SEC Number 1177

File Number ____

GLOBE TELECOM, INC. (Company’s Full Name)

27th Floor The Globe Tower

32nd Street corner 7th Avenue, Bonifacio Global City, Taguig (Company’s Address)

(632) 797-2000 (Telephone Numbers)

30 SEPTEMBER 2018 (Quarter Ending)

SEC FORM 17-Q (Form Type)

SEC Form 17Q – 3Q 2015 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 three months ended 30 September 2018

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 jurisdiction of incorporation or organization: PHILIPPINES

6. Industry Classification Code: (SEC Use Only)

7. Address of registrant’s principal office:

27th Floor, The Globe Tower

32nd Street corner 7th Avenue, Bonifacio Global City, Taguig

8. Registrant’s telephone number, including area code: (632) 797-2000

9. Former name, former address and former fiscal year, if changed since last report: N / A

10. Securities registered pursuant to Sections in Securities Regulation Code

Number of shares of stock

Title of each class outstanding

Common Stock, P50.00 par value 133,053,248

Voting Preferred Stock, P5.00 par value 158,515,021

Non-Voting Preferred Stock, P50.00 par value 20,000,000

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

GLOBE TELECOM, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FOR THE NINE MONTHS ENDED

30 September 2018

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Our unaudited condensed consolidated financial statements include the accounts of Globe Telecom, Inc.

and its subsidiaries such as, Innove Communications, Inc. (herein referred to as “Innove”), GTI Business

Holdings, Inc. (GTI) and its subsidiaries, Kickstart Ventures, Inc. (Kickstart) and its subsidiary, Asticom

Technology, Inc. (Asticom), Globe Capital Venture Holdings Inc.(GCVHI) and its subsidiaries, and Bayan

Telecommunications, Inc. (Bayan) and its subsidiaries, and TaoDharma Inc. (Tao).

The unaudited condensed consolidated financial statements for the nine months ended September 30, 2018

(filed as Annex 1 of this report) have been prepared in accordance with Philippine Accounting Standard

34, Interim Financial Reporting and hence do not include all of the information required in the December

31, 2018 annual audited financial statements.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following is a discussion and analysis of Globe Group’s financial performance for the nine months

ended 30 September 2018. The prime objective of this MD&A is to help the readers understand the

dynamics of the Company’s business and the key factors underlying its financial results. Hence, Globe’s

MD&A is comprised of a discussion of its core business, and analysis of the results of operations for each

business segment. This section also focuses on key statistics from the unaudited 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, Globe’s 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. The Globe

Group has adopted an expanded corporate governance approach in managing its business risks. An

Enterprise Risk Management Policy was developed to systematically view the risks and to manage these

risks in the context of the normal business processes such as strategic planning, business planning,

operational and support processes.

The Company’s MD&A should be read in conjunction with its 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” means the Globe Group and references

to “Globe” mean Globe Telecom, Inc., not including its wholly-owned subsidiaries.

Additional information about the Company, including annual and quarterly reports, can be found on our

corporate website www.globe.com.ph

http://www.globe.com.ph/

SEC Form 17Q – 2Q 2015 5

TABLE OF CONTENTS:

OVERVIEW OF OUR BUSINESS................................................................................. 6

KEY PERFORMANCE INDICATORS....................................................................... 13

FINANCIAL AND OPERATIONAL RESULTS ......................................................... 15

GROUP FINANCIAL SUMMARY ........................................................................... 15

GROUP OPERATING REVENUES ......................................................................... 18

GROUP OPERATING EXPENSES.......................................................................... 34

LIQUIDITY AND CAPITAL RESOURCES ........................................................... 39

FINANCIAL RISK MANAGEMENT ...................................................................... 43

LEGAL, REGULATORY AND CORPORATE DEVELOPMENTS ........................ 46

OTHER RELEVANT INFORMATION.......................................................................51

SIGNATURES..................................................................................................................53

CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

OVERVIEW OF OUR BUSINESS

Globe Telecom, Inc. is a major provider of telecommunications services in the Philippines, supported by

over 7,700 employees and over 1.2 million AutoloadMax (AMAX) retailers, distributors, and business

partners nationwide. The Company operates one of the largest and most technologically-advanced mobile,

fixed line and broadband networks in the country, providing reliable, superior communications services to

individual customers, small and medium-sized businesses, and corporate and enterprise clients. Globe

currently has 65.4 million mobile subscribers (including fully mobile broadband), over 1.5 million home

broadband customers, and over 1.4 million landline subscribers.

Globe is one of the largest companies in the country, and has been consistently recognized both locally

and internationally for its corporate governance practices. It is listed on the Philippine Stock Exchange

under the ticker symbol GLO and had a market capitalization of US$5.4 billion as of the end of September

2018.

The Company's principal shareholders are Ayala Corporation and Singapore Telecom, both industry

leaders in their respective countries. Aside from providing financial support, this partnership has created

various synergies and has enabled the sharing of best practices in the areas of purchasing, technical

operations, and marketing, among others.

Globe is committed to being a responsible corporate citizen. Globe Bridging Communities (or Globe

BridgeCom) is the company's umbrella corporate social responsibility program, which leads and supports

various initiatives that promote the quality education, active citizenship to protect the environment, social

entrepreneurship and responsive governance through the innovative and Communications Technology,

resulting in enabled, empowered and enriched lives for its employees and partner communities. Since its

inception in 2003, Globe BridgeCom has made a positive impact on the lives of thousands of public

elementary and high school students, teachers, community leaders, and micro-entrepreneurs throughout

the country. For its efforts, Globe BridgeCom has been reco