achieved our 2024 guidance. As such, the company's consolidated outlook now extends through 2025. For service revenues, we continue to expect low to mid-single-digit growth compared to the record-breaking level of 2024, supported by the resiliency of our business against external pressures. For our EBITDA margin, we are maintaining the guidance of 50%. Margins will likely be affected by the growing share of lower margin data-related products, but cost management efforts will mitigate this impact. And lastly, we want to reaffirm our major commitment to shoring up free cash flow. With 2024 being a banner year for the company, positive free cash flow territory is well within site. This guidance continues to be aligned with the sustained reduction in CapEx spending to less than USD 1 billion for 2025. To end. These efforts demonstrate Globe's commitment to deliver exceptional services and quality results, all while maintaining financial sustainability. That ends the presentation. Thank you all for listening.

Again, good morning to all. And before we begin the Q&A, we'd like to introduce again the management panel who are already here on stage: Sir Ernest Cu, our President and Chief Executive Officer; Sir Carlo Puno, our Chief Financial Officer and Chief Risk Officer; Attorney Froilan Castelo, General Counsel; Mr. Darius Delgado, Chief Commercial Officer; Mr. Danny Theseira, Senior Advisor for the Broadband business; and Mr. Carlo Malana, our Chief Executive Officer, STT GDC, who just entertained us with their latest updates on the data center business. Also, we would like to acknowledge the presence of Ms. Minette Navarrete, the President of Kickstart Ventures; and of course, Mr. Carl Raymond Cruz, our Deputy Chief Executive Officer. Good morning, boss.

We will now begin the Q&A session. Our first set of questions come from Kervin Sisayan of Maybank Securities. The first question is on Mynt, and I believe this is for Earnest. It appears that there is a significant decline in Mynt's fourth quarter 2024 earnings compared to the previous quarter. Any reason behind this? And is this a one-off? And is there also guidance in terms of potential earnings growth for Mynt in 2025?

Thanks for the question, and it is totally expected that, that will be the first question asked, despite the fact that this is a Globe Telecom analyst briefing. Anyway, in all seriousness, we all know that it's an open secret. Mynt is in preparations to go public. We've been saying that and we've been working on that for the last 2 years. As normal and requisite with any preparation, a very stringent review of the financials goes on. And we are now cleaning up with any adjustments, accruals for expenses, provisions and so on that have not been done over the last 5 years. Remember, the company started scaling sometime in 2020, and it's been 5 years, nearly 5 years of continuous growth. Now of course, during that period, we would always see and miss a few things as the company was growing pretty much exponentially. These are one-offs, to answer that question ahead of, straight off. And for those guys doing their modeling, as you know, Mynt is still private today. All I can tell you is that the growth trajectory continues. You could see very well in the report that we provided that all of the metrics in terms of growth are consistent and sustaining, right? And so if you want to calculate the numbers, you could already clearly see that the trends of the previous quarters should continue without these one-offs.

Thank you, Earnest. The second question is on mobile. So this is for Darius. How is the competitive landscape on mobile? Is it improving? And can we expect uplift in ARPUs in the near term?

So just for context, of course, whenever a new management, especially in the PLDT side, which you all know, enters the fray or enters the battlefield, you would expect some competitive intensity and change in the dynamics. But it's not at the level of aggression that's going to erode value in the industry so far. And we've seen recovery of top-ups also in January, in Feb this year, which also is a testimony of that more or less not aggressive state of the industry. However, I think behind that question is also a question on -- and therefore, why are the Q4 ARPU, especially on the prepaid brands, eroding. And as we have expected and anticipated as presented already earlier, it's a combination of continuous [ entrenchment ] in the capacity to spend of the mass market households of inflationary pressures. As you all know, prices of food and transport comprise more than 50% of the average household spend of a Filipino family, and the prices in those categories have been increasing consistently. And therefore, they spend less on telco. And that has been also exacerbated with the fact there have been 6 typhoons, successive typhoons in 30 days in Q4 that struck North Luzon and South Luzon, areas where we have strongholds. We have valuable customers, but their expanding capacity has been impaired. But net-net, despite of that, when you look at the fundamentals of the mobile industry as a whole -- mobile business of Globe as a whole, you look at the cumulative subscribers. We have increased 1%. You look at the net adds, we have increased 9%, even better than Q3 traction despite of the typhoons. When you look at the ARPU of postpaid, it does increase by 3%. You look at the churn across all of the prepaid brands, they have improved versus Q3. So there's strong fundamentals in the mobile brands of Global, net of what we cannot control, which are the impact of typhoons and also the continuing shrinkage of their spending capacity because of inflation.

Thanks, Darius. The next question also is on mobile. There is a continued decline in postpaid subscribers. Just want to get a sense if they are moving to our prepaid base? Or are we seeing our competitors more aggressive in the space?

Okay? So number one, in terms of postpaid, you can see also that the churn rate of postpaid has been at a level that's the lowest ever in a long time. It's 1.3% versus 1.7% normally or 1.8%. Secondly, when you look at the net adds of Q4 versus Q3, it's 3x better. So postpaid is also strong. Now why are they downgrading? It's because they have been high value prepaid customers from before who shifted or we were able to upsell to SIM-only plans, and now they go back being a high-value prepaid customer, so we retain them in the base.

Thanks, Darius. The next set of questions come from Zhiwei Foo of Macquarie. First question is on Mynt, which was already answered earlier, thank you. The next question again is on GCash, and I believe this is for Earnest. What levels of credit charges is GCash seeing?

I guess when you mean credit charges, you mean NPL, right, on the lending business, or trying to ascertain whether the decline in net profit or profit of GCash is due to the lending business. And the answer is a very clear no. The lending business continues its momentum. We're continuing to see very low lending NPLs that are still best in class at the moment. So there is no change in the quality of the borrowers that we're seeing in GCash, even as we expand the lending base continuously. And also, the scoring continues to hold in terms of it being a grade -- a catalyst for the growth of the loan book in GCash.

Thanks, Ernest. The next question is on broadband, and this is for Danny. Could you share more color on momentum of growth from GFiber Prepaid? Could we see Home Broadband revenues continue to accelerate in FY '25 and drive EBITDA margin improvement above the guided low 50s in the group level?

Thanks for the question, Jomari. For GFP, which is GFiber Prepaid, we're seeing really strong momentum, reinforcing our strategy towards the whole expansion of accessibility and affordability in the home broadband market. And this is primarily coming from a few key areas. First is really the consistent uptick and expansion that we're seeing Q-on-Q, and that's really coming from the [ underserved ] and the whole Prepaid segment. We're also accelerating the deployment across all territories with further improvements in terms of serviceability and more importantly, accessibility, especially into the right prepaid market. Although when you look about what it really entails, it's really around the right product and the right price, and that's the affordability and the flexibility that we bring to the market. And really, it penetrates in terms of new broadband customers. But what we've realized more recently is also switching as customers come out of contracts from the market, right? And when we go into a broader market penetration towards a more reliable Internet connectivity, we're also expanding. As you can see, we also have the 100 Mbps plan for Prepaid fiber. And what we also have as well which makes it convenience is the Auto Load capability with GCash. So you can just set it up once on recurring and just load it on a monthly basis, based on the SKUs that you prefer. With regards to the question on the EBITDA margin impact, we remain within the group level guidance as we use and leverage this product to be able to really enhance the utilization rate. And when we see this -- and we're confident about the expansion contributing to both top line growth as well as long-term profitability ensuring us, of course, to optimize the margins going forward.

Thank you, Danny. The next questions come from Arthur Pineda of Citi. His first question again is on the Mynt, which we already addressed earlier. Second is on the mobile movement Q-on-Q and ARPU, which was also answered earlier, thank you. The third question is for Carlo Puno. For cost, staff costs appear to have dropped dramatically, both Q-on-Q and year-on-year. How should we view staff trends into 2025? Is 4Q the benchmark? Or were there any one-off adjustments then?

Thanks for the question, Arthur. I think for the fourth quarter, we did see some decline in the headcount. I think it's more timing more than anything else. Because of the decline in the headcount, there were some accruals that we needed to do in terms of end-of-year adjustments. I would say as we scale up and potentially replace those headcounts, we should go back up to normal levels. I think we're averaging around PHP 4.5 billion a quarter, you're probably going to see that moving forward in 2025.

Thanks, Carlo. The next 2 questions come from Pranav Balani of Papa Securities. Again, the first question is on Mynt fourth quarter performance, which was already answered earlier. The next question is on broadband. So this is for Danny. Globe added over 100,000 subscribers in the Prepaid fixed broadband segment, offsetting the subscriber loss in the postpaid fixed broadband segment. Is Globe's broadband focus shifting towards prepaid? And do you see more upside in this segment?

Thanks, Jomari. Globe remains committed on both segments. The strong performance of what we've seen so far in GFiber Prepaid reflects the demand, as I was saying earlier, for affordable and flexible broadband offering, especially in the [ underserved ]. But while we continue to gain momentum we're also realizing we're penetrating new segments, we're gaining share in switches, people are wanting backup broadband in their homes and even vacation homes or even short term for rentals. But postpaid broadband still remains a priority for us, especially strategically for households requiring higher speeds, they have more bandwidth. They want multiple devices connected within the home, whole home coverage, and that's what we offer with WiFi 6, FTTR, and of course, you can add on the IoT and all that. Having said that, we really want to continue to maximum both segments and also maximize the overall broadband growth for the country and, of course, profitability.

Sorry, can I add to that? In broadband, it's always new ones in terms of -- it's not just one focus area. Just like in mobile, you serve a lot of segments across the nation. It's the same for broadband. So while the growth area is Prepaid, because 70% of the market are the masses and therefore, Prepaid in terms of growth potential will be the focus, more than 80% of our revenues in broadband today are still on postpaid. So it's a protect play. So it's 2 things, always 2 things.

Okay. Thank you, Danny and Darius for that. The next set of questions come from Peter Louise Garnace of Unicapital, who I believe is here with us today. The first question again is on Prepaid mobile ARPU, which was already answered earlier. The next question, this is on broadband. So this is again for Danny. Broadband subscribers have been on a steady decline. How does Globe plan to mitigate this?

Thanks, Jomari. So we actually grew Q-on-Q by 3%, and that's coming off a strong performance of the GFiber Prepaid. Also, we grew is about 1.4x, offsetting the decline in legacy. And what Darius was articulating earlier as well, it's also a protect play on the postpaid fiber base. Thank you.

Thank you, Danny. The third question is more of a housekeeping question on Globe's smartphone penetration. The answer is as of December 2024, it's around 93%. Thank you. Next set of questions come from [ Nicky Franco ] of [ Abacus Securities ]. Again, the first question is on Mynt's fourth quarter performance. So that was already addressed earlier. The next question is on other income. So this is for Carlo Puno. In the other income component of earnings, others net shows PHP 712 million, which is a big swing from the PPH 1.1 billion in fourth quarter 2023. Can you give more color on this or preferably a breakdown?

On the other income side, it's more the amount of towers that we've closed. So the decline is related to the gain on sale on the towers. If I'm not mistaken, we closed close to 350 towers in the third quarter to just 44 thereabouts in the fourth quarter. So it's really just that, the amount of towers we're able to close per quarter.

Thank you, Carlo. The next question is also again for Carlo. On the outlook for a return to positive free cash flow, will this be used to reduce debt? And how soon can investors expect a significant reduction in debt or debt service costs?

2025 is still the third year of the payments for the peak CapEx that we did in 2022. So there is still a lot of spend happening. In terms of the target, what we're targeting for the -- for 2025 is free cash flow positive before dividends. Hopefully, by 2026, we're able to get to free cash flow positive after dividends, but it also depends on the plans moving forward. In terms of whether or not we will use this to reduce debt, that is the goal. But I think the way we're looking at it is it's more debt avoidance rather than prepayments. So it's really -- we are going to continue to invest in the network. There's going to be more -- there's going to be investments into the different lines of businesses as we don't want to underinvest this period. And so it's really us being able to fund a portion of that CapEx through our free cash flows rather than our full reliance on debt.

Thank you, Carlo. Maybe at this point, we'll take questions from the floor. So if you have any questions, please raise your hand, and we'll hand over the mic to you. Please introduce yourself and then we can ask your question. Okay. Maybe you're still formulating your question. Maybe the next question we'll take is from [ Derek Guarin ] of CLSA. On broadband, what is the breakdown of Q-on-Q net adds for 4Q for fixed line broadband?

Thanks. But unfortunately, we don't disclose such breakdowns. But if there's further questions, I guess we can take it offline.

Thank you, Danny. Again, if there are any questions from the floor.

Congrats on the results. I'm [ Ramon de la Paz from Metrobank Trust ]. Maybe a couple of questions from me. First, on the cleanup of expenses on GCash for Q4. May I ask how much is the -- how much was the total for that? And maybe if this was included in the computation of the core net income. I just want to clarify.

It is included. That's why it reduced the amount. We are not at liberty to disclose that at the moment as it's an ongoing process. All I can say is that I can repeat, it's a onetime thing and that the focus should not be on that onetime cleanup, but rather on the momentum that this -- that the company is showing and continues to exhibit.

All right. And then just to clarify, so the mobile data traffic decline in quarter-on-quarter was attributed to the typhoons and the high inflation. For this year, do we expect some uptick given that this is an election year? Are you seeing some historical [ relation ] on that one?

So on the election lift, historically, we have seen election lift, and we are expecting the same magnitude this year. And secondly, based on the January to Feb to-date results of top-ups that we see today, we are seeing some recovery already.

Understood. Probably last question from me for now. I think I saw a welcome development in terms of the flat quarter-on-quarter movement in terms of voice and SMS now. I just want to see if you expect it to continue in the coming quarters.

What's happening is that when customers reduce their spend, they reduce their spend on data. Sometimes they stay at home, they have Internet, they offload inside the home. But SMS and voice will be crucial services. It will become relevant again. And that's why you see a slight uptick quarter-on-quarter on voice and SMS, but the decline on data, it's because of that behavior. They keep their SIMs for connection, for basic connection. And therefore, we don't expect to continue to sustain that kind of a trajectory, especially if data has already come back up.

Okay. Thank you, Darius. Again, I'd like to ask if there are any additional questions on the floor before we conclude the Q&A.

[ Marty Karunungan from FF Security ]. Just to check, you're not planning to list GCash in any other country anymore, right?

That's correct.

Setting aside the current market condition today, what's holding you back in pushing the GCash IPO aside from the present?

There's really nothing holding us back. It's a matter of preparing a company for public listing. It's a very long process. It's a pretty large company with a lot of interest across the world in terms of international investors. So when we're ready, we're ready. Again, it's also the fact that we are not in a hurry to do anything at this point. We want to make sure everything is set. We have our ducks all in a row before we go to market.

Thank you for that, Ernest. Unfortunately, we need to stop the Q&A already because you already have financial briefing afterwards. So we'll now turn over the floor to Ernest for his closing remarks.

Thanks, Jommi. Again, looking back at the year, it was another banner year for Globe. We had record service revenues around PHP 165 billion. We had an all-time high EBITDA result of about PHP 86.8 billion, and we successfully delivered an [ EBIT ] margin of 53%, which, by the way, exceeds our full year guidance. The mobile segment continues to be strong, driven by growth in data. And we saw significant market repair efforts begin in 2024, right? And also, there might be some question as to whether competition has heightened. My own opinion, and this is my personal opinion, is that every time a new management goes into a particular company, there tends to be a little bit of heightened competition. But I guess the result that Darius mentioned in the first month of the year already shows a move back to rationality. And again, it's I think, good -- you could note that competition will remain benign at this point. Household spending, though, was a bigger factor for us in the fourth quarter. The effects of inflation are sustained. Inflation abating merely means that the growth of prices slow down or stabilize, but the prices remain high, right? And so it's not like when inflation goes down, prices go down. It is not the case. We see that inflation is at a low single digit today, but prices are still moving up. Then you add that to that the effects of the weather, we had a series of typhoons in the fourth quarter that diverted spend of people away from telco services back to basics, right? Given the number of questions that were asked about broadband, I think there are quite a bit of interest now in broadband. We're very proud of the 260,000-plus subs that we have garnered in Prepaid fiber. And I think that momentum is going to continue as both Darius and Danny put it, the larger segment of the market is in Prepaid. This is and will always be an attribute of the Philippine telco market. You see that in the mobile side, where 3% are Postpaid, 97% are Prepaid. That's been the case for the last at least 17 years that I've been here. It has not changed, and I don't expect it to change. There is a very, very clear preference for the prepaid way of paying. Our corporate data, it also continues to be strong as we see expansion of enterprises, as enterprises go to the cloud, we definitely can see that the needs for connectivity continue to go up. We talked about Mynt. Mynt continues to grow. I think I've said a lot about Mynt during this discussion. Its growth momentum continues. The numbers and the top line continue to grow. And I'm sure that by the third -- by the next quarter, you will see once again the numbers rebound after the one-offs have all been taken into account. I'd like to highlight, though, Mynt's international expansion, right? We have been very focused over the last year in building access to Mynt for our Filipinos overseas. So now Filipinos abroad can cash in from all U.S. banks. We've also signed a deal with Europe that Filipinos in Europe can also cash in from banks or from their credit cards, and we will tackle the Middle East next. The GCash payments are also at an all-time high internationally. I think you guys have seen and our many ads that say we are now accepted in China. You no longer need to look for an Alipay Plus merchant globally. It's just Alipay. So basically, any Alipay merchant can now accept a GCash payment. And of course, the most desired travel app at the moment is the GCash Prepaid -- sorry, GCash debit Visa card, right? That also functions as an ATM card and has the best in terms of exchange rates. This has driven quite a bit of interest in terms of getting to the cards. And I believe GCash is now probably the largest debit card issuer in the Philippines today, right, in a span of about a year. So financial inclusion continues to be our North Star. 92% of our users come from low-income brackets. And we are very, very proud that we've been able to provide lending, investments, insurance to this underserved segment. I personally am also very excited about our data centers. As you can see, it is not a minor project. It is a massive project and 124 megawatts would make it the largest data center in the Philippines. But I think most importantly, it is probably the only data center company with a pipeline of customers that we have, right? We have heard many times in the market that a lot of people have built data centers, but the difference is who can bring the customers in. I believe the partnership with STT GDC is truly going to yield quite a bit of benefit for both sides, Globe as well as STT because of the combined reputation of both companies and the company's expertise, and that combination creates the demand that we hope to fill our data centers with. So both STT and Fairview -- STT Fairview and Cavite are progressing on track and ready to meet the demand in 2025. In terms of guidance for 2025, we expect to build on the momentum of the previous year, 20% CapEx reduction aligns with the goal to become free cash flow positive in 2025. We focus on execution, financial discipline, which we exhibited as you see the costs have been well managed and a lot of our top line expansion going into the bottom line. So it's an optimistic 2025 for Globe as we commit to growth and financial sustainability. [Foreign Language]

Thank you, Ernest. And as a fund manager best put it, you're truly a rock star among your peers. And on that note, we conclude the fourth quarter 2024 Analysts' Briefing of Globe Telecom. We should thank again all of you who joined us here and in the call. Hope you'll join us again for our first quarter 2025 Analysts' Briefing in early May. Again, we wish everyone a pleasant good morning. Stay safe.