SEC Number 1177 File Number GLOBE TELECOM, INC. · PDF fileSEC Number 1177 File Number ____...

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Transcript of SEC Number 1177 File Number GLOBE TELECOM, INC. · PDF fileSEC Number 1177 File Number ____...

  • SEC Form 17Q - 4Q 2005 1

    SEC Number 1177 File Number ____

    GLOBE TELECOM, INC. (Companys Full Name)

    5th Floor Globe Telecom Plaza (Pioneer Highlands) Pioneer corner Madison Streets, 1552 Mandaluyong City

    (Companys Address)

    (632) 730-2000 (Telephone Numbers)

    31 December 2005 (Quarter Ending)

    SEC FORM 17-Q (Form Type)

  • SEC Form 17Q - 4Q 2005 2

    SECURITIES AND EXCHANGE COMMISSION

    SEC FORM 17-Q

    QUARTERLY REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SRC RULE 17(2)(b) THEREUNDER

    1. For the quarterly period ended 31 December 2005 2. Commission identification number: 1177 3. BIR Tax Identification No. 000-768-480-000 4. Exact name of registrant as specified in its charter: GLOBE TELECOM, INC. 5. Province, country or other jurisdic tion of incorporation or organization: PHILIPPINES 6. Industry Classification Code: (SEC Use Only) 7. Address of registrants principal office: 5th Floor, Globe Telecom Plaza (Pioneer Highlands) Pioneer corner Madison Streets 1552 Mandaluyong City 8. Registrants telephone number, including area code: (632) 730-2000 9. Former name, former address and former fiscal year, if changed since last report: Not Applicable 10. Securities registered pursuant to Sections in Securities Regula tion Code Number of shares of stock Title of each class outstanding Common Stock, P50.00 par value 131,900,430 Preferred Stock, P5.00 par value 158,515,021 11. Are any or all of the Securities listed on the Philippine Stock Exchange? Yes 12. Indicate whether the registrant:

    a) Has filed all reports required to be filed by Section 17 of the Code and SRC Rule 17 thereunder or Sections 11 of the SRC and SRC Rule 11(a)-1 thereunder, and Sections 26 and 141 of the Corporation Code of the Philippines, during the preceding 12 months (or for such shorter period the registrant was required to file such reports). Yes

    b) Has been subject to such filing requirements for the past 90 days. Yes

  • SEC Form 17Q - 4Q 2005 3

    PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Our unaudited consolidated financial statements include the accounts of Globe Telecom, Inc. and its wholly owned subsidiaries, Innove Communications, Inc.(Innove) and G-Xchange, Inc. (GXI), collectively referred to as the Globe Group in this report. The unaudited consolidated financial statements for the full year ended 31 December 2005 have been prepared in accordance with generally accepted accounting principles in the Philippines (Philippine GAAP) and are filed as Annex I of this report. ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A) The following is a discussion and analysis of Globe Groups financial performance for the full year ended 31 December 2005. The prime objective of this MD&A is to help the readers understand the dynamics of our Companys business and the key factors underlying our financial results. Hence, our MD&A is comprised of a discussion of our core business, and our analysis of the results of operations for each business segment. This section also focuses on key statistics from the consolidated financial statements and pertains to known risks and uncertainties relating to the telecommunications industry in the Philippines where we operate up to the stated reporting period. However, our MD&A should not be considered all inclusive, as it excludes unknown risks, uncertainties and changes that may occur in the general economic, political and environmental condition after the stated reporting period. Our MD&A should be read in conjunction with our unaudited consolidated financial statements and the accompanying notes. All financial information is reported in Philippine Pesos (Php) unless otherwise stated. Any references in this MD&A to we, us, our, Company mean the Globe Group and references to Globe mean Globe Telecom, Inc., not including its wholly owned subsidiaries. Additional information about our Company, including annual and quarterly reports, can be found on our corporate website www.globe.com.ph.

  • SEC Form 17Q - 4Q 2005 4

    The following is a summary of the key sections of this MD&A:

    OVERVIEW OF OUR BUSINESS........................................................................................................................................................................ 5 KEY PERFORMANCE INDICATORS ................................................................................................................................................................ 9 FINANCIAL AND OPERATIONAL RESULTS ................................................................................................................................................. 11

    GROUP FINANCIAL HIGHLIGHTS......................................................................................................................................................................... 11 GROUP RESULTS OF OPERATIONS..................................................................................................................................................................... 12 GROUP OPERATING REVENUES................................................................................................................................................................. 12

    GROUP OPERATING REVENUES BY SEGMENTS...................................................................................................................................... 13 OTHER GLOBE GROUP REVENUES......................................................................................................................................................... 22

    GROUP OPERATING EXPENSES.................................................................................................................................................................. 24 LIQUIDITY AND CAPITAL RESOURCES ....................................................................................................................................................... 28 FOREIGN EXCHANGE AND INTEREST RATE EXPOSURE.......................................................................................................................... 31 RECENT DEVELOPMENTS ............................................................................................................................................................................. 33 OTHER MATTERS ........................................................................................................................................................................................... 35

    MAJOR STOCKHOLDERS................................................................................................................................................................................... 35 BOARD OF DIRECTORS..................................................................................................................................................................................... 35 KEY OFFICERS............................................................................................................................................................................................. 35

    ANNEX I............................................................................................................................................................................................................ 36

  • SEC Form 17Q - 4Q 2005 5

    OVERVIEW OF OUR BUSINESS Our company is a leading telecommunications company in the Philippines. We continue to grow and engage our customers through our clear commitment of Making Great Things Possible. The Globe Group is comprised of the following three focused companies:

    Globe provides our wireless telecommunications services; Innove, a wholly-owned subsidiary, provides our fixed line telecommunications services and

    information and communications infrastructure and services for internal applications, internet protocol-based solutions and multimedia content delivery. Innove currently offers cellular services under the TM prepaid brand. The TM brand is supported in the integrated cellular networks of Globe and Innove; and

    As part of its wireless business, Globe also provides mobile commerce services through its wholly-

    owned subsidiary, G-Xchange, Inc. (GXI) which was incorporated in 2004. Wireless Business: Products and Services Our Company offers its wireless services including local, national long distance, international long distance, international roaming and other value-added services through three brands: Globe Handyphone, Globe Handyphone Prepaid and TM. Globe Handyphone is the postpaid brand of Globe. This includes all postpaid plans such as G-Plans and consumable G-Flex Plans, Platinum (for the high-end market), and GlobeSolutions (for corporate and business needs). Globe Handyphone Prepaid and TM are the prepaid brands of the Globe Group. Each brand is positioned at different market segments. Globe Handyphone Prepaid is focused on the broad market classes while TM is focused on mass-based market classes. To cater to a wide variety of our prepaid subscribers, we provide various top up facilities at each subscribers convenience. Our Globe Handyphone Prepaid and TM subscribers can reload airtime value or credits using various reloading channels. They can purchase Globe Prepaid Call and Text cards in P100, P300 and P500 denominations while TM Call and Text cards are available in P50, P100 and P300. They ca