- Globe Telecom

The theme of this year’s report is commitment to our customers, our communities and the rest
of our stakeholders. And what better way to
express our commitment than to provide each of
our shareholders an opportunity to experience and
enjoy our services through the Globe prepaid SIM.
A life with Globe lets you live out your passions
through reliable communication services. Be a
proud Globe subscriber and it will set you apart
from the rest, from innovative products to best in
class services like our loyalty rewards. Together,
with Globe, we make great things possible!
!
!
The Globe Telecom, Inc. 2010 Annual Report Cover and inside pages are printed Certified as a FSC mixed sources
product, 9lives 55 is produced with 55% recycled fibre from both pre- and post-consumer sources, together with 45%
FSC certified virgin fibre from well managed forest. 9lives 55 provides the same visual and mechanical performance as
100% virgin fibre papers and offers excellent environmental attributes.
Contents
1
3
5
7
11
19
25
33
49
About the Report
Our Company
Our 2010 Milestones
Message from the Chairpersons
Message from the President and
CEO
Our Customers
Enjoy Your Globe, Your Way
Our People
Sustainability & Corporate Social
Responsibility
71 87
Corporate Governance
Management's Discussion
and Analysis
92 Report of the Audit Committee
to the Board of Directors
93 Statement of Management's
Responsibility for Financial
Statements
94 Independent Auditors’ Report
184 Global Reporting Initiative (GRI) Index
190 Our Store Directory
197 Contest: Read, Play, Win
About the Report
The annual report covers
Globe Telecom and
its subsidiaries in the
Philippines. This year,
we have reached another milestone by
publishing our first integrated financial
and sustainability reports. This is the
third year that Globe has come up with
a corporate social responsibility and
sustainability report that is compliant
with the guidelines of the internationally
recognized Global Reporting Initiative
(GRI) G3 standard. Our sustainability
report is a self-declared B level, the
scope of which has been determined
by available data and metrics tracked
by different customer facing units and
business enabling groups. We remain
committed in utilizing more measures to
understand the impact of our business
and various sustainability programs to
our communities and natural resources.
Aside from our business strategies, we
have considered various stakeholder
engagement activities in selecting the
material sustainability issues in this report.
We have also considered national issues
affecting the telecommunications industry
and included comments by various
stakeholders. We shall strive to enhance
measures on the impact of our CSR and
sustainability programs and include more
performance indicators so these initiatives
are best-fit and strategically aligned to our
core business. We will also elevate our
reporting practices to meet higher GRI
application levels and seek independent
third party assurance on our report in the
future.
As a dynamic company in a very
competitive industry, we injected some of
our dynamism and fun into the report and
made it interactive through an online game
and feedback. This will give you and the
rest of our stakeholders the opportunity
to share your thoughts about the report.
Token prizes will be given to selected
respondents as a gesture of goodwill.
Your feedback is important to help
us understand how our programs impact
the business and society and how to
communicate the work we have done.
Please refer to page 197 and join the
online game.
1
I Love Winning
I live for little triumphs and rejoicing
in major wins,
For my challenges that exhilarate me,
And the everyday victories that are won.
I am Abby Sarte
Loving Globe since 2000
2
Our Company
Mission and Vision
The Company mission and vision is embodied in The Globe Way that was crafted during the
year. It encompasses all the values and set of behaviors that the Company truly believed in and
currently practices. The Globe CUSTOMER FIRST policy resonates across the organization, and
guides the Company on how to conduct its business, now and in the future.
We put our customers first.
Our people make the difference.
We act with integrity.
We care like an owner.
We keep things simple.
To us, it’s be fast or be last.
I love Globe. Together, we make great things possible.
Corporate History
Globe Telecom has firmly imbibed itself
into the hearts and minds of more than twenty
six million subscribers. It has been there
in every way for its customers, in building
relationships, at work, communicating and
reaching out. Inasmuch as Filipinos love
to communicate, Globe has been a reliable
partner, ready to provide the most convenient
and affordable service as possible.
For 83 years, Globe has lived up to its
reputation of innovation leader – from the
moment it introduced the first SMS or text
messaging service in the country, and today’s
introduction of the first personalized postpaid
plans. Globe has been a pioneer in many
ways; each new beginning is a testament of its
commitment to serving its customers better.
In 1928, Congress passed Act No.
3495 granting the Robert Dollar Company,
a corporation organized and existing under
the laws of the State of California, a franchise
to operate wireless long distance message
services in the Philippines. Subsequently,
Congress passed Act No. 4150 in 1934 to
transfer the franchise and privileges of the
Robert Dollar Company to Globe Wireless
Limited which was incorporated in the
Philippines on 15 January 1935.
Globe Wireless Limited was later
renamed as Globe-Mackay Cable and Radio
Corporation (“Globe-Mackay”). Through
Republic Act (“RA”) 4630 enacted in 1965
by Congress, its franchise was further
expanded to allow it to operate international
communications systems. Globe-Mackay was
granted a new franchise in 1980 by Batasan
Pambansa under Batas Pambansa 95.
In 1974, Globe-Mackay sold 60% of its
stock to Ayala Corporation, local investors
and its employees. It offered its shares to the
public on 11 August 1975.
In 1992, Globe-Mackay merged with
Clavecilla Radio Corporation, a domestic
telecommunications pioneer, to form
GMCR, Inc. (“GMCR”). The merger gave
GMCR the capability to provide all forms
of telecommunications to address the
international and domestic requirements of
its customers. GMCR was subsequently
renamed Globe Telecom, Inc. (“Globe”).
3
Fast Forward
It was a monumental partnership in
1993, with then President Fidel V. Ramos as
witness to the signing of a Memorandum of
Understanding between Ayala Corporation
and Singapore Telecom, Inc. (STI),
wholly-owned subsidiary of Singapore
Telecommunications Limited (SingTel), was
formalized, that created a formidable Globe
Telecom. During the year, Globe Telecom
was catapulted to the status of a giant in the
telecommunications industry, and awarded
an initial US $30 million supply contract.
Since then, Globe Telecom has revolutionized
the way Filipinos connect and communicate
with the launch of the Globe Handyphone,
the country’s first fully digital CMTS (Cellular
Mobile Telephone System) using the GSM
(Global Systems for Mobile) communications
network. It obtained its provisional authority
(PA) for International Gateway Facility (IGF)
operations and rolled out its fixed telephone
service and international direct dial (IDD)
services in designated areas.
Within a couple of years, Globe launched
its G-Net service in 1995 to become the first
Philippine telecoms carrier to offer internet
access. Thereafter, Globe went into acquisition
(Islacom) and interconnection agreements
with other telecom carriers to boost its
network and services. In 2000, Globe joined
C2C Cable Network, a fiber-optic submarine
cable project in the Asia Pacific region. The
following year, Globe inaugurated its first
cable landing station and backhaul facility
in Nasugbu, Batangas. By 2004, Globe
launched the GCASH, a breakthrough in
mobile commerce and e-payments.
In 2009, Globe inaugurated its second
landing station in Ballesteros, Cagayan. It also
reinforced its best network connectivity with the
TGN-Intra Asia Cable System and the first in
the country to launch Worldwide interoperability
for Microwave Access (WiMAX).
4
A breakthrough in mobile and landline
service for postpaid subscribers in Metro
Manila and Cebu called DUO was introduced.
This was later on offered to small and medium
enterprise (SME) clients, fulfilling the need for
additional business lines at a cheaper cost.
Globe also introduced the BlackBerry®
lifestyle to the Philippine market with the
BlackBerry® Storm, powered by Globe
Personal BlackBerry® Plans. Globe was
granted the preferential selling rights to the
iPhone 3G and iPhone 3GS. This partnership
with Apple™ was reinforced in 2010 with the
launch of the iPhone 4.
Globe Telecom and Visa were recognized
as the first two founding partners of the
Mobile Money Exchange at the GSMA Annual
Mobile Money Summit in Barcelona. Globe
Data Center achieved an ISO 27001:2005
certification for having met the Information
Security Management System (ISMS)
standard. It also received an ISO 9001:2008
certification upgrade for meeting the Quality
Management System standard.
Boosting its network further, Globe
participated in the new Southeast Asia Japan
Cable (SJC) System, the highest capacity
system in the world that links Singapore, Hong
Kong, Indonesia, Philippines and Japan. The
company achieved another first by having its
Globe Carrier Ethernet offerings certified by
the Metro Ethernet Forum (MEF) according
to MEF 9 service-provider specifications.
Globe also rolled out its second fiber optic
backbone network (FOBN2), a high capacity
transmission system that spans over 1,900
kilometers of inland and submarine cable,
covering most areas of Luzon, Visayas, and
Mindanao.
Our 2010 Milestones
Globe achieved its ISO 27001:2005 certification for its Information Security Management
under its Information Security Group, the first and only IT organization from a telecom company in
the Philippines that has achieved an ISO certification.
Globe scored many firsts in 2010 including the establishment of the largest domestic
remittance network for GCASH, the introduction of the first-ever P10.00 Tingi Load for prepaid
subscribers, the launch of personalized postpaid plans and the introduction of the most extensive
loyalty program in the industry. Globe also launched its new concept Flagship Stores, the Globe
Tattoo MyFi, an all-in-one wireless modem router that allows shared internet access and the m-ad
service, the first permission-based mobile advertising service in the country.
2010
AWARDS
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2010 CEO Excel Award of Excellence in
Communications for Globe President and
CEO Ernest L. Cu, International Association of
Business Communicators (IABC)
Globe President and CEO Ernest L. Cu
received recognition from the Business
Processing Association of the Philippines
(BPAP)
Platinum Award for All-Round Corporate
Excellence by The Asset, Hong Kong-based
financial magazine.
Gold Award by the Institute of Corporate
Directors (ICD)
FinanceAsia 10th Annual Poll of Philippine Top
Companies
• Best CEO, Ernest L. Cu
• Best CFO, Alberto de Larrazabal
• 2nd Best Managed Company
• Best in Corporate Governance
• 2nd place, Most Committed to a Strong
Dividend
• 3rd place, Investor Relations
• 8th place, Corporate Social Responsibility
4th place, Philippines’ Most Admired
Companies in the Asia 200 Survey by Wall
Street Journal Asia
2nd Global Corporate Social Responsibility
Awards, Singapore
• Gold Award, Best Work Place Practices
category
• Bronze Award, Best Environmental
Excellence Program
46th Anvil Awards, Public Relations Society of
the Philippines
• Awards of Excellence
Globe Sagot Ka ni Kap!
Globe BridgeCom Employee
Volunteerism
• Merit Awards
Globe BridgeCom Livelihood Grant
Globe Goes Green Lifeboats and
Lifelines
Globe Bangon Pinoy
Globe Negostar Fair
Run for Home 2010
Globe Cordillera Challenge
Masigasig Magazine
ICON: The Globe Intranet
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2010 Philippine Quill Awards, IABC
• Awards of Excellence
Kalinga sa Bayan (Community Relations)
Globe Negostar Fair (Marketing
Communications)
Globe Great Deals Catalogue and Globe
Life Magazine (Publications)
• Merit Citations
Bangon Pinoy (Community
Relations)
Globe Store: The Blueprint for the Future
(Media Relations, Special Events)
Globe Cordillera Challenge (Media
Relations, Multi-Audience
Communication, Special Events,
Graphic Design)
Ka-Globe Jam (Special Events)
Globe WiMAX Launches (Special Events)
Lifeboats and Lifelines (Special Events)
Globe Goes Green (Economic, Social and
Environmental Program)
ICON: The Globe Intranet (Electronic and
Digital Communication)
Globe BridgeCom Booth (Graphic Design)
Superbrands, Globe Tattoo
Silver Award, 2010 Araw Values Advertising
Awards for the campaign “Dasal”
Silver award, 2010 Tambuli Awards for Dasal
campaign, Best in Family-Oriented Values
Category
Silver Boomerang Award for Globe-Ayala
Land Run for Home ChampionChip Update
Application
GCASH Mobile Money Transfer Hub, top
honors, world’s first Mobile Money Transfer
(MMT) Awards, Best International Mobile
Transfer Program category
5
I Love Nurturing Dreams
Aspiring and reaching for my goals,
And planning for the future,
For realizing my plans and making new, better ones.
I am Vlad Concepcion
Loving Globe since 2002
6
Message from the Chairpersons
Globe Telecom continued to operate in
a very challenging environment in 2010. The
mobile telephony sector, which comprises
close to two-thirds of total industry revenues,
remained intensely competitive. There were
many reasons for this. Mobile penetration rates
have peaked, with over 90% of the population
now owning a mobile phone. Multi-SIM usage
continued, driving the service providers to
compete for “share of spend” in a declining
market. Industry revenues contracted, despite
an exponential rise in voice and SMS traffic,
as the market increasingly shifted towards
flat-rate, unlimited value promotions which,
in turn, accelerated the erosion of unit prices
and margins for domestic voice and data
services. The development of a wider range
of communications options; including social
networking sites, email, instant messaging, and
voice over IP, also weighed on the industry’s
inbound call volumes and revenues. Finally,
these negative forces were exacerbated by
the impact of the strong peso on US$-linked
revenues.
Counterbalancing these industry dynamics
was the sustained robust growth of broadband.
In this sector, industry subscribers rose by 40%
from 2.5 million in 2009 to about 3.6 million by
the end of the year. This was brought about by
the increasing affordability of access devices
such as laptops, PCs, and tablets, and the
wider availability of internet service as industry
players aggressively expanded network
coverage. Wired and wireless broadband
technologies were harnessed to deliver internet
connectivity to both the fixed and fully-mobile
markets nationwide. Prepaid offers at sachet
prices also became pervasive, making the
service more accessible to a much wider
market base, particularly among the youth.
Against this industry backdrop, Globe
Telecom posted service revenues that were
flat against the previous year, and a net
income of P9.7 billion, which was 22% lower
7
when compared to 2009. Mobile revenues,
which comprise 81% of consolidated service
revenues, were 5% lower than the previous
year. However, this was partially offset by
broadband revenues which were up a strong
75% compared to 2009. Meanwhile, Globe’s
wireline data business, which primarily caters to
the corporate and enterprise sector (including
the BPO industry) remained a consistent
growth driver; delivering a 15% revenue
improvement against the prior year. The
drivers behind the mixed 2010 performance
are covered in greater detail in the President’s
report.
From a stockholder’s perspective,
Globe’s market capitalization fell to P106
billion, by the end of 2010, given the market’s
negative sentiment on the telecom sector in
general. While one-year total shareholder
return declined in 2010 to (4%), compounded
average return over a longer 5-year time
horizon from 2006, was actually at an attractive
11%. It is also important to note that Globe’s
dividend yield of 8.7% for 2010 remained one
of the highest in the local market and among
telecom companies in the region. Dividends
paid out during the year totaled P10.6 billion,
representing 84% of 2009 net income and
consistent with our recently upgraded dividend
pay-out policy of distributing 75% to 90% of
prior year’s net income.
In response to some of the mentioned
setbacks, Globe re-oriented its strategies
successfully by midyear. The Company
remains fundamentally strong and is wellpositioned to sustain the growth and market
share improvements that were created in the
second half of 2010. While we see no let-up
in competitive intensity in the coming year,
especially with the imminent entry of a new
mobile player, we believe that the market will
regain equilibrium and resume a path of growth.
This would not be dissimilar to what we have
seen in other developed, highly penetrated
markets. Adjusting our operating models to
these new market realities is clearly important
for us to execute successfully. This means
getting relevant products out to the market
faster, maintaining our price competitiveness,
8
improving customer loyalty, reducing churn
levels, and ensuring the continued strength and
reliability of our network – all while managing
our costs.
Key to solidifying Globe’s position as
the primary challenger to the incumbent is
to ensure superior network service. We are
not standing still. Over the past two years,
Globe has invested over P44 billion in capital
expenditures (including P19.5 billion in 2010) to
expand its coverage and increase the capacity
of its mobile and broadband networks. Our
network footprint has grown rapidly over this
period with total 2G, 3G, and WiMAX base
stations up 38%. Our cellsite base has also
increased by 15% compared to end-2008
levels. Globe’s 2G coverage now extends to
over 99% of the population, while 3G coverage
is in excess of 70%. Our WiMAX deployment
for wireless broadband remains among the
largest in the Asia-Pacific region.
Globe also completed several major
international and domestic transmission
projects since 2009, including the Company’s
second domestic fiber optic backbone
network, and the TGN-Intra Asia cable system
which terminates at the Company’s cable
landing station in Northern Luzon. Globe
is also the exclusive landing party in the
Philippines of the Southeast Asian Japan
Cable System (SJC) which is expected to
be completed in 2013. SJC is the fifth major
investment of Globe in submarine cable
systems, which are spread across the Asian
region and connected to a portfolio of diverse
trans-Pacific transmission systems that
bring traffic from the Philippines to various
international destinations. These investments
support the country’s competitiveness
and strengthen our position as a preferred
destination for off-shoring and outsourcing
companies.
In the coming year, we will continue to
aggressively modernize and upgrade our
mobile networks so that they can serve the
changing traffic profile, improve our customer
experience, all while minimizing our total cost
of ownership. It is also critical that we reinvest our networks with future technologies
in mind; networks that support new wireless
technologies such as LTE (long-term evolution)
and efficiently scale up to manage the
next wave of traffic growth; including that
from mobile data browsing across cheaper
smartphones.
Finally, Globe is embarking on a
transformation of its business and operations
support systems, including its customer care
and service creation platforms in order to
improve time-to-market, support even more
aggressive commercial offerings to customers,
and create a single, integrated view of the
customer, while reducing the complexity and
total cost of operating our IT systems.
Beyond our efforts to grow our core
business, we continue to tap and develop
opportunities in adjacent spaces. We launched
the Philippines’ first permission-based mobile
advertising service during the fourth quarter of
2010, cognizant of the unique medium that a
mobile phone presents to advertisers as they
dialogue with their target consumers. Globe
subscribers can now choose the type of
mobile ads that they wish to receive and earn
rewards points for every SMS ad. These are
then redeemable against the various gifts and
discounts available to subscribers under the
Globe My Rewards My Globe loyalty program.
In the few months since its launch, this
innovative m-ads service has generated US$4
million in advertising commitments from major
multinational companies in the country, and has
quickly built an “opted-in” subscriber base of
1.7 million.
In the area of mobile banking and
microfinance, BPI Globe BanKO Inc. – our
mobile microfinance joint venture with Ayala
Corporation and the Bank of the Philippine
Islands – opened its first branch during the
first quarter of 2010, and has just inaugurated
five additional branches across the country.
BanKO is now extending wholesale loans
to other microfinance banks, while offering
mobile savings and insurance products to retail
customers. We are also pleased to report that
Globe GCASH Remit mobile money transfer
service is now being used by the Department
of Social Welfare and Development and the
Land Bank to facilitate the disbursement
of funds to poor families in far-flung areas
under the government’s Conditional Cash
Transfer Program; a key component of the
government’s poverty alleviation agenda.
Through GCash Remit, families in remote
areas no longer need to spend and travel long
distances to collect their cash assistance,
in line with our vision of providing financial
services to the unbanked and underbanked
markets. Our business models and corporate
social responsibility programs under Globe
BridgeCom, such as Text2Teach and Internetin-Schools Program, remain closely intertwined,
creating value beyond traditional economic
metrics and keeping the Company relevant to
the bigger communities in which we operate.
In closing, we reiterate our commitment
to transform our Company and our operating
models to serve the new realities of our
market. In doing so, we intend to create
a platform for sustainable growth and
shared value creation that benefits both our
shareholders and society. Let me also end
by extending our appreciation to our Board
for their support, our investors for their trust,
our employees and business partners for
their dedication and perseverance, and to our
subscribers for their loyal patronage.
JAIME AUGUSTO ZOBEL DE AYALA
Chairman, Board of Directors
GERARDO C. ABLAZA, JR.
Co-Vice Chairman
HUI WENG CHEONG
Co-Vice Chairman
9
I Love Mentoring
Beyond teaching skills and imparting advice,
Shaping, developing, molding,
Young minds to be great thinkers.
Carlos and Myca Hinlo
Will love Globe in 2016
10
Message from the President and CEO
Steadfastly in 2010 we continued our
transformation to serve customers better. We
trailblazed a resolute path towards customer
centricity, shedding the skin of a traditional
utility to bear the new markings of a serviceoriented company. Customer focus, the
primary driver for change, took concrete
shape in several milestone undertakings.
First, we opened our doors to a new
integrated retail experience to reveal the
blueprint for the future. With the launch of
our new flagship and concept stores – a
rich blend of technology, passion for the
customer, and the future, today – we bid the
days of impersonal, almost robotic payment
centers farewell, and instead beckoned
customers with the warmth of a full service,
interactive store experience. Boldly, eight
new Globe stores were put up – in Makati
City (Greenbelt 4), Quezon City (SM City
North EDSA and SM City Fairview), Las
Pinas City (SM Southmall), Muntinlupa City
2010 closed on
a high note with
consolidated
fourth quarter
revenues of
P16.7 billion,
the highest on
record in Globe
history.
(Alabang Town Center), Tarlac City (SM City
Tarlac), Cebu City (Ayala Center Cebu), and
Tagum City in Davao del Norte (Gaisano
Grand Mall) – with tremendous appeal and
sales prospects. Customer take up has been
truly encouraging, and there will be many
more new stores rising in the year ahead.
Second, our years of insightful research
helped address customer preferences
more thoughtfully and deliberately through
enhanced product and service development
anchored on personalization. This was
clearly pronounced in the postpaid segment
which has been our prized territory of market
leadership since the beginning of Globe.
We saw fresh opportunities to grow our
postpaid business through unprecedented
customizable postpaid plans that drew
great response from old and new customers
alike. My Super Plan and My Fully Loaded
Plan customizable offers resonated in the
postpaid segment registering all time highs
Our mobile
business posted
its fifth consecutive
quarter of growth
coming off the
recalibration of our
acquisition drives and
churn out of marginal
subscribers in late2009. Also in the last
quarter, the mobile
business delivered a
net of 1.1 million SIM
additions, the highest
since the second
quarter of 2008.
11
Globe Postpaid gained record subscriber growth in the fourth
quarter, netting 83,000 additional subscribers, a seven-year
high, and surpassing even full year 2009 levels. Total postpaid
net additions for the year were about 215,000, almost four times
higher than last year’s growth, pushing our postpaid customer
base past the 1 million mark.
in subscriber growth by empowering each
postpaid customer to choose the services
that fit him best. A lifestyle-defined monthly
service fee, an assortment of text and call
combos, loads of freebies, and the hottest
devices – mixed and matched to the
customers’ whims.
In prepaid mobile telephony, we stepped
up our unlimited and bucket service offers,
and broke down inter-network barriers
through our SuperUnli and SuperAllTxt
variants – affordably giving unlimited text
messaging all day for 20 pesos – again in
direct response to customer clamor.
An emerging business, broadband grew
at a robust pace, most especially among the
youth. The frenzy to do social networking
while enjoying mobility has incentivized all
telecom carriers to provide mobile data access
at a faster clip. Our Tattoo Broadband offers
packaged in edgier, hipper skin, bonded well
with our digitally-attuned customers’ penchant
for self-expression. We also propagated
WiMAX technology as a strong alternative
to 3G and DSL, and gave our broadband
customers flexibility in establishing their internet
connections. So well-received was the service
that as early as July 2010, Globe had already
garnered more than 100,000 broadband
subscribers on our WiMAX network, one of
the largest in the Asia-Pacific region, and the
first-of-its-kind in the Philippines. Most certainly
then, our broadband product portfolio was
not just superficially treated, but backed up
by a reliable network, competitive pricing, and
speed.
12
We heeded the call of the most techsavvy of customers, delighting them with the
Apple™ iPhone 4, to date a Globe exclusive
on Philippine shores. In September, we fueled
smartphone desires by introducing the world’s
most coveted device of its time. Our iPhone 4
launch demonstrated the superior customer
experience we constantly aspire to deliver
by distributing the iPhone 4 in the comfort of
some of Manila’s finest venues, and offered the
added convenience of online reservation prior
to launch date. One fine day in September,
thousands of Apple™ fans became happy
Globe customers, while we moved record
inventories of this amazing gadget.
Business customers with corporate
data requirements also benefited from
our drive to provide solutions that best fit
their communication needs. For example,
enterprise clients surely managed to lower
travel costs as they conducted real-time
remote conferences using our cutting-edge
Telepresence public room. High definition
video conferencing from our Manila facility
allowed virtual face-to-face encounters
with business associates around the world,
unimpeded by time lags. Our hosted contact
center solution presented opportunities for
the flourishing business process outsourcing
industry to operate and deliver their services,
unrestricted by the hefty network, hardware
and software investment requirements. For
the small to medium scale enterprise (SME)
segment, we launched the Negostar fair, a
caravan that traveled 20 areas nationwide
introducing the best of Globe Business’
Our accomplishments in 2010 also reflect what we do for
our communities as a responsible corporate citizen. This year,
we cemented our leadership in ICT for education by having
the most number of public schools connected to the internet
through our Internet-in-Schools Program (ISP).
products and services to prop up the
communications backend of nation-building
SMEs and entrepreneurs.
Better service, better offer, better
pricing – all in the spirit of Customer
First – this helped make Globe the brand
of choice among our customers. Tying
everything together as a compelling reason
to choose Globe is our customer relationship
management (CRM) strategy. CRM gave us
a deeper understanding of our customers
and connected us in ways that made them
feel uniquely privileged to be with Globe.
In October, we launched the My Rewards
My Globe Plus loyalty program to give new
meaning to being a Globe customer. Indepth profiling of customer behavior helped
reward loyalty more meaningfully through
rebates, discounts, and complimentary topups, among others. Ultimately, across all our
brands and offers, we want our customers
to have their way, Globe being truly at their
service.
Third, our organization rallied around
a new vision and mission, a credo that we
refer to as The Globe Way. It encapsulates
our reason for being, and embodies our
aspirations as a service-oriented company.
Key to the cultural transformation that
improves the way we serve our customers,
The Globe Way declares Customer First,
recognizes that our people make the
difference, upholds integrity, inspires
ownership and malasakit, espouses
simplicity, and calls for speed and action.
Guided and unified by The Globe Way, our
employees embrace the call for customerdriven transformation towards better service
– our competitive differentiator in the industry
today.
These were some of the key initiatives
that Globe pursued throughout 2010 with
the customer at the center of all our ideals.
I believe that transforming our culture,
mindset, and philosophy, to that which truly
benefits our customers, is indeed making a
huge difference in the way Globe operates
and performs as a business. Let me go
through the Company’s 2010 performance
highlights.
2010 closed on a high note with
consolidated fourth quarter revenues of
P16.7 billion, the highest on record in Globe
history. Our core mobile business led the
fourth quarter surge with service revenues
of P13.5 billion, 13% higher against the
last quarter. The broadband and fixed line
business grew 2% over the previous quarter,
resulting in full year revenues 32% higher
compared to 2009. With our improved fourth
quarter performance, we ended the year
with service revenues of P62.6 billion pesos,
slightly higher than 2009’s P62.4 billion.
Subscriber growth was clearly on the
upswing in 2010. In the last quarter, our
mobile business posted its fifth consecutive
quarter of growth coming off the recalibration
of our acquisition drives and churn out of
marginal subscribers in late-2009. Also in the
last quarter, the mobile business delivered a
net of 1.1 million SIM additions, the highest
since the second quarter of 2008. Gross
13
additions increased while churn rates steadily
declined, resulting in total net additions of
3.2 million SIMs in 2010 compared to the
previous year’s net reduction of 1.4 million.
We thus ended the year with a mobile SIM
base of 26.5 million, an increase of 14%
against last year.
Globe Postpaid gained record subscriber
growth in the fourth quarter, netting 83,000
additional subscribers, a seven-year high,
and surpassing even full year 2009 levels.
Total postpaid net additions for the year was
about 215,000, almost four times higher
than last year’s growth, pushing our postpaid
customer base past the 1 million mark.
Likewise, Globe Prepaid and TM
achieved record net additions in the last
quarter of 2010 following efforts to refresh
and revitalize the brands. Globe Prepaid, in
particular, added over 480,000 SIMs in the
4th quarter, the highest quarterly increase
since the second quarter of 2009, more than
doubling the previous quarter’s net growth.
Globe Prepaid and TM collectively accounted
for 93% of the year’s net additions, and
closed the year with a SIM base of 13.8
million and 11.6 million, respectively.
Our broadband business ended the year
with 1.1 million customers, 50% higher than
2009 results. Wireless subscribers comprised
over three-fourths of the total broadband
customer base, and accounted for 89%
of net additions for the year. Broadband
revenues rose 75% against last year to P5.7
billion, and the segment accounted for 9% of
consolidated revenues compared to 5% the
previous year.
Meanwhile, EBITDA, EBIT and net
income were lower than last year’s.
Consolidated EBITDA margins stood at
54% from 58% in 2009, reflective of margin
pressures in the mobile business and dilution
from the contribution of the fast-growing, but
lower-margin broadband business. By the
end of the year, the Company’s net income
14
stood at P9.7 billion, down 22% year-onyear, but notably trending better coming
from a 24% gap in the 3rd quarter, and 30%
deficit in the 2nd quarter. All said, Globe still
delivered consistent 21% return on equity.
Going forward, our key priorities for our
consumer business will continue to revolve
around differentiated customer service,
improved network quality experience for our
subscribers, and unique product offers that
will drive usage and increase the share of
spend among multi-SIM users. Globe will
focus on nourishing the preferred brand for
mobile internet in the country through: (1) the
best featurephone and smartphone range
in the industry; (2) value-based data plans
that suit various lifestyles; (3) development
of relevant content that makes using the
internet on a mobile phone compelling;
and (4) delivery of the finest customer data
experience in the market.
For broadband, our primary goal is
to increase the scale of the business,
lower churn through an improved network,
drive higher ARPUs through more crossselling, and lower costs through process
reengineering and better operating models.
For our corporate data business, we
aim to sustain the double-digit growth of the
segment through customized, value-adding
solutions, competitive pricing, and continued
engagement with our enterprise partners. In
addition to large corporations, we will focus
on SMEs across the country, providing them
with affordable tools and solutions to help
them run their businesses more efficiently.
We see no let up in competitive intensity
in 2011, with unlimited and bucket service
pricing continuing to impact yields and
margins. Traffic will continue to grow, but
will not create a significant uplift in revenues,
similar to what we see today. Competition
will remain intense, and the entry of a fourth
player is expected to intensify the competitive
climate. The broadband segment, meanwhile,
will continue to grow, but likely at a slower
rate given higher penetration levels.
The Company’s EBITDA margins will
be under pressure, but will also be greatly
moderated by our programs to improve
the profitability of our broadband business.
Our programmed spend for 2011 will total
about US$ 500 million, including close to
US$ 70 million in carryover projects from
2010. We will devote a sizeable portion of
2011 capex to improving network quality
and availability, and increasing capacities to
offer our customers a better voice and data
experience. We will also strengthen our
backend systems and delivery platforms to
support even more aggressive offers, and
further improve the customer experience.
Our accomplishments in 2010
also reflect what we have done for our
communities as a responsible corporate
citizen. This year, we cemented our
leadership in ICT for education by having the
most number of public schools connected
to the internet through our Internet-inSchools Program (ISP). We took great
strides in supporting education as a primary
advocacy by launching our Global Filipino
School (GFS) program, and our teachertraining Global Filipino Teachers (GFT)
program in partnership with the Coalition for
Better Education (CBE). We continued to
leverage on our partnership with SingTel for
our reading programs and library donations
that benefit elementary schoolchildren. In
keeping with our thrust on sustainability,
we made sure that our programs have the
necessary support for long term commitment
and engagement, including care for the
environment, entrepreneurship, youth
development and disaster response.
Moreover, Globe proactively assumed
a key role in a Philippine government
initiative to alleviate poverty. Bringing
mobile technology to the grassroots with
our GCASH Remit service, we enabled the
disbursement of funds to the marginalized
in far-flung areas under the government’s
Conditional Cash Transfer Program. GCASH
Remit allowed those in remote localities to
collect cash assistance immediately. We have
GCASH in the spirit of providing financial
services to the unbanked and underbanked
markets.
Finally, we take pride in having
contributed to the success of the nation’s first
automated national elections. Through Globe
Business, we hosted the main automated
election system (AES) servers that tabulated
and stored election returns. We also supplied
more than 35,000 SIMs to allow precinct
count optical count (PCOS) machines to
transmit election data, provided internet and
core data services, and secure virtual private
(VPN) network connectivity for the safe and
reliable transmission of election data from
voting precincts to canvassing centers.
Reflecting on our successes in 2010, we
will continue transforming our Company with
even greater customer focus in 2011. We
remain committed to delivering sustainable
profitability and respectable returns to our
shareholders. Rooted in The Globe Way, we
will step up our competitive advantage as
the challenger brand, and be the preferred
choice differentiated by superior customer
experience.
ERNEST L. CU
President and Chief Executive Officer
15
There is a need for a special prepaid
family SIM whose expiration date
can be extended easily, and if the
SIM is lost or damaged, the user
should be able to retain the same
number. We are pleased and excited
to be partnering with Globe in
addressing these requirements by
creating the customized PeopleLink
SIM. Moving forward, I hope that this
partnership will be the start of the
many possibilities that Globe and
PeopleLink can do together.
-Norman Carcellar/President/PeopleLink
One of the conveniences of using
Platinum Plan is enjoying the services
of a dedicated Account Manager whom I
can call anytime for assistance and
inquiries.
- Marily Y. Orosa/Owner/Studio 5
Designs, Inc.
Business Plus enhances our workforce’s
mobility, enabling all of us to
communicate effortlessly. With this
solution, our employees can stay
connected wherever they may be in the
sprawling grounds.
-Efren Belarmino/General Manager/
Plantation Bay
16
We used the best features
of Globe to our advantage.
With the increase in calls
and inquiries in our business
and bookings we need that
reliability. Our One-call
booking system (through
9-00000-2) via the Globe Trunk
hunting facilities enables
us to serve them (customers)
faster.
- Paulo Tibig/President/
Vcargo & the Association of
Filipino Franchisers Inc.
Globe Tattoo helps me keep in
touch with my friends, surf the
net, and play in the Philippine
Stock Market anytime, anywhere,
anyplace. I love my Globe Tattoo.
-Greg Yu/Account Manager/Fujitsu
Philippines
I’ve been using Globe for more than
10 years and we have had very good
experience since then so I have never
changed.
- Ofelia Bulaong/Government Employee
17
I Love Connecting
I live for my gadgets that let me share,
For my online life where I chat, work, play,
For the cyberspace that keeps me aware.
I am Vicente Tanpho
Loving Globe since 2000
18
Our Customers
Making it Your Way: Globe at Your Service
The year was replete with many firsts
in the industry, focusing on satisfying
customers’ expectations. Globe was the first
telecommunications provider to launch an
integrated store environment where zoning
for shopping and services are provided. In the
new store look, there were live demo handsets
versus the traditional dummy phone units. In
lieu of conventional tarpaulins, brochures and
flyers, digital and interactive merchandising
was made available. Customers can
experience technology with touch screens and
retail television. Furthermore, a Great Deals
catalogue, an in-store lifestyle magazine, was
made available in the store.
At the beginning of the year, the
Customer Experience Management (CXP)
team of Globe led the implementation of single
calling number for Mobile and Broadband,
eliminating instances of multiple calling
numbers that subscribers find confusing and
hard to remember. Platinum Sales was also
created, making a major difference in handling,
treating and mining the valuable Platinum
database of customers.
Part of the customer experience in the
new Flagship Store was the easy, paperless
digital application. Most documents were
scanned right at the counter, eliminating the
need for photocopied documents required
from a subscriber. The self-service kiosks in the
service zone were also made available for the
customer who requires immediate answers, or
for someone who may need simple services
such as bill printing.
Among the activities done in the past
year was the launch of mystery shopper, to
gather insights and customer feedback on
hits and misses of major service launches,
supplemented by a network survey.
For more immediate feedback, Globe
also launched a program that inquires on
the customers’ store experience by sending
them a text within 24 hours upon leaving the
store. Fully-launched online customer service
channels on Globe Facebook (http://facebook.
com/GlobePH) and Twitter (http://twitter.com/
talk2Globe) was implemented to address more
customer concerns while leveraging on the
web space.
Various enhancements in the Interactive
Voice Response (IVR) system were done
to address difficulties in getting across a
subscriber concern to the proper agents. A
major revamp of the IVR for TM subscribers
for more self-help options facilitated faster
transactions, less waiting period and a
reduced queue at the TM hotline. Contact
tags underwent a major revamp accurately
capture subscriber concerns and prioritize
follow up calls.
Throughout the year, various initiatives
were implemented to address subscriberinitiated churn. Centralized handling was
assigned to the Customer Experience
Management Retention Unit to give focus on
saving subscribers. Improvements on save
offers for subscribers were promoted, while
fast lane processes in shops were created
to resolve subscriber concerns as quickly
as possible. Furthermore, the launch of a
retention hotline for inbound cancellation was
created to address low contact and save on
rates.
Why Globe? 13 years na akong gumagamit ng
Globe; even the members of my family are
using Globe. At that time, my cellphone
was the big one, ‘yung original; ‘yung
malaki. Even the signal is very clear.
Hindi ko ipagpapalit and Globe.
-Amelita Nazareno/Head, University
Facilities Reservation Office/University
of Makati
To support Globe Bangon Pinoy Program,
we conducted the Typhoon Ondoy Sweep,
a joint effort of the CXP and Customer
Operations Support Group (COSG), to
check all Ondoy-affected areas for last-mile
problems affecting customers’ Wireline and
Broadband services. Resolving these involved
the immediate repair of technical problems as
well as giving out proactive bill adjustments to
compensate for service loss.
19
I really believe in the service of Globe.
In the features of Globe, especially
the UnliTxt. It’s very convenient, the
UnliCalls, it’s very convenient. 235,
232, alam ko lahat ‘yan. I’m really loyal
to Globe.
-Che Galica/Marketing Manager
Internal changes adopted include the
introduction of the One Frontliner View. It is
a single sign-on system for identified web
tools and aims to facilitate easier tagging of
transactions to minimize switching from one
web tool to another in processing customer
requests.
The Inventory and Partner Management
aims to facilitate easy retail shop sales of
offers that have accessories and hardware
integrated with network plans. It allows for
partner management and arrangement and
tracks warranties and repairs. For the rest
of the year, CXP conducted free upgrades
of 128K Postpaid SIM cards for consumer
and corporate accounts. The go-to-market
planning and execution of the upgrade was
done to ensure that subscribers get the latest
version of 128K SIMs with added security
features and higher memory size.
To complete the transformation, store
personnel’s uniforms were also made to reflect
the new theme. Easy to move around in, hip
and multifunctional, the uniform design aims
to inspire in the staff to live the brand promise
and to adopt the new retail mindset.
Employee programs that encourage
ownership and a culture of intrapreneurship
include Flagship Store employee tours.
Organized store tours for Globe employees
were regularly done to build and encourage
a sense of pride and instill brand
ambassadorship in every employee.
To further promote the unique Globe
Way of service, Outstanding Project Teams
and Employee of Year awards were given
through the 2010 Globe Way Awards. This
program recognizes excellence among
20
the men and women of Globe who have
consistently risen above expectations, who
have gone beyond the call of duty and
have shown outstanding contributions and
delivered significant results.
In a move to properly appreciate our loyal
subscribers, Globe feted its longest-tenured
customers to a night of merriment to celebrate
the Lucky 0917. They are a select group
of Globe customers who have been with
the brand since it began in 1994, including
those whose 16-year tenure with Globe
has led many of them to be its most ardent
advocates. Exclusive to over 1,700 pioneer
subscribers, the party was held at the NBC
Tent last October 6, 2010, marking another
first in the telecommunications’ subscriber
loyalty program.
A Close Look at the Store Experience
A Revolution in Telecommunications Retail
Experience
Globe Telecom has changed the way
people shop for communication products and
services, following the opening of eight new
full-service stores in 2010. Located in strategic
locations nationwide, the new design of the
Globe Flagship and Retail Concept Stores has
fully integrated the Globe brand promise of
“enriching lives through ease and relevance,”
delivered by combining superior customer and
after-sales support with world-class shopping
experience.
The cutting-edge design
of the Globe store features
a seamless, two-section
layout that allows customers
to easily browse around
the top-of-the-line gadgets
and accessories in product
displays, as well as request
for after-sales support.
Over the past year, Globe has opened
new stores in Makati City (Greenbelt 4),
Quezon City (SM City North EDSA and SM
City Fairview), Las Pinas City (SM Southmall),
Muntinlupa City (Alabang Town Center), Tarlac,
(SM City Tarlac), Cebu City (Ayala Center
Cebu), and Davao del Norte (Gaisano Grand
Mall in Tagum City).
Each store showcased the “blueprint for
the future” concept of Globe, concentrating
on a digital lifestyle that focused on the needs
of the customers. All the stores featured a
wide array of working mobile phones like the
iPhone 4, and latest gadgets like tablets that
customers can try. There were also laptops
with WiFi and broadband connections for
everyone to experience internet surfing
services of Globe. Store specialists were
also on-hand to provide consultations and
business solutions to the customers.
Created by award-winning Australian
architectural firm Public Design Group, the
cutting-edge design of the Globe store
featured a seamless, two-section layout which
allowed customers to easily browse around
the top-of-the-line gadgets and accessories in
product displays, as well as request for aftersales support. The new Globe store has three
sections for customer service- Express, Full
and Cashiering. The Express Service section
was for fast transactions, such as modification
of account information and subscription plans;
while the Full Customer Service section was
for more complex transactions and opening
of new accounts. The Cashier section, on the
other hand, was for bills payments. The Store
also has a self-help area for customers who
want immediate answers or who need to print
a copy of their bill.
Dating Globe Prepaid user ako, pero
nagshift na ako sa Globe Postpaid.
Sobrang daming offer ng Globe na
mas nakakatulong sa katulad kong
empleyado.
-Cathy Araji/Employee/Federal
Construction Company
21
GXI was granted by the
regulators the ability
to accredit and utilize
15,000 of Globe airtime
sub- distributor network as
outlets to service the array
of financial services that
it offers.
In the fashion of Globe “Your
Way”, GXI launched a new
product: the very first fully
customizable, mobile money
based GCASH Card.
GCASH is now used in a
new SM Cinema service
where customers can
reserve SM Cinema tickets
online, pay for the tickets
using GCASH and claim SM
Cinema tickets on site using
the mobile phone.
22
The Globe store received numerous
commendations in The Globe Way Awards held
in December, including Outstanding Project
Team of the Year of Business (Greenbelt 4
Store Team), and Outstanding Project Team of
the Year for Corporate Support.
Interconnectivity, Every Which Way
With every plan that a customer may
choose, Globe ensures that these plans
are designed with value for money in mind.
These cost-efficient solutions give a sense of
freedom and mobility to subscribers without
sacrificing connectivity and reliability.
Products and services, all customized
your way. Globe Telecom’s products are
solutions in answer and in anticipation to your
every communication need.
The story of G-Xchange, Inc. (GXI) is no
different. In the past year, GXI was granted
by the regulators the ability to accredit and
utilize 15,000 Globe airtime sub-distributor
network as outlets to service the array of
financial services that it offers. This landmark,
network based, regulatory approval is a first
in the changing landscape of mobile financial
services. This 15,000 airtime sub-distributor
network was consequently accredited by GXI
and allowed it to become the platform for major
initiatives for the rest of 2010.
By April 2010, GXI launched its GCASH
REMIT domestic remittance service on
a mobile based, sub-distributor network
allowing reference based, cash pick-up
remittance service using mobile phones as
interface between sending and recipient
outlets. This service is another innovation
that uses a mobile-based platform versus
the traditional PC-based interface, benefiting
the customers on account of a low cost and
convenient delivery mechanism.
GXI was also tapped by the United
Nations World Food Programme for the
disbursement of financial assistance to
disaster affected communities in Metro Manila
and Luzon via the GCASH platform. The
success of this initiative was made possible
through the reliability and broad access of
GXI’s mobile services.
In the fashion of enjoying Globe“Your
Way”, GXI launched the first fully customizable,
mobile money based GCASH Card. This
provides GCASH customers 24-7 access to
any of the 9,000 ATMs of the different ATM
networks and allows subscribers more cash
out points for them to “withdraw” or convert
GCASH to cash. Aside from expanding cash
out access for our subscribers, the GCASH
Card also serves as a valid ID as the back
portion carries the subscriber’s ID picture.
The front of the card is highly customizable
allowing the subscriber to choose from any
of available templates, with the option to use
their own pictures and designs.
This was followed in November by
the Department of Social Welfare and
Development’s Conditional Cash Transfer
(CCT) program where GCASH REMIT
was commissioned to be a channel for
disbursements for financial aid to indigent
families in very remote areas. Most of
these areas are at least 5 hours away from
the nearest financial institution requiring
several modes of travel including hiking
just to reach transit points. The success of
the initial CCT disbursements in the most
challenging areas is a testament to GCASH
REMIT’s broad coverage and has led to the
awarding of several more areas for long term
engagement.
In November, GXI again broke new
ground by enabling an industry first for the
use of mobile money in cinema ticketing.
GCASH is now used in a new SM Cinema
service where customers can reserve SM
Cinema tickets online, pay for the tickets using
GCASH and claim SM Cinema tickets on site
using the mobile phone. A unique “Bcode”
is sent to the mobile phone after payment,
requiring a customer to conveniently flash the
code from the mobile phone on the “BCode”
machine at the cinema entrance.
Rounding up the year of GCASH
trustworthiness as a product was the task
given to the Philippines’ first Mobile Savings
Bank, the BPI-Globe BanKO providing
microfinance and banking services to
customers at the base of the economic
pyramid using GCASH. Since November
2008, when the MOU among Ayala
Corporation, Bank of the Philippine Islands,
and Globe was signed, the BPI-Globe BanKO
has released as of end-2010 a total of P1.059
billion in wholesale loans and collected P608
million in deposits from more than 4,600
depositors.
For GXI alone, 2010 was a year of many
firsts, shaped by mobile money industry
milestones benefiting millions with GCASH’s
best in class platform. All of these initiatives
are the levers that will propel GCASH in 2011
and the years to come.
Withdraw your GCASH
from Any ATM, Anytime,
Anywhere!
Now you can enjoy 24/7 GCASH convenience
with the tool and customizable GCASH Card!
Choose your own design and cash-out in style!
23
I Love Entertaining
Dancing to live, to refresh my spirit,
To occupy creative space, in quiet and play,
Being boundless to leaping, for dreaming.
I am Ollie Real
Loving Globe since 2000
24
Enjoy Your Globe, Your Way
It’s a statement that demands
personalization, allowing freedom of choice
and individual preferences. In 2010, Globe
was in the middle of a heated brand war and
found itself needing to differentiate its imagery
from competition, one brand known for its
coverage and calling circle, and another, which
was the originator of the unlimited proposition.
With the category declining due to increasing
commoditization of offers and a growing
perception of telcos as utility companies, Globe
considered it imperative to transform its brand
experience into one that placed the customer
at the very heart of all its services and products.
Market research bore out the fact that
customers felt restricted by the services they
used. Their usage was defined and limited
by the choices they made. Postpaid users
felt tied down by their plans, many of which
locked them in for at least two years; prepaid
users wished for the larger calling circle
of other brands and so ended up owning
multiple SIMs in order to stay connected to
friends across networks.
In response, Globe set out to make its
customers feel empowered. Its inimitable
tagline: Enjoy Your Globe Your Way. To its
broad range of subscribers across age groups,
socio-economic classes and livelihoods, Globe
was determined to be the brand of choice that
would make them the masters of their own
fate, equipping them to successfully juggle the
multiple roles each one played among family
and friends. Globe would enable them to chart
their successes, manage their responsibilities,
and still live in the moment and suck out the
marrow of life at every endeavour.
The brand launched a thematic campaign
that cuts across various media ranging from TV
to out-of-home advertising to digital and social
media executions, using popular celebrity
endorsers Vice Ganda and Sarah Geronimo
whose own star power crossed generational
lines and appealed to all.
The proposition was supported by strong
product offers that allowed customers to
use Globe services in any way they pleased,
encouraging them to make the brand an
integral part of their daily lives in easy and
flexible ways. Offers ran the gamut from
never-been-done-before customizable postpaid
plans, aggressive all-network prepaid SMS
deals that broke category restrictions and
innovative rewards programs that strengthened
customer relationship and loyalty.
Globe Postpaid introduced its innovative
personalized postpaid plans My Super
Plan and My Fully Loaded Plan which both
contributed significantly to the postpaid
segment’s achievement of both revenue and
’Yung UnliTxt saka ‘yung SuperUnli
10, sobrang useful niya. Anytime
pwede kang tumawag, pwede kang
gumamit. Ok ang performance ng
Globe (laughs). Ok ang ginagawa
nila. Maganda ang service.
- Patrick De Guzman/Employee
market leadership. This allowed subscribers to
customize their postpaid plans based on their
choice of consumable plans, freebies, unlimited
services, and handsets. Eventually unified under
the banner of The All-New My Super Plan, the
postpaid offer remains the first truly personalized
plan launched in the market. In addition, an
exclusive partnership with Apple™ which
enabled Globe to launch the iPhone 4, plus a
strong alliance with BlackBerry® seen in a series
of aggressive marketing offers, took the game
to a level that few others could match and drove
growth of the postpaid subscriber base.
The Company’s prepaid segment also
pioneered two of the most affordable prepaid
offers that elevated the game of unlimited
text and call services. For only P25 a day,
Globe subscribers enjoyed unlimited call
and text to Globe and TM subscribers with
Globe SuperUnli Call and Text. For users
who needed to be connected to their friends
much longer, a 7-day variant at P150 was
also offered to them. For those who desired
25
constant connection to friends and family
across telco networks, Globe then offered
its most hard-hitting inter-network text offer,
the Globe SuperAll Txt 20 which allowed
subscribers to send 200 text messages to all
networks for just P20 a day.
The 2009 launch of the broadband brand
Tattoo resulted in the achievement of more
than 1 million broadband subscribers in 2010
with an increase of 50% subscriber base. As
Globe continued to build its Tattoo network,
improvements in customer experience also
continued and were documented in technical
and market testing done around the country.
I surf a lot. And I use the internet
for social networking, checking
e-mail, looking for new places for
vacation, and checking out new
gadgets. For internet, I use Globe
Broadband because Globe Broadband is a
fast and reliable service and it works
almost everywhere.
- Roman Allen Umali/Sound Engineer/
Digitrax Sound Production
Towards year-end, Tattoo launched its most
powerful broadband stick, an all-in-one
wireless modem called the Tattoo SuperStick,
which provided speeds up to 3 Mbps and
also enabled users to create their own WiFi
hotspots with shared access for up to 5
devices or users. The Tattoo MyFi and the
Tattoo Stick completed the product array.
These nomadic offerings were supplemented
by a product portfolio that expanded into the
home broadband space, with fixed services
like Tattoo DSL, Tattoo WiMAX and the
powerful Tattoo Torque which gave heavy
internet users the richest media experience
with speeds up to 100 Mbps.
Innovative call and text offers were also
offered internationally by expanding presence
and forging partnerships with foreign telecom
26
operators in countries with the most number
of overseas filipino workers. The Company’s
presence in 17 countries comes through 27
partnerships which provide international call
and text services with 600 roaming partners.
PowerRoam, an add-on consumable roaming
plan, allows subscribers to enjoy discounted
roaming rates with the Company’s partner
operators in 15 countries and territories.
Together with Singtel and the rest of Bridge
Alliance, Globe introduced Bridge DataRoam
which enabled worry-free, unlimited data
roaming across the Asia Pacific for as low as
US$10 a day and US$27 for 3 days.
To support its thrust towards superior
customer experience, Globe launched an
industry first: an exclusive rewards programs
for its loyal subscribers, branded My Rewards,
My Globe and TM Astig Rewards. These
programs allowed Globe subscribers to earn
points for every load purchase they make. The
points can be redeemed for a multitude of
rewards which consist of Globe products and
services, gift certificates, gadgets and travel
miles. On top of rewards, subscribers enjoyed
freebies, discounts and exclusive privileges
from over 70 stores, restaurants, food outlets,
hotels, gaming centers, boutiques and health,
beauty and lifestyle establishments. Apart from
significantly reducing churn for the mobile
brands, the rewards programs empowered
subscribers to design and enjoy their rewards
according to their wants and needs. Enhanced
offers via a partnership with the popular SM
Advantage Card delivered extra value to loyal
Globe Prepaid and TM users.
In October 2010, Globe launched
another first in the Philippines with the first
permission-based mobile advertising service,
tagged My Rewards, My Globe Plus. This
program allowed subscribers to opt-in and
get free information on the latest promos and
special offers from their favorite brands. Since
its launch, US$4 million worth of advertising
commitments from some of the country’s
biggest brands such as Unilever, HSBC and
McDonald’s were already in place, while 1.7
million opted-in subscribers were reported
three months after the launch.
Globe also recognized the wealth of
opportunities that mobile data business can
bring into the revenue stream. Creating a
new line up by offering exciting content, latest
handsets, relevant and affordable mobile
browsing plans, this was intended to cover
the market's social networking base. Mobile
browsing plans such as Globe Powersurf and
Globe Supersurf and partnerships with handset
providers Apple™, BlackBerry®, Samsung and
Nokia offering the most up-to-date handsets
were launched. Globe has also partnered with
GetJar, an application provider, for a more
entertaining mobile browsing experience with
over 75,000 free apps.
These products and services made
Globe the category-defying brand, effectively
demonstrating to customers that would
make possible what others could not. Even
as the campaign ran its course, Globe has
endeavored to reinvent itself, designing
experiences for its customers that will delight
and provide them with services that give
meaningful value, assuring them at every step
that they made the right choice.
Globe Business : Providing relevant ICT
solutions with unparalleled service
Globe Business is the enterprise
and corporate client servicing unit of the
Company that focuses on providing relevant
ICT solutions with unparalleled service. It
delivers a full suite of products and services
to meet clients’ demands for cost-efficiency,
mobility, security, IT integration and reliable
connectivity.
27
We are enjoying the benefits of using
Inventory Ordering System (IOS) and Globe
Postpaid services. In business, we want
to do things fast and on time. Meeting
timelines and accuracy are important. IOS
is easier and faster than manual. They can
text orders at anytime of the day even when
they close shop at 10pm. It also eases up
our stress since now we have a smooth flow
of transactions. These Globe solutions
are very important because when you are
in business you do multi-tasking. You do a
lot of things and if you don’t have such
solutions you don’t see the rest of your
business, which are also important.
- Tess Ngan Tian/Owner/Lots’A Pizza
Effectively managing communication
expenses and optimizing business investments,
TxtConnect is a web-based service that
allows up to five authorized users, sharing one
subscription plan, to send text broadcasts
from any web-connected PC in the office.
TxtConnect enables enterprises to broadcast
text messages to pre-registered groups such
as employees and customers. It provides
companies with instant, targeted and flexible
communication solutions.
As the leader in BlackBerry® smartphone
usage, Globe Business offers data plans
for BlackBerry® devices, allowing enterprise
customers to stay productive while on the way
to work, in a meeting, or even outside of the
office. BlackBerry® gives users instant access
to their emails and corporate applications,
giving them greater flexibility and enabling them
to respond to pressing matters right away.
Tracker GPS gives businesses the ability
to keep track of their mobile assets in real-time
using the Global Positioning System (GPS).
With Tracker GPS, enterprises are assured of
increased protection for their fleet as they are
able to monitor and pinpoint their exact location.
Hosted Contact Center provides an
end-to-end solution that offers the full
features of contact center applications, with
a high capacity platform and very secure
infrastructure. It enables businesses to
communicate more effectively with customers
and meet their demands for quality service
levels with low upfront investment, minimal
28
IT resource requirements and robust contact
center features.
Companies and large enterprises can
experience a fully redundant and seamless
connectivity for reduced service disruptions
with IP Converge Optical Network (ICON). It
is the first pure multi-service Internet Protocol
Multi Protocol Label Switching (IP MPLS)
network in the country, providing highly reliable
and secure network connections. Globe
Business also boasts of strong domestic data
offerings that include the Broadband Access
Service (BAX) network with 10G of bandwidth
capacity. It has a secure, flexible and reliable
International Data Service that connects an
enterprise’s branch from the Philippines to the
world, with speeds ranging from 64Kbps to
620Mbps. Its Internet Core boasts of the best
and most diverse route that enables borderless
communication and access to information.
Globe Business’ complete portfolio can be
viewed at www.globe.com.ph/business.
Globe Negostar: Advancing the growth of
SMEs with business innovations
Globe Negostar was launched in 2010 to
reach out to SMEs nationwide with the aim of
helping them grow their businesses.
Spearheaded by Globe Business, Globe
Negostar drew entrepreneurs in Nueva Ecija,
Baguio, Batangas, Pampanga, Metro Manila,
Davao, Cebu, Bacolod, Laguna, Pangasinan,
Globe President & CEO Ernest Cu speaks at the first Enterprise
Innovation Forum.
Globe Telepresence
enables a life-size
“in-person” meeting
experience for
interaction and
collaboration across
multiple locations around
the world in real time.
Cavite, Bulacan, Cagayan de Oro and Iloilo
to experience the benefits of using the latest
communication technologies and solutions.
Globe had 17 Negostar fora last year,
working like a caravan moving from one
province to another. During these events,
the Account Managers of Globe Business
are on hand ready to listen to the pressing
needs of SMEs and discuss how these can
be addressed with business solutions that
specifically fit their requirements.
Globe Business offers Tracker GPS as
an innovative security tool for entrepreneurs
to monitor their vehicles in real-time using the
Global Positioning System (GPS). GPS is a
satellite navigation system that determines
the precise location of a person or delivery of
stocks. It assures protection of assets and
goods as their movement can be monitored
and entrepreneurs get to know the exact
location of their trucks and cargo en route to
their destinations.
WebEye gives SMEs peace of mind as
this enables them to watch and monitor their
various sites anytime and anywhere. This digital
security system allows businesses to view their
branches through their computers or mobile
phones. It even has a motion detector system,
video recording and security features, and
allows video conferencing.
Inventory Ordering System is an easy
to use end-to-end solution for supply chain
management. For SMEs with multiple sites,
IOS enables inventory and sales monitoring,
automated invoicing, and procurement, as
well as allows orders and reports via SMS or
web, all in a simple web-based and selfservice set up.
TxtConnect is the text broadcast service
of Globe Business that could send messages
up to a thousand pre-registered recipients.
Businesses can use this to announce a sale
and market their products and services, or
provide updates and info to employees. It
allows businesses to save costs on calls and it
is convenient as it can be accessed anywhere
because it is a web-based service.
Also popular among SMEs at the Globe
Negostar is the unlimited postpaid plans
offer – Business Plus, the affordable unlimited
Globe and TM calls package – Biz Talk, the
unlimited mobile calling to Globe and TM
What we want is a one-stop-shop for
all our communication needs; it’s
just easier and cheaper that way.
In my case I appreciate how Globe
provides for these. Globe Business
has truly been my partner in growing
Aquabest.
- Carson W. Tan/President and CEO/
Aquabest
29
tack-on for landline – Biz Landline, and the
Globe Broadband and Biz Laptop Bundle.
These are just among the many business
tools SMEs can expect to see during the
Negostar fora.
Inspiring SMEs to grow their businesses
and achieve their dreams are successful
entrepreneurs who support Globe Negostar.
Among them are Cebu industrial designer
Kenneth Cobonpue, restaurateur Margarita
Fores, Edgar “Injap” Sia II of Mang Inasal,
Paulo Tibig of Vcargo, Ricardo Cuna of
Fiorgelato, Michelle Asence-Fontelera of
Zen Zest, Richard Sanz of Bibingkinitan,
Tess Ngan Tian of Lots ‘A Pizza and Carson
Tan of Aquabest. To these entrepreneurs,
communication is critical in their businesses
and so they utilize the affordable, innovative
and reliable solutions of Globe Business for
their very own negosyo.
KaGlobe Retailer Club: Engaging
Retailers to Grow their Business
Our Customer First policy does not only
apply to our customers in mass markets, it
also applies to our partners who care for our
business the way we do. Globe has over
800,000 retailers of Globe SIM cards, loads
and products nationwide, and growing. Trade
distribution is a key area of the business that
helps make Globe products and services as
ubiquitous as possible. By giving value to our
distributors and strengthening our partnerships,
we make Globe accessible to more customers
- wherever they are.
Globe has over 800,000
retailers of Globe SIM
cards, loads and products
nationwide, and growing.
30
Engaging partners for sustainable growth
For years, Globe has promoted
entrepreneurship by cultivating, supporting
and encouraging its territorial distributors,
sub-distributors and retailers in every city,
town, province and barangay nationwide.
This time, to give back to its loyal retailers,
Globe organized the Ka-Globe Retailer Club,
the country's first loyalty program for telecom
retailers. These include the sari-sari stores,
groceries, canteens, bakeshops, beauty
parlors, and market stalls. The program
We know that through this
partnership with Globe Business,
we will be able to reach our
customers from all over the world
with more ease and convenience.
This new venture is not the
first time we have partnered with
Globe. We are always delighted
to work with them, and we look
forward to a deeper and more
significant relationship between
our companies.
-Aniceto Serrato/Plant Manager/CP
Kelco Philippines
entitles qualified members to freebies and
discounts from top merchants in the country.
The unique concept of the Ka-Globe
Retailer Club is envisioned to engage its
network of retailers and distributors beyond
the provision of business support and profit
opportunities. By helping improve their
quality of life, Globe elevates its relationship
with retailers as partners in success.
To be a Ka-Globe Retailer Club member,
an AutoloadMax (AMAX) retailer has to reach a
monthly AMAX transaction volume of P5,000
within a three-month period. Members are
given a membership card depending on
their average transaction volume - Bronze
for monthly transactions of P5,000-9,999;
Silver for P10,000-19,999; Gold for P20,000
- P39,999; and Diamond for P40,000 and
above.
Ka-Globe Retailer Club members have
unique privileges like free personal accident
insurance and low medical consultancy fee,
as well as discounts in boat fares, food and
apparel purchases, recreational activities,
and courier services. Rewards are given in
coupons and loaded unto the member's SIM.
To promote camaraderie and bonding,
salu-salo meetings are held monthly where
strategizing go a long way.
Nurturing relationships through Affinity
Superior products running on reliable
technologies, yet unique for a special set
of customers. This personalized approach
makes a marked difference for Globe when
dealing with its customers. One instance is
taking care of its partner communities, the
special interest group or organization with its
own membership base which can easily be
enabled with communications. These partner
communities fall under four broad categories
- religious groups (El Shaddai, Jesus is Lord,
Couples for Christ); schools and universities
(La Salle - Taft, Bacolod, Cavite; University of
Sto. Tomas; Lyceum - Manila and Batangas;
Silliman University; University of Cebu; Central
Philippine University; Holy Name University;
Misamis University; University of Makati; Notre
Dame of Dadiangas University); volunteer
organizations (Gawad Kalinga); and business
organizations (Puregold, Net 25, Avon).
Each partner community enjoys a
customized Globe SIM enabling unique
functions that are relevant to them. For
schools and universities, for example, the
Globe SIM cards are used by students to
check their grades and receive news about
class availability or suspension. For religious
organizations, a Globe special service include
sending daily texts of uplifting Bible verses and
schedule of religious gatherings for members
to participate in.
Aside from partner communities, Globe
also continues to forge and nurture tie-ups with
the most respected names in Philippine retail
such as SM, Puregold, Shopwise, and Ayala
where Globe dominates retail space in terms
of availability, sales, and merchandising of its
consumer products across hundreds of sales
counters in almost 100 store outlets nationwide.
It has also partnered with a host of computer
shops including Villman, Asianic, Accent Micro,
and Silicon Valley, establishing presence for its
broadband and mobile products.
Globe participates in the country’s first
Automated National Elections
In the spirit of public service and in full
support of the automated election process,
Globe provided vital data center hosting
(system co-location) and transmission services
(35,000 VPN-enabled SIMs and 117 DSL lines)
for the 2010 national elections. Mainly powered
by our consistent and stable network, 80%
of election data returns have been seamlessly
transmitted barely 12 hours since the close of
polls on May 10, 2010.
Despite the long hours of waiting to cast
a vote in a number of precincts, the speedy
transmission of votes was a major achievement
to the delight of many voters! Globe provided
51% of all SIMs used by Smartmatic-TIM/
COMELEC to transmit election data through
wireless and DSL lines. About 45% of precincts
that relied on a single carrier’s SIM/transmission
facility were using Globe-only facilities. We are
proud to be the lead carrier for the country’s
first-ever automated national elections.
Globe employees worked
together for a seamless
election.
Globe recognizes the men and women
who worked passionately to make this a
collective success for the entire nation: Globe
Business, Network Operations Center (NOC),
Corporate and Regulatory Affairs, Enterprise
Business Continuity Risk Management,
Corporate Communications, Customer
Engagement, and support teams from
Information Systems Group, Digital Marketing,
Logistics and Administration Support,
Employee Relations and Security.
Hats off as well to all Ka-Globe who called
our hotline, sent messages to our textline, and
did all within their civic duty to ensure peaceful
and orderly elections.
The successful participation of Globe
in the Philippines’ first automated national
elections speaks volumes about our network
reliability and reach. The entire nation has
looked to the professionalism, transparency
and governance of Globe Telecom in safely and
swiftly transmitting votes that added credibility
to a clean and orderly electoral process.
31
I Love Serving
I live for my customer’s delight; serving them with a smile,
Doing my work as well as I can, caring like it matters,
With a joyful heart, nothing is impossible.
We are BJ Marasigan, Ana Tica and Tina Pedro
Loving Globe since 1999.
32
Our People
A healthy organization will speak of satisfied brand ambassadors who will represent the
Globe values and ideals. In successfully and consistently encouraging learning, development, and
realizing expectations, Globe employees are able to exceed their own service performance.
General Employee Indicators
Total Workforce by Employment Type and Region
Region
Regular
Probationary
Total
%
3,727
182
3,909
69.0%
NORTH LUZON
340
26
366
6.5%
SOUTH LUZON
396
25
421
7.4%
VISAYAS
619
39
658
11.6%
MINDANAO
295
18
313
5.5%
Grand Total
5,377
290
5,667
100.0%
%
94.9%
5.1%
100%
GMA
Employees by Gender, Age Range and Category
Gender
Age Range
Staff
Mid Mngt
Sr Mngt
Total
%
20-29
677
240
0
917
33.7%
30-39
690
718
51
1,459
53.6%
40-49
53
182
66
301
11.0%
50-59
3
27
14
44
1.6%
60-69
1
2
0
3
0.1%
1,424
1,169
131
2,724
100.0%
Age Range
Staff
Mid Mngt
Sr Mngt
Total
%
20-29
664
197
1
862
29.3%
30-39
583
807
69
1,459
49.5%
40-49
150
309
73
532
18.1%
50-59
21
39
25
85
2.9%
60-69
2
1
2
5
0.2%
Male Total
1,420
1,353
170
2,943
100.0%
Grand Total
2,844
2,522
301
5,667
%
50.2%
44.5%
5.3%
100.0%
Female
Female Total
Gender
Male
33
In 2010, Globe hired 1,282 new
employees, the highest rate of hiring in recent
years. The Company successfully conducted
its first Stores job fair as part of its strategy
to beef up its talent pool which will help fill
manpower requirements of its 134 stores
network nationwide.
More than 1,400 applicants were present
during the 2-day job fair. The job fair instantly
sealed 224 job offers of successful applicants
who will start working for Globe Stores.
The event closed all 70 open positions in
September and created a stores pipeline for
2010 Q4 onwards.
How We Develop and Nurture our Talent
Cultivating an environment with a passion
for learning and constant self-development is
important in Globe. Each employee is given
the chance to collaborate with their managers
and plan out their career development
program. Regular performance reviews are
conducted to check in with the employees at
what level and progression their career path is
moving.
Ninety-one percent or 5,154 of 5,667 are
Non-Collective Bargaining Unit Employees
(NCBU) while 9% or 513 of 5,667 are
members of the Collective Bargaining Unit.
Ratio of Basic Salary of Men to Women by
Employee Category
Our male employees have a slightly higher
basic salary compared to female employees.
Ratio per Employee Level (Male)
Staff Level employees
Middle Management
Senior Management
34
1:14
1:10
1:03
Total number of employee turnover: 572 (10.3%)
By Age Group
20-29: 196
30-39: 309
40-49: 56
50-59: 9
60-69: 2
By Gender
Male: 297
Female: 275
By Region
GMA: 450
NLuzon: 33
SLuzon: 38
Visayas: 32
Mindanao: 19
As we nurture a strong performanceoriented culture in the organization, we also
ensure a holistic approach in developing our
talent by providing internal career opportunities
consistent with our employees’ aspirations. In
2010, our Internal Hiring Policy empowered
283 of our employees to explore and fill vacant
positions in the Company. The change in
policy also strengthened communication and
performance conversations between people
managers and their direct reports.
Benefits provided to full time employees:
Healthcare Benefits
Health Insurance - Group
Hospitalization (In-Patient)
Plan
Outpatient Healthcare
• Outpatient
Consultations/
Diagnostics
• Outpatient Medicine
Reimbursement
• Dental Services
• Optical Services/
Subsidy
• Other Outpatient
Benefits: Free medical
consultations at
company designated
clinics
Other Healthcare Benefits
• Maternity Pay
• Work-Related Accident
or Injury
Security and
Protection Benefits
Time-Off/Leave
Benefits
Group Term Life Insurance
Hazard Insurance
(based on role)
Retirement
Vacation Leave
Short Term Sick Leave
Long Term Sick Leave
Paternity Leave
Maternity Leave
Leave Due to Illness in the
Family (Confinement)
Paid Time-Off (for Non-CBU
Only)
Solo Parent Leave
Court Subpoena Leave
For CBU members:
• Leave Due to Illness
in the Family (NonConfinement)
• Bereavement Leave
• Calamity Leave
• Additional Day-Off
Other Benefits
Company Loans
Longevity Awards
Handyphone Postpaid Plan Availment
Car Plan/Company Car Program
(for managers and executive levels)
Other Cash Allowances
Emergency and Non-Emergency Loans
Percentage of employees covered by collective bargaining agreements:
9% or 513 of 5,667 employees are covered by collective bargaining agreements
35
Protecting Human Rights and Upholding the
Labor Law
The Corporate Code of Conduct is
put into place not to curtail the actions of
employees but to encourage them to act
according to the corporate values of integrity
and accountability.
Globe adheres to the minimum notice
period in operational changes as required,
including those specified in collective
agreements. Globe also observes a period of
thirty (30) day notice minimum as mandated
by law.
Free From Child Labor
Globe, aside from adhering to the
principles of the Human Rights Act, also
recognizes the Child Labor Law. We ensure
and observe measures that protect children
and there are no operational activities that
pose significant and hazardous risks to
children and young workers in the workplace.
Key Leadership Programs
Nurturing a culture of excellence requires
leadership and training programs for the
employees.
In the year 2010, a total of 4,639
employees or about 84% of the Globe
population directly benefited from the
Company’s varied learning programs, with a
total of 18,538 training seats delivered. This
was the highest training reached in the last
five years.
The flagship program Learning Expo
2010 was attended by 2,283 employees who
registered for 8,465 slots in various learning
sessions held nationwide. Through the Globe
Trainer Management Program (GTMP), we
have continuously developed internal trainers
and so far, 137 trainers have been recognized,
further spreading the culture of mentoring,
coaching and teaching across the various
functions of the organization. The corporate
university, Globe University, regularly runs
the core and leadership programs including
the functional curricula which have been
developed and executed for our key talent
36
segments in Network, Product, Retail, Sales
and Marketing. The major technical programs
for these segments focused on our capabilities
in Internet Protocol (IP), Project Management,
IT Infrastructure Library (ITIL), Business Model
Innovation, and Retail Consultative Selling
and Customer Service which supported the
launch of the Globe Flagship Stores across the
Philippines.
Human Resource Development Highlights
Globe takes pride in ensuring that
our partners- the employees, get the best
retention, training and development programs.
Through fostering a culture of excellence
in performance and recognizing these with
rewards, we are consistent in the message of
Customer First; after all, employees are the
organization’s internal customers.
In the past year, the Human Resources
Group led in tracking and monitoring
productivity through decision-making and
manpower rationalization, with the intent
of ensuring cost-effectiveness across the
organization.
Globe is proud to have people who
make a difference. In 2010, Talent and Career
Management designed and implemented
various career development initiatives for key
executives and talents.
•
•
•
The Ayala Leadership Acceleration
Program (LEAP) paved the way for
leadership development and coaching
straight from Ayala and Harvard
executives.
In partnership with the Harvard Business
School Publishing, HR designed the
Globe Emerging Leaders (GEL) program
to provide executives and key talents the
latest management best practice tools.
Senior executives participated in Game
for Global Growth (GGG), a oneyear development program for senior
executives in the telco industry, which
was also designed for SingTel affiliates.
•
Key talents and other executives went
through a one week course called
Regional Leadership in Action (RLA),
which focuses on leadership soft
skills and business acumen, designed
specifically for the SingTel group.
The Talent and Career Management
group also launched the Company’s
online Performance Management System,
highlighting the Planning and Performance
Evaluation (PPE) form that allows employees
and their immediate supervisors to
document, track, and evaluate performance
throughout the year.
The design and implementation of our
Total Rewards and Benefits programs were
enhanced to align with the performancedriven culture in Globe. The Company’s
flexible benefits program called myChoice
introduced more options for flexing and
points conversion, enabling employees to
design their benefits according to personal
needs. HR also reviewed and updated
the salary structure to ensure market
competitiveness. Furthermore, Globe
designed differentiated incentive plans
anchored on group metrics and deliverables
to better recognize the contribution of each
employee in the attainment of corporate
targets. In the past year, there was an
increase in the number of managementinitiated promotions, to recognize and reward
high performers.
The combined strengths of Organization
Development, HR Communications and
Employee Programs paved the way for
successful culture-building programs.
In the past year, Globe has successfully
launched The Globe Way, the Company’s
new credo and way of life that embodies
collective values and aspirations. To further
experience The Globe Way, a road show
called I Love Globe Caravan was done
to showcase various perks and privileges
exclusive to employees. To sustain and
to capitalize these new core values, The
Globe Way Awards was held to recognize
individuals and teams whose exemplary
behavior, values and achievements best
demonstrated The Globe Way. The Employee
Satisfaction Survey gathers indicators that
drive employee engagement in Globe, and
results showed that we are still above the
baseline score.
Coming Together in the Spirit of Volunteerism
While our people keep up with the
rapid pace of their daily endeavors in the
Company, we take pride in our collective
and relentless efforts to be of service not
only to the customer but to the larger society
and community. In 2010, Globe employees
devoted a total of 7,818 hours to take part
in various outreach and volunteer activities
that included building homes and schools,
teaching out-of-school youths, reforestation
and cleanup initiatives, and other sociallyrelevant programs in partnership with our
corporate social responsibility program,
Globe BridgeCom.
Employee Engagement
In April 2010, we conducted an
ESAT survey as a measure of employee
engagement. The Employee Satisfaction
Index (ESI) increased from 68.58 in
September 2009 to 69.12 in April 2010. The
response rate has been consistently better
from 78.11% in the first run to 87.29% this
year.
37
True to the principle of work-life balance,
Globe supports employees with special
interests, such as the Globe Adventure
Club (mountaineering), Voices@Work (Globe
Chorale), Click Camera Club (Photography
enthusiasts), Globe Runners Club, and Globe
Bowling Club. The Company also organized
employee activities that catered to both
employees and their family members. These
include the Halloween Trick or Treat and the
very successful yearend Christmas Party at
the PhilSports Arena.
Sportsmanship and excellence are key
values which Globe inculcates in employee
activities. These are clearly evident in the
Globe Champions Team program, which
brings together employee athletes who
officially represent the company in national
and inter-company sporting tournaments and
competitions like the JZA Cup and IRONMAN
Triathlon. Globe also organizes employee
sportsfests and tournaments in Basketball,
Bowling, Badminton, Volleyball, and Golf for
the general employee population.
Compensation and Benefits Services
group took the lead in delivering reliable and
customer-focused services in an eco-friendly
way by introducing paperless transactions.
In 2010, rewards and promotions letters
were sent to employees electronically via
PeopleSoft.
The strong partnership of Labor Relations
Group and The Globe Telecom Employee
Union (GTEU) resulted in the fast negotiation
and resolution of the Collective Bargaining
Agreement that will be enforced over the next
five years. This was the first time that a CBA in
Globe was finalized only after six meetings.
Keeping our Employees Safe
Globe puts a premium on the health and
safety of our employees. In the past year,
several wellness programs were initiated
by the Safety, Health and Environment
Department.
38
By providing opportunities to lead
a healthier lifestyle through wellness
programs, Globe employees have better
choices and can take better control of
their health and wellbeing. Globe has
introduced monthly wellness days and
nutrition clubs in the corporate offices.
In addition to the vaccination program
that provides access to more affordable
vaccines, annual immunization fairs are
conducted nationwide. Other vaccines are
made available monthly as well, advocating
and educating employees on disease
management and prevention.
Program
Participation
Flu Immunization
4,126 employees
and 3,926
dependents
Health Screening
(cholesterol, FBS,
Hepa B and Bone
screening)
1,213 employees
Adult Vaccination
(Vaccines covering
Cervical Cancer,
Hepatitis A/ B,
Typhoid, Chicken
Pox, MMR, and
Meningococcemia)
405 employees
Fitness Club
Membership
607 employees
Lunch Forum on
Wellness
632 employees
Blood Drive
310 employee
donors
Accident Summary Reporting
In 2010, there were 117 accidents
reported but there were no reported disabling
injuries or deaths arising from these. The
Company submits a quarterly accident
summary report to the Department of Labor
and Employment – Bureau of Working
Conditions in compliance with Rule 1050
– Notification and Keeping of Records of
Accidents and/or Illness of the Philippine
Occupational Safety and Health Standards.
Occupational Safety and Health
Emergency Preparedness and Response:
Disaster Management.
Disaster management took on a new
level as planning and testing at Globe Priority
Sites evolved to cover more threats. Aside
from the fire drill regularly conducted in 36
Ultra A sites, the team also conducted the
Site Disaster Plan (SDP) Testing in 2010. An
SDP is a documented process on how a
Telco Site or Facility prepares and responds
to any threat or risk that may eventually lead
to an emergency or disaster. An SDP will
help ensure Business Continuity despite
the occurrence of a catastrophic event. A
Site Disaster Plan consists of threat-specific
procedures or OPLAN :
OPLAN no. 1 – EARTHQUAKE
OPLAN no. 2 – FLOODING /
TYPHOON
OPLAN no. 3 – PANDEMIC /
EPIDEMIC
OPLAN no. 4 – FIRE
OPLAN no. 5 – TERRORISM /
BOMBING
OPLAN no. 6 – NETWORK FAILURE
OPLAN no. 7 – SUPPORT FACILITIES
FAILURE ( POWER )
OPLAN no. 8 – SUPPORT FACILITIES
FAILURE ( HVAC )
The SDP Test simulates a scenario to
assess how the site’s Emergency Response
Team (ERT) will respond. The team will be able
to identify and evaluate the Site Administrators
and the ERT Leaders according to the
following criteria:
a. Able to manage risks/threats that may
lead to disasters
b. Able to manage the actual emergency
c. Establish among themselves different
approaches in an emergency
d. Identify their respective functions and
obligations during emergency
e. Distinguish the effects of the emergency
f. Able to respond and ensure business
continuity
g. Cascade the procedure to other
businesses on site
h. Frequently test or update their SDP
The test has four levels:
a. REDUCTION (Prevention and Mitigation)
b. RESPONSE (Preparedness & Response)
c. RECOVERY & RESUMPTION (Temporary
Operations and Business Continuity)
d. RESTORATION & RETURN (Business-AsUsual)
Fire Emergency Preparedness and Site
Response Plan
The Safety team also developed the Fire
Emergency Preparedness and Site Response
Plan of 31 Ultra A sites. This plan aims to
document the procedures on a per site basis.
Aside from complementing the SDP, this plan
also includes means of communications and
cascading procedures. Telephone Numbers of
the ERT members are listed and this includes
Immediate Superiors, LGUs, support groups,
and other emergency numbers. The team
supports Globe events by providing personnel
and logistics to ensure safety in the area and
to manage emergencies.
39
Our Board
40
Jaime Augusto Zobel de Ayala
Gerardo C. Ablaza, Jr.
Mr. Zobel, 51, Filipino, has served as Chairman of the Board
since 1997 and a Director since 1989. He serves as Chairman of the
Board of Directors and Chief Executive Officer of Ayala Corporation;
Chairman of the Board of Directors of Bank of the Philippine Islands
and Integrated Micro-Electronics, Inc.; Vice Chairman of Ayala Land,
Inc. and Manila Water Co., Inc.; Co-Vice Chairman of Mermac, Inc.,
and the Ayala Foundation; Director of BPI PHILAM Life Assurance
Corp., Alabang Commercial Corporation, Ayala International Pte
Ltd., and Ayala Hotels, Inc.; Member of the Mitsubishi Corporation
International Advisory Committee, JP Morgan International Council,
and Toshiba International Advisory Group; Chairman of Harvard
Business School Asia-Pacific Advisory Board, Member of Harvard
University Asia Center Advisory Committee, Member of the Board of
Trustees of the Eisenhower Fellowships, the Singapore Management
University and Asian Institute of Management; Member of the Asia
Business Council, The Asia Society, the International Business
Council of the World Economic Forum; Chairman of the World Wildlife
Fund Philippine Advisory Council, Vice Chairman of Asia Society
Philippines Foundation, Inc., Co-Vice Chair of the Makati Business
Club, Asia Society Philippines Foundation, Inc., and Member of the
Board of Trustees of the Children’s Hour Philippines, Inc. He was also
a TOYM (Ten Outstanding Young Men) Awardee in 1999 and was
named Management Man of the Year in 2006 by the Management
Association of the Philippines. He was also recognized as the
Emerging Markets CEO of the Year (1998); Harvard Business School
Alumni Achievement Awardee (2007); Presidential Medal of Merit
(2009); and Outstanding Manilan (2009).
Mr. Ablaza, 57, Filipino, has served as Director since 1998.
Mr. Ablaza is a Senior Managing Director of Ayala Corporation and a
member of the Ayala Group Management Committee, a post he has
held since 1998. He is a Director of Bank of the Philippine Islands,
BPI Family Savings Bank, BPI Card Finance Corporation, Azalea
International Venture Partners Limited, Asiacom Philippines, Inc.,
Manila Water Company, LiveIT Investment Ltd., BPI Globe BanKO
Inc. and Ayala Foundation Inc. Mr. Ablaza is currently President
and Chief Executive Officer of Manila Water Company, Inc. Prior to
this position, he served as Chief Executive Officer of AC Capital with
directorship positions in Azalea Technology Investments, Inc. HRMall
Holdings Limited, Integreon, Inc., Affinity Express Holdings Limited,
NewBridge International Investments Ltd., Stream Global Services.,
RETC Renewable Energy Test Center., ACST Business Holdings, Inc.
AG Holdings Limited (HK), Ayala Automotive Holdings Corporation,
Ayala Aviation Corporation, Michigan Power, Inc., MPM Noodles
Corporation, Northern Waterworks and Rivers of Cebu Inc, Purefoods
International Investment Limited. He was President and Chief
Executive Officer of Globe Telecom, Inc. from 1998 to April 2009. Mr.
Ablaza was previously Vice-President and Country Business Manager
for the Philippines and Guam of Citibank, N.A. for its global consumer
banking business. Prior to this position, he was Vice-President for
consumer banking of Citibank, N.A. Singapore. Attendant to his last
position in Citibank, N.A., he was the bank’s representative to the
Board of Directors of City Trust Banking Corporation and its various
subsidiaries. Mr. Ablaza graduated summa cum laude from De La
Salle University in 1974 with an AB degree major in Mathematics
(Honors Program). He was the first Filipino to win CNBC’s Asia
Business Leader of the Year in 2004, and was also awarded by
Telecom Asia as the Best Asian Telecom CEO in the same year.
Hui Weng Cheong
Mr. Hui, 56, Singaporean, was appointed as Director on 8
October 2010. Mr Hui has over 30 years of experience with the
Singapore Telecom Group and has held various management roles
in various positions. Starting out his career as an Engineer, he spent
10 years in the Teleview Division, moving from system development
to managing the Planning and Support Department. In 1995, he was
posted to Thailand as the Managing Director of Shinawatra Paging,
before returning to Singapore in 1999 to take on the role of VP
(Consumer Products) to manage the product development of all new
mobile, paging, internet, broadband and telephone business. He also
held the post of COO with SingTel Group’s Thai associate, Advanced
Info Service, and was responsible for sales and marketing, network
operations, IT solutions, and customer and services management.
He is currently the SingTel CEO International since 1 December 2010.
Mr. Hui graduated with First Class Honors in Electrical Engineering
from the National University of Singapore in 1980, and obtained his
Master of Business Administration from the International Business
Education and Research Program at the University of Southern
California, USA in 1992.
Romeo L. Bernardo
Mr. Bernardo, 56, Filipino, has served as Director since 2001.
He is Managing Director of Lazaro Bernardo Tiu and Associates
(LBT), a boutique financial advisory firm based in Manila. He is also
GlobalSource economist in the Philippines. He does World Bank and
Asian Development Bank-funded policy advisory work, Chairman of
ALFM Family of Funds and Philippine Stock Index Fund. He is likewise
a Director of several companies and organizations including Aboitiz
Power, BPI, RFM Corporation, Philippine Investment Management,
Inc. (PHINMA), Philippine Institute for Development Studies (PIDS),
BPI-Philam Life Assurance Corporation (formerly known as Ayala
Life Assurance, Inc.), National Reinsurance Corporation of the
Philippines and Institute for Development and Econometric Analysis.
He previously served as Undersecretary of Finance and as Alternate
Executive Director of the Asian Development Bank. He was an
Advisor of the World Bank and the IMF (Washington D.C.), and served
as Deputy Chief of the Philippine Delegation to the GATT (WTO),
Geneva. He was formerly President of the Philippine Economics
Society; Chairman of the Federation of ASEAN Economic Societies
and a Faculty Member (Finance) of the University of the Philippines.
Mr. Bernardo holds a degree in Bachelor of Science in Business
Economics from the University of the Philippines (magna cum laude)
and a Masters degree in Development Economics at Williams
College (top of the class) from Williams College in Williamstown,
Massachusetts.
Ernest L. Cu
Mr. Cu, 50, Filipino, is currently the President and Chief
Executive Officer of Globe Telecom. Mr. Cu has served as Director
since 2009. He joined the Company on 1 October 2008 as Deputy
CEO. He brings with him over two decades of general management
and business development experience spanning multi-country
operations. Prior to joining Globe, he was the President and Chief
Executive Officer of SPI Technologies, Inc. Mr. Cu was the recipient
of the Ernst & Young ICT Entrepreneur of the Year award in 2003,
and was recently adjudged Best CEO by Finance Asia. He was also
conferred the International Association of Business Communicators’
(IABC) CEO EXCEL award for communication excellence in telecoms
and IT, and was voted as one of the Most Trusted Filipinos in a
poll conducted by Reader’s Digest. Mr. Cu earned his Bachelor
of Science in Industrial Management Engineering from De La Salle
University in Manila, and his MBA from the J.L. Kellogg Graduate
School of Management, Northwestern University.
41
Our Board
Roberto F. de Ocampo
Dr. de Ocampo, 65, Filipino, has served as Director since
2003. He is currently the President of Philam Asset Management, Inc.
Funds, and the Chairman of DFNN International, Asian Aerospace,
Inc., Eastbay Resorts,Inc., Stradcom Corporation and Stradcom
International Holdings, Inc., Tollways Association of the Philippines,
MoneyTree Publishing Corporation and Centennial Asia Advisors Pte.
Ltd. He also serves as Vice Chairman of Seaboard Eastern Insurance
Company, Tranzen Group. Mr. de Ocampo is also a member of
the Board of Directors of several companies including – PHINMA
Corporation, Benlife-PNB Insurance, Thunderbird Resorts, AB Capital
and Investment Corporation, Alaska Milk, Bankard, EEI Corporation,
House of Investments, Rizal Commercial Banking Corporation,
Robinsons Land Corporation, Salcon Power and United Overseas
Bank. He is also on the Board of Advisers of ARGOSY Fund, Inc.,
NAVIS Capital Partners and AES Corporation (Philippines) and is a
member of the Board of Trustees of Asian Institute of Management
and Angeles University Foundation. His other significant positions
in civic organizations include being the Founding Director of the
Centennial Group Policy & Strategic Advisors (Washington, DC) and
The Emerging Markets Forum. He is currently an Advisory Board
member of a number of important global institutions including The
Conference Board, the Trilateral Commission, and the BOAO Forum
for Asia. He currently serves as Chairman of the RFO Center for Public
Finance and Regional Economic Cooperation (an ADB Regional
Knowledge Hub), Public Finance Institute of the Philippines and the
British Alumni Association. He was a former Secretary of Finance of
the Republic of the Philippines; Former Chairman and Chief Executive
Officer of the Development Bank of the Philippines; Recipient of
Global Finance Minister of the Year, Asian Finance Minister of the
42
Year, Philippine Legion of Honor, Chevalier of the Legion of Honor of
France, ADFIAP Man of the Year, Ten Outstanding Young Men Award
(TOYM), several Who’s Who Awards, and the 2006 Asian HRD Award
for Outstanding Contribution to Society. Dr. de Ocampo graduated
from De La Salle College and Ateneo de Manila University in Manila,
received an MBA from the University of Michigan, holds a postgraduate diploma from the London School of Economics, and has
four doctorate degrees (Honoris Causa).
Koh Kah Sek
Ms. Koh, Malaysian, 39, has served as Director since 2006.
She is currently the Group Treasurer of SingTel. She joined SingTel
in March 2005 as Group Financial Controller. Prior to joining SingTel,
she was with Far East Organisation – Yeo Hiap Seng Limited as
Vice President (Finance) responsible for the financial functions of the
Singapore and US operations. Prior to joining Far East Organisation,
she had spent a number of years in PricewaterhouseCoopers and
Goldman Sachs.
Delfin L. Lazaro
Mr. Lazaro, 64, Filipino, has served as Director since January
1997. He is a member of the Management Committee of Ayala
Corporation. His other significant positions include: Chairman of
Philwater Holdings Company, Inc., Atlas Fertilizer & Chemicals Inc.,
Chairman and President of Michigan Power, Inc., and A.C.S.T.
Business Holdings, Inc.; Chairman of Azalea Intl. Venture Partners,
Ltd.; Director of Ayala Land, Inc., Integrated Micro-Electronics, Inc.,
Manila Water Co., Inc., Ayala DBS Holdings, Inc., AYC Holdings,
Ltd., Ayala International Holdings, Ltd., Bestfull Holdings Limited,
AG Holdings, AI North America, Inc., Probe Productions, Inc. and
Empire Insurance Company; and Trustee of Insular Life Assurance
Co., Ltd. He was named Management Man of the Year 1999 by the
Management Association of the Philippines for his contribution to
the conceptualization and implementation of the Philippine Energy
Development Plan and to the passage of the law creating the
Department of Energy. He was also cited for stabilizing the power
situation that helped the country achieve successively high growth
levels up to the Asian crisis in 1997.
Xavier P. Loinaz
Mr. Loinaz, 67, Filipino, has served as Independent Director
since 2009. He was formerly the President of the Bank of the
Philippine Islands (BPI). He currently holds the following positions:
Independent Director of BPI, BPI Capital Corporation, BPI Direct
Savings Bank, Inc., BPI/MS Insurance Corporation, BPI Family
Savings Bank, Inc. and Ayala Corporation; Member of the Board
of Trustees of BPI Foundation, Inc. and E. Zobel Foundation;
and Chairman of the Board of Directors of Alay Kapwa Kilusan
Pangkalusugan.
Guillermo D. Luchangco
Inc; Chairman of ICCP Venture Partners, Inc., and Director of Phinma
Corporation, Phinma Property Holdings Corp., Roxas & Co., Inc.,
Ionics, Inc., Ionics EMS, Inc., and Science Park of the Philippines, Inc.
Fernando Zobel de Ayala
Mr. Zobel, 50, Filipino, has served as Director since 1995.
He is currently the Vice Chairman, President and Chief Operating
Officer of Ayala Corporation. His other significant positions include:
Chairman of Ayala Land, Inc., Manila Water Company, Inc., Ayala DBS
Holdings, Inc. and Alabang Commercial Corporation; Vice Chairman
of Azalea Technology Investments, Inc., Co-Vice Chairman of Ayala
Foundation, Inc. and Mermac, Inc.; Director of Bank of the Philippine
Islands, Integrated Micro-Electronics, Inc., Asiacom Philippines,
Inc., Ayala Hotels, Inc., AC International Finance Limited, Ayala
International Pte, Ltd.; Member of the Asia Society, World Economic
Forum, INSEAD East Asia Council, and the World Presidents’
Organization; Director of the Board of Habitat for Humanity
International and Chairman of the Habitat for Humanity’s Asia-Pacific
Steering Committee. He is also trustee of the International Council
of Shopping Centers; Member of the Board of Directors of Caritas
Manila, Kapit Bisig para sa Ilog Pasig Advisory Board, Pilipinas Shell
Corporation and Pilipinas Shell Foundation.
Mr. Luchangco, 71, Filipino, has served as Independent
Director since 2001. He is also Chairman and Chief Executive Officer
of various companies of the ICCP Group, including Investment &
Capital Corporation of the Philippines, Cebu Light Industrial Park,
Inc., Pueblo de Oro Development Corp., Regatta Properties, Inc, and
RFM-Science Park of the Philippines, Inc.; Chairman and President
of Beacon Property Ventures, Inc. and Manila Exposition Complex,
43
Our Key Officers
Alberto M. de Larrazabal
Chief Financial Officer and Treasurer
Gil B. Genio
Head – Business Customer Facing Unit and
President – Innove Communications, Inc.
Rodell A. Garcia
Head – Technical Transformation
44
Rebecca V. Eclipse
Head – Office of Strategy Management
Renato M. Jiao
Head – Human Resources
Greg L. Romero
Head – Information Systems Group
Ferdinand M. dela Cruz
Head – Consumer Sales and After Sales
45
Our Key Officers
Marisalve Ciocson-Co
Compliance Officer and Assistant Corporate
Secretary
Vicente Froilan M. Castelo
OIC – Corporate and Legal Services Group
(formerly Corporate & Regulatory Affairs
Group)
46
Carmencita T. Orlina
Head – Consumer Marketing
Solomon M. Hermosura
Corporate Secretary
Our Key Consultants and Internal Audit
Lee Han Kheng
Chief Operating Adviser
Peter Bithos
Advisor for the Consumer Customer Facing Unit
Rodolfo A. Salalima
Chief Legal Counsel and Senior Advisor
Robert Tan
Chief Technical Adviser
Catherine Hufana-Ang
Head-Internal Audit
47
I Love Learning
Feeding my curiosity and understanding new things,
Discovering exciting ideas that inspire,
Rejoicing at new knowledge found.
I am Cheche Hinlo
Loving Globe since 1999
48
Sustainability & Corporate Social
Responsibility
How We Care and Serve
Globe is aware that our actions have far-reaching consequences and this has pushed us to
continuously integrate sustainability in our strategy and in the daily operations of our business.
The following are our approaches and commitments on sustainability issues.
Management Approaches, Commitments and Progress
Management Approach
By managing long term
sustainability of our
business and the industry
with integrity and the
(DMA – Economic highest ethical standards,
and Product
we fulfill our economic
Responsibility)
responsibility to our
stakeholders.
Contributing
to the Nation’s
Growth
Commitments Implement innovative and
effective management
structures and methods.
Strive to ensure low cost,
high efficiency business
operations.
To expand our
network coverage and
infrastructure and provide
access to as many
people as possible.
Engage in effective
management and risk
controls.
Grow our business in
a way that adds value
and takes advantage of
our key strengths as a
business.
Develop a diverse
set of products and
services that satisfy our
customers needs.
Create new opportunities,
continuously improve our
capabilities and lead our
industry.
Our Progress
Globe reported service revenues in
2010 at P62.6 billion.
We stepped up our unlimited and
bucket service offers and broke
down inter-network barriers through
the SuperUnli and SuperAllTxt
variants making communications
more affordable for Filipinos.
Increased opportunities for
microenterprises to be technology
enabled through our Globe Negostar
program.
As of end 2010, there were 11,660
base stations in the country.
Improve our existing business
continuity capability by conducting
a full review of the program and
aligned our guidelines with British
Standards (BS) 25999 and by giving
emphasis on emergency response,
recovery from natural calamities and
overall crisis management.
Established new channels to elicit
customer feedback through social
media and crowdsourcing initiatives.
49
Management Approach
Developing our
People, Enriching
Lives
By nurturing our people,
providing an inclusive
working environment and
investing on training and
people development,
we drive a strong,
performance-driven
workforce and create a
culture of meritocracy
that will help us steer our
business aspirations.
(DMA-Labor and
Human Rights)
Commitments Encourage employee
diversity as each
employee brings his
or her unique skill set
and work experience to
enable business success.
Ensure equal
employment
opportunities by creating
a work environment
free of discrimination or
harassment on the basis
of race, color, religion,
gender, national origin,
disability or age.
Recruit and retain
employees based on
merit and their ability to
perform the specific job
functions.
Sustaining our
Environment
(DMAEnvironment)
By promoting efficient and
effective environmental
protection initiatives, we
contribute to preserve our
planet and the future of
young people.
People strategy is centered on
empowering, engaging, and
constantly energizing talents.
In 2010, Globe hired 1,282 new
employees. Provided leadership and
competency development initiatives
across all levels.
During the recruitment process,
we ensure that recruitment
advertisements placed in
newspapers and internet websites
are non-discriminatory and publicly
accessible.
Employee volunteerism nationwide
and provided opportunities to all
employees to pursue other interests
like sports activities and other
employee engagement programs.
Closely manage
waste disposal and
reuse, building an
environmentally friendly
company.
Developed programs that reduce
energy across our organization.
Continue to study
and apply sustainable
strategies in our network
and properties - one
that reduces energy use
and helps us lower our
emissions.
Promoted paperless billing for our
postpaid subscribers.
Promote recycling and
reuse.
Increased bins for our cellphone take
back program.
Continue to raise
public awareness
of environmental
issues and encourage
public participation in
environmental activities.
Initiated the annual Globe
Cordillera Challenge as a signature
environment activity that engages
employees to participate actively in
reforestation.
In 2010, we made milestones that define
our key leadership areas in Corporate Social
Responsibility (CSR) and sustainability while
making considerable contributions to solving
key social problems, especially in areas where
we operate.
50
Our Progress
Continued to monitor our carbon
emissions.
Lead-acid batteries recycling was
done throughout our operations.
Solid waste management is present
in our major offices.
With these social challenges, Globe
is utilizing the broad potential that modern
Information and Communications Technology
(ICT) offers and facing up to current
challenges in Philippine society. It provides
access to educational opportunities, ICT-
Building
Communities,
Bridging
Communities
(DMA-Society)
Management Approach
By harnessing
our technologies,
competencies, and by
providing access to
communications, we
passionately contribute to
initiatives that help uplift the
overall well-being of society.
Commitments Contribute to the overall
advancement of society
and culture.
Utilize our technologies in
developing products and
services that uplift the
poor.
Our Progress
Globe Bridging Communities
– our flagship corporate social
responsibility program strengthened
its focus on utilizing the Company’s
core competencies on information
technology to enable social
programs.
Remained committed to providing
internet connectivity to public
high schools as well as utilized
mobile technologies for delivery of
educational materials.
Instituted the Global Filipino
Teachers program to build the
capabilities of public high school
teachers to deliver lessons through
technology and project-based
learning.
Utilized our GCASH platform
to support the UN World Food
Programme’s Cash-for-Work
program.
Engaged with more than 50
organizations so programs can
impact more people.
enabled microenterprises, environmental
sustainability and climate change adaptation.
Moving forward, Globe is committed to focus
on ICT as an enabler for social services
delivery.
Likewise, we engaged with government
agencies to shape public policy on issues
that shape public interest specifically in the
telecommunications industry. We particularly
participated on initiatives regarding consumer
protection including combating spam text
messages as well as anti-hacking and antichild pornography (in the internet). We have
also partnered with the local government in
crafting priority programs for the expansion
of internet connectivity especially in remote
areas. A major public-private partnership
in 2010 is our participation in the first-ever
automated elections in the Philippines which
shaped the inclusion of technology and
increased public participation in the exercise of
suffrage in the country.
To further our dialogue with stakeholder
groups, we continue to be a member of
a number of organizations and corporate
social responsibility initiatives such as
the American Chamber of Commerce,
Canadian Chamber of Commerce,
European Chamber of Commerce in the
Philippine, GSM Association, International
Association of Business Communicators
Philippines, Public Relations Society of the
Philippines, International Telecommunications
Union, League of Corporate Foundations
and the Philippine Electronics and
Telecommunications Federation.
As a major contributor to the Philippine
economy, we have made important financial
and operational gains in 2010 despite the
challenging economic environment. Globe
Telecom is a major contributor to the
Philippine economy.
51
Economic Value Generated and Distributed
In Million Pesos
2010
Inflows
Revenues*
65,548
Total Comprehensive Income
9,638
Distributions
Suppliers / contractors**
24,635
Employees ( salaries & benefits)
5,089
Government (taxes & licenses paid)
12,108
Stockholders (dividends)
10,638
Charitable contributions
33
Total Distributions
52,503
Investments
Equity Investments
0
Capex
19,467
Total Investments
19,467
*
**
Includes service and non-service revenues
Please see financial statements for details. This includes cost of sales, general, selling & administrative
expenses but excludes those items already separately disclosed herein (eg staff costs, taxes, and charitable
contributions).
Social Commitments
Accomplishments
Leadership in ICT for Education
Completed the loop of ICT for public education by
instituting connectivity (Internet-In-Schools Program),
capacity building (Global Filipino Teachers) and
sustainability and replicability (Global Filipino Schools).
Environmental Sustainability
Institutionalized an integrated program on the
environment called Globe Goes Green and spearheaded
an annual environment signature event called the Globe
Cordillera Challenge.
Enterprise Development
Extended assistance to 15 cooperatives and people’s
organizations to strengthen and expand livelihood of
marginalized families.
ICT for Social Services Delivery
Successfully launched ICT-enabled social services such
as the conditional cash transfer via mobile with the UN
World Food Programme’s Cash-for-Work, 3G-powered
information educational materials delivery for Text2Teach
and community engagement on environmental
protection and reporting via SMS with Greenline.
Engaging Stakeholders on Sustainability
Year-round, we continue to initiate stakeholder engagement activities to show us where we
need to intensify our commitment and how we can further improve our products, processes and
performance. These result to a better understanding of the issues we face and are confident that
this report includes some concerns and areas of interest to our stakeholders. We will continue
to improve our engagement strategies to be relevant to our business strategy. The table below
describes our regular engagements with major types of stakeholders:
52
Management Approach
Commitments Our Progress
Customers
Customer service center
Customer satisfaction survey
Customer complaint
management
Providing high quality, innovative
products and services to meet
the needs of our customers
Shareholders and
Investors
Annual Financial Report
Annual Stockholders Meeting
Quarterly Media and Analysts
Briefings
Investor Road Shows
Stable and sustainable
investment returns
Transparent, open, and fair
disclosure systems
Sound management and
corporate governance
approaches
Employees
Employee Satisfaction Survey
Employee representation in
various committees
Meetings
Employee Relations programs
Collective Bargaining Agreement
with Union Members
Provide equal employment
and career development
opportunities
Recognize and work on
employee health issues
and create a safe working
environment
Government Authorities and
Regulators
Regular communication
Representation in Congressional
and Committee meetings
Membership in critical public
service organizations
Comply with relevant laws and
regulations
Access to communication for
Filipinos
Provide public service during
disasters
Value Chain Partners
Contract bidding and
procurement
Supplier assessment and
management
Meeting with suppliers
Training for value chain partners
Work with value chain partners
to meet the needs of our
customers
Contract fulfillment
Transparency
Mutually beneficial growth
Industry Peers
Industry discussion forums
Representation in various
industry associations
Promote industry conferences
Build a fair competitive
environment
Promote sustained industry
development
Communities where we operate
Nationwide community
consultations
Community Investment activities
Letters and calls
Proactive company
engagement with communities
Access to communications
Actively engage in community
initiatives
Protect the environment
Support delivery of social
services
53
Corporate Social Responsibility and
Sustainability Management
Exercising responsibility and sustainability
are integral parts of our corporate culture in
Globe.
Globe believes that corporate
responsibility and sustainability support
its vision of becoming a market leader in
communications services in the Philippines.
Our entire organization is conscious that
social responsibility is an intrinsic part of
our business activities and helps build a
meaningful connection with our stakeholders.
It is part and parcel of our product and
service development, the infrastructure and
networks that we operate, our workforce and
our relationships with our suppliers.
CSR and sustainability management
in Globe is designed, developed,
managed, monitored and reported by
the Corporate Social Responsibility
Department. It coordinates and manages
the implementation of CSR and sustainability
strategy in day-to-day business operations.
Reporting under Corporate Communications
Divison, the CSR department is situated
at the highest level in the CEO’s area of
responsibility.
The CSR department is supported by
the Globe CSR and Sustainability Council - a
cross-functional task force that ensures the
strategic management and the operational
implementation of CSR and sustainability
in the company. Members of the council
include representatives of the most important
CSR-relevant functions in the business:
Corporate Communications, Human
Resources, Procurement, Regulatory Affairs
and the Safety, Health and Environment
Departments. The Globe CSR and
Sustainability Council convene at least four
times a year.
The CSR Department and the CSR and
Sustainability Council prepare and publish the
annual CSR and Sustainability Report following
the Global Reporting Initiative (GRI) standard. It
54
has published two independent annual reports
in 2008 and 2009 and has integrated the GRI
report in its Integrated Annual and Sustainability
Report beginning 2010.
Leadership in Information and
Communications Technology for Education
Globe makes full use of technology and
innovation central to our business to help
raise the bar of the Philippines’ educational
system. Globe has been steadfastly building
up its capacity to serve every Filipino’s
ICT aspirations with network investments.
Through international submarine cable
systems, existing network enhancements and
our roll out of the WiMAX service, we bring
technology closer to underserved areas by
telecommunications.
Globe BridgeCom has consistently
led the use of technology for education to
bring ICT to the grassroots of our society.
Short for Globe Bridging Communities,
the program also provided grassroots and
community entrepreneurs to learn more
about how technology can enable community
businesses as well as provided support to
the national government in delivering social
services in inexpensive, fast and meaningful
means.
Preparing Globally Competitive Young Filipinos
The primary CSR advocacy of Globe
is the integration of information and
communications technology for education.
Globe would like to enable as many students,
teachers, school heads, and other education
stakeholders in the public school system
to have access to ICT, regardless of where
they live, their age, level of competency or
presence of disabilities. ICT integration in the
public education system is an important and
necessary step toward equal opportunities.
By rapidly providing internet connectivity,
Globe enables the latest e-learning tools
to be used in school, making it possible to
design efficient and forward-looking working
and learning processes. The broadband
connections also enable data-intensive
teaching materials such as audio and
video files to be used in lessons. The use
of services ranging from basic SMS to the
latest connectivity platforms like WiMAX to
deliver ICT education sets Globe apart as
there is no other company and no other CSR
program in the Philippines that rivals the use
of technology-based programs.
At the end of 2010, Globe has
connected 2,012 public schools, the most
number of internet installations set up by
any telecommunications company in the
Philippines. Of the total, 1,954 are public
high schools while 58 are public elementary
schools, evidently showing the Company’s
significant contribution in bringing technology
to the educational system. The Globe
ISP program is conducted in partnership
with the Department of Education internet
Connectivity Project, Gearing Up Internet
Literacy and Access for Students (GILAS)
consortium and USAID-Growth with Equity in
Mindanao’s Computer Literacy and Internet
Connection (CLIC) project.
The program exposes students to
a wealth of information and allows them
to develop superior math, science and
language skills through various multimedialearning tools.
The internet has proven to be a useful
tool for the schools, as a resounding majority
of teachers in Globe-connected schools
registered improvements in students’
performance and interest in taking ICT-related
courses in college.
For instance, drop out rates in
Consolacion National High School in
Consolacion, Cebu decreased due to the
presence of internet learning. Web-based
activities also helped Consolacion teachers
lighten up their load since they have to teach
five classes daily with an average of 70
students per class.
Aside from popular broadband services
DSL and WiFi, Globe also deploys WiMAX, in
select public and secondary schools.
WiMAX is a next-generation fixed
wireless broadband technology that Globe
launched last year to provide Filipino
consumers with an affordable and reliable
at-home internet service in areas not covered
by traditional wired internet solutions, with
speeds much faster than many other athome broadband services. Through WiMAX’s
larger coverage and higher bandwidth
performance, internet connectivity became
available even in remote rural areas.
Working together with the DICP, the
Globe ISP has provided millions of Filipino
students and teachers the confidence
in using digital media as a key skill that
enables participation in the information and
knowledge society.
Complementing connectivity for public
schools, Globe also provides free internet
connectivity to learning centers such as
the Filipinas Heritage Library – one of the
country’s leading repository of Filipiniana
references which benefit students and
professionals doing research on Philippine
history and culture.
55
Global Filipino Teachers
GFT is a holistic teacher enhancement
program that focuses on ICT-enabled learning
processes. It is implemented by Globe
BridgeCom in cooperation with Cebu-based
Coalition for Better Education (CBE) and the
Department of Education.
It has been noted that traditional teaching
methods are no longer enough and teachers
are encouraged to adapt to the ICT learning
environment to promote creativity and produce
efficient learners and problem solvers.
A survey among Globe internetconnected schools in 2008 showed that
students know more about computers and
ICT in general than their teachers. The survey
also showed that teachers were not fully
utilizing the potentials of the internet and ICT
for classroom instructions, thereby, providing a
lot of room for improvement in the use of ICT
for classroom instruction.
More than just providing public schools
with free internet connectivity, Globe takes
responsibility to equip the schools with the
necessary and relevant skills that would allow
both students and teachers to harness the
powers of ICT.
Globe expects to provide teachers with
essential skills to fully integrate ICT with
classroom instructions and improve students‘
participation in class by introducing interactive
learning activities.
Teachers who applied new ICT-based
teaching skills were amazed at how fast
the working students were able to catch up
with their lessons. The internet transformed
their classroom into a collaborative learning
experience.
The inspiration for the conduct of
GFT came at the heels of the successful
implementation of Globe BridgeCom’s
Internet-In-Schools Program (ISP).
GFT involves ICT Skills Assessment,
Teacher Enhancement Program and an
evaluation system for monitoring the
classroom programs that the teacherparticipant implements.
56
GFT-trained teachers are now present in
Luzon, Visayas and Mindanao. From the initial
97 teachers who finished the training from
the first batch, there are now 247 GFT-trained
teachers across the country.
In 2010, GFT was expanded to cover
Luzon (Metro Manila, Cavite, Batangas,
Oriental Mindoro), Western Visayas (Negros
Occidental, Iloilo, Aklan, Antique, Capiz),
Eastern Visayas (Leyte, Samar, Northern
Samar) and for the first time, elementary
school teachers from Cagayan De Oro City in
Mindanao were also trained under GFT.
GFT's success has rippled, fostering
more interest in ICT integration among
teachers. GFT graduates are already helping
other educators harness ICT in classroom
instruction. From conducting seminars in their
departments and schools to developing new
modules for their colleagues to learn from,
GFT-trained teachers are focused in letting
fellow educators enjoy the benefits of the
digital age to the fullest.
Global Filipino Schools
In December 2010, Globe launched a
culminating CSR program in the field of ICT
for education called Global Filipino Schools
or GFS.
Following the successful deployments
of Text2Teach, the Globe Internet-In-Schools
Program, and the Global Filipino Teachers
initiative, Globe wants to further raise, via GFS,
the ICT maturity of various public schools so
that they can become their own community
expert in ICT.
The GFS program is an ICT competencybuilding initiative that utilizes communications
technology to help the public school sector.
It aims to enhance the learning, teaching
and management competencies of our
students, teachers and school heads mainly
by harnessing the educational power of ICT.
In brief, GFS shall foster an ICT-enabled
environment in public schools through ICTequipped multi-media laboratories, ICT
skills building for the entire academe, and
ICT-enabled community programs led by
public schools for their own communities. We
envision ICT-powered public schools – where
students tap networked computers, where
multi-media material is increasingly utilized for
teaching, and where school heads manage
administrative processes with efficiencyenhancing ICT systems.
The GFS program will be implemented in
three phases:
First, GFS will provide select schools with
relevant ICT infrastructure like an enhanced ICT
laboratory complete with at least 30 networkedcomputers, and multi-media equipment such
as LCD projectors, screens, and television
sets. Globe provided both wired and wireless
connectivity for the equipment.
Second, GFS will train teachers and
school heads on online collaboration,
authentic assessment, and project-based
learning through the Global Filipino Teachers
program. GFS partner Coalition for Better
Education will lead the capacity-building
component of the program.
Finally, GFS will implement programs in
communities that enrich self-development
and encourage self-sufficiency. Global
Filipino Teachers and their students have
already implemented such projects in their
respective communities. GFS will provide
the structure and the necessary support
programs to scale up these projects to
broaden their positive impact.
As first step, Globe and CBE have
chosen Palo National High School in Palo,
Leyte (Eastern Visayas) and Bilar National
High School in Bilar, Bohol (Central Visayas)
to be the pilot schools of the GFS program
since they are already in the early stages of
introducing innovations in their system. Both
schools have, likewise, shown potentials in
undertaking sustainable development projects
as well as abilities to forge partnerships
and collaboration with the community
stakeholders. More public high schools which
have the potential to become “ICT excellent”
will be identified later on, with the end goal
of creating at least one GFS per region in the
next three years beginning 2011. Globe also
plans to invite the local government units to
evaluate the program and help fund one GFS
in their own municipality in the next ten years.
Text2Teach: Knowledge at the palm
of your hands
Since 2003, the Text2Teach program has
been providing public elementary teachers and
students in the Philippines educational video
materials that excite the students’ imagination
in the classroom. Utilizing an application
called Nokia Education Delivery (NED),
teachers can now download hundreds of
audio and video materials and lesson guides
in Science, Math, and English for Grades 5
and 6, simply by texting. This is made possible
with the power of Globe high speed 3G mobile
technology in the classroom.
In 2010, Globe together with the
Text2Teach consortium: Ayala Foundation,
Nokia, the Southeast Asia Ministers of
Education Association-INNOTECH, the
Department of Education and the local
government units were able to roll out
Text2Teach in 83 schools nationwide.
Today, about 900,000 students from 331
public elementary schools are able to use
Text2Teach.
Text2Teach Roll-out
Year/s
Number of Schools
Provinces
2005-2007
123
Luzon: Albay, Batangas, Benguet, Cagayan, Ilocos. Norte, Ilocos Sur, Isabela,
Metro Manila (QC), Pangasinan,
Oriental Mindoro
2008
82
Visayas: Antique
2009
97
Mindanao: Cotobato City, Maguindanao, Misamis
2010
83
Oriental, North Cotobato, South Cotobato
57
Globe Labs
In 2010, Globe launched Globe Labs
for universities to enhance the learning
experience of Information Technology
students. It is an industry-academe linkage
program that aims to promote excellence in
the field of IT by providing students access
to Globe technologies through research and
development activities. This program gives IT
students the opportunity to use Globe facilities
and experience firsthand the technologies
that would enable them to create prototypes
for their ideas. The University of San Jose
Recoletos (USJR) in Cebu was the first recipient
of this program. Globe Labs in USJR takes
them from theoretical studies to actual product
creation, greatly enhancing their IT knowledge.
Globe Labs is a department created
in 2008 to immerse the company and its
different partners with future technologies.
It aims to identify and develop applications
across fixed and wireless networks that
can be commercially introduced. Globe
Labs is designed to build future technology
development test beds in a creative
and secure environment. It establishes
partnerships with developers to build and
showcase these new applications. Also,
Globe Labs provides technical support to
introduce new services using both old and
new technologies.
Globe will provide training and information
in developing applications for mobile phones
that support software such as Java, Symbian
and Android, among others. IT students
will have access to the software. Globe
APIs (Application Programming Interface),
particularly SMS and MMS and its network,
are needed in programming prototypes of their
innovative ideas. Students will then get the
chance to see the applications they develop
actually run on the Globe mobile network.
Information and Communications
Technology for Social Services Delivery
In our effort to help shape a sustainable
Philippine society, we want to enable many
Filipinos to access basic social services
58
through their mobile phones. Filipinos are
beginning to learn that more than just sending
text messages and making voice calls, the
mobile phone has become a tool to make
their lives easier and their livelihoods more
empowered.
Cash-for-Work through GCASH
Twenty-six year old Melanie Lucenesio
was simply content with tending her two
young kids while her husband, Rey, works
as a construction worker. When their humble
dwelling was almost washed away by flood
waters during typhoon Ondoy over a year
ago, Melanie and her family, together with
more than 170 other families were forced
to relocate to a resettlement area in the
mountainous part of San Mateo, Rizal
under the Joint Resettlement for Economic
Development (JRED) project of the San Mateo
local government unit (LGU) and its partners,
the new APEC Development Corporation and
Gawad Kalinga.
As the JRED site is located on a
mountain slope, residents had to build
ripraps, composed of sand bags, in potentially
vulnerable areas around it and nearest to the
constructed houses to prevent soil erosion or
landslide when heavy rains set in. Melanie and
the other housewives helped in sandbagging
and in cleaning the surroundings while the
men constructed the ripraps.
During this critical period of transition
for the residents in the JRED, the LGU of
San Mateo partnered, via the DSWD, with
the United Nations World Food Programme
(UNWFP) through its Cash-for-Work (CFW)
program – a cash transfer endeavor designed
to support the recovery and rehabilitation of
typhoon-affected communities by assisting
them in meeting immediate food and
nutritional needs.
Through CFW, the participating residents
were paid P230 a day for three days of work
on sandbagging and two days of ripraping.
Half of the number of days worked was paid
in kind (rice) and the rest in cash, through
Globe GCASH, a mobile phone-based money
transfer service.
Almost 100 percent of the CFW projects
using Globe GCASH in identified pilot areas
have been completed, benefiting over 2,000
households.
GCASH is the first mobile phonebased cash transfer service used for CFW in
Southeast Asia to assist in the rehabilitation
of communities affected by natural disasters,
armed conflicts and chronic hunger. For
the GCASH pilot project, five places were
identified – Mandaluyong and Marikina in
Metro Manila; and Jala-Jala, Binangonan and
San Mateo in Rizal.
Some 2,000 residents in the said areas
who were severely hit by typhoon Ondoy either
participated in community projects or attended
trainings in exchange for money to buy food
for the family. The community projects were
implemented with the help of the Department of
Social Welfare and Development (DSWD) and
Community Family Services International (CFSI).
Ensuring Food Security Through Mobile
Services
Globe, in partnership with the Department
of Agriculture (DA) and the International Rice
Research Institute (IRRI), has come up with
a special mobile service for farmers to help
ensure that the country’s rice production will
remain sustainable and stable.
Through the Nutrient Manager for
Rice Mobile (NMRiceMobile) toll free text
messaging service, rice farmers can now
easily gain access to vital information
on how to properly manage their fields.
NMRiceMobile is an ICT-based decision
software that utilizes mobile phone
capabilities to provide farmers and extension
workers with a comprehensive site-specific
fertilizer guideline for their rice fields. It
capitalizes on the ubiquity of the mobile
phone to reach the farmers especially those
in remote areas.
By giving farmers a fast and cheap way
to get vital information on fertilizers using their
mobile phones, Globe is able to empower
the farmers and aid them in getting greater
yields on their crops and produce. More and
more, mobile telecommunications services
such as voice and SMS are getting more
commoditized and our stakeholders are
looking for value-added services that can
meaningfully contribute to their work.
Since farmers spend much on fertilizers,
they need to determine the right fertilizer
to apply at the proper time to maximize
production and profit and at the same time,
reduce waste.
Farmers, extension workers, crop
advisors or anyone interested to learn more
about farming, can simply dial or call 2378
toll free from their Globe or TM mobile phone.
They can choose their preferred language
such as Tagalog, Cebuano, Iloko or English.
About 12-15 recorded questions will be asked
such as the cropping season, the type of seed
being used, growth duration of the rice variety,
field size, water supply, field location, and
weight of harvested palay. The questions may
be answered by pressing the corresponding
number on the cellphone keypad.
Once all the information are provided,
the caller will receive a free fertilizer
recommendation through text, an example of
which goes like this: “NMRice: For 94-105
sacks of palay on 1 hectare in dry season
with good management practices: Apply 3
bags 14-14-14 basal or within 10 days after
transplanting (DAT), 1 bag urea at 21 to 25
DAT, 1 bag urea at 30 to 34 DAT.
Providing a Lifeline for Overseas Filipino
Workers
Globe and Natasha Goulbourn Foundation
(NGF) have joined hands to provide dedicated
telephone lines which may be used to counsel
affected individials during difficult times. This
59
foundation aims to reach out to family members
of Overseas Filipino Workers (OFWs) in Hong
Kong who may be suffering from depression or
other related illnesses.
Volunteers from NGF, aided by hotlines,
will be able to help empower those suffering
from depression, utilizing resources that
can open new doors in their journey to
self-discovery and well-being. At the same
time, family and friends of people afflicted
by depression would be given advice on
how to understand the illness and provide
constructive support.
Because Hong Kong has the largest
number of OFWs, mostly women, NGF
organized a monthly Friday segment titled
"Heart to Heart“ played in Metro Radio’s
talk show hosted by Tita Kerry. This
program encourages depressed OFWs to
call in their worries and problems, enabling
them to speak directly to a psychologist or
psychiatrist in Manila.
Enterprise Development
Globe has introduced trainings on
product development and design, and
established a forum on entrepreneurship
for select youth leaders. This year, Globe
BridgeCom offered grants, trainings and
opportunities for market linkages to 15 chosen
community enterprises.
Globe community leadership and
entrepreneurship program started as a
livelihood training program that aims to
promote entrepreneurship as a tool for
economic self-sufficiency. Through the years,
it has continued to evolve to meet the various
needs of Filipino microenterprises.
Globe BridgeCom created the Enterprise
Development Program to address the strong
need of communities for alternative sources
of income. As of end 2010, this program has
benefited more than 32,000 Filipino leaders
and microentrepreneurs from more than 5,000
barangays all over the country.
Globe provides livelihood trainings
that equip microentrepreneurs with skills
60
on marketing, operations and financial
management, as well as help them create
viable new products and services with the use
of technology.
From offering livelihood trainings, the
Enterprise Development Program has grown
to accommodate new projects and reach
more Filipinos in the provinces. The Globe
Entrepreneurship Fairs launched in 12
provinces provide venues to train participants
to showcase their products to a larger
audience. These fairs also allowed them to
learn from successful local entrepreneurs,
share their experiences and learn from one
another, and encourage their entrepreneurial
interests.
In 2010, Globe widened its Enterprise
Development Program as it introduced
the Globe BridgeCom Livelihood Grants.
This project will help sustain and expand
community enterprises as Globe provides
them the needed support to attain their
economic goals.
The following are the recipients of the
Globe BridgeCom Livelihood Grants in 2010:
Community Enterprise
Area of Operation
PAMANA PAGASA
Foundation
Metro Manila
Antique Development
Foundation
Antique
Crafter's Joy Cornhusk
Products
Pangasinan
Kamay Krafts
Multipurpose
Cooperative
Metro Manila
Talleres de Nazaret
Cavite
Potrero Pamana
Foundation
Metro Manila
Kapisanan ng mga
ilaw ng tahanan ng
Macalamcam
Batangas City
Kapitan Bayanan 3
Batangas City
Lydia E. Malot (KMBI)
Davao Del Sur
Letecia Tabotabo
(KMBI)
Davao City
Cina Abarca (KMBI)
Daet
Kooperatiba ng mga
Magsasaka ni San
Isidro Labrador (Roxas
Foundation)
Nasugbu, Batangas
John B Cena (Roxas
Foundation)
Nasugbu, Batangas
Lord Ejasmine G. Nanit
(Roxas Foundation)
Lian, Batangas
Tugdaan Mangyan
Center for Indigenous
People Education
Mindoro (office based
in QC)
Community Relations
Our approach to community involvement
brings to light our genuine concern to
be a meaningful partner to help develop
communities where we operate through
initiatives that address local needs using
communications technology.
Utilizing mobile technologies for governance
and peacekeeping
Through Globe BridgeCom’s “Sagot Ka
Ni Kap!” (the village captain cares for you),
stakeholders in the community – from the
barangay captain to every resident – have a
contribution in keeping peace and order in
their area. The program helps communities
prevent crime in their areas by providing
communication and relevant law enforcement
equipment including mobile phones, handheld
radios, uniform shirts, boots, flashlights, and
raincoats, to the local community police
auxiliary units or barangay tanods.
The program has been effective in
preventing crime as barangay leaders and
tanods were able to respond immediately to
emergencies and other complaints from their
residents. In addition, barangay tanods are
now quick to respond to any emergencies
or complaints since they are informed
immediately. Globe BridgeCom has also
established a barangay-based hotline where
community members are encouraged to file
incident reports via texts or calls. To date,
there are more than 350 barangays who have
implemented the “Sagot Ka ni Kap!” program.
The “Sagot Ka Ni Kap!” program was
able to turn around peace and order issues
into an opportunity for leadership. Though
admittedly limited as a total intervention for
eradicating criminal elements, the program
was successful in espousing constructive
dialogue within the barangay and provided
a solid foundation for future cooperation
between the communities and the business
sector. These, more than anything else are
the key elements for lasting peace.
Partnering with the Armed Forces
Globe recognizes the gallant efforts of
the Philippine Army in maintaining security
and peace all over the country by awarding
education grants to the institution’s service
awardees.
The regional educational grants program
for Infantry Division service awardees is a
nationwide project of Globe BridgeCom in
partnership with the Philippine Army. Three
service awardees—an officer, an enlisted
personnel, and a Citizen Armed Forces
Geographical Unit (CAFGU) personnel were
handpicked by the Philippine Army to receive
the Globe education grants based on the
following criteria—displaying courage and
valor in the line of duty; diligently observing
and carrying out responsibilities promptly
and effectively; and constantly exhibiting
community centeredness in the execution of
his mandate.
Aside from the awards given, Globe
BridgeCom also supports the Armed Forces
various programs in the provinces. For
example, Globe joined hands with AFP Task
Force Davao in helping tribal minorities by
providing food donations to indigenous people
living in the hinterlands of Davao City.
Disaster Relief
Globe, through its Bangon Pinoy Program
responded to many communities devastated
by various typhoons in 2010. Bangon Pinoy
is a comprehensive, integrated effort that
combined volunteerism, disaster response,
with service recovery and corporate social
responsibility, capturing our commitment to
keep people connected at the most critical
moments and highlighting our customer focus
and responsiveness at all times. We quickly
mobilized our resources and manpower for this
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purpose to help people quickly connect with
those that matter in their lives. We invested in
the timely repair of our mobile and broadband
networks, and provided rebates, payment
reprieves, and flexible connection options for
our affected subscribers. The program is built
on the values of hope and perseverance, and
on the belief that even in the toughest of times,
we can rely on one another and collectively rise
above the challenges.
For example, Globe and TM set up
Libreng Tawag centers and Libreng Charging
stations in various parts of Cagayan, Isabela,
Kalinga and Pangasinan which were badly
hit by typhoon Juan so as to give affected
residents a way to get in touch with their
62
families and friends in these time of need.
The centers were located in key areas of
Tuguegarao, Aparri and Abulug in Cagayan;
Ilagan, Isabela; Dagupan, Pangasinan; and
Tabuk, Kalinga.
Globe BridgeCom and the Millennium
Development Goals
We have continuously monitored our own
contributions to the Millennium Development
Goals (MDG) of the United Nations. The
MDGs provide us with a strategic perspective
in developing our own social responsibility
programs that are aligned in meeting these
global targets.
The MDGs
How telecommunications can contribute
Examples of how Globe is contributing
Eradicate extreme
poverty and hunger
Research shows mobile phones can
increase productivity, and generate higher
incomes
Globe continues to develop mobile and
internet technology solutions to address
social problems such as access to capital,
entrepreneurial opportunities as well as
peacekeeping. In 2010, we used our
GCASH platform to enable the Cash-forWork program of the United Nations World
Food Programme. This program benefited
some 2,000 families affected by the past
typhoons. GCASH has also continued in
being an important partner for rural banks
as well as micro-finance institutions and
cooperatives.
Achieve universal
primary education
Globe products and services such as
SMS and broadband can help students
and teachers access educational content;
Globe BridgeCom’s major community
investment focuses on education access
especially for the marginalized.
Globe has invested on mobile and
broadband infrastructure so public schools
nationwide can have access to rich
educational content through their cellphones
and through the internet. More than 330
public elementary schools benefit from
Text2Teach and more than 2,000 public high
schools were connected to the internet. 250
Teachers also benefit from the Global Filipino
Teachers training program to ensure that
students get the best learning experience
through ICT. Globe has also started the
Global Filipino Schools program to help
replicate the success of integrating ICT in the
learning delivery in public schools.
The MDGs
How telecommunications can contribute
Examples of how Globe is contributing
Promote gender
equality and
empower women
Mobile and internet technologies can
empower women through better access to
online learning or through mobile banking.
Globe BridgeCom has been providing
women microentrepreneurs with the
necessary entrepreneurship training and
livelihood support in their communities.
Women microfinance clients also get the
opportunity to augment their family income
through microfinancing powered by our
mobile banking platform, GCASH which is
very pervasive in microfinance institutions in
the countryside.
Reduce child
mortality
Mobile technology can significantly
improve the efficiency of healthcare
services, particularly in remote areas.
Globe is continuously looking for possible
support initiatives in this area. We are
supporting the proposal to put up a mobilehealth alliance team in the Philippines.
Improve
maternal health
Mobile technology can significantly
improve the efficiency of healthcare
services, particularly in remote areas.
Globe is continuously looking for possible
support initiatives in this area. We are
supporting the proposal to put up a mobilehealth alliance team in the Philippines.
Combat HIV/AIDS,
malaria and other
diseases
Innovative mobile and broadband solutions
together with awareness building and
advocacy can help prevent these health
challenges.
Using infrastructure and technological
capability, Globe and Pilipinas Shell
Foundation Inc. developed the malaria
InfoText service, an SMS channel that
enables health workers and volunteers to
send and receive reports on the disease.
The program utilizes the TxtConnect plus
BizTxt service of Globe which provides an
end-to-end solution to collect reports on
the status of cases, drug inventory, and
other activities from more than 500 sites in
five provinces nationwide and aims to bring
down malaria morbidity and mortality rates
by 70% and hopes a malaria-free Philippines
by 2020.
Ensure
environmental
sustainability
The telecommunications industry have
already shown effective ways to reduce
its carbon footprint primarily through
the greening of its operations: utilizing
renewable energies for the network,
greening the fleet, green marketing and
protecting biodiversity in its areas of
operations.
To reduce the environmental impact of our
network, solar and wind energy powered
cellsites are now being used in selected
Globe cellsites especially those located in
remote areas. Coupled with greening our
fleet, supply chain and marketing initiatives,
as well as, involving our consumers to
subscribe to paperless billing, we integrate
environmental sustainability in our business
strategy.
Develop a global
partnership for
development
The telecommunications industry has
already demonstrated how its business
and its mobile network operations have
helped bridge the digital divide through
its investments on ICT infrastructure
as well as helping put up ICT-based
microenterprises for community
organizations.
Globe has utilized its business, value
chain, products and services to help
solve social challenges such as access to
education, empowering microentrepreneurs
and democratizing technology so the
marginalized can benefit from it. By lowering
access and service rates, many more
Filipinos, especially in the low income groups
stay connected to their families all over the
world.
63
Environmental Responsibility
Over the years, we have progressed at
addressing the challenges of environmental
sustainability. While climate change puts an
increasing pressure on society and business,
Globe has implemented a system based on the
ISO 14001 standard that takes environmental
protection as a priority consideration. We do
our share to help reduce carbon emissions
by developing products and solutions that will
enable a low-carbon economy. By complying
with environmental regulations, incorporating
sustainability in our business strategies and by
contributing to solutions that mitigate climate
change, we live out our strong commitment to
sustainable development.
Deliverables
64
Our environmental strategy has four key
elements:
• Manage our operations’ carbon footprint
and identify areas of operation where we
could utilize renewable energies
• Develop products and services that enable
consumers and businesses to reduce their
environmental impact
• Manage our industrial wastes
• Help protect the environment where we
operate
In 2010, we summarized below our key
accomplishments:
Target
Actual
Reforestation Program - Trees
Planted
50,000
53,200
Targets exceeded by
106%
Solid Waste Management
5% increase in Volume
Waste Recycled 2009
= 22%
Recyclables
=20,815 kgs
Wastes
=78,138 kgs
Increased recyclables
by 27%
Hazardous Waste
Management
100% disposal of
ULABS, used oil and
BFLs
Achieved
280.5 tons of batteries
recycled
CO2 reduction
2.5%
3.0% CO2 reduction in corporate offices
SHEMS Certification at Valero
(new)
Valero Telepark certified 80% completion by end of December
to ISO14001 & OHSAS 2010
18000 by 2Q of 2010
Doing More with Less
In 2010, we launched an internal program
called Globe Eco-Action which subscribes
to the principles of eco-efficiency, a business
philosophy coined by the World Business
Council for Sustainable Development (WBCSD)
that promotes Doing More with Less. For
Globe, this challenged us to create more value
for the service that we provide our customers
by using less of the required resources thereby
producing less waste, including emissions
and air pollution. It makes most sense for both
business and the environment as it creates
savings while reducing our environmental
impact. Eco-Action’s main strategies focus on
resource efficiency and conservation and Globe
challenges everyone in the organization to
rethink current processes to be able to optimize
resources use.
Doing more with less also means
operational adjustments. Valero Telepark
has cut off 40% of their electricity lighting
consumption by adopting the new LED lighting
technology. Light-emitting diode (LED) is a
seminconductor light source that has lower
energy consumption, low heat dissipation,
longer lifetime, greater durability and reliability
compared to conventional fluorescent lamps.
LED lights do not contain toxic mercury vapor.
By replacing conventional lights at the 14th
floor at the 755 square meter office space,
consumption was cut by 1,473 Kw-Hr per
month. This has resulted in savings of P11,000
a month. Upon project completion, the 2,969
pieces of new LED lights installed will bring a
total of P178,000 savings per month. This will
also save the company P22,000 annually from
the costs incurred by the mercury-containing
fluorescent lamps. The Kw-Hr savings from this
initiative will also result to a reduction in Carbon
emission by 292,000 kilograms of carbon
dioxide per year.
We continued to apply renewable energies
– such as wind and solar energy – for base
stations located in remote areas. They don’t
only provide a stable source of power but also
help reduce the environmental impact of these
stations. We have a number of base stations
running on solar energy and wind power. We
continue to study and apply this strategy to as
many applicable sites as possible.
Recognizing that businesses are now
finding value in having certified management
systems as a quality assurance for customers,
clients also now prefer to deal with companies
that demonstrate their commitment to
corporate social responsibility through an
integrated management system for a proactive
management of the environment and the health
and safety of their employees certified against
international standards.
A certified system means that operations
have been assessed with regards to potential
threats to the environment and to employees’
wellbeing and that proactive measures
are underway. Initiatives for an integrated
management system at the Valero facility
has begun and is now certified against the
ISO 14001 and OHSAS 18001 standards for
environmental management and occupational
health and safety. Operationally, this will ensure
that environmental aspects and hazards are
managed proactively.
The Management System enables
conscientious analysis actual health and safety
needs and a more organized assessment of
delivering business in a more environmentfriendly manner. Globe continues to evaluate
current safety, health and environmental
programs and improve them accordingly. As
a major environmental responsibility, Globe
continues to improve how resources are
used and ensures that waste is reduced and
efficiently managed.
All of these efforts will result in reduced
accident rates, less work-related illnesses and
a lower volume of trash thrown to the landfill,
among other important metrics. The certificate
is expected to be awarded by a third party
certifying body in May, 2011 after passing the
2-stage audit that will commence in March
2011.
65
In time for the twin celebrations of Earth
Hour and Earth Day 2010, Globe launched
Globe Goes Green – an engagement campaign
that seeks to integrate key environmental
initiatives to our business strategy. For Globe
employees, we launched a learning program
dubbed Globe Goes Green: Lifeboats and
Lifelines which helped our organization
understand the impact of our operations to
the environment. We partnered with the World
Wildlife Fund Philippines to implement this
program in Metro Manila, Cebu and Davao
where hundreds of employees participated.
Clean Fleet Program
A Clean Fleet Program contributes to the
efforts for cleaner air. To identify options for
reducing these emissions, Globe participated
in United Nation’s Environmental Protection
(UNEP) Program on Clean Fleet. By using the
Clean Fleet Tool, Globe was able to examine
closely the impact from our fleet including the
pollution indices like Particulate Matter, SOx,
NOx, VOC, Carbon Monoxide, and Pb. Options
for reduction were suggested by the tool and is
now currently being implemented to minimize
our fleet’s emissions.
Managing our Carbon Footprint
We continued to monitor our greenhouse
gas (GHG) emissions through a voluntary
initiative on GHG Accounting which we started
since 2008. Having established our baseline
for our operations’ carbon footprint, we used
the International GHG Protocol Corporate
Accounting and Reporting Standard and
specifically used the following calculation tools:
• GHG Emissions from Fuel Use in the
Facilities; Version 3.0, December 2007.
• Mobile Combustion CO2 Emissions
Calculation Tool. Version 1.3.January
2005.
66
•
•
Indirect CO2 Emissions from Purchased
Electricity, Version 3.0, December 2007.
CO2 Emissions from Business Travel.
Version 2.0, June 2006.
(All the calculation tools used for this accounting
activity were developed by the Word Resources
Institute (WRI) and copyrighted. They are available at
www.ghgprotocol.org.)
Working with a team representing groups
that maintain data of our carbon dioxide
emission sources, we used the Operational
Control Approach covering only all emissions
coming from the company’s operation where
Globe has 100% operational control. We have
also defined greenhouse gases defined in the
Kyoto Protocol – CO2, CH4 and N2O - emitted
from the company’s operations as part of the
accounting. For the year 2010, we will report
the results by July 2011 through our website.
Managing the end-of-life of our Lead-Acid
Batteries
One of the primary environmental issues
that we address is the end-of-life management
of the lead-acid batteries that are extensively
being generated from our telecom operations.
Categorized as hazardous wastes under the
Republic Act 6969 due to its lead metal and
sulfuric content, these used lead-acid batteries
require proper disposal through an accredited
treatment and recycling facility. Since 2003,
we have implemented a network-wide recycling
program in cooperation with the Environmental
Management Bureau of the Department of
Environment and Natural Resources and the
Philippine Recyclers, Inc. In 2010, we recycled
280,578 kilos of batteries.
Summary of Environmental Gains from
Used-lead Acid Battery Disposal Program from 2003-2010
Year
Weight of
Batteries (kg)
Monetary Value
(Php)
Sulfuric Acid
Recovered
(liters)
Lead
Recovered (kg)
Landfill Area
Saved (cu.
meters)
2003
5,220
18,633
1,044
3,654
132
2004
157,123
786,778
31,425
109,986
3,966
2005
87,110
913,723
17,422
60,977
2,199
2006
18,160
252,445
3,632
12,712
458
2007
170,112
2,645,438
34,002
119,078
4,294
2008
49,794
1,077,690
9,959
34,856
1,257
2009
46,715
671,112
9,343
32,701
1,179
2010
280,578
6,110,511
56,116
196,405
7,082
TOTAL
487,519
12,476,329
162,962
570,368
20,566
Donated
to Bantay
Kalikasan
Sold to PRI
Solid Waste Management
Globe continues to implement a solid waste management program in our corporate offices
nationwide. We developed advocacy campaigns promoting waste reduction, material reuse
and recycling and organized recyclables collection events to provide venues where trash gets
converted to cash.
Summary of Volume of Recyclables Generated in Globe Telecom Plaza (2005-2010)
Year
Amount
Total No. of
Recyclables (kgs)
Volume of Wastes
Collected (kgs)
% of Recyclables
Collected
2005
96,788.05
25,123
68,833
36%
2006
162,410.50
27,978
85,372
33%
2007
185,561.00
32,648
97,696
33%
2008
218,211.00
36,867
108,665
34%
2009
118,263.00
22,474
103,282
22%
2010
85,991.50
20,815
78,138
27%
867,225.05
165,902.50
541,985.50
TOTAL
67
Environmental Benefits
Paper & Cartons
2,767.29
667,406.20
4,313,376.27
Trees saved
kwh of energy saved
liters of water saved
373.37
cu. meters of landfill space
saved
15.09
cu. meters of landfill space
saved
Aluminum Cans
PET & other plastics
2,342.34
kilos of plastics recycled
As a result of our Company’s Solid Waste Management and Recyclable Collection Events, a
total of 165,902.50 kg of recyclable items were collected from year 2005-2010. This total volume
represents the volume of wastes that were diverted from the landfill with a resource recovery value of
P867,225.05.
One of our key programs involving our subscribers is the cellphone recycling program. By
placing 30 recycling bins in corporate offices and business centers, commercial malls in Metro
Manila and in Cebu City, we have encouraged our subscribers to drop in their used cellphones and
accessories for proper disposal.
Protecting bio-diversity in areas where we operate
Globe continues to implement various treeplanting activities across the nation. In 2010, a total
of 53,200 trees were planted all over the country. This is part of our commitment to sustain the
biodiversity in areas where we operate. These initiatives also spearheaded our commitment to grow
new 250,000 trees from 2009 to 2013.
Reforestation Area
68
Partner/s
No. of Trees Planted
Cordillera Mountains
Globe Bridging Communities,Globe
Adventure Club,Cordillera
Conservation Trust
15,000
Fort Bonifacio, Taguig
Fort Andres Bonifacio Endangered and
Indigeneous Tree Sanctuary (FABEITS)
Lian, Batangas
Bro. Alfred Shields Marine Station
10,000
Sitio Kaysakat, Brgy. San Jose,
Antipolo City
DENR-CENRO Rizal
1,500
Matina, Davao
Davao City High School
Batch ’85 Alumni Ass’n.
10,000
Taklong Island Marine Reserve,
Guimaras, Iloilo
DENR-CENRO Guimaras
5,000
Bulacan
Blacksmith Institute
10,500
Naga, Cebu
DENR-CENRO Cebu City
1,000
200
Reviving the Marilao-Meycauayan-Obando
River System through Globe Greenline
Globe, in partnership with Blacksmith
Institute, DENR Region 3, DENR Bulacan, and
MMO Water Quality Management Board, has
organized separate bamboo and mangrove
planting activities in Bulacan in an attempt to
help revive the Marilao-Meycauayan-Obando
River System (MMORS), one of the world’s 30
most polluted places.
About 200 volunteers from public and
private sectors participated in planting 10,500
bamboo and mangrove seedlings in San Jose
Del Monte and Obando. The twin events
which are part of the team’s Greenline project,
showcased how people from the industry, the
government, and the community could work
together to salvage such an important river
system in the province.
Greenline is a dedicated 24-hour call
and text facility where residents and other
concerned parties can report violations of
environmental laws and policies. The first one
was unveiled in Bulacan late last year to protect
the MMORS.
The bamboo and mangrove seedlings
were planted along the tributaries of SJDM
and the coastal area of Obando to help in the
streambank stabilization and rehabilitation of
mangrove areas of the river system. This is
part of the commitment of the stakeholders to
help clean-up and revitalize the MMORS.
The Globe Cordillera Challenge
In the first quarter of 2010, Globe
BridgeCom, together with the Globe Adventure
Club launched the Globe Cordillera Challenge
to raise consciousness and funds for the
reforestation of the Cordillera Mountains. By
rebuilding the forests of the Cordilleras, Globe
helps in securing the water supply, protect
biodiversity and conserve the heritage of the
Cordillera people.
The mountain region is the home of a
varied number of indigenous groups. People
who have the pride that no lowlander has the
right to claim, the pride of being free while
the rest of the Philippines was under the
colonial rule of the Spanish. Ibaloi, Kankanai,
Kalanguya, Iwac, Ifugao, Bontoc, Kalinga,
Tinguian among these groups we find the
people who have kept these mountains
safe for centuries, Our homes are seemingly
under siege, “development” has claimed the
homes of many communities. The Cordillera
being home to the bounties of the earth
have provided life for generations, yet today
people seek to destroy that which has given
us life. Yet this is only a small fraction of
the importance of the Cordillera Mountain
Ecosystem, other factors such as biodiversity,
energy production; mineral production as well
as ecological maintenance functions such
as; stream flow, nutrient cycling, soil stability,
habitat, are among the other factors which
make this region unique.
This diversity of people living in this region
presents a challenge to the management of
the Cordillera Mountain environment and yet
they also provide a resource as we are people
who hold a unique knowledge of our local
environments and their utilization, knowledge
which is a powerful asset in creating strategies
to address the continued degradation of our
mountain ecosystems.
On Earth Day weekend April 24, 2010,
seventy (70) bikers from the Globe Adventure
Club, the Cordillera Conservation Trust as
well as other collaborators like Subaru and
media partners pedaled their way through a
40km high- altitude, cross-country trail from
La Trinidad all the way to Kapangan, Benguet.
This campaign resulted to funds raised
amounting to P300,000 which is equivalent to
15,000 seedlings to be planted in a denuded
section of the Cordillera mountains.
69
I Love Creating
I live for self-expression, in colors,
Blocks and planks; for visuals that speak,
And for imagery that moves me.
I am Jino Ferrer
Loving Globe since 2000
70
Corporate Governance
We strive to adhere to the highest
standards of ethics and governance in all
that we do. Globe recognizes the importance
of good governance in realizing its vision,
carrying out its mission, and living out its
values to create and sustain increased value
for all its stakeholders. The impact of global
conditions and challenges further underscores
the need to uphold the Company’s high
standards of corporate governance to
strengthen its structures and processes.
As strong advocates of accountability,
transparency and integrity in all aspects of the
business, the Board of Directors (“Board”),
management, officers, and employees of
Globe commit themselves to the principles
and best practices of governance in the
attainment of its corporate goals.
Corporate Governance Policies
The basic mechanisms for corporate
governance are principally contained in the
Company’s Articles of Incorporation and ByLaws. These documents lay down, among
others, the basic structure of governance,
minimum qualifications of directors, and the
principal duties of the Board and officers of
the Company.
The Company’s Manual of Corporate
Governance supplements and complements
the Articles of Incorporation and By-Laws
by setting forth the principles of good
and transparent governance. In 2009, the
Company commissioned a review of the
manual to update and improve it. This review
was completed in February 2010 and new
provisions have been incorporated in the
manual to conform with SEC Memorandum
Circular No. 6, Series of 2009 Revised
Code of Corporate Governance. The Board
Committee Charters were also revisited to
align with the Company’s revised Manual of
Corporate Governance.
The Company has likewise adopted a
Code of Conduct, Conflict of Interest, and a
Whistleblower Policy, and has existing formal
policies concerning Unethical, Corrupt and
Other Prohibited Practices covering both its
employees and the members of the Board.
These policies serve as guide to matters
involving work performance, dealings with
employees, customers and suppliers, handling
of assets, records and information, avoidance
of conflict of interest situations and corrupt
practices, as well as the reporting and handling
of complaints from whistleblowers, including
reports of fraudulent reporting practices.
Moreover, the Company adopted an
expanded corporate governance approach
in managing business risks. A Revised
Enterprise Risk Management Policy was
developed to provide a better understanding
of the different risks that could threaten the
achievement of the Company’s vision, mission,
strategies and goals. The policy also highlights
the vital role that each individual plays in the
organization – from the Senior Executive
Group (SEG) to the staff – in managing risks
and in ensuring that the Company’s business
objectives are attained.
New initiatives are regularly pursued to
develop and adopt corporate governance
best practices, and to build the right corporate
culture across the organization. In 2010, Globe
participated in various activities of the Institute
of Corporate Directors (ICD), Philippine Stock
Exchange (PSE) and the Philippine Securities
and Exchange Commission (SEC) to improve
corporate governance practices and refine the
corporate governance self-rating system and
scorecard used by publicly listed companies
to assure good corporate governance.
The following sections summarize the key
corporate governance structures, processes
and practices adopted by Globe.
Board of Directors
Key Roles
The Board of Directors is the supreme
authority in matters of governance. The Board
establishes the vision, mission, and strategic
direction of the Company, monitors overall
corporate performance, and protects the
71
long-term interests of the various stakeholders
by ensuring transparency, accountability, and
fairness. The Board has oversight responsibility
for risk management function while ensuring
the adequacy of internal control mechanisms,
reliability of financial reporting, and compliance
with applicable laws and regulations.
In addition, certain matters are reserved
specifically for the Board’s disposition,
including the approval of corporate operating
and capital budgets, major acquisitions and
disposals of assets, major investments, and
changes in authority and approval limits.
Board Composition
The Board is composed of eleven (11)
members, elected by stockholders entitled to
vote during the Annual Stockholders Meeting
(ASM). The Board members hold office for one
year and until their successors are elected and
qualified in accordance with the By-laws of the
Company.
The roles of the Chairman of the Board
and the Chief Executive Officer (CEO) are
clearly delineated and are held by two
individuals to ensure balance of power
and authority and to promote independent
decision making. Of the eleven members of
the Board, only the President & CEO is an
executive director; the rest are non-executive
directors who are not involved in the day-today management of the business.
In compliance with the Revised Code of
Corporate Governance, the Board has two
independent directors of the caliber necessary
to effectively weigh in on Board discussions
and decisions. Globe defines an independent
director as a person who is independent from
management and free from any business
or other relationship which could materially
interfere with his exercise of independent
judgment in carrying out his responsibilities as
a director.
All board members have the expertise,
professional experience, and background
that allow for a thorough examination and
deliberation of the various issues and matters
affecting the Company. The members of the
Board have likewise attended trainings on
corporate governance prior to assuming office.
The qualifications of all board nominees
are reviewed by the Nomination Committee,
chaired by an independent director. The
profiles of the directors are found in the “Board
of Directors” section of this Annual Report.
As of 31 December 2010, the Board is comprised of the following members:
Directors
Position
Nature of Appointment
Jaime Augusto Zobel de Ayala*
Chairman
Non-executive
Gerardo C. Ablaza, Jr.
Co-Vice Chairman
Non-executive
Hui Weng Cheong
Co-Vice Chairman
Non-executive
Delfin L. Lazaro
Director
Non-executive
Ernest L. Cu
Director
Executive
Romeo L. Bernardo
Director
Non-executive
Koh Kah Sek
Director
Non-executive
Xavier P. Loinaz
Director
Non-executive / Independent
Guillermo D. Luchangco
Director
Non-executive / Independent
Roberto F. de Ocampo
Director
Non-executive
Fernando Zobel de Ayala*
Director
Non-executive
* Jaime Augusto Zobel de Ayala and Fernando Zobel de Ayala are brothers.
72
Also, the level of per diem is in line with
standards currently practiced among publicly
listed companies similar to Globe.
Board Remuneration
In accordance with the Company’s ByLaws, the Board members receive stock
options and remuneration in the form of a
specific sum for attendance at each regular
or special meeting of the Board. A per
diem of P100,000 per Board or committee
meeting was agreed and approved by the
shareholders during the ASM held last April
1, 2003. The remuneration is intended to
provide a reasonable compensation to the
directors in recognition of their responsibilities
and the potential liability they assume as a
consequence of the high standard of best
practices required of the Board as a body and
of the directors individually, under the SECpromulgated Code of Corporate Governance.
Board Performance
Directors attend regular meetings of the
Board, which are normally held on a monthly
basis, as well as special meetings of the
Board, and the ASM. A director must have
attended at least 50% of all meetings held in
a year in order to be qualified for re-election in
the following year.
The Board met eleven (11) times in 2010,
including the Annual Stockholders’ Meeting
(ASM). The attendance of the individual
directors at these meetings is duly recorded,
as follows:
2010
2009
Regular & Special
Meetings
Present
Absent
ASM
Present
Regular & Special
Meetings
Absent
Present
Absent
ASM
Present
Absent
Jaime Augusto Zobel de Ayala
7
3
1
0
8
2
1
0
Gerardo C. Ablaza, Jr.
8
2
1
0
9
1
1
0
Chang York Chye
-
-
-
-
7
0
1
0
Mark Chong Chin Kok**
4
3
1
0
3
0
-
-
Hui Weng Cheong*
2
1
-
-
-
-
-
-
Delfin L. Lazaro
9
1
1
0
10
0
1
0
Ernest L. Cu
10
0
1
0
10
0
1
0
Romeo L. Bernardo
10
0
1
0
10
0
1
0
Koh Kah Sek
9
1
1
0
9
1
1
0
Xavier P. Loinaz
10
0
1
0
8
2
1
0
Guillermo D. Luchangco
9
1
1
0
9
1
1
0
Roberto F. de Ocampo
9
1
1
0
9
1
1
0
Fernando Zobel de Ayala
9
1
1
0
7
3
1
0
* Hui Weng Cheong was appointed Director and Co-Vice Chairman in place of Mark Chong Chin Kok at the 8 October 2010
Board Meeting.
** Mark Chong Chin Kok was appointed Director and Co-Vice Chairman in place of Chang York Chye at the 6 October 2009
Board Meeting.
73
The average attendance rate of members
of the Board was at 88% for 2010 and
91% for 2009. All directors have individually
complied with the SEC’s minimum attendance
requirement of 50%.
Prior to the Board meetings, all of the
directors are provided with board papers
which include reports on the Company’s
strategic, operational, and financial
performance and other regulatory matters.
The Board also has access to the Corporate
Secretary who, among other functions,
oversees the flow of information to the Board
prior to the meetings and who serves as
adviser to the directors on their responsibilities
and obligations. The members of the Board
also have access to management should
they need to clarify matters concerning items
submitted for their consideration.
The Board conducts an annual selfassessment to ensure the continuing
effectiveness of its processes and to identify
areas for improvement. During the last meeting
of every year, the Board meets in executive
session to evaluate and discuss various matters
concerning the Board, including that of its
own performance and that of the Company’s
management team.
Board Committees
To further support the Board in the
performance of its functions and to aid in good
governance, the Board has established five
(5) committees. The role and function of each
Board Committee is described in detail below.
Executive Committee
The Executive Committee’s roles and
responsibilities are clearly defined in the
Executive Committee Charter approved by the
Board. The Executive Committee (ExCom) is
comprised of five (5) members appointed by
the Board. The ExCom acts by majority vote
and in accordance with the authority granted
by the Board. All actions of the ExCom are
reported to the Board at the meeting following
74
such action and are subject to ratification or
revision and alteration by the Board.
Audit Committee
The Audit Committee’s roles and
responsibilities are clearly defined in the Audit
Committee Charter approved by the Board.
The Committee supports the corporate
governance process of the Company by
fulfilling its oversight responsibility relating to a)
the integrity of the financial statements and the
financial reporting process; b) internal controls
and financial reporting principles, policies, and
systems; c) the qualifications, independence
and remuneration of the independent auditors;
d) internal audit function and independent
auditors’ performance; and e) compliance with
legal, regulatory, and corporate governance
requirements. Management however has
the primary responsibility for the financial
statements and the reporting process,
including the system of internal controls and
risk management.
The Committee is composed of three
members, one of whom is an independent
director. The independent director chairs the
Audit Committee. All members of the Audit
Committee are appointed by the Board.
The Committee ensures tenders for
independent audit services are conducted,
reviews audit fees, and recommends the
appointment and fees of the independent
auditors to the Board. The Board, in turn,
submits the appointment of the independent
auditors and their fees for approval of the
shareholders at the ASM. The amount of audit
fees is disclosed in this Annual Report.
The Audit Committee also approves the
work plan of the Globe Internal Audit Group, as
well as the overall scope and work plan of the
independent auditors.
The Audit Committee meets at least
once every quarter and invites non-members,
including the President & CEO, Chief Financial
Officer, independent and internal auditors,
and other key persons involved in company
governance, to attend meetings where
necessary. During these meetings:
• The Committee reviews the financial
statements and all related disclosures
and reports certified by the Chief Financial
Officer, and released to the public and/
or submitted to the Philippine SEC for
compliance with both the internal financial
management handbook and pertinent
accounting standards, including regulatory
requirements. The Committee, after its
review of the quarterly unaudited and
annual audited consolidated financial
statements of Globe Telecom, Inc. and
Subsidiaries, endorses these to the Board
for approval.
• The Committee meets with the internal
and independent auditors, and discusses
the results of their audits, ensuring
that management is taking appropriate
corrective actions in a timely manner,
including addressing internal controls and
compliance issues.
• The Committee reviews the performance
and recommends the appointment,
retention or discharge of the independent
auditors, including the fixing of their
remuneration, to the full Board. On
an annual basis, the Committee also
assesses the independent auditor’s
qualifications, skills, resources,
effectiveness and independence. The
Committee also reviews and approves the
proportion of audit and non-audit work
both in relation to their significance to the
auditor and in relation to the Company’s
total expenditure on consultancy, to ensure
that non-audit work will not be in conflict
with the audit functions of the independent
auditor.
• The Committee reviews the plans,
activities, staffing, and organizational
structure and assesses the effectiveness
of the internal audit function, including
conformance with the International
Standards for the Professional Practice of
Internal Auditing (ISPPIA).
• The Committee provides oversight of the
financial reporting and operational risks,
specifically on financial statements, internal
controls, legal or regulatory compliance,
corporate governance, risk management
and fraud risks. The Committee also
reviews the results of management’s
annual risk assessment exercise.
The Audit Committee reports after each
meeting and provides a copy of the minutes of
its meetings to the full Board. (Also see Annual
Report of the Audit Committee to the Board of
Directors on page 92 of this Annual Report).
To ensure compliance with regulatory
requirements and assess the appropriateness
of the existing Charter for enabling good
corporate governance, the Committee also
reviews and assesses the adequacy of its
Charter annually, seeking Board approval for
any amendments.
The Committee conducts an annual
assessment of its performance to benchmark
its practices against the expectations set
out in the approved Charter, and to ensure
that it continues to fulfill its responsibilities
in accordance with global best practices
and in compliance with the Manual of
Corporate Governance and other relevant
regulatory requirements. The results of the
self-assessment and any ensuing action
plans formulated to improve the Committee’s
performance are reported to the Board.
Compensation and Remuneration Committee
The Compensation and Remuneration
Committee’s roles and responsibilities are
clearly defined in the Compensation and
Remuneration Committee Charter approved
by the Board. The Committee is composed
of three (3) members, one of whom is an
independent director. All members of the
Compensation and Remuneration Committee
are appointed by the Board.
The Committee is tasked to review the
compensation philosophy and structure
of the Company and the reasonableness
of its compensation and incentive plans
and structures. The Committee also
reviews and approves the Company’s
annual compensation plan and corporate
incentive plan. In reviewing the plans, the
75
Committee considers relevant industry
and multi-industry benchmarks in order to
assess the reasonableness of management’s
recommendations. The compensation plan also
includes retention structures for key positions.
The Compensation and Remuneration
Committee usually meets at least twice a year,
or more often as required.
The Stock Options Committee is a
sub-committee of the Compensation and
Remuneration Committee and has two (2)
members. The Stock Options Committee
considers the framework for the award of stock
options to managers and executives, to the
directors, and to certain key consultants.
Nomination Committee
The Nomination Committee’s roles and
responsibilities are clearly defined in the
Nomination Committee Charter approved by
the Board. The Committee is composed of
three (3) members, including one independent
director. An independent director chairs the
Committee. All members of the Nomination
Committee are appointed by the Board.
The Nomination Committee reviews
the qualifications of all persons nominated
to position in the Corporation which require
appointment by the Board.
The Committee meets at least once
in the first quarter of the year to review the
qualifications and attendance of the nominees
to the Board prior to the list of nominees being
submitted to the stockholders at the ASM.
Thereafter, it meets as often as required to
review specific nominations of key hires and
promotions to key positions as they come up in
the ordinary course of business.
Finance Committee
The Finance Committee’s roles and
responsibilities are clearly defined in the
Finance Committee Charter approved by
the Board. The Finance Committee is
responsible for reviewing and evaluating the
financial affairs of the Company, including
conducting an annual review of all financial
activities during the immediately preceding
year prior to each ASM. The Committee is
composed of four (4) members. All members
of the Finance Committee are appointed by
the Board.
On 8 February 2011, the Board of
Directors approved the Finance Committee
Charter. Under the new charter, the Committee
shall be composed of such number of
members as the Board may designate but in no
case less than three (3) members, majority of
whom shall be existing Board members.
The members of each Board Committee are set forth below as of 31 December 2010:
Executive Committee
Audit Committee
Compensation &
Remuneration
Committee
Nomination
Committee
Finance Committee
Jaime Augusto Zobel de Ayala*
Xavier P. Loinaz*
Gerardo C. Ablaza, Jr.*
Guillermo D. Luchangco*
Delfin L. Lazaro*
Hui Weng Cheong
Romeo L. Bernardo
Guillermo D. Luchangco
Gerardo C. Ablaza, Jr.
Koh Kah Sek
Ernest L. Cu
Koh Kah Sek
Hui Weng Cheong
Hui Weng Cheong
Delfin C. Gonzalez, Jr.
Gerardo C. Ablaza, Jr.
Alberto M. De Larrazabal
Koh Kah Sek
* Chairman
At the 8 October 2010 Board meeting, Mr. Hui Weng Cheong was also appointed member of the Executive Committee, Nomination Committee and
Compensation and Remuneration Committee in place of Mr. Mark Chong Chin Kok.
76
In 2010, the Executive Committee met fifteen (15) times, Audit Committee met four (4) times, the Nomination
Committee met six (6) times, the Compensation & Remuneration Committee met two (2) times and Finance Committee met
once. The Attendance of the members of these Committees is duly recorded, as follows:
Executive
Committee
Name
Present
Absent
Audit
Committee
Present
Absent
Nomination
Committee
Present
Absent
Present
Absent
6
0
2
0
6
0
2
0
6
0
2
0
Guillermo D. Luchangco
Gerardo C. Ablaza, Jr.
Mark Chong Chin Kok
1
13
2
8
3
Xavier P. Loinaz
4
0
Romeo L. Bernardo
4
0
4
0
Koh Kah Sek
10
5
Compensation
& Remuneration
Committee
Present
Absent
1
0
Delfin L. Lazaro
1
0
Delfin C. Gonzalez, Jr.
1
0
1
0
Alberto M. De Larrazabal
Jaime Augusto Zobel de Ayala
8
7
Ernest L. Cu
15
0
3
1
Hui Weng Cheong
2
Ferdinand M. de la Cruz
Finance
Committee
3
3
0
Mr. Chong stepped down from the Board on 1 October 2010.
Mr. Hui was elected on 8 October 2010.
3
Mr. dela Cruz was a member of the ExCom from January-March 2010.
1
2
Management
The President & CEO, guided by the
Company’s vision, mission, and values
statements, is accountable to the Board for
the development and recommendation of
strategies, and the execution of the defined
strategic imperatives. The President & CEO
is assisted by the heads of each of the major
business units and support groups.
The Office of Strategy Management
(OSM) reports to the President & CEO and
oversees the Company’s strategy management
processes from strategy formulation, translation
to executable plans, horizontal alignment of
business objectives across the organization, to
execution and performance tracking linked to
the Company’s rewards system.
Every year, the Company reviews and
formulates its strategic priorities which then
guide the formulation of the key business
strategies and goals for the year. Using
the balanced scorecard framework, each
business group identifies financial and nonfinancial objectives, and sets targets and
initiatives to achieve them as reflected in
the groups’ Terms of Reference (TOR). To
ensure line of sight, the group TORs are
cascaded to all employees, making sure
that everyone understands and appreciates
their contribution to the group goals. This
helps in developing individual performance
plans that are aligned with the key strategies.
Rewards and incentives are given based on
the achievement of the committed group and
individual targets.
77
Key programs, projects, and major
organizational initiatives are taken up at the
SEG, composed of the President and CEO, as
well as the heads of each of the major business
units and support groups. All budgets and
major capital expenditures must be approved
in accordance with the Company’s limits of
authority and by the CEO prior to endorsement
to the Board for approval. The Chief Operating
Adviser and Chief Legal Adviser also provide
inputs to the SEG as required. The SEG meets
at least once a week.
Management is mandated to provide
complete and accurate information on the
operations and affairs of the Company in a
timely manner. Management is also required
to prepare financial statements for each
preceding financial year in accordance with
Philippine Financial Reporting Standards
(PFRS). Management’s statement of
responsibility with regard to the Company’s
financial statements is included in this annual
report on page 93.
The annual compensation of the key
officers of the Company, including the
President & CEO, is disclosed in the Definitive
Information Statement distributed to the
shareholders. The total annual compensation
includes the basic salary, guaranteed
bonuses, fixed allowances, and variable pay
(performance-based annual incentive).
Recognition for Excellence in
Corporate Governance
Globe also bagged seven awards out
of the nine sectors in the 10th Annual Poll of
Philippine Top Companies by Finance Asia, a
leading financial publishing company in Asia with
bureaus in Hong Kong, Singapore, and Sydney.
Among the distinctions received are
second place in Best Managed Company and
Best in Corporate Governance categories,
second place in terms of the Most Committed
to a Strong Dividend, third in Investor
Relations, and eighth in Corporate Social
Responsibility.
Also, Ernest L. Cu, Globe President and
CEO was adjudged Best CEO along with Globe
Chairman and Ayala CEO Jaime Augusto Zobel
de Ayala, while Alberto de Larrazabal, Globe
CFO was hailed Best CFO.
These honors affirm the Company’s
deliberate commitment to the principles of
good governance and transparency with
its key stakeholders while it constantly find
ways to improve the business given the
challenging times.
Enterprise Risk Management
Cognizant of the dynamism of the
business and the industry and in line with
its goal to continuously enhance value for
its stakeholders, Globe Telecom has put in
place a robust risk management approach
that is fully integrated in its strategy planning,
execution and day to day operations.
Risk Management Approach
The continuous effort of Globe in
strengthening the Company’s good
governance and practices led to several
citations and awards.
In May 2010, the Institute of Corporate
Directors (ICD) conferred Globe Telecom the
Gold award as one of the top 15 highest scorers
at 95 percent and above among publicly listed
companies in the 2009 Corporate Governance
Scorecard. This is a joint project of ICD with the
Securities and Exchange Commission, Philippine
Stock Exchange, Institute of Internal Auditors of
the Philippines, Ateneo Law School, and Center
for International Private Enterprise.
78
As part of its strategy management
calendar, senior management and key
leaders regularly conduct an enterprise–wide
assessment of risks focused on identifying
the key risks that could threaten the
achievement of the Company's business
objectives, both at the corporate and
business unit level, as well as specific plans
to mitigate or manage such risks.
Risks are prioritized, depending on
their impact to the overall business and the
effectiveness by which these are managed.
Risk mitigation strategies are developed,
updated and continuously reviewed for
effectiveness, and are also monitored through
various control mechanisms.
Globe employs a two-dimensional view
of risk monitoring. Senior Management’s
scorecard includes the status of risk mitigation
plans as they relate to the attainment of a
particular business objective. Enterprise Risk
Owners, on the other hand, regularly monitor
and report to the Chief Risk Officer the status
of the approved mitigation plans meant to
address the key risks.
Annually, Globe conducts an Enterprise
Risk Management Performance Evaluation
which serves as a basis for continuously
improving our Risk Management processes
and capabilities.
Roles and Responsibilities
The Board of Directors, supported by
the Executive Committee (ExCom) and Audit
Committee, has an oversight role over the
Company’s risk management activities and
approves Globe’s risk management policies.
The ExCom covers specific non-financial
(e.g., strategic, operational, human capital,
regulatory) risks, while the Audit Committee
provides oversight of financial reporting risks.
The Chief Financial Officer supports the
President, as the overall risk executive, in
overseeing the risk management activities of
the Company, ensuring that the responsibilities
for managing specific risks are clear, the level of
risk accepted by the Company is appropriate,
and that an effective control environment exists
for the Company as a whole.
Risk owners at the senior executive level
have been identified and made accountable
for managing specific risks, supported by
business process owners who have been
designated, trained, and made responsible
for the particular process or activity from
which the risk arises. This is consistent with
management’s belief that risks are best
understood and managed by the employees
who are closest to the process.
The Enterprise Risk Management unit,
under the Office of Strategy Management,
facilitates the enterprise risk management
activities, bringing these closer to and more
aligned with the Company’s strategic planning
and execution framework. This also supports
the integration of enterprise risk management
with the Company’s scorecard processes and
more tightly link risk mitigation efforts with its
day-to-day operations.
In addition to this overall risk
management framework, Globe Telecom,
through its Enterprise Business Continuity
Risk Management Office, has put in place
an enterprise-wide program to focus
continuously on managing incidents and
ensure business continuity immediately after
a significant disruption. During its inception in
2008, Globe adapted the business continuity
methodology and framework of the Business
Continuity Management Institute (BCMI)
of Singapore. In 2009, it implemented the
Good Practices Guidelines of the Business
Continuity Institute, which is a Management
Guide to implementing global best practices
on business continuity management. And in
2010, Globe Telecom continued to improve
its existing business continuity capability by
conducting a full review of the program and
started aligning it with British Standards (BS)
25999, the leading international standard on
business continuity management, and by
giving emphasis on emergency response,
recovery from natural calamities and overall
crisis management.
Globe continues to identify and
address single points of failure in its network
and support facilities to make them less
vulnerable to failures. It has invested in
technology that will ensure network resiliency
and disaster-preparedness. Enhancements
are currently being made on the international
network and in strengthening core network
elements as well as investments in
emergency power.
Over the past year, Globe continued to
ensure uninterrupted services in missioncritical sites in baluarte areas, making certain
that the area can withstand the effects of
typhoons. Proof of our disaster preparedness
was our network performance in the midst of
79
typhoon Juan (international name, Megi) in
October. Part of the disaster preparedness
efforts included acquiring the necessary
tools and conducting typhoon and flooding
drills months before the start of the typhoon
season to make disaster recovery teams more
prepared for typhoons and floods. Globe
also created Regional Crisis Management
Teams in North and South Luzon, the
most typhoon/flood-prone regions in the
country, while continuing to improve its crisis
communication process, community disaster
response programs, and overall regional crisis
management program.
Business continuity preparedness
involves all levels of the organization. In
extreme weather conditions, updates and
alerts about incoming typhoons are regularly
issued not just to disaster response teams
but also to senior executives, members of the
Crisis Management Team and members of
the Business Continuity Core Team to ensure
uniformity and consistency of response.
Post-typhoon meetings are held to identify
gaps and lessons learned and corresponding
improvements, and report these to senior
executives led by the President and to the
Executive Committee.
Since business continuity management is
a journey, Globe has trained and continues to
train those who are involved in the program,
and conducts awareness campaigns. In
2010, a training based on British Standard
25999 was held for network engineers and
IT experts who develop Disaster Recovery
Plans. Members of Emergency Response
Teams in corporate offices and missioncritical technical sites were trained on
Emergency Response and First Aid. The
“BeAware, Prepare” business continuity
awareness campaign was launched even
as we continue to orient new employees on
safety and business continuity.
All these made the Globe organization
and its people more resilient to crisis and
natural disasters. By embedding Business
Continuity in our way of life, Globe became
even more responsive to its customers’ needs
at the most critical times.
80
The May 2010 first automated elections
was another opportunity to serve and
showcase the reliability of the Globe network.
Around 35,000 SIMs were distributed and
used by the PCOS machines, mostly in the
Luzon area. 117 DSL sites in the Visayas
and Mindanao canvassing centers were
used to transmit consolidated returns to the
canvassing centers. To ensure security and
accuracy of data transmission, four vital sites
were linked to the main data center where
Smartmatic servers were located. Among
them are the Back Up Data Center provided
by PLDT, the Comelec Data Center at the
PICC, the Congress and the KBP Center at
Pope Pius at UN Avenue. More than 3,000
sites nationwide were used to service the
PCOS machines, all of which were operational
during the elections, earning a commendation
from Comelec and Smartmatic.
Typhoons Basyang and Juan gave Globe
the chance to give back to the community.
In the days prior to Basyang’s landfall, Globe
North Luzon teams ensured advanced
deployment of gensets to mission-critical
sites, augmented manpower and delivered fuel
to all sites across the region. Globe activated
the HQ Command Center, Regional Crisis
Management Team and the Disaster Recovery
Teams, while working with vendors and
contractors to ensure sufficient supplies. Even
as typhoon Basyang hit earlier than expected
and affected GMA instead of Northern Luzon,
Globe teams, also relying on international
weather bureaus, made the necessary
adjustments and preparation.
When typhoon Juan struck the country,
Globe teams delivered all the necessary
machines and extra manpower to be able to
respond well. Within twenty-six hours, 64% of
affected sites were restored and Globe was
the only telecommunications provider that
worked in Tuguegarao in the immediate two
hours after the onslaught of Juan.
Business continuity and uninterrupted
service is just one of the marks of Globe
making a difference in the consumer’s life. It
also extends to being there first and fast, while
ensuring service performance.
Audit and Internal Controls
Internal Audit
It is the policy of Globe Telecom to
establish and support an Internal Audit
function as a fundamental part of its corporate
governance practices. Internal Audit is a
service, providing an independent, objective
assurance and consulting function within
Globe Telecom, and sharing the organization’s
common goal of creating and enhancing value
for its stakeholders, through a systematic
approach in evaluating the effectiveness of
the Company’s risk management, internal
control and governance processes. The Audit
Committee regards its relationship with Globe
Internal Audit having a vital role in supporting
the Committee in the effective discharge of its
oversight role and responsibilities.
The Internal Audit Group performs its
auditing functions faithfully by maintaining
independence from management and
controlling shareholders as it reports
functionally to the Board, through the Audit
Committee, and administratively, to the
President & CEO.
The Internal Audit Group maintains,
reviews and assesses the adequacy of its
Charter annually to ensure compliance with
regulatory requirements and appropriateness
for enabling good corporate governance. Any
amendments to the Charter are submitted
to the Audit Committee and the Board for
approval.
Globe Internal Audit adopts a risk-based
audit approach in developing its annual
work plan, re-assessed quarterly to consider
emerging risks and the changing dynamics of
the telecommunications industry. The Audit
Committee reviews and approves the annual
work plan and all deviations, and ensures
that internal audit examinations cover at least
the evaluation of adequacy and effectiveness
of controls encompassing the Company’s
governance, operations, information
systems, reliability and integrity of financial
and operational information, effectiveness
and efficiency of operations, safeguarding
of assets, and compliance with laws, rules,
and regulations. The Audit Committee also
ensures that audit resources are reasonably
allocated to and focused on the areas of
highest risk.
The Committee meets with the internal
auditors, and discusses the results of
their audits, ensuring that management is
taking appropriate corrective actions in a
timely manner, including addressing internal
controls, regulatory and compliance issues.
The Committee also receives periodic reports
on the status of internal audit activities, key
performance indicators’ accomplishments,
and quality assurance and improvement
programs.
Globe Internal Audit governs its activities
in conformance with the International
Standards for the Professional Practice
of Internal Auditing (the “Standards”), the
Institute of Internal Auditor’s Code of Ethics,
and the Company’s Code of Conduct. In
2007, the group subjected its activities to
an external Quality Assurance Review (QAR)
which resulted to a “Generally Conforms”
rating, the highest rating that can be achieved
in the QAR process, confirming that internal
audit activities are conducted in conformance
with the Standards.
As an advocate of the principles of
good corporate governance, Globe Internal
Audit worked together with the Institute
for Solidarity in Asia (ISA) which assists
public sector organizations to improve their
governance practices and raise them to
global standards and The Institute of Internal
Auditors in validating reported breakthrough
transformations in one of the Government Owned and Controlled Corporations. The
results of the validation were considered by
ISA in assessing the corporation’s eligibility for
conveying upon it an Institutionalized status
under Performance Governance System (PGS),
a globally recognized framework and an actionbased, measurable and time-bound program
designed to make organizations perform and
execute strategy successfully. It is a local
adaptation of the Balanced Scorecard applied
to the public sector, to track the agencies’
performance against a set of goals.
81
Last August 2010, Globe Internal Audit
also played host to the 7th Regional Chief
Audit Executives (CAE) Forum for Singapore
Telecommunications (SingTel) and its affiliates
held at the Shangri-La Mactan Resort & Spa
in Cebu City. The forum was attended by
delegates from SingTel’s various regional
affiliates such as AirTel (India), Optus
(Australia), Warid (Pakistan), AIS (Thailand),
as well as delegates from SingTel, Globe and
Ayala Corporation with the theme “P.R.I.M.E.
for Excellence” (Prepare, Refocus, Immerse,
Manage, Execute).
The annual Regional CAE Forum is
one of the established regional events
since 2004 that aims to gather the Heads
and key officers of internal audit teams of
SingTel and its regional affiliates to promote
synergies and relationship building through
sharing of knowledge, thought leadership,
experiences, and good practices on risk
management, internal control and corporate
governance.
Globe Internal Audit has also actively
participated in sharing good practice of
internal auditing and corporate governance
through various external speaking
engagements and attendance to forums and
other related events.
In 2009, Globe was featured in the
first project of the Asian Confederation
of IIA (ACIIA) entitled Governance, Risk
Management and Control: Internal Audit
Leading Practices, Case Studies in Asia”, the
first book published by ACIIA (a confederation
of 14 IIA affiliates in the Asia Pacific region).
Aligned with the resolve of the Company to
uphold the principles of good governance,
Globe Internal Audit shares its practices on
corporate governance and internal auditing.
Geared towards excellence, the Internal
Audit Group provides for continuing personal
and professional development for all auditors
through its Learning Ladder Frame work to
equip them in the conduct of reviews, with
focus on acquiring familiarity with Globe
internal processes and telecom technology,
new accounting and auditing standards, fraud
investigation skills, and regulatory updates.
82
External Audit
The Company engages the services of
independent auditors to conduct an audit and
obtain reasonable assurance on whether the
financial statements and relevant disclosures
are free from material misstatements. The
independent auditors are directly responsible
to the Audit Committee in helping ensure the
integrity of the Company’s financial statements
and reporting process.
It is the practice of the Company every
three (3) years to tender bid for the external
audit services of independent auditors and on
an annual basis conducting the independent
auditor’s performance appraisal. From the
results, the Audit Committee evaluates and
proposed to the Board for endorsement and
approval of the shareholder, the appointment
of the independent auditors. The endorsement
is submitted to the shareholders for approval
at the ASM. The representatives of the
independent auditors are expected to be
present at the ASM and have the opportunity to
make a statement on the Company’s financial
statements and results of operations if they
desire to do so. The auditors are also expected
to be available to respond to appropriate
questions during the meeting.
SyCip, Gorres, Velayo & Company (SGV
& Co.) is the appointed independent auditors
for Globe Telecom, Inc, and its subsidiaries.
In accordance with regulations issued by the
SEC, the audit partner principally handling
the Company’s account is rotated every five
(5) years or sooner. The most recent rotation
occurred in 2007.
There were no disagreements with the
Company’s independent auditors on any
matter of accounting principles or practices,
financial statement disclosure, or auditing
scope or procedure.
Fees approved in connection with the
audit services rendered by SGV & Co.,
pursuant to the regulatory and statutory
requirements amounted to P15.95 million
annually for the years ended 31 December
2010 and 2009.
In addition to performing the audit of
Globe Group’s financial statements, SGV &
Co. was also selected, in accordance with established procurement policies, to provide other
services in 2010 and 2009.
The Audit Committee has an existing policy to review and to pre-approve the audit and nonaudit services rendered by the Company’s independent auditors. It does not allow the Globe
Group to engage the independent auditors for certain non-audit services expressly prohibited by
SEC regulations to be performed by an independent auditor for its audit clients. This is to ensure
that the independent auditors maintain the highest level of independence from the Company, both
in fact and appearance.
The Audit Committee has reviewed the nature of non-audit services rendered by SGV
& Co. and the corresponding fees and concluded that these are not significant to impair the
independence of the auditors.
The aggregate fees billed by SGV & Co. are shown below (with comparative figures for 2009):
(Amount in millions of Pesos)
Audit Fees
Non-Audit Fees
Total
Audit Fees. This includes audit of Globe
Group’s annual financial statements and
review of quarterly financial statements in
connection with the statutory and regulatory
filings or engagements for the years ended
2010 and 2009.
Non-Audit Fees. This includes special
projects, trainings and seminars rendered by
the SGV & Co. and its affiliates.
The fees presented above include out-ofpocket expenses incidental to the independent
auditor’s services.
Responsible Tax Payment
Globe recognizes and follows Philippine
tax rules and regulations. The organization
pays the right amount of tax legally due to
the government and observes all applicable
rules and regulations in the country in a
timely manner. The organization’s employees,
consultants and business partners are
expected to treat with integrity all matters
pertaining to tax activities.
2010
2009
P15.95
P15.95
3.25
0.05
P19.20
P16.00
Financial Reporting
The annual audited consolidated
financial statements of Globe Telecom
and its subsidiaries have been prepared in
accordance with PFRS, which are aligned with
International Financial Reporting Standards.
Management has the primary
responsibility for the financial statements and
the financial reporting process.
The independent auditors are directly
responsible to the Audit Committee in
helping ensure the integrity of the Company’s
financial statements and relevant disclosures,
and for expressing an opinion on Globe
Group’s annual audited consolidated
financial statements. As part of its oversight
responsibility, the Audit Committee, with the
assistance of the internal auditors, reviews the
financial statements and all related disclosures
and endorses these to the Board for approval.
The financial statements comprise of the
consolidated statements of financial position,
consolidated statements of comprehensive
income, consolidated statements of changes
in equity, and consolidated statements of
cash flows.
83
Information showing the performance of the wireless and wireline segments is also disclosed
to show their respective contributions to total corporate performance. Finally, the financial
statements also include a detailed discussion of the Company’s significant accounting policies and
other explanatory notes.
Dealings in Securities
Globe has adopted strict policies and guidelines for trades involving the Company’s shares
made by key officers and those with access to material non-public information. Key officers and
those with access to the quarterly results in the course of its review are prohibited from trading
in Globe’s shares starting from the time when quarterly results are internally reviewed until after
Globe publicly discloses its results. Notices of trading blackouts are regularly issued to the officers
concerned and compliance is monitored by the Corporate and Legal Services Group. Also, all
key officers are required to submit a report on their trades to a designated compliance officer, for
submission to the SEC in accordance with the Securities Regulation Code.
Stockholders
Common
Shares
% of
Common
Ayala Corp.
40,319,263
30.47%
SingTel
62,646,486
47.33%
-
-
-
158,515,021
29,382,724
22.20%
-
132,348,473
100%
158,515,021
Asiacom
Public*
Total
Preferred
Shares
% of Preferred
shares
-
Total
-
% of Total
40,319,263
13.86%
-
62,646,486
21.54%
100%
158,515,021
54.50%
-
29,382,724
10.10%
100%
290,863,494
100%
* Including shares held by Globe directors, officers and employees through ESOP (Executive Stock Option Plan)
Ownership Structure
Globe Telecom regularly discloses the top
20 shareholders of the common and preferred
equity securities of the Company. Disclosure
is also made of the security ownership of
certain record and beneficial owners who
hold more than 5% of the Company’s
common and preferred shares. Finally, the
shareholdings and percentage ownership of
the directors and key officers are disclosed in
the Definitive Information Statement sent to
the shareholders prior to the ASM.
Shareholder Relations
Globe Telecom recognizes the importance
of regular communication with its investors,
and is committed to high standards of
disclosure, transparency, and accountability.
The Company aims to provide a fair, accurate,
and meaningful assessment of the Company’s
84
financial performance and prospects through
the annual report, quarterly financial reports,
and analyst presentations.
The Company’s quarterly financial results
are disclosed to the SEC and Philippine
Stock Exchange (PSE) within 24 hours from
their approval by the Board. The Company
also files its quarterly and year-end financial
statements and the detailed management’s
discussion and analysis within forty-five (45)
and one hundred and five (105) calendar
days respectively from the end of the financial
period covered by the report, in compliance
with the financial reporting and disclosure
requirements of the SEC and the PSE. These
reports are also made available to the analysts
immediately upon confirmation by the SEC of
receipt of disclosure, and are posted on the
Company’s website.
Additionally, any material, marketsensitive information such as dividend
declarations are also disclosed to the SEC
and PSE, as well as released through various
media including press releases and Company
website posting. The Company regularly
holds analysts and media briefings to discuss
the quarterly financial results. A conference
call facility is set up during these briefings to
enable wider participation. The company also
participates in both local and international
investor conferences as part of its investor
communications program.
The Company likewise holds an annual
stockholders’ meeting where shareholders
are given the opportunity to raise questions
and clarify issues relevant to the Company.
The Board, President & CEO, members
of management, and external auditors are
present to address any questions raised at
these meetings. Enquiries by shareholders,
whether by telephone, mail, or electronic
mail, are dealt with as promptly as possible.
Shareholders, investors, and the public may
also access the Company’s website (http://
www.globe.com.ph) to obtain information on
the Company.
Corporate Governance Guidelines:
Disclosure Survey
On 7 February 2011, Globe filed its
response to the Corporate Governance
Guidelines Disclosure Survey with the
Philippine Stock Exchange, Inc. (PSE) and
provided the following additional information:
1. The Company has in place relevant
policies and initiatives on Enterprise Risk
Management, which may be revised and
modified from time to time as necessary
to adapt to changes in the business and
operating environment, both internal and
external. Currently, there is an initiative
to enhance the risk management policy
and procedure to ensure that they
continue to remain relevant and effective.
The Company has and will continue to
engage outside consultants, as required,
to provide relevant expertise to help
improve its ERM capability through the
implementation of industry best practices
as part of the continuous improvement
process. Regular reporting to the Board
and/or its Committees of the material
business risks inherent in the Company’s
business by management facilitates the
Board’s oversight on the adequacy and
effectiveness of the management of
these risks.
2. In compliance with SEC Memorandum
Circular No. 6, Series of 2009, two of
eleven board members were nominated
and elected as Independent Directors. In
addition, all the directors except for the
President and CEO are non-executives.
3. The Company complies with the Minimum
Public Ownership requirement of the
PSE. As of 31 December 2010, public
ownership is 22.06% of total issued and
outstanding common shares, and 10.04%
of total issued and outstanding common
and preferred shares. Further, the
primary shareholders (Ayala Corporation
and Singapore Telecom) are publicly
held and listed companies themselves
and are, therefore, accountable to
their own public shareholders for their
governance of Globe. Each corporation
maintains high standards of governance,
are professionally managed, and are
acknowledged as models of good
governance both within their respective
countries of domicile and abroad.
85
I Love Performing
I live for music and celebrating good times,
I rejoice in my passion for revelry and playing,
For rejoicing in everyday gratefulness.
I am Ferry Llorico
Loving Globe since 2000
86
Management’s Discussion and Analysis
Operational Performance
Results of Operations (P Mn)
Net Operating Revenues
Service Revenues
Mobile1
Fixed Line Voice2
Fixed Line Data3
Broadband4
Non-Service Revenues
3
4
1
2
31 Dec
2010
65,548
62,555
50,503
2,816
3,488
5,748
2,993
31 Dec
2009
63,861
62,443
53,321
2,795
3,038
3,289
1,418
YoY Change
(%)
3%
-5%
1%
15%
75%
111%
Includes mobile voice and data revenues.
Includes revenues from landline and DUO services.
Includes international and domestic data services, corporate internet access, and data center solutions.
Includes revenues from wired, fixed wireless, and fully mobile broadband services.
Mobile Business
Globe provides digital mobile
communication services nationwide using
a fully digital network based on the Global
System for Mobile Communication (GSM)
technology. It provides voice, data and valueadded services to its mobile subscribers
through three major brands: Globe Postpaid,
Globe Prepaid and TM.
Globe Postpaid includes all postpaid
plans such as regular G-Plans, consumable
G-Flex Plans, Load Allowance Plans, Load
Tipid, Apple™ iPhone 3G plans and high-end
Platinum Plans. During the year, the Company
further expanded its postpaid offerings to
include My SuperPlan and My Fully Loaded
Plan, as well as various other add-on roaming
and mobile browsing plans to cater to the
needs of specific market segments. My
Fully Loaded Plan allows subscribers to
customize their plan depending on their
needs. Meanwhile, My Superplan is an
affordable and first-in-the-market personalized
plan which allows subscribers to choose from
and combine its unlimited call, text and web
browsing services. Both My Superplan and
My Fully Loaded Plan give subscribers the
flexibility to change their bundled services
as often as monthly. For those subscribers
who want to upgrade their mobile internet
browsing experience, Globe introduced
Personal Blackberry® and Super Surf add-on
plans which entail additional monthly fees
on top of their regular monthly postpaid
subscription fees.
Globe Prepaid and TM are the prepaid
brands of Globe. Globe Prepaid is targeted
towards the adult, mainstream market. Its
unique brand proposition revolves around
its innovative product and service offerings,
superior customer service, and Globe
“worldwidest” services and global network
reach. TM, on the other hand, caters to the
value-conscious segment of the market.
In addition to digital wireless
communications, Globe also offers mobile
payments and remittance service under the
GCash brand. GCash is an internationally
acclaimed micro payment service that
transforms a mobile phone into a virtual
wallet, enabling secure, fast, and convenient
money transfers at the speed and cost of a
text message. Since the launch of GCash,
wholly-owned subsidiary GXI has established
a wide network of local and international
partners that includes government agencies,
utility companies, cooperatives, insurance
companies, remittance companies, universities,
and commercial establishments which have
agreed to accept GCash as a means of
payment for products and services.
Mobile revenues, which comprised 81%
of consolidated service revenues, reached
P50.5 billion in 2010, 5% below the P53.3
billion achieved last year. Despite an overall
growth in voice and SMS traffic, the mobile
business was affected by the continued multiSIM usage, subscriber preference for loweryield bucket and unlimited service offerings,
and price pressures resulting from intense
competition.
87
Globe closed the year with a cumulative
mobile subscriber base of 26.5 million, 14%
higher than last year’s 23.2 million SIMs. Gross
additions recovered from last year’s recalibration
of acquisition programs and churn out of
marginal subscribers, bringing full year gross
additions to 21.8 million, 12% better than 2009
level of 19.4 million. With churn rates improving
across all brands, net subscriber additions
surged to 3.2 million SIMs in 2010 compared to
last year’s net reduction of 1.4 million.
Globe Postpaid, which accounted for 4%
of the total mobile subscriber base, delivered
record-breaking performances in key metrics
in 2010. The innovative My Super Plan and
My Fully Loaded Plan, which allow subscribers
to customize their plans, have been a major
growth driver in this segment, enabling the
Company to accumulate record subscriptions
during the year. Full year gross acquisitions
soared to an all-time high of 412,894 during
the period. With churn rate improving from
1.95% in 2009 to 1.92% in 2010, net additions
likewise surged to a record high of about
215,000. As a result, cumulative postpaid
subscribers breached the 1 million mark to
close the year with a total of 1,066,137 SIMs,
25% higher than previous year’s level of
851,368 subscribers. Postpaid gross and net
ARPUs of P1,609 and P1,192 were lower than
last year’s P1,822 and P1,283, respectively.
Growth in mobile browsing and roaming
revenues were offset by lower domestic
voice and SMS revenues, as well as lower
inbound international revenues. Meanwhile,
subscriber acquisition costs (SAC) decreased
by 35% from 2009 level of P5,382 to P3,489
due largely to lower subsidy, advertising and
promotion charges. Acquisition costs remained
recoverable within the 24-month contract
period for postpaid subscribers.
Globe Prepaid comprised 52% of the
total mobile subscriber base in 2010. During
the year, gross acquisitions increased by
4% from 10.4 million in 2009 to 10.8 million
SIMs in 2010 as a result of the Company’s
efforts to revitalize the prepaid brands and
following the Company’s recalibration of its
acquisition drives in 2009 and the deliberate
churn-out of marginal subscribers. With churn
rate declining year-on-year from 6.75% to
6.23%, net incremental subscribers for 2010
were 785,855, reversing the net reduction
88
Mobile Subscribers (In ‘000 SIMs)
23,245
851
22,394
26,471
1,066
25,405
2009
2010
■ Globe Prepaid & TM
■ Globe Postpaid
of 244,371 in 2009. As a result, cumulative
Globe Prepaid subscribers rose 6% from last
year’s 13.0 million to 13.8 million SIMs in 2010.
Despite an overall growth in voice and SMS
traffic, Globe Prepaid gross and net ARPUs fell
by 15% and 14%, respectively, from last year.
The continued shift in usage from regular, payper-use to value-based bucket and unlimited
service offerings, alongside price pressures
arising from intense competition, were the
key drivers behind the decline. Subscriber
acquisition costs, on the other hand, were
maintained at last year’s level of P37 and
remained recoverable within a month’s net
ARPU. TM closed the year with 11.6 million
subscribers, up 24% from last year’s 9.3
million, and accounted for 44% of total mobile
subscriber base in 2010. Full year gross
acquisitions rose 20% from 8.8 million last year
to 10.5 million as the Company concluded
its clean-up of lower-quality subscribers and
revitalized its acquisition program. With churn
rate substantially improving from 8.35% to
6.62%, net additions increased to over 2.2
million and reversed net reduction of about 1.2
million subscribers in 2009. Similar to trends
in Globe Prepaid, TM gross and net ARPUs fell
from 2009 levels by 2% and 6%, respectively.
Subscriber acquisition costs, on the other
hand, dropped significantly by 21% year-onyear on lower handset and SIM pack subsidies,
and remained recoverable within a month’s net
ARPU.
Fixed Line and Broadband Business
Globe offers a full range of fixed line
communications services, wired and
wireless broadband access, and end-to-
end connectivity solutions customized
for consumers, SMEs (Small & Medium
Enterprises), large corporations and
businesses.
Globe’s fixed line voice services include
local, national and international long distance
calling services in postpaid and prepaid
packages through its Globelines brand. For
corporate and enterprise customers, Globe
offers voice solutions that include regular and
premium conferencing, enhanced voice mail,
IP-PBX solutions and domestic or international
toll free services.
The Company’s fixed line data services
include end-to-end data solutions customized
according to the needs of businesses. Product
offerings include international and domestic
data services, wholesale and corporate
internet access, data center services and
segment-specific solutions tailored to the
needs of specific industries.
For the broadband business, Globe
offers wired, fixed wireless, and fully mobile
internet-on-the-go services across various
technologies and connectivity speeds for its
residential and business customers. Wired or
DSL broadband packages bundled with voice,
or broadband data-only services are available
at download speeds ranging from 256 kbps
up to 3 mbps. In selected areas where DSL is
not yet available, Globe offers a fixed wireless
broadband service using its WiMAX network.
For consumers who require a fully mobile,
internet-on-the-go broadband connection,
Globe Broadband Tattoo allows subscribers
to access the internet at speeds of up to 2
mbps using 3G with HSDPA, EDGE, GPRS
or Wi-Fi at various hotspots nationwide using
a plug-and-play USB modem. This service
is available in both postpaid and prepaid
packages. In addition, consumers in selected
urban areas who require faster connections
have the option to subscribe to Globe’s Hyper
Speed broadband plans using leading edge
GPON (Gigabit Passive Optical Network)
technology with speeds of up to 100 mbps.
In 2010, the fixed line and broadband
business of Globe continued its robust
growth and posted a year on year revenue
growth of 32%. This was driven by the strong
performances of the broadband and fixed line
data businesses whose revenues grew 75%
and 15%, respectively.
Globe’s fixed line voice business grew its
subscriber base by 5%, to close the year with
about 619,000 subscribers. This was driven by
the demand for bundled voice and broadband
plans, as well as subscriptions to the postpaid
Duo and SuperDuo services. Total fixed line
voice revenues increased by 1% to P2.8 billion,
in spite of the continued shift in traffic from fixed
line voice to mobile services and the softer
demand for voice-only, fixed line products.
The fixed line data business sustained
its strong growth and ended the year
with P3.5 billion in revenues, an increase
of 15% over 2009 level. This was fueled
by the Company’s continued expansion
of its network of high-speed data nodes,
transmission links, and international bandwidth
capacity to serve the requirements of business
and enterprise clients, including those in
the financial services, retail, offshoring and
outsourcing industries. During the year, and
to further address the communication needs
of corporates, especially those frequently
dealing with business partners overseas,
Globe Business launched Globe Telepresence,
the Company’s most advanced, close-to-live
conferencing solution. Supported by Globe’s
reliable Multi-Protocol Label Switching (MPLS)
for Virtual Private Network (VPN) transport,
Globe Telepresence enables customers to
conduct highly-immersive virtual meetings,
supported by life-size, high-definition images,
and smooth, realistic, real-time motion and
spatial audio. Globe Telepresence connects
to other telepresence rooms on the AT&T
Business Exchange, giving customers access
to over 70 countries and territories, helping
them save on travel time and costs.
In 2010, the Globe broadband business
achieved a major milestone when its
cumulative subscriber base breached the
1 million mark, ending the year with over
1,074,000 subscribers, 50% higher than the
prior year’s level of 715,000. This was driven
by the continued gains of Globe Broadband
Tattoo, the Company’s nomadic broadband
service, and Globe WiMAX, Globe fixed
wireless service for at-home use. Globe
WiMAX, which reached 100,000 subscribers
during the year, is the country’s biggest
and fastest-growing WiMAX service and is
available in over 420 towns and cities, in over
60 provinces nationwide. Wireless broadband
89
subscribers now account for 76% of total
broadband customers, up from 70% last year.
The robust subscriber pick-up translated
to sustained revenue gains, with broadband
service revenues up 75% to close the year at
P5.7 billion compared to P3.3 billion in 2009.
The broadband business now comprises 9%
of consolidated service revenues compared to
5% in 2009.
In an effort to sustain the strong growth
in the segment, Globe expanded its WiMAX
offerings by introducing a prepaid variant in
2010. Globe WiMAX Prepaid 4G is available
in data-only prepaid kits at speeds of up
to 3mbps for only P60 per day (plus onetime modem charge). Globe also released
Immortal Surf, the first and only mobile
internet offer that gives consumable internet
surfing minutes without expiry. For only P20,
Immortal Surf provides subscribers with one
hour of internet surfing minutes that will not
expire as long as the subscriber maintains a
P5 maintaining balance.
In the last quarter of 2010, Globe
also made its Globe Tattoo MyFi Device
more affordable by dropping prices of its
prepaid kit from P7,000 to P4,995. Globe
Tattoo MyFi is a wireless modem and Wi-Fi
router that enables one to share internet
access with other Wi-Fi-capable devices
simultaneously. Meanwhile, for Globe Tattoo
Plan499 and Plan999 subscribers, the
price of the MyFi device was also reduced
from a monthly fee of P250 to P149 for 24
months. Following the price drop of Globe
Tattoo MyFi, Globe launched the Tattoo
SuperStick, Globe Tattoo’s most powerful
mobile broadband, capable of speeds of up
to 3 mbps, and with sharable Globe-powered
WiFi connection for only P1,299 per month.
It also comes with one month of free McAfee
Antivirus Plus and 200 free SMS to Globe
and TM subscribers every month.
Financial Performance
Full year consolidated service revenues
of P62.6 billion were higher by P112 million
from last year’s P62.4 billion. The doubledigit growth of the fixed line and broadband
business compensated for the decline in
the Company’s mobile business which was
weighed down by declining yields from
90
value offerings and price pressures resulting
from intense competition. Consolidated
non-service revenues, on the other hand,
more than doubled from last year’s level of
P1.4 billion to P3.0 billion driven by higher
handset sales resulting from the record high
acquisitions in the postpaid segment, and the
brisk sales of Globe Broadband Tattoo.
Revenues for 2010 results include the
impact of a one-time upward adjustment of
P526 million, representing prepaid load credits
that have either expired or have already been
used up. Excluding this upward adjustment,
consolidated service revenues would have
closed the year at P62.0 billion, just slightly
below last year’s level of P62.4 billion.
Operating expenses and subsidy
increased by 12% from a year ago, from
P26.0 billion to P29.0 billion, driven largely by
higher network costs, marketing, outsourced
services, and provisions. Network-related
charges such as electricity, fuel, repairs and
maintenance grew as a result of an expanded
2G, 3G and broadband network. These
were offset by lower rent resulting from
the termination of temporary cable leases
following the completion of FOBN2, the
Company’s 2nd fiber optic backbone network.
Subsidy and marketing expenses, meanwhile,
also rose by 4% compared to 2009. As a
percentage of service revenues, marketing
and subsidy was at 9% from 8% in 2009.
With the increase in operating expenses
outpacing the growth in service revenues,
consolidated EBITDA was down 8% from
P36.5 billion to P33.5 billion in 2010. While
Service Revenue Profile
Fixed Line
Voice
4%
Fixed Line
Data
6%
Broadband
9%
Mobile
81%
Return on Equity
Net Income (P Bn)
12.6
26%
9.7
21%
2009
2010
mobile EBITDA margin remained healthy
at 63% of service revenues, the higher
contribution of the fast-growing but lowermargin fixed line and broadband business
diluted consolidated EBITDA margin to 54%
from 58% in 2009.
Globe closed the year with net income
after tax of P9.7 billion, 22% lower than
previous period’s P12.6 billion. Excluding
foreign exchange, mark-to-market gains and
losses, as well as non-recurring items, core
net income stood at P9.1 billion, down 24%
from past year’s P12.0 billion.
Consolidated basic earnings per share
decreased to P73.63 in 2010 from last year’s
P94.59, while consolidated diluted earnings
per share was at P73.12 from P94.31 a
year ago. Consolidated return on equity,
meanwhile, was at 21% in 2010 compared to
26% in 2009 using net income and average
equity balances for the year ended.
Globe Telecom's financial position
remains strong with ample liquidity and
gearing within optimum levels.
Consolidated assets amounted to
P130,628 million in 2010 compared to
P127,644 million in 2009. Cash balances
were at P5,869 million at the end of the
period compared to P5,943 million in 2009.
Investment in property and equipment also
went up to support an expanding mobile and
broadband operation.
Consolidated net cash provided by
operating activities decreased by 19% from
2009
2010
P33,376 million in 2009 to P27,148 million
in 2010 on lower cash flows generated from
operations and lower collections.
Meanwhile, consolidated net cash used
in investing activities amounted to P16,929
million, 22% below 2009 level of P21,829
million driven by lower capital expenditures.
Full year 2010 consolidated capital
expenditures declined by 21% from P24,702
million in 2009 to P19,467 million in 2010.
Last year’s amount included a one-time spend
in the Company’s domestic backbone network
FOBN2 and the related investment in the
TGN-Intra Asia submarine cable system.
Consolidated net cash used in financing
activities decreased by 10% to P10,172
million in 2010 on lower cash dividends paid
out during the year. Consolidated total debt
increased by 6% from P47,477 million to
P50,371 million in 2010. Loan repayments
of Globe for the period amounted to P11,987
million, a 13% decrease compared to the
P13,822 million paid in 2009.
The Company’s gearing levels have
been increasingly optimized over the past
few years with the raised dividend payouts
and higher proportion of debt to total
capitalization. Globe ended the year with
gross debt to equity ratio of 1.07:1 on a
consolidated basis which is well within the
2:1 debt to equity limit dictated by its debt
covenants. Meanwhile, net debt to equity
ratio was at 0.95:1 compared to 0.87:1 for
the same period last year.
91
Report of the Audit Committee to the Board of Directors
for the Year Ended 31 December 2010
In adherence to Article 2.5 of the Manual of Corporate Governance of Globe Telecom, Inc., the Audit Committee assists the
Board of Directors in carrying out its responsibility as they relate to the oversight of Globe’s financial reporting and operational
risks specifically on financial statements, financial reporting process and systems of internal controls, internal audit function and
independent auditors, legal or regulatory compliance, corporate governance, risk management process and fraud risks.
The Audit Committee’s role and responsibilities are likewise defined in the Audit Committee Charter approved by the Company’s
Board of Directors (Board).
In compliance with the Audit Committee Charter, we confirm that:
• An independent director chairs the Audit Committee;
• We had four (4) meetings during the year. The company’s President & CEO, the Chief Operating Adviser, the Chief Financial
Officer, and other members of management were requested to attend the Committee meetings. External subject experts,
such as the appointed independent auditors and other consultants, were also invited to the meetings.
• The Committee met with the Head of Internal Audit in executive sessions during the year.
• We have reviewed and discussed the quarterly unaudited financial statements and the audited annual financial statements
of Globe Telecom, Inc. and Subsidiaries (Globe Group), including the Management’s Discussion and Analysis of Financial
Condition and Results of Operations, with the Globe Group's Management, who has the primary responsibility for the financial
statements and the financial reporting process, the Internal Audit and with SGV & Co., the Independent Auditor of the Globe
Group who is responsible for expressing an opinion on the conformity of the Globe Group's consolidated audited financial
statements with Philippine Financial Reporting Standards;
• We have reviewed and discussed the adequacy of the Globe Group’s enterprise risk management framework and risk
management processes specific to financial statement and reporting, business continuity, fraud, revenue assurance and
regulatory risks with Management who is primarily responsible for the risk management process;
• We have discussed and approved the overall scope and plans for the respective audit reviews of the internal auditors and
SGV & Co.
• We have discussed the audit results of the independent auditors and their assessment of the Globe Group’s overall quality
of the financial reporting process, mainly on financial statements and compliance to financial reporting standards, and their
observations of internal control weaknesses arising from statutory audits;
• We have also discussed the results and reports of internal audit reviews and follow-up of implementation of audit
recommendations, and their assessment of the Globe Group’s internal controls ensuring that management is taking
appropriate corrective actions in a timely manner, including addressing internal control and any regulatory compliance issues;
• We have reviewed the effectiveness of the internal audit function, ensuring compliance with the International Standards for the
Professional Practice of Internal Auditing (ISSPIA), and the Internal Audit’s annual and quarterly reports to the Audit Committee
covering:
• Work plan and Key Performance Indicators (KPI) Accomplishments
• Critical Risk Areas Covered, including investigative reviews and resolutions
• Quality Assurance and Improvement Programs
• Organizational Structure, Resource Utilization and Staff Competencies
• We have reviewed and recommended for Board approval the audit services of SGV & Co. and approved audit-related and
permitted non-audit services provided by SGV & Co. to the Globe Group and the related fees for such services, in accordance
with existing policies, standards, and regulatory requirements, and concluded that the non-audit fees are not significant to
impair their independence.
Based on the reviews and discussions undertaken, and subject to the limitations on our roles and responsibilities referred to above,
the Audit Committee recommends to the Board of Directors that the audited financial statements be included in the Annual Report
for the year ended 31 December 2010 for filing with the Securities and Exchange Commission.
We are also recommending to the Board of Directors the re-appointment of SGV & Co. as the Globe Group’s Independent Auditor
for 2011 based on a fair and transparent tender process, and considering the independent auditor performance and qualifications.
7 February 2011
92
Xavier P. Loinaz
Chairman Romeo L. Bernardo Member Koh Kah Sek
Member
GLOBE TELECOM, INC. AND SUBSIDIARIES
Statement of Management’s Responsibility
for Financial Statements
The management of Globe Telecom, Inc. is responsible for all information and representations contained in the consolidated
financial statement as at and for each of the three years in the period ended 31 December 2010. The consolidated financial
statements have been prepared in accordance with Philippine Financial Reporting Standards and reflect amounts that are based on
the best estimates and informed judgment of management with an appropriate consideration to materiality.
In this regard, management maintains a system of accounting and reporting which provides for the necessary internal controls to
ensure that transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition and
liabilities are recognized. The management likewise discloses to the Company’s Audit Committee and to its external auditors: (i)
all significant deficiencies in the design or operation of internal controls that could adversely affect its ability to record, process and
report financial data; (ii) material weakness in the internal controls; and (iii) any fraud that involves management or other employees
who exercise significant roles in internal controls.
The Board of Directors reviews the consolidated financial statements before such statements are approved and submitted to the
stockholders of the company.
Sycip Gorres Velayo & Co., the independent auditors appointed by the stockholders, have audited the consolidated financial
statements of the Company and its Subsidiaries in accordance with Philippine Standards on Auditing and has expressed their
opinion on the fairness of presentation upon completion of such audit, in its report to Stockholders and the Board of Directors
dated 8 February 2011.
Jaime Augusto Zobel de Ayala
Chairman, Board of Directors
Ernest L. Cu
President and Chief Executive Officer
Alberto M. De Larrazabal
Chief Financial Officer
93
Independent Auditors’ Report
The Stockholders and the Board of Directors
Globe Telecom, Inc.
We have audited the accompanying consolidated financial statements of Globe Telecom, Inc. and Subsidiaries, which comprise
the consolidated statement of financial position as at December 31, 2010, 2009 and 2008, and the consolidated statements of
comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the years then
ended, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance
with Philippine Financial Reporting Standards, and for such internal control as management determines is necessary to enable the
preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our
audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement
of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Globe Telecom,
Inc. and Subsidiaries as of December 31, 2010, 2009 and 2008, and its financial performance and its cash flows for the years then
ended in accordance with Philippine Financial Reporting Standards.
SYCIP GORRES VELAYO & CO.
Arnel F. de Jesus
Partner
CPA Certificate No. 43285
SEC Accreditation No. 0075-AR-1
Tax Identification No. 152-884-385
PTR No. 2641517, January 3, 2011, Makati City
February 8, 2011
94
GLOBE TELECOM, INC. AND SUBSIDIARIES
Consolidated Statements
of Financial Position
Notes ASSETS
Current Assets
Cash and cash equivalents 28, 30
Short-term investments 28 Receivables - net 4, 28 Inventories and supplies 5
Derivative assets 28 Prepayments and other current assets - net 6, 28 Total Current Assets Assets classified as held for sale 25.4 Noncurrent Assets
Property and equipment - net 7
Investment property - net 8
Intangible assets and goodwill - net 9
Investments in joint ventures 10 Deferred income tax - net 24 Other noncurrent assets - net 11,18 Total Noncurrent Assets LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued expenses 12, 18, 28 Provisions 13 Derivative liabilities 28 Income tax payable 24 Unearned revenues 4
Notes payable 14, 28 Current portion of:
Long-term debt 14, 28 Other long-term liabilities 15, 28 Total Current Liabilities Liabilities directly associated with the assets
classified as held for sale 25.4 Noncurrent Liabilities
Deferred income tax - net 24 Long-term debt - net of current portion 14, 28 Derivative liabilities
28 Other long-term liabilities - net of current portion 15, 28 Total Noncurrent Liabilities Total Liabilities Equity
Paid-up capital 17 Cost of share-based payments 16, 18 Other reserves 17, 28
Retained earnings 17 Total Equity 2010 December 31
2009 (In Thousand Pesos)
2008
P5,868,986
–
8,374,123 1,839,333 19,888 4,704,198 20,806,528 778,321 21,584,849 P5,939,927
2,784 6,583,228 1,653,750 36,305 4,199,320 18,415,314 –
18,415,314 P5,782,224
–
7,473,346
1,124,322
169,012
5,106,429
19,655,333
–
19,655,333
101,837,254 214,192 3,248,376 197,016 670,594 2,875,686 109,043,118 P130,627,967 101,693,868 236,739 2,982,856 233,800 742,538 3,338,410 109,228,211 P127,643,525 93,540,390
259,223
3,338,796
73,529
523,722
2,360,195
100,095,855
P119,751,188
P22,115,203 224,388 93,336 1,098,492 2,402,749 –
P20,838,681 89,404 85,867 1,107,721 2,981,880 2,000,829 P17,032,474
202,514
163,989
1,237,969
3,247,711
4,002,160
8,677,209 –
34,611,377 5,667,965 803,617 33,575,964 7,742,227
99,145
33,728,189
697,729 35,309,106 –
33,575,964 –
33,728,189
4,620,490 41,694,261 152,529 1,982,453 48,449,733 83,758,839 4,627,294 39,808,057 6,589 1,916,707 46,358,647 79,934,611 4,590,429
28,843,711
21,665
2,475,639
35,931,444
69,659,633
33,946,004 544,794 (88,310) 12,466,640 46,869,128 P130,627,967 33,912,158 468,367 18,518
13,309,871 47,708,914 P127,643,525 33,861,398
386,905
(35,382)
15,878,634
50,091,555
P119,751,188
See accompanying Notes to Consolidated Financial Statements.
95
GLOBE TELECOM, INC. AND SUBSIDIARIES
Consolidated Statements
of Comprehensive Income
Notes REVENUES
Service revenues 16 Nonservice revenues
Interest income 19, 29 Others - net 20 Gain on disposal of property
and equipment - net 7, 29 COSTS AND EXPENSES
General, selling and administrative 21 Depreciation and amortization 7, 8, 9, 29 Cost of sales 5
Financing costs 22, 29 Impairment losses and others 23 Equity in net losses of joint ventures 10, 29 INCOME BEFORE INCOME TAX PROVISION FOR (BENEFIT FROM) INCOME TAX 24
Current Deferred NET INCOME OTHER COMPREHENSIVE INCOME (LOSS) 17
Transactions on cash flow hedges - net Changes in fair value of available-for-sale
investment in equity securities Exchange differences arising from translations of
foreign investments
Tax effect relating to components of other
comprehensive income TOTAL COMPREHENSIVE INCOME Earnings Per Share 27
Basic Diluted Cash dividends declared per common share 17 See accompanying Notes to Consolidated Financial Statements.
96
Years Ended December 31
2010 2009 2008
(In Thousand Pesos, Except Per Share Figures)
P62,554,689 2,993,301
218,532 856,941
66,623,463 P62,443,518 1,418,614 271,806 1,064,476 65,198,414 P62,894,488
1,923,560
420,425
700,874
65,939,347
52,449 66,675,912 608,400 65,806,814 24,837
65,964,184
26,692,104 18,085,839
4,238,960 2,068,401 1,549,448 2,968 52,637,720 14,038,192 24,496,882 17,388,430 2,947,950 2,182,881 810,960 7,009 47,834,112 17,972,702 23,757,126
17,028,068
3,117,172
3,000,391
1,205,679
9,728
48,118,164
17,846,020
4,187,625 105,933 4,293,558 9,744,634 5,583,809 (179,980) 5,403,829
12,568,873 7,268,584
(698,442)
6,570,142
11,275,878
(133,257) 25,040
(310,099)
20,150 14,553 (19,734)
(33,698) 24,682 1,508
39,977
(106,828) P9,637,806 (10,375) 53,900 P12,622,773 108,535
(219,790)
P11,056,088
P73.63 P73.12
P80.00 P94.59 P94.31 P114.00
P84.75
P84.61
P125.00
GLOBE TELECOM, INC. AND SUBSIDIARIES
Consolidated Statements
of Changes in Equity
Cost of
Capital
Stock
Paid-in
Payments
Reserves
(Note 17)
Capital
(Note 16.5)
(Note 17)
Notes
Additional Share-Based
Other
Retained
Earnings Total
For the Year Ended December 31, 2010 (In Thousand Pesos)
P7,409,079 P26,503,079 P468,367 the year
–
–
–
(106,828) 9,744,634 9,637,806
–
–
–
–
(10,587,865)
(10,587,865)
104,788
As of January 1, 2010 P18,518
P13,309,871 P47,708,914
Total comprehensive income (loss) for
Dividends on common stock 17.3 Cost of share-based payments 18.1 –
–
104,788 –
–
Exercise of stock options 17.2 144
33,702 (28,361) –
–
5,485
P7,409,223 P26,536,781 P544,794
(P88,310) P12,466,640 P46,869,128
As of January 1, 2009 P7,408,075 P26,453,323 P386,905
Total comprehensive income for the year –
–
–
53,900 12,568,873 12,622,773
(15,087,144)
As of December 31, 2010 For the Year Ended December 31, 2009 (In Thousand Pesos)
Dividends on: (P35,382) P15,878,634 P50,091,555
17.3
Common stock
–
–
–
–
(15,087,144)
Preferred stock –
–
–
–
(50,492)
(50,492)
18.1
–
–
126,437
–
–
126,437
Collection of subscriptions receivable 732 –
–
–
–
732
Exercise of stock options 17.2 272
49,756 (44,975)
–
–
5,053
As of December 31, 2009 P7,409,079 P26,503,079 P468,367 P18,518
P13,309,871 P47,708,914
Cost of share-based payments For the Year Ended December 31, 2008 (In Thousand Pesos)
As of January 1, 2008
P7,367,002 P26,353,378 P306,358
P184,408 P21,205,664 P55,416,810
–
–
–
(219,790) 11,275,878
11,056,088
(16,542,271)
Total comprehensive income (loss) for
the year Dividends on: 17.3
Common stock –
–
–
–
(16,542,271) Preferred stock
–
–
–
–
(60,637) (60,637)
18.1 –
–
182,324 –
–
182,324
Collection of subscriptions receivable 40,742
Cost of share-based payments 40,742
–
–
–
–
17.2 331
99,945 (101,777) –
–
(1,501)
As of December 31, 2008 P7,408,075 P26,453,323 P386,905
(P35,382) P15,878,634 P50,091,555
Exercise of stock options See accompanying Notes to Consolidated Financial Statements.
97
GLOBE TELECOM, INC. AND SUBSIDIARIES
Consolidated Statements
of Cash Flows
Notes CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax
Adjustments for:
Depreciation and amortization 7, 8, 9 Interest expense 22 Provisions for (reversals of) other probable losses 23
Cost of share-based payments 16, 18 Impairment losses (reversal of impairment losses)
on property and equipment 23 Loss (gain) on derivative instruments 22 Equity in net losses of a joint venture 10
Dividend income
Gain on disposal of property and equipment
7
Foreign exchange losses (gains) - net 20, 22
Interest income 19
Operating income before working capital changes Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables
Inventories and supplies Prepayments and other current assets Increase (decrease) in:
Accounts payable and accrued expenses Unearned revenues Other long-term liabilities
Cash generated from operations Income tax paid
Net cash flows provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES
Additions to:
Property and equipment 7,30 Intangible assets 9
Proceeds from sale of property and equipment Decrease (increase) in:
Short-term investments
Held-to-maturity investments Other noncurrent assets Acquisition of subsidiaries
9
Dividend received
Interest received
Net cash flows used in investing activities
(Forward)
98
Years Ended December 31
2010 2009 (In Thousand Pesos)
2008
P14,038,192 P17,972,702 P17,846,020
18,085,839 1,981,785 138,760
104,787 17,388,430 2,096,945 (88,047) 126,437 17,028,068
2,255,878
(5,031)
182,324
83,040
36,570 2,968
(2,366)
(52,449)
(501,500)
(218,532) 33,697,094 85,631
64,547 7,009 (592)
(608,400)
(286,530)
(271,806)
36,486,326
(31,172)
(105,642)
9,728
(27)
(24,837)
759,299
(420,425)
37,494,183
(1,932,420) (185,583)
(438,808) 833,760
(529,428)
754,837
(751,361)
(12,176)
(2,482,801)
1,007,956 (579,131)
(314,998) 31,254,110
(4,105,733) 27,148,377 1,617,432 (265,831)
68,345
38,965,441 (5,589,227)
33,376,214 (2,778,052)
1,381,180
(818,774)
32,032,199
(7,117,556)
24,914,643
(17,552,246)
(169,329)
113,258 (20,988,768) (99,164) 58,145 (18,754,502)
(196,052)
137,124
2,784 –
482,918
–
2,366 191,436 (16,928,813)
(2,784) –
(863,889)
(141,330) 592 208,094 (21,829,104)
500,000
2,350,032
(619,397)
(351,499)
27
352,990
(16,581,277)
Notes CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings: 14
Long-term Short-term Repayments of borrowings: 14
Long-term Short-term
Payments of dividends to stockholders: 17
Common
Preferred
Collection of subscriptions receivable and exercise of
stock options Interest paid
Net cash flows used in financing activities Years Ended December 31
2010 2009 (In Thousand Pesos)
2008
P14,181,967 1,000,000 P18,629,170 2,000,000 P11,500,000
6,603,375
(8,986,275) (3,000,829)
(9,820,330)
(4,001,330)
(4,814,990)
(3,100,540)
(10,587,865)
(50,492) (15,087,144) (60,637)
(16,542,271)
(49,449)
5,485 (2,734,000) (10,172,009)
5,785 (3,009,233)
(11,343,719)
39,241
(2,407,243)
(8,771,877)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 47,555 203,391 (438,511)
NET FOREIGN EXCHANGE DIFFERENCE (118,496)
(45,688) 29,731
CASH AND CASH EQUIVALENTS AT
BEGINNING OF THE YEAR 5,939,927 5,782,224 6,191,004
P5,868,986 P5,939,927 P5,782,224
CASH AND CASH EQUIVALENTS AT
END OF YEAR 28, 30 See accompanying Notes to Consolidated Financial Statements.
99
GLOBE TELECOM, INC. AND SUBSIDIARIES
Notes to Consolidated
Financial Statements
1. Corporate Information
Globe Telecom, Inc. (hereafter referred to as “Globe Telecom”) is a stock corporation organized under the laws
of the Philippines, and enfranchised under Republic Act (RA) No. 7229 and its related laws to render any and all
types of domestic and international telecommunications services. Globe Telecom is one of the leading providers
of digital wireless communications services in the Philippines under the Globe and Touch Mobile (TM) brand using
a fully digital network. It also offers domestic and international long distance communication services or carrier
services. Globe Telecom’s principal executive offices are located at 5th Floor, Globe Telecom Plaza, Pioneer
Highlands, Pioneer corner Madison Streets, Mandaluyong City, Metropolitan Manila, Philippines. Globe Telecom is
listed in the Philippine Stock Exchange (PSE) and has been included in the PSE composite index since September
17, 2001. Major stockholders of Globe Telecom include Ayala Corporation (AC), Singapore Telecom, Inc. (STI) and
Asiacom Philippines, Inc. None of these companies exercise control over Globe Telecom.
Globe Telecom owns 100% of Innove Communications, Inc. (Innove). Innove is a stock corporation organized
under the laws of the Philippines and enfranchised under RA No. 7372 and its related laws to render any and
all types of domestic and international telecommunications services. Innove holds a license to provide digital
wireless communication services in the Philippines. Innove also offers a broad range of wireline voice and data
communication services, including domestic and international long distance communication services or carrier
services as well as broadband internet services. Innove also has a license to establish, install, operate and
maintain a nationwide local exchange carrier (LEC) service, particularly integrated local telephone service with
public payphone facilities and public calling stations, and to render and provide international and domestic carrier
and leased line services.
Globe Telecom owns 100% of G-Xchange, Inc. (GXI), a corporation formed for the purpose of developing,
designing, administering, managing and operating software applications and systems, including systems
designed for the operations of bill payment and money remittance, payment and delivery facilities through various
telecommunications systems operated by telecommunications carriers in the Philippines and throughout the
world and to supply software and hardware facilities for such purposes. GXI is registered with the Bangko Sentral
ng Pilipinas (BSP) as a remittance agent. GXI handles the mobile payment and remittance service using Globe
Telecom’s network as transport channel under the GCash brand. The service, which is integrated into the cellular
services of Globe Telecom and Innove, enables easy and convenient person-to-person fund transfers via short
messaging services (SMS) and allows Globe Telecom and Innove subscribers to easily and conveniently put cash
into and get cash out of the GCash system.
Globe Telecom acquired 100% of Entertainment Gateway Group Corporation (EGGC) and EGGstreme (Hong
Kong) Limited (EHL) (collectively referred here as “EGG Group”) on June 26, 2008 (see Note 9). EGG Group is
engaged in the development and creation of wireless products and services accessible through telephones or other
forms of communication devices. EGGC is registered with the Department of Transportation and Communication
(DOTC) as a content provider.
Globe Telecom owns 100% of GTI Business Holdings, Inc. (GTI). The primary purpose of this company is to invest,
purchase, subscribe for or otherwise acquire and own, hold, sell or otherwise dispose of real and personal property
of every kind and description. GTI was incorporated on November 25, 2008. In July 2009, GTI incorporated its
wholly owned subsidiary, GTI Corporation (GTIC), a company organized under the General Corporation Law of
the State of Delaware for the purpose of engaging in any lawful act or activity for which corporations may be
organized under the Delaware General Corporation Law. GTIC has not yet started commercial operations as of
December 31, 2010.
100
2. Summary of Significant Accounting Policies
2.1
Basis of Financial Statement Preparation
The accompanying consolidated financial statements of Globe Telecom and its wholly-owned subsidiaries,
collectively referred to as the “Globe Group”, have been prepared under the historical cost convention
method, except for derivative financial instruments and available-for-sale (AFS) investments that are
measured at fair value.
The consolidated financial statements of the Globe Group are presented in Philippine Peso (P), Globe
Telecom’s functional currency, and rounded to the nearest thousands except when otherwise indicated.
On February 8, 2011, the Board of Directors (BOD) approved and authorized the release of the
consolidated financial statements of Globe Telecom, Inc. and Subsidiaries as of and for the years ended
December 31, 2010, 2009 and 2008.
2.2
Statement of Compliance
The consolidated financial statements of the Globe Group have been prepared in compliance with Philippine
Financial Reporting Standards (PFRS).
2.3
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of Globe Telecom and its
subsidiaries as of and for the years ended December 31, 2010, 2009 and 2008. The subsidiaries are as
follows:
Place of Percentage of
Name of Subsidiary
Incorporation
Principal Activity
Ownership
Innove Philippines Wireless and wireline voice and data
communication services 100%
GXI Philippines Software development for
telecommunications applications
and money remittance services 100%
EGG Group
EGGC Philippines Mobile content and application
development services
100%
EHL
Hong Kong
Mobile content and application
development services
100%
GTI GTIC Philippines United States Investment and holding company No operations 100%
100%
Subsidiaries are consolidated from the date on which control is transferred to the Globe Group and
cease to be consolidated from the date on which control is transferred out of the Globe Group. The
financial statements of the subsidiaries are prepared for the same reporting year as Globe Telecom using
uniform accounting policies for like transactions and other events in similar circumstances. All significant
intercompany balances and transactions, including intercompany profits and losses, were eliminated
during consolidation in accordance with the accounting policy on consolidation.
2.4
Changes in Accounting Policies
The accounting policies adopted are consistent with those of the previous financial year except for the
adoption of the following new and amended PFRS and Philippine Interpretations of International Financial
Reporting Interpretations Committee (IFRIC) which became effective on January 1, 2010. Except as
otherwise indicated, the adoption of the new and amended Standards and Interpretations did not have a
significant impact on the consolidated financial statements.
•
Revised PFRS 3, Business Combinations and Philippine Accounting Standard (PAS) 27,
Consolidated and Separate Financial Statements
The revised PFRS 3 introduces a number of changes in the accounting for business combinations that
will impact the amount of goodwill recognized, the reported results in the period that an acquisition
101
occurs, and future reported results. The revised PAS 27 requires, among others, that (a) change in
ownership interests of a subsidiary (that do not result in loss of control) will be accounted for as an
equity transaction and will have no impact on goodwill nor will it give rise to a gain or loss; (b) losses
incurred by the subsidiary will be allocated between the controlling and non-controlling interests
(NCI) (previously referred to as ‘minority interests’), even if the losses exceed the non-controlling
equity investment in the subsidiary; and (c) on loss of control of a subsidiary, any retained interest
will be remeasured to fair value and this will impact the gain or loss recognized on disposal.
•
Philippine Interpretation IFRIC 17, Distribution of Non-cash Assets to Owners
This Interpretation provides guidance on accounting for arrangements whereby an entity distributes
non-cash assets to shareholders either as a distribution of reserves or as dividends.
•
Amendment to PAS 39, Financial Instruments: Recognition and Measurement - Eligible Hedged
Items
This Amendment clarifies that an entity is permitted to designate a portion of the fair value changes
or cash flow variability of a financial instrument as a hedged item. This also covers the designation
of inflation as a hedged risk or portion in particular situations. The Group has concluded that the
amendment will have no impact on the financial position or performance of the Group, as the Group
has not entered into any such hedges.
•
Amendments to PFRS 2, Share-based Payment: Group Cash-settled Transactions
This Amendment clarifies the scope and the accounting for group cash-settled share-based
payment transactions.
Improvements to PFRSs
The omnibus amendments to PFRSs issued in May 2008 and April 2009 were issued primarily with a
view to removing inconsistencies and clarifying wordings. There are separate transitional provisions for
each standard. The adoption of these amended standards did not have any significant impact on the
consolidated financial statements of the Globe Group, unless otherwise indicated.
Issued in May 2008
•
IFRS 5, Non-current Assets Held for Sale and Discontinued Operations
This Amendment clarifies that when a subsidiary is classified as held for sale, all its assets and
liabilities are classified as held for sale, even when the entity remains a non-controlling interest after
the sale transaction. The Amendment is applied prospectively.
Issued in April 2009
•
PFRS 2, Share-based Payment
This Amendment clarifies that the contribution of a business on formation of a joint venture and
combinations under common control are not within the scope of PFRS 2 even though they are out
of scope of PFRS 3.
102
•
PFRS 5, Non-current Assets Held for Sale and Discontinued Operations
This Amendment clarifies that the disclosures required in respect of non-current assets and disposal
groups classified as held for sale or discontinued operations are only those set out in PFRS 5.
The disclosure requirements of other PFRSs only apply if specifically required for such non-current
assets or discontinued operations.
•
PFRS 8, Operating Segments
This Amendment clarifies that segment assets and liabilities need only be reported when those
assets and liabilities are included in measures that are used by the chief operating decision maker.
•
PAS 1, Presentation of Financial Statements
This Amendment clarifies that the terms of a liability that could result, at anytime, in its settlement by
the issuance of equity instruments at the option of the counterparty do not affect its classification.
2.5 •
PAS 7, Statement of Cash Flows
This Amendment explicitly states that only expenditure that results in a recognized asset can be
classified as a cash flow from investing activities.
•
PAS 17, Leases
This Amendment removes the specific guidance on classifying land as a lease. Prior to the
amendment, leases of land were classified as operating leases. This Amendment requires that leases
of land are classified as either ‘finance’ or ‘operating’ in accordance with the general principles of
PAS 17.
•
PAS 36, Impairment of Assets
This Amendment clarifies that the largest unit permitted for allocating goodwill, acquired in a
business combination, is the operating segment as defined in PFRS 8 before aggregation for
reporting purposes.
•
PAS 38, Intangible Assets
This Amendment clarifies that if an intangible asset acquired in a business combination is identifiable
only with another intangible asset, the acquirer may recognize the group of intangible assets as
a single asset provided the individual assets have similar useful lives. It clarifies that the valuation
techniques presented for determining the fair value of intangible assets acquired in a business
combination that are not traded in active markets are only examples and are not restrictive on the
methods that can be used.
•
PAS 39, Financial Instruments: Recognition and Measurement
This Amendment clarifies the following: 1) that a prepayment option is considered closely related
to the host contract when the exercise price of a prepayment option reimburses the lender up to
the approximate present value of lost interest for the remaining term of the host contract; 2) that
the scope exemption for contracts between an acquirer and a vendor in a business combination to
buy or sell an acquiree at a future date applies only to binding forward contracts, and not derivative
contracts where further actions by either party are still to be taken and 3) that gains or losses on
cash flow hedges of a forecast transaction that subsequently results in the recognition of a financial
instrument or on cash flow hedges of recognized financial instruments should be reclassified in the
period that the hedged forecast cash flows affect profit or loss.
•
Philippine Interpretation IFRIC 9, Reassessment of Embedded Derivatives
This Interpretation clarifies that it does not apply to possible reassessment, at the date of acquisition,
to embedded derivatives in contracts acquired in a combination between entities or businesses
under common control or the formation of a joint venture.
•
Philippine Interpretation IFRIC 16, Hedges of a Net Investment in a Foreign Operation
This Interpretation states that, in a hedge of a net investment in a foreign operation, qualifying
hedging instruments may be held by any entity or entities within the group, including the foreign
operation itself, as long as the designation, documentation and effectiveness requirements of PAS
39 that relate to a net investment hedge are satisfied.
Future Changes in Accounting Policies
The Globe Group will adopt the following new and amended standards and interpretations enumerated
below when these become effective. Except as otherwise indicated, the Globe Group does not expect the
adoption of these new and amended PFRS and Philippine Interpretations to have significant impact on the
consolidated financial statements.
Effective 2011
•
Amendment to PAS 24, Related Party Disclosures
This Amendment is effective for annual periods beginning on or after January 1, 2011. It clarifies
the definition of a related party to simplify the identification of such relationships and to eliminate
inconsistencies in its application. The revised standard introduces a partial exemption of disclosure
requirements for government-related entities. Early adoption is permitted for either the partial
exemption for government-related entities or for the entire standard.
103
•
Amendment to PAS 32, Financial Instruments: Presentation - Classification of Rights Issues
This Amendment is effective for annual periods beginning on or after February 1, 2010. It amended
the definition of a financial liability in order to classify rights issues (and certain options or warrants)
as equity instruments in cases where such rights are given pro rata to all of the existing owners of
the same class of an entity’s non-derivative equity instruments, or to acquire a fixed number of the
entity’s own equity instruments for a fixed amount in any currency.
•
Amendments to Philippine Interpretation IFRIC 14, Prepayments of a Minimum Funding Requirement
This Amendment is effective for annual periods beginning on or after January 1, 2011, with
retrospective application. It provides guidance on assessing the recoverable amount of a net
pension asset. The amendment permits an entity to treat the prepayment of a minimum funding
requirement as an asset.
•
Philippine Interpretation IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments
This Interpretation is effective for annual periods beginning on or after July 1, 2010. It clarified that
equity instruments issued to a creditor to extinguish a financial liability qualify as consideration paid.
The equity instruments issued are measured at their fair value. In case that this cannot be reliably
measured, the instruments are measured at the fair value of the liability extinguished. Any gain or
loss is recognized immediately in profit or loss.
Improvements to PFRSs
The omnibus amendments to PFRSs issued in May 2010 were issued primarily with a view to
removing inconsistencies and clarifying wordings. There are separate transitional provisions for
each standard and will become effective January 1, 2011. Except otherwise stated, the Globe
Group does not expect the adoption of these new standards to have significant impact on the
consolidated financial statements.
•
PFRS 3, Business Combinations (Revised)
This Amendment clarifies that the Amendments to PFRS 7, Financial Instruments: Disclosures,
PAS 32 and PAS 39 that eliminate the exemption for contingent consideration, do not apply
to contingent consideration that arose from business combinations whose acquisition dates
precede the application of PFRS 3 (as revised in 2008).
It also limits the scope of the measurement choices that only the components of NCI that
are present ownership interests that entitle their holders to a proportionate share of the
entity’s net assets, in the event of liquidation, shall be measured either: at fair value or at the
present ownership instruments’ proportionate share of the acquiree’s identifiable net assets.
Other components of NCI are measured at their acquisition date fair value, unless another
measurement basis is required by another PFRS.
The Amendment also requires an entity (in a business combination) to account for the
replacement of the acquiree’s share-based payment transactions (whether obliged or
voluntarily), i.e., split between consideration and post combination expenses. However, if
the entity replaces the acquiree’s awards that expire as a consequence of the business
combination, these are recognized as post-combination expenses. It further specifies the
accounting for share-based payment transactions that the acquirer does not exchange for its
own awards: if vested - they are part of NCI and measured at their marked-based measure;
if unvested - they are measured at market-based value as if granted at acquisition date, and
allocated between NCI and post-combination expense.
104
•
PFRS 7, Financial Instruments: Disclosures
This Amendment emphasizes the interaction between quantitative and qualitative disclosures
and the nature and extent of risks associated with financial instruments.
The amendments to quantitative and credit risk disclosures are as follows:
a) Clarify that only financial assets whose carrying amount does not reflect the maximum
exposure to credit risk need to provide further disclosure of the amount that represents the
maximum exposure to such risk.
b) Requires, for all financial assets, disclosure of the financial effect of collateral held as security
and other credit enhancements regarding the amount that best represents the maximum
exposure to credit risk (e.g., a description of the extent to which collateral mitigates credit
risk).
c) Remove disclosure of the collateral held as security, other credit enhancements and an
estimate of their fair value for financial assets that are past due but not impaired, and
financial assets that are individually determined to be impaired.
d) Remove the requirement to specifically disclose financial assets renegotiated to avoid
becoming past due or impaired.
e) Clarify that the additional disclosure required for financial assets obtained by taking
possession of collateral or other credit enhancements are only applicable to assets still
held at the reporting date.
•
PAS 1, Presentation of Financial Statements
This Amendment clarifies that an entity will present an analysis of other comprehensive income
for each component of equity, either in the statement of changes in equity or in the notes to the
financial statements.
•
PAS 27, Consolidated and Separate Financial Statements
This Amendment clarifies that the consequential amendments from PAS 27 made to PAS 21,
The Effect of Changes in Foreign Exchange Rates, PAS 28, Investments in Associates and PAS
31, Interests in Joint Ventures, apply prospectively for annual periods beginning on or after July
1, 2009 or earlier when PAS 27 is applied earlier.
•
PAS 34, Interim Financial Reporting
This Amendment provides guidance to illustrate how to apply disclosure principles in PAS 34
and add disclosure requirements around:
a) The circumstances likely to affect fair values of financial instruments and their
classification;
b) Transfers of financial instruments between different levels of the fair value hierarchy;
c) Changes in classification of financial assets;
d) Changes in contingent liabilities and assets.
•
Philippine Interpretation IFRIC 13, Customer Loyalty Programmes
This Amendment clarifies that when the fair value of award credits is measured based on the
value of the awards for which they could be redeemed, the amount of discounts or incentives
otherwise granted to customers not participating in the award credit scheme, is to be taken
into account.
Effective 2012
• Philippine Interpretation IFRIC 15, Agreement for the Construction of Real Estate
This Interpretation covers accounting for revenue and associated expenses by entities that
undertake the construction of real estate directly or through subcontractors which should be
applied retroactively and prospectively. It requires that revenue on construction of real estate be
recognized only upon completion, except when such contract qualifies as construction contract
to be accounted for under PAS 11, Construction Contracts, or involves rendering of services in
which case revenue is recognized based on stage of completion. Contracts involving provision
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of services with the construction materials and where the risks and reward of ownership are
transferred to the buyer on a continuous basis will also be accounted for based on stage of
completion.
•
PAS 12, Income Taxes, Deferred Tax: Recovery of Underlying Assets
The Amendment to PAS 12 is effective for annual periods beginning on or after January 1, 2012.
It provides a practical solution to the problem of assessing whether recovery of an asset will
be through use or sale. It introduces a presumption that recovery of the carrying amount of an
asset will, normally, be through sale.
•
PFRS 7, Financial Instruments: Disclosures (Amendments) – Disclosures–Transfers of Financial
Assets
The Amendments to PFRS 7 are effective for annual periods beginning on or after July 1, 2011.
It will allow users of financial statements to improve their understanding of transfer transactions
of financial assets (for example, securitizations), including understanding the possible effects of
any risks that may remain with the entity that transferred the assets. It also requires additional
disclosures if a disproportionate amount of transfer transactions are undertaken around the end
of a reporting period.
Effective 2013
• PFRS 9, Financial Instruments: Classification and Measurement
The Standard, as issued in 2010, reflects the first phase of the work on the replacement of PAS
39 and applies to classification and measurement of financial assets and financial liabilities as
defined in PAS 39. It is effective for annual periods beginning on or after January 1, 2013. In
subsequent phases, hedge accounting and derecognition will be addressed. The completion
of this project is expected in early 2011. The adoption of the first phase of this Standard will
have an effect on the classification and measurement of the Globe Group’s financial assets.
The Globe Group will quantify the effect in conjunction with the other phases, when issued, to
present a comprehensive picture.
2.6 Significant Accounting Policies
2.6.1 Revenue Recognition
The Globe Group provides mobile and wireline voice, data communication and broadband internet
services which are both provided under postpaid and prepaid arrangements.
The Globe Group assesses its revenue arrangements against specific criteria in order to determine
if it is acting as principal or agent. The following specific recognition criteria must also be met before
revenue is recognized.
Revenue is recognized when the delivery of the products or services has occurred and collectability
is reasonably assured.
Revenue is stated at amounts invoiced and accrued to customers, taking into consideration the
bill cycle cut-off (for postpaid subscribers), the amount charged against preloaded airtime value
(for prepaid subscribers), switch-monitored traffic (for carriers and content providers) and excludes
value-added tax (VAT) and overseas communication tax. Inbound traffic charges, net of discounts
and outbound traffic charges, are accrued based on actual volume of traffic monitored by Globe
Group’s network and in the traffic settlement system.
2.6.1.1 Service Revenue
2.6.1.1.1 Subscribers
Revenues from subscribers principally consist of: (1) fixed monthly service
fees for postpaid wireless, wireline voice, broadband internet, data
subscribers and wireless prepaid subscription fees for promotional offers;
(2) usage of airtime and toll fees for local, domestic and international long
distance calls in excess of consumable fixed monthly service fees, less (a)
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bonus airtime and short messaging services (SMS) on free Subscribers’
Identification Module (SIM), and (b) prepaid reload discounts, (3) revenues
from value-added services (VAS) such as SMS in excess of consumable fixed
monthly service fees (for postpaid) and free SMS allocations (for prepaid),
multimedia messaging services (MMS), content and infotext services, net of
amounts settled with carriers owning the network where the outgoing voice
call or SMS terminates and payout to content providers; (4) mobile data
services, (5) inbound revenues from other carriers which terminate their calls
to the Globe Group’s network less discounts; (6) revenues from international
roaming services; (7) usage of broadband and internet services in excess
of fixed monthly service fees; and (8) one-time service connection fees (for
wireline voice and data subscribers).
Postpaid service arrangements include fixed monthly service fees, which are
recognized over the subscription period on a pro-rata basis. Monthly service
fees billed in advance are initially deferred and recognized as revenues during
the period when earned. Telecommunications services provided to postpaid
subscribers are billed throughout the month according to the bill cycles of
subscribers. As a result of bill cycle cut-off, monthly service revenues earned
but not yet billed at the end of the month are estimated and accrued. These
estimates are based on actual usage less estimated consumable usage
using historical ratio of consumable usage over billable usage.
Proceeds from over-the-air reloading channels and the sale of prepaid
cards are deferred and shown as “Unearned revenues” in the consolidated
statements of financial position. Revenue is recognized upon actual usage
of airtime value net of discounts on promotional calls and net of free airtime
value or SMS and bonus reloads. Unused load value is recognized as
revenue upon expiration.
The Globe Group offers loyalty programs which allow its subscribers to
accumulate points when they purchase services from the Globe Group. The
points can then be redeemed for free services, discounts and raffle coupons,
subject to a minimum number of points being obtained. The consideration
received or receivable is allocated between the sale of services and award
credits. The portion of the consideration allocated to the award credits is
accounted for as unearned revenues. This will be recognized as revenue
upon the award redemption.
2.6.1.1.2 Traffic
Inbound revenues refer to traffic originating from other telecommunications
providers terminating to the Globe Group’s network, while outbound
charges represent traffic sent out or mobile content delivered using agreed
termination rates and/or revenue sharing with other foreign and local carriers
and content providers. Adjustments are made to the accrued amount for
discrepancies between the traffic volume per Globe Group’s records and
per records of the other carriers as these are determined and/or mutually
agreed upon by the parties. Uncollected inbound revenues are shown as
traffic settlements receivable under the “Receivables” account, while unpaid
outbound charges are shown as traffic settlements payable under the
“Accounts payable and accrued expenses” account in the consolidated
statements of financial position unless a legal right of offset exists.
2.6.1.2
Nonservice revenues
Proceeds from sale of handsets, phonekits, SIM packs, modems and accessories are
recognized upon delivery of the item. The related cost or net realizable value of handsets,
phonekits, SIM packs, modems and accessories sold to customers are presented as
“Cost of sales” in the consolidated statements of comprehensive income.
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2.6.1.3
Others
Interest income is recognized as it accrues using the effective interest rate method.
Lease income from operating lease is recognized on a straight-line basis over the lease
term.
Dividend income is recognized when the Globe Group’s right to receive payment is
established.
2.6.2 Subscriber Acquisition and Retention Costs
The related costs incurred in connection with the acquisition of subscribers are charged against
current operations. Subscriber acquisition costs primarily include commissions, handset, phonekit
and device subsidies and selling expenses. Subsidies represent the difference between the cost
of handsets, phonekits, SIM cards, modems and accessories (included in the “Cost of sales”
and “Impairment losses and others” account), and the price offered to the subscribers (included
in the “Nonservice revenues” account). Retention costs for existing postpaid subscribers are in
the form of free handsets, devices and bill credits. Retention costs are charged against current
operations and included under the “General, selling and administrative expenses” account in the
consolidated statements of comprehensive income upon delivery or when there is a contractual
obligation to deliver. Bill credits are deducted from service revenues upon application against
qualifying subscriber bills.
2.6.3 Cash and Cash Equivalents
Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments
that are readily convertible to known amounts of cash with original maturities of three months or less
from date of placement and that are subject to an insignificant risk of change in value.
2.6.4 Financial Instruments
2.6.4.1 General
2.6.4.1.1 Initial recognition and fair value measurement
Financial instruments are recognized in the Globe Group’s consolidated
statements of financial position when the Globe Group becomes a party to
the contractual provisions of the instrument. Purchases or sales of financial
assets that require delivery of assets within the time frame established by
regulation or convention in the marketplace are recognized (regular way
trades) on the trade date, i.e., the date that the Globe Group commits to
purchase or sell the asset.
Financial instruments are recognized initially at fair value. Except for financial
instruments at fair value through profit or loss (FVPL), the initial measurement
of financial assets includes directly attributable transaction costs.
The Globe Group classifies its financial assets into the following categories:
financial assets at FVPL, held-to-maturity (HTM) investments, AFS
investments, and loans and receivables. The Globe Group classifies its
financial liabilities into financial liabilities at FVPL and other financial liabilities.
The classification depends on the purpose for which the investments were
acquired and whether they are quoted in an active market. Management
determines the classification of its investments at initial recognition and,
where allowed and appropriate, reevaluates such designation every
reporting date.
The fair value for financial instruments traded in active markets at the end
of reporting date is based on their quoted market price or dealer price
quotations (bid price for long positions and ask price for short positions),
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without any deduction for transaction costs. When current bid and ask
prices are not available, the price of the most recent transaction provides
evidence of the current fair value as long as there has not been a significant
change in economic circumstances since the time of the transaction.
For all other financial instruments not listed in an active market, the fair
value is determined by using appropriate valuation techniques. Valuation
techniques include net present value techniques, comparison to similar
instruments for which market observable prices exist, option pricing models,
and other relevant valuation models. Any difference noted between the fair
value and the transaction price is treated as expense or income, unless it
qualifies for recognition as some type of asset or liability.
Where the transaction price in a non-active market is different from the
fair value of other observable current market transactions in the same
instrument or based on a valuation technique whose variables include only
data from observable market, the Globe Group recognizes the difference
between the transaction price and fair value (a “Day 1” profit) in profit or
loss. In cases where no observable data is used, the difference between the
transaction price and model value is only recognized in profit or loss when
the inputs become observable or when the instrument is derecognized. For
each transaction, the Globe Group determines the appropriate method of
recognizing the “Day 1” profit amount.
2.6.4.1.2 Financial Assets or Financial Liabilities at FVPL
This category consists of financial assets or financial liabilities that are held
for trading or designated by management as FVPL on initial recognition.
Derivative instruments, except those designated as hedging instruments
in hedge relationships as defined by PAS 39, are classified under this
category. Derivatives, including separated embedded derivatives, are also
classified as held for trading unless they are designated as effective hedging
instruments.
Financial assets or financial liabilities at FVPL are recorded in the consolidated
statements of financial position at fair value, with changes in fair value being
recorded in profit and loss. Interest earned or incurred is recorded as “Interest
income or expense”, respectively, while dividend income is recorded when
the right of payment has been established. Both are recorded in profit and
loss.
Financial assets or financial liabilities are classified in this category as
designated by management on initial recognition when any of the following
criteria are met:
•
•
•
the designation eliminates or significantly reduces the inconsistent
treatment that would otherwise arise from measuring the assets or
liabilities or recognizing gains or losses on a different basis; or
the assets and liabilities are part of a group of financial assets, financial
liabilities or both which are managed and their performance are
evaluated on a fair value basis in accordance with a documented risk
management or investment strategy; or
the financial instrument contains an embedded derivative, unless the
embedded derivative does not significantly modify the cash flows
or it is clear, with little or no analysis, that it would not be separately
recorded.
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2.6.4.1.3 HTM investments
HTM investments are quoted non-derivative financial assets with fixed or
determinable payments and fixed maturities for which the Globe Group’s
management has the positive intention and ability to hold to maturity.
Where the Globe Group sells other than an insignificant amount of HTM
investments, the entire category would be tainted and reclassified as AFS
investments. After initial measurement, HTM investments are subsequently
measured at amortized cost using the effective interest rate method, less
any impairment losses. Amortized cost is calculated by taking into account
any discount or premium on acquisition and fees that are an integral part
of the effective interest rate. Gains and losses are recognized in profit or
loss when the HTM investments are derecognized and impaired, as well as
through the amortization process. The amortization is included in “Interest
income” in the consolidated statements of comprehensive income. The
effects of restatement of foreign currency-denominated HTM investments
are recognized in profit or loss.
There are no outstanding HTM investments as of December 31, 2010, 2009
and 2008.
2.6.4.1.4 Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are
not entered into with the intention of immediate or short-term resale and
are not classified as financial assets held for trading, designated as AFS
investments or designated at FVPL.
This accounting policy relates to the consolidated statements of financial
position caption “Receivables”, which arise primarily from subscriber and
traffic revenues and other types of receivables, “Short-term investments”,
which arise primarily from unquoted debt securities, and other nontrade
receivables included under “Prepayments and other current assets” and
loans receivables included under “Other noncurrent assets”.
Receivables are recognized initially at fair value, which normally pertains to
the billable amount. After initial measurement, receivables are subsequently
measured at amortized cost using the effective interest rate method, less
any allowance for impairment losses. Amortized cost is calculated by taking
into account any discount or premium on the issue and fees that are an
integral part of the effective interest rate. Penalties, termination fees and
surcharges on past due accounts of postpaid subscribers are recognized as
revenues upon collection. The losses arising from impairment of receivables
are recognized in the “Impairment losses and others” account in the
consolidated statements of comprehensive income. The level of allowance
for impairment losses is evaluated by management on the basis of factors
that affect the collectability of accounts (see accounting policy on 2.6.4.2
Impairment of Financial Assets).
Short-term investments, other nontrade receivables and loans receivable
are recognized initially at fair value, which normally pertains to the
consideration paid. Similar to receivables, subsequent to initial recognition,
short-term investments, other nontrade receivables and loans receivables
are measured at amortized cost using the effective interest rate method,
less any allowance for impairment losses.
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2.6.4.1.5 AFS investments
AFS investments are those investments which are designated as such or do
not qualify to be classified as designated as at FVPL, HTM investments or
loans and receivables. They are purchased and held indefinitely, and may be
sold in response to liquidity requirements or changes in market conditions.
They include equity investments, money market papers and other debt
instruments.
After initial measurement, AFS investments are subsequently measured
at fair value. Interest earned on holding AFS investments are reported as
interest income using the effective interest rate. The unrealized gains and
losses arising from the fair valuation of AFS investments are excluded from
reported earnings and are reported as “Other reserves” (net of tax where
applicable) in the equity section of the consolidated statements of financial
position. When the investment is disposed of, the cumulative gains or losses
previously recognized in equity is recognized in profit or loss.
When the fair value of AFS investments cannot be measured reliably
because of lack of reliable estimates of future cash flows and discount rates
necessary to calculate the fair value of unquoted equity instruments, these
investments are carried at cost, less any allowance for impairment losses.
Dividends earned on holding AFS investments are recognized in profit or
loss when the right of payment has been established.
The Globe Group evaluates its AFS investments whether the ability and
intention to sell them in the near term is still appropriate. When the Globe
Group is unable to trade the AFS investments due to inactive markets and
management intent significantly changes to do so in the foreseeable future,
the Globe Group may elect to reclassify it to HTM investment or loans
and receivables provided they meet certain criteria set by PAS 39 in rare
circumstances.
The losses arising from impairment of such investments are recognized
as “Impairment losses and others” in the consolidated statements of
comprehensive income.
2.6.4.1.6 Other financial liabilities
Issued financial instruments or their components, which are not designated
at FVPL are classified as other financial liabilities where the substance of the
contractual arrangement results in the Globe Group having an obligation
either to deliver cash or another financial asset to the holder, or to satisfy the
obligation other than by the exchange of a fixed amount of cash or another
financial asset for a fixed number of own equity shares. The components of
issued financial instruments that contain both liability and equity elements
are accounted for separately, with the equity component being assigned
the residual amount after deducting from the instrument as a whole the
amount separately determined as the fair value of the liability component
on the date of issue. After initial measurement, other financial liabilities are
subsequently measured at amortized cost using the effective interest rate
method. Amortized cost is calculated by taking into account any discount
or premium on the issue and fees that are an integral part of the effective
interest rate. Any effects of restatement of foreign currency-denominated
liabilities are recognized in profit or loss.
This accounting policy applies primarily to the Globe Group’s debt, accounts
payable and other obligations that meet the above definition (other than
liabilities covered by other accounting standards, such as income tax
payable).
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2.6.4.1.7 Derivative Instruments
2.6.4.1.7.1 General
The Globe Group enters into short-term deliverable and
nondeliverable currency forward contracts to manage its
currency exchange exposure related to short-term foreign
currency-denominated monetary assets and liabilities and
foreign currency linked revenues.
The Globe Group also enters into long-term currency and
interest rate swap contracts to manage its foreign currency and
interest rate exposures arising from its long-term loan. Such
swap contracts are sometimes entered into in combination
with options.
2.6.4.1.7.2 Recognition and measurement
Derivative financial instruments are initially recognized at
fair value on the date on which a derivative contract is
entered into and are subsequently remeasured at fair value.
Derivatives are carried as financial assets when the fair value
is positive and as financial liabilities when the fair value is
negative. The method of recognizing the resulting gain or
loss depends on whether the derivative is designated as a
hedge of an identified risk and qualifies for hedge accounting
treatment. The objective of hedge accounting is to match
the impact of the hedged item and the hedging instrument
in profit or loss. To qualify for hedge accounting, the hedging
relationship must comply with strict requirements such as the
designation of the derivative as a hedge of an identified risk
exposure, hedge documentation, probability of occurrence of
the forecasted transaction in a cash flow hedge, assessment
(both prospective and retrospective bases) and measurement
of hedge effectiveness, and reliability of the measurement
bases of the derivative instruments.
Upon inception of the hedge, the Globe Group documents
the relationship between the hedging instrument and the
hedged item, its risk management objective and strategy
for undertaking various hedge transactions, and the details
of the hedging instrument and the hedged item. The Globe
Group also documents its hedge effectiveness assessment
methodology, both at the hedge inception and on an ongoing
basis, as to whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in fair
values or cash flows of hedged items.
Hedge effectiveness is likewise measured, with any
ineffectiveness being reported immediately in profit or loss.
2.6.4.1.7.3 Types of Hedges
The Globe Group designates derivatives which qualify as
accounting hedges as either: (a) a hedge of the fair value of
a recognized fixed rate asset, liability or unrecognized firm
commitment (fair value hedge); or (b) a hedge of the cash
flow variability of recognized floating rate asset and liability or
forecasted sales transaction (cash flow hedge).
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Fair Value Hedges
Fair value hedges are hedges of the exposure to variability in
the fair value of recognized assets, liabilities or unrecognized
firm commitments. The gain or loss on a derivative instrument
designated and qualifying as a fair value hedge, as well as
the offsetting loss or gain on the hedged item attributable
to the hedged risk, are recognized in profit or loss in the
same accounting period. Hedge effectiveness is determined
based on the hedge ratio of the fair value changes of the
hedging instrument and the underlying hedged item. When
the hedge ceases to be highly effective, hedge accounting is
discontinued.
As of December 31, 2010, 2009 and 2008, there were no
derivatives designated and accounted for as fair value
hedges.
Cash Flow Hedges
The Globe Group designates as cash flow hedges the following
derivatives: (a) interest rate swaps as cash flow hedge of the
interest rate risk of a floating rate obligation and (b) certain
foreign exchange forward contracts as cash flow hedge of
expected United States Dollar (USD) revenues.
A cash flow hedge is a hedge of the exposure to variability
in future cash flows related to a recognized asset, liability or
a forecasted sales transaction. Changes in the fair value of
a hedging instrument that qualifies as a highly effective cash
flow hedge are recognized in “Other reserves,” which is a
component of equity. Any hedge ineffectiveness is immediately
recognized in profit or loss.
If the hedged cash flow results in the recognition of a
nonfinancial asset or liability, gains and losses previously
recognized directly in equity are transferred from equity and
included in the initial measurement of the cost or carrying
value of the asset or liability. Otherwise, for all other cash flow
hedges, gains and losses initially recognized in equity are
transferred from equity to profit or loss in the same period or
periods during which the hedged forecasted transaction or
recognized asset or liability affect earnings.
Hedge accounting is discontinued prospectively when the
hedge ceases to be highly effective. When hedge accounting
is discontinued, the cumulative gains or losses on the hedging
instrument that has been reported in “Other reserves” is
retained in other comprehensive income until the hedged
transaction impacts profit or loss. When the forecasted
transaction is no longer expected to occur, any net cumulative
gains or losses previously reported in “Other reserves” is
recognized immediately in profit or loss.
The effective portion of the hedge transaction coming from the
fair value changes of the currency forwards are subsequently
recycled from equity to profit or loss and is presented as part
of the US dollar-based revenues.
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2.6.4.1.7.4 Other Derivative Instruments Not Accounted for as
Accounting Hedges
Certain freestanding derivative instruments that provide
economic hedges under the Globe Group’s policies either
do not qualify for hedge accounting or are not designated as
accounting hedges. Changes in the fair values of derivative
instruments not designated as hedges are recognized
immediately in profit or loss. For bifurcated embedded
derivatives in financial and nonfinancial contracts that are not
designated or do not qualify as hedges, changes in the fair
values of such transactions are recognized in profit or loss.
2.6.4.1.8 Offsetting
Financial assets and financial liabilities are offset and the net amount is
reported in the consolidated statements of financial position if, and only if,
there is a currently enforceable legal right to offset the recognized amounts
and there is an intention to settle on a net basis, or to realize the asset and
settle the liability simultaneously. This is not generally the case with master
netting agreements; thus, the related assets and liabilities are presented
gross in the consolidated statements of financial position.
2.6.4.2
Impairment of Financial Assets
The Globe Group assesses at end of the reporting date whether a financial asset or
group of financial assets is impaired.
2.6.4.2.1 Assets carried at amortized cost
If there is objective evidence that an impairment loss on financial assets
carried at amortized cost (e.g. receivables) has been incurred, the amount of
the loss is measured as the difference between the asset’s carrying amount
and the present value of estimated future cash flows discounted at the
asset’s original effective interest rate. Time value is generally not considered
when the effect of discounting is not material. The carrying amount of the
asset is reduced through the use of an allowance account. The amount of
the loss shall be recognized in profit or loss.
The Globe Group first assesses whether objective evidence of impairment
exists individually for financial assets that are individually significant, and
individually or collectively for financial assets that are not individually
significant. If it is determined that no objective evidence of impairment
exists for an individually assessed financial asset, whether significant or not,
the asset is included in a group of financial assets with similar credit risk
characteristics and that group of financial assets are collectively assessed
for impairment. Assets that are individually assessed for impairment and for
which an impairment loss is or continues to be recognized are not included
in a collective assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases
and the decrease can be related objectively to an event occurring after the
impairment was recognized, the previously recognized impairment loss is
reversed. Any subsequent reversal of an impairment loss is recognized in
profit or loss to the extent that the carrying value of the asset does not
exceed what should have been its amortized cost at the reversal date.
With respect to receivables, the Globe Group performs a regular review of
the age and status of these accounts, designed to identify accounts with
objective evidence of impairment and provide the appropriate allowance
for impairment losses. The review is accomplished using a combination of
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specific and collective assessment approaches, with the impairment losses
being determined for each risk grouping identified by the Globe Group.
2.6.4.2.1.1
Subscribers
Full allowance for impairment losses is provided for receivables
from permanently disconnected wireless and wireline
subscribers. Permanent disconnections are made after a
series of collection steps following nonpayment by postpaid
subscribers. Such permanent disconnections generally occur
within a predetermined period from billing date.
The allowance for impairment loss on wireless subscriber
accounts is determined based on the results of the net flow
to write-off methodology. Net flow tables are derived from
account-level monitoring of subscriber accounts between
different age brackets, from current to 1 day past due to
210 days past due. The net flow to write-off methodology
relies on the historical data of net flow tables to establish a
percentage (“net flow rate”) of subscriber receivables that are
current or in any state of delinquency as of reporting date that
will eventually result in write-off. The allowance for impairment
losses is then computed based on the outstanding balances
of the receivables at the end of reporting date and the net
flow rates determined for the current and each delinquency
bracket.
For active residential and business wireline voice subscribers,
full allowance is generally provided for outstanding receivables
that are past due by 90 and 150 days, respectively. Full
allowance is likewise provided for receivables from wireline
data corporate accounts that are past due by 150 days.
Regardless of the age of the account, additional impairment
losses are also made for wireless and wireline accounts
specifically identified to be doubtful of collection when there
is information on financial incapacity after considering the
other contractual obligations between the Globe Group and
the subscriber.
2.6.4.2.1.2 Traffic
For traffic receivables, impairment losses are made for
accounts specifically identified to be doubtful of collection
regardless of the age of the account. For receivable balances
that appear doubtful of collection, allowance is provided
after review of the status of settlement with each carrier and
roaming partner, taking into consideration normal payment
cycles, recovery experience and credit history of the parties.
2.6.4.2.1.3
Other receivables
Other receivables from dealers, credit card companies and
other parties are provided with allowance for impairment
losses if specifically identified to be doubtful of collection
regardless of the age of the account.
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2.6.4.2.2 AFS investments carried at cost
If there is objective evidence that an impairment loss has been incurred on
an unquoted equity instrument that is not carried at fair value because its
fair value cannot be reliably measured, or on a derivative asset that is linked
to and must be settled by delivery of such unquoted equity instrument, the
amount of the loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows discounted at
the current market rate of return for a similar financial asset. The carrying
amount of the asset is reduced through the use of an allowance account.
2.6.4.2.3 AFS investments carried at fair value
If an AFS investment carried at fair value is impaired, an amount comprising
the difference between its cost (net of any principal repayment and
amortization) and its current fair value, less any impairment loss previously
recognized in profit or loss, is transferred from equity to profit or loss.
Reversals of impairment losses in respect of equity instruments classified as
AFS are not recognized in profit or loss. Reversals of impairment losses on
debt instruments are made through profit or loss if the increase in fair value
of the instrument can be objectively related to an event occurring after the
impairment loss was recognized in profit or loss.
2.6.4.3 Derecognition of Financial Instruments
2.6.4.3.1 Financial Asset
A financial asset (or, where applicable a part of a financial asset or part of a
group of financial assets) is derecognized where:
•
the rights to receive cash flows from the asset have expired;
•
the Globe Group retains the right to receive cash flows from the asset,
but has assumed an obligation to pay them in full without material delay
to a third party under a “pass-through” arrangement; or
•
the Globe Group has transferred its rights to receive cash flows from
the asset and either (a) has transferred substantially all the risks and
rewards of ownership or (b) has neither transferred nor retained the risk
and rewards of the asset but has transferred the control of the asset.
Where the Globe Group has transferred its rights to receive cash flows from
an asset and has neither transferred nor retained substantially all the risks
and rewards of the asset nor transferred control of the asset, the asset is
recognized to the extent of the Globe Group’s continuing involvement in the
asset.
2.6.4.3.2 Financial Liability
A financial liability is derecognized when the obligation under the liability is
discharged or cancelled or has expired. Where an existing financial liability is
replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an exchange
or modification is treated as a derecognition of the original liability and the
recognition of a new liability, and the difference in the respective carrying
amounts is recognized in profit or loss.
2.6.5 116
Inventories and Supplies
Inventories and supplies are stated at the lower of cost or net realizable value (NRV). NRV for
handsets, modems and accessories is the selling price in the ordinary course of business less direct
costs to sell, while NRV for SIM packs, call cards, spare parts and supplies consists of the related
replacement costs. In determining the NRV, the Globe Group considers any adjustment necessary
for obsolescence, which is generally provided 100% for nonmoving items after a certain period.
Cost is determined using the moving average method.
2.6.6 Non-current assets held for sale
Non-current assets classified as held for sale are measured at the lower of carrying amount and fair
value less cost to sell. Non-current assets are classified as held for sale if their carrying amounts
will be recovered through a sale transaction rather than through continuing use. This condition is
regarded as met only when the sale is highly probable and the asset is available for immediate sale
in its present condition. The Globe Group is committed to the sale, which should be expected to
qualify for recognition as a completed sale within one year from the date of classification.
Property and equipment and intangible assets once classified as held for sale are not depreciated/
amortized.
2.6.7 Property and Equipment
Property and equipment, except land, are carried at cost less accumulated depreciation, amortization
and impairment losses. Land is stated at cost less any impairment losses.
The initial cost of an item of property and equipment includes its purchase price and any cost
attributable in bringing the property and equipment to its intended location and working condition.
Cost also includes: (a) interest and other financing charges on borrowed funds used to finance the
acquisition of property and equipment to the extent incurred during the period of installation and
construction; and (b) asset retirement obligations (ARO) specifically on property and equipment
installed/constructed on leased properties.
Subsequent costs are capitalized as part of property and equipment only when it is probable that
future economic benefits associated with the item will flow to the Globe Group and the cost of
the item can be measured reliably. All other repairs and maintenance are charged against current
operations as incurred.
Assets under construction (AUC) are carried at cost and transferred to the related property and
equipment account when the construction or installation and related activities necessary to prepare
the property and equipment for their intended use are complete, and the property and equipment
are ready for service.
Depreciation and amortization of property and equipment commences once the property and
equipment are available for use and computed using the straight-line method over the estimated
useful lives (EUL) of the property and equipment.
Leasehold improvements are amortized over the shorter of their EUL or the corresponding lease
terms.
The EUL of property and equipment are reviewed annually based on expected asset utilization
as anchored on business plans and strategies that also consider expected future technological
developments and market behavior to ensure that the period of depreciation and amortization is
consistent with the expected pattern of economic benefits from items of property and equipment.
When property and equipment is retired or otherwise disposed of, the cost and the related
accumulated depreciation, amortization and impairment losses are removed from the accounts and
any resulting gain or loss is credited to or charged against current operations.
2.6.8 ARO
The Globe Group is legally required under various contracts to restore leased property to its original
condition and to bear the cost of dismantling and deinstallation at the end of the contract period.
The Globe Group recognizes the present value of these obligations and capitalizes these costs as
part of the balances of the related property and equipment accounts, which are depreciated on a
straight-line basis over the useful life of the related property and equipment or the contract period,
whichever is shorter.
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The amount of ARO is accrued and such accretion is recognized as interest expense.
2.6.9 Investment Property
Investment property is initially measured at cost, including transaction costs. Subsequent to
initial recognition, investment property is carried at cost less accumulated depreciation and any
impairment losses.
Expenditures incurred after the investment property has been put in operation, such as repairs
and maintenance costs, are normally charged against income in the period in which the costs are
incurred.
Depreciation of investment property is computed using the straight-line method over its useful life,
regardless of utilization. The EUL and the depreciation method are reviewed periodically to ensure
that the period and method of depreciation are consistent with the expected pattern of economic
benefits from items of investment properties.
Transfers are made to investment property, when, and only when, there is a change in use, evidenced
by the end of the owner occupation, commencement of an operating lease to another party or
completion of construction or development. Transfers are made from investment property when,
and only when, there is a change in use, evidenced by the commencement of owner occupation or
commencement of development with the intention to sell.
Investment property is derecognized when it has either been disposed of or permanently withdrawn
from use and no future benefit is expected from its disposal. Any gain or loss on derecognition of an
investment property is recognized in profit or loss in the period of derecognition.
2.6.10 Intangible Assets
Intangible assets consist of 1) costs incurred to acquire application software (not an integral part
of its related hardware or equipment) and telecommunications equipment software licenses; and
2) intangible assets identified to exist during the acquisition of EGG Group for its existing customer
contracts. Costs directly associated with the development of identifiable software that generate
expected future benefits to the Globe Group are recognized as intangible assets. All other costs of
developing and maintaining software programs are recognized as expense when incurred.
Subsequent to initial recognition, intangible assets are measured at cost less accumulated
amortization and any impairment losses. The EUL of intangible assets with finite lives are assessed
at the individual asset level. Intangible assets with finite lives are amortized on a straight-line basis
over their useful lives. The periods and method of amortization for intangible assets with finite useful
lives are reviewed annually or more frequently when an indicator of impairment exists.
A gain or loss arising from derecognition of an intangible asset is measured as the difference
between the net disposal proceeds and the carrying amount of the asset and is recognized in the
consolidated statements of comprehensive income when the asset is derecognized.
2.6.11 Business Combinations and Goodwill
Business combinations are accounted for using the purchase method. The cost of an acquisition
is measured as the fair value of the assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable
assets (including previously unrecognized intangible assets) acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at fair values at the date of
acquisition, irrespective of the extent of any minority interest.
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Goodwill is initially measured at cost being the excess of the cost of the business combination over
the Group’s share in the net fair value of the acquiree’s identifiable assets, liabilities and contingent
liabilities. If the cost of the acquisition is less than the fair value of the net assets of the subsidiary
acquired, the difference is recognized directly in the consolidated statements of comprehensive
income.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For
the purpose of the impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s cash-generating units (CGU) that are expected
to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of
the acquiree are assigned to those units.
Goodwill allocated to a cash-generating unit is included in the carrying amount of the CGU being
disposed when determining the gain or loss on disposal. For partial disposal of operation within the
CGU, the goodwill associated with the disposed operation is included in the carrying amount of
the operation when determining gain or loss on disposal and measured on the basis of the relative
values of the operation disposed of and the portion of the CGU retained, unless another method
better reflects the goodwill associated with the operation disposed of.
2.6.12 Investments in Joint Ventures
Investments in joint ventures (JV) are accounted for under the equity method, less any impairment
losses. A JV is an entity, not being a subsidiary nor an associate, in which the Globe Group exercises
joint control together with one or more venturers.
Under the equity method, the investments in JV are carried in the consolidated statements of
financial position at cost plus post-acquisition changes in the Globe Group’s share in net assets of
the JV, less any allowance for impairment losses. The profit or loss includes Globe Group’s share
in the results of operations of its JV. Where there has been a change recognized directly in the JV’s
equity, the Globe Group recognizes its share of any changes and discloses this, when applicable,
in other comprehensive income.
2.6.13 Impairment of Nonfinancial Assets
For assets excluding goodwill, an assessment is made at the end of the reporting date to determine
whether there is any indication that an asset may be impaired, or whether there is any indication
that an impairment loss previously recognized for an asset in prior periods may no longer exist or
may have decreased. If any such indication exists and when the carrying value of an asset exceeds
its estimated recoverable amount, the asset or CGU to which the asset belongs is written down
to its recoverable amount. The recoverable amount of an asset is the greater of its net selling price
and value in use. Recoverable amounts are estimated for individual assets or investments or, if it
is not possible, for the CGU to which the asset belongs. For impairment loss on specific assets or
investments, the recoverable amount represents the net selling price.
In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset.
An impairment loss is recognized only if the carrying amount of an asset exceeds its recoverable
amount. An impairment loss is charged against operations in the year in which it arises. A previously
recognized impairment loss is reversed only if there has been a change in estimate used to
determine the recoverable amount of an asset, however, not to an amount higher than the carrying
amount that would have been determined (net of any accumulated depreciation and amortization
for property and equipment, investment property and intangible assets) had no impairment loss
been recognized for the asset in prior years. A reversal of an impairment loss is credited to current
operations.
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For assessing impairment of goodwill, a test for impairment is performed annually and when
circumstances indicate that the carrying value may be impaired. Impairment is determined for
goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the
goodwill relates. Where the recoverable amount of the CGU is less than their carrying amount an
impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future
periods.
2.6.14 Income Tax
2.6.14.1
Current Tax
Current tax assets and liabilities for the current and prior periods are measured at the
amount expected to be recovered from or paid to the tax authority. The tax rates and tax
laws used to compute the amount are those that are enacted or substantively enacted
as at the end of the reporting period.
2.6.14.2 Deferred Income Tax
Deferred income tax is provided using the liability method on all temporary differences,
with certain exceptions, at the end of the reporting period between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognized for all taxable temporary differences,
with certain exceptions. Deferred income tax assets are recognized for all deductible
temporary differences, with certain exceptions, and carryforward benefits of unused
tax credits from excess minimum corporate income tax (MCIT) over regular corporate
income tax and net operating loss carryover (NOLCO) to the extent that it is probable
that taxable income will be available against which the deductible temporary differences
and the carryforward benefits of unused MCIT and NOLCO can be used.
Deferred income tax is not recognized when it arises from the initial recognition of an
asset or liability in a transaction that is not a business combination and, at the time of
transaction, affects neither the accounting income nor taxable income or loss. Deferred
income tax liabilities are not provided on nontaxable temporary differences associated
with investments in JV.
Deferred income tax relating to items recognized directly in equity or other comprehensive
income is included in the related equity or other comprehensive income account and
not in profit or loss.
The carrying amounts of deferred income tax assets are reviewed every end of reporting
period and reduced to the extent that it is no longer probable that sufficient taxable income
will be available to allow all or part of the deferred income tax assets to be utilized.
Deferred income tax assets and liabilities are offset, if a legally enforceable right exists to
set off current income tax assets against current income tax liabilities and the deferred
income taxes relate to the same taxable entity and the same taxation authority.
Deferred income tax assets and liabilities are measured at the tax rates that are expected
to apply in the year when the assets are realized or the liabilities are settled based on
tax rates (and tax laws) that have been enacted or substantively enacted as at the end
of the reporting period.
Movements in the deferred income tax assets and liabilities arising from changes in tax
rates are charged or credited to income for the period.
2.6.15 120
Provisions
Provisions are recognized when: (a) the Globe Group has present obligation (legal or
constructive) as a result of a past event; (b) it is probable (i.e., more likely than not)
that an outflow of resources embodying economic benefits will be required to settle
the obligation; and (c) a reliable estimate can be made of the amount of the obligation.
Provisions are reviewed every end of the reporting period and adjusted to reflect the
current best estimate. If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessment of the time value of money and, where appropriate, the
risks specific to the liability. Where discounting is used, the increase in the provision
due to the passage of time is recognized as interest expense under “Financing costs” in
consolidated statements of comprehensive income.
2.6.16 Share-based Payment Transactions
Certain employees (including directors) of the Globe Group receive remuneration in
the form of share-based payment transactions, whereby employees render services in
exchange for shares or rights over shares (“equity-settled transactions”) (see Note 18).
The cost of equity-settled transactions with employees is measured by reference to the
fair value at the date at which they are granted. In valuing equity-settled transactions,
vesting conditions, including performance conditions, other than market conditions
(conditions linked to share prices), shall not be taken into account when estimating
the fair value of the shares or share options at the measurement date. Instead, vesting
conditions are taken into account in estimating the number of equity instruments that
will vest.
The cost of equity-settled transactions is recognized in profit or loss, together with a
corresponding increase in equity, over the period in which the service conditions are
fulfilled, ending on the date on which the relevant employees become fully entitled
to the award (‘vesting date’). The cumulative expense recognized for equity-settled
transactions at each reporting date until the vesting date reflects the extent to which
the vesting period has expired and the number of awards that, in the opinion of the
management of the Globe Group at that date, based on the best available estimate of
the number of equity instruments, will ultimately vest.
No expense is recognized for awards that do not ultimately vest, except for awards
where vesting is conditional upon a market condition, which are treated as vesting
irrespective of whether or not the market condition is satisfied, provided that all other
performance conditions are satisfied.
Where the terms of an equity-settled award are modified, as a minimum, an expense is
recognized as if the terms had not been modified. In addition, an expense is recognized
for any increase in the value of the transaction as a result of the modification, measured
at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of
cancellation, and any expense not yet recognized for the award is recognized immediately.
However, if a new award is substituted for the cancelled award, and designated as a
replacement award on the date that it is granted, the cancelled and new awards are
treated as if they were a modification of the original award, as described in the previous
paragraph. The dilutive effect of outstanding options is reflected as additional share
dilution in the computation of earnings per share (EPS) (see Note 27).
2.6.17 Treasury Stock
Treasury stock is recorded at cost and is presented as a deduction from equity. When
the shares are retired, the capital stock account is reduced by its par value and the
excess of cost over par value upon retirement is debited to additional paid-in capital
to the extent of the specific or average additional paid-in capital when the shares were
issued and to retained earnings for the remaining balance.
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2.6.18 Pension Cost
Pension cost is actuarially determined using the projected unit credit method. This method
reflects services rendered by employees up to the date of valuation and incorporates
assumptions concerning employees’ projected salaries. Actuarial valuations are
conducted with sufficient regularity, with option to accelerate when significant changes
to underlying assumptions occur. Pension cost includes current service cost, interest
cost, expected return on any plan assets, actuarial gains and losses and the effect of
any curtailment or settlement.
The net pension asset recognized by the Globe Group in respect of the defined benefit
pension plan is the lower of: (a) the fair value of the plan assets less the present value of
the defined benefit obligation at the end of the reporting period, together with adjustments
for unrecognized actuarial gains or losses that shall be recognized in later periods; or
(b) the total of any cumulative unrecognized net actuarial losses and past service cost
and the present value of any economic benefits available in the form of refunds from the
plan or reductions in future contributions to the plan. The defined benefit obligation is
calculated annually by an independent actuary using the projected unit credit method.
The present value of the defined benefit obligation is determined by using risk-free
interest rates of government bonds that have terms to maturity approximating the terms
of the related pension liabilities or by applying a single weighted average discount rate
that reflects the estimated timing and amount of benefit payments.
A portion of actuarial gains and losses is recognized as income or expense if the
cumulative unrecognized actuarial gains and losses at the end of the previous reporting
period exceeded the greater of 10% of the present value of defined benefit obligation
or 10% of the fair value of plan assets. These gains and losses are recognized over the
expected average remaining working lives of the employees participating in the plan.
2.6.19 Borrowing Costs
Borrowing costs are capitalized if these are directly attributable to the acquisition,
construction or production of a qualifying asset. Capitalization of borrowing costs
commences when the activities for the asset’s intended use are in progress and
expenditures and borrowing costs are being incurred. Borrowing costs are capitalized
until the assets are ready for their intended use. These costs are amortized using the
straight-line method over the EUL of the related property and equipment. If the resulting
carrying amount of the asset exceeds its recoverable amount, an impairment loss is
recognized. Borrowing costs include interest charges and other related financing charges
incurred in connection with the borrowing of funds, as well as exchange differences
arising from foreign currency borrowings used to finance these projects to the extent
that they are regarded as an adjustment to interest costs. Premiums on long-term debt
are included under the “Long-term debt” account in the consolidated statements of
financial position and are amortized using the effective interest rate method.
Other borrowing costs are recognized as expense in the period in which these are
incurred.
2.6.20 Leases
The determination of whether an arrangement is, or contains a lease, is based on the
substance of the arrangement and requires an assessment of whether the fulfillment
of the arrangement is dependent on the use of a specific asset or assets and the
arrangement conveys a right to use the asset. A reassessment is made after inception
of the lease only if one of the following applies:
•
•
•
•
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there is a change in contractual terms, other than a renewal or extension of the
arrangement;
a renewal option is exercised or an extension granted, unless that term of the
renewal or extension was initially included in the lease term;
there is a change in the determination of whether fulfillment is dependent on a
specified asset; or
there is a substantial change to the asset.
Where a reassessment is made, lease accounting shall commence or cease from
the date when the change in circumstances gave rise to the reassessment for any of
the scenarios above, and at the date of renewal or extension period for the second
scenario.
2.6.20.1 Group as Lessee
Finance leases, which transfer to the Globe Group substantially all the risks
and benefits incidental to ownership of the leased item, are capitalized at
the inception of the lease at the fair value of the leased property or, if lower,
at the present value of the minimum lease payments and included in the
“Property and equipment” account with the corresponding liability to the
lessor included in the “Other long-term liabilities” account in the consolidated
statements of financial position. Lease payments are apportioned between
the finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance
charges are charged directly as “Interest expense” in the consolidated
statements of comprehensive income.
Capitalized leased assets are depreciated over the shorter of the EUL of the
assets and the respective lease terms.
Leases where the lessor retains substantially all the risks and benefits of
ownership of the asset are classified as operating leases. Operating lease
payments are recognized as an expense in profit or loss on a straight-line
basis over the lease term.
2.6.20.2 Group as Lessor
Finance leases, where the Globe Group transfers substantially all the risk and
benefits incidental to ownership of the leased item to the lessee, are included
in the consolidated statements of financial position under “Prepayments and
other current assets” account. A lease receivable is recognized equivalent
to the net investment (asset cost) in the lease. All income resulting from the
receivable is included in the “Interest income” account in the consolidated
statements of comprehensive income.
Leases where the Globe Group does not transfer substantially all the risk
and benefits of ownership of the assets are classified as operating leases.
Initial direct costs incurred in negotiating operating leases are added to the
carrying amount of the leased asset and recognized over the lease term on
the same basis as the rental income. Contingent rents are recognized as
revenue in the period in which they are earned.
2.6.21 General, Selling and Administrative Expenses
General, selling and administrative expenses, except for rent, are charged against
current operations as incurred.
2.6.22 Foreign Currency Transactions
The functional and presentation currency of the Globe Group is the Philippine Peso,
except for EHL whose functional currency is the Hong Kong Dollar (HKD). Transactions
in foreign currencies are initially recorded at the functional currency rate prevailing at the
date of the transaction. Monetary assets and liabilities denominated in foreign currencies
are retranslated at the functional currency rate of exchange ruling at the end of reporting
period.
Nonmonetary items that are measured in terms of historical cost in a foreign currency
are translated using the exchange rate as at the date of the initial transaction and are
not subsequently restated. Nonmonetary items measured at fair value in a foreign
currency are translated using the exchange rate at the date when the fair value was
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determined. All foreign exchange differences are taken to profit or loss, except where
it relates to equity securities where gains or losses are recognized directly in other
comprehensive income.
As at the reporting date, the assets and liabilities of EHL are translated into the
presentation currency of the Globe Group at the rate of exchange prevailing at the end
of reporting period and its profit or loss is translated at the monthly weighted average
exchange rates during the year. The exchange differences arising on the translation
are taken directly to a separate component of equity under “Other reserves” account.
Upon disposal of EHL, the cumulative translation adjustments relating to EHL shall be
recognized in profit or loss.
2.6.23 EPS
Basic EPS is computed by dividing earnings applicable to common stock by the
weighted average number of common shares outstanding, after giving retroactive effect
for any stock dividends, stock splits or reverse stock splits during the period.
Diluted EPS is computed by dividing net income by the weighted average number of
common shares outstanding during the period, after giving retroactive effect for any
stock dividends, stock splits or reverse stock splits during the period, and adjusted
for the effect of dilutive options and dilutive convertible preferred shares. Outstanding
stock options will have a dilutive effect under the treasury stock method only when
the average market price of the underlying common share during the period exceeds
the exercise price of the option. If the required dividends to be declared on convertible
preferred shares divided by the number of equivalent common shares, assuming such
shares are converted, would decrease the basic EPS, then such convertible preferred
shares would be deemed dilutive. Where the effect of the assumed conversion of the
preferred shares and the exercise of all outstanding options have anti-dilutive effect,
basic and diluted EPS are stated at the same amount.
2.6.24 Operating Segment
The Globe Group’s major operating business units are the basis upon which the Globe
Group reports its primary segment information. The Globe Group’s business segments
consist of: (1) mobile communication services; (2) wireline communication services;
and (3) others. The Globe Group generally accounts for intersegment revenues and
expenses at agreed transfer prices.
2.6.25 Contingencies
Contingent liabilities are not recognized in the consolidated financial statements. These
are disclosed unless the possibility of an outflow of resources embodying economic
benefits is remote. Contingent assets are not recognized in the consolidated financial
statements but are disclosed when an inflow of economic benefits is probable.
2.6.26 Events after the Reporting Period
Any post period-end event up to the date of approval of the BOD of the consolidated
financial statements that provides additional information about the Globe Group’s position
at the end of reporting period (adjusting event) is reflected in the consolidated financial
statements. Any post period-end event that is not an adjusting event is disclosed in the
consolidated financial statements when material.
3. Management’s Significant Accounting Judgments and Use of Estimates
Judgments and Estimates
The preparation of the accompanying consolidated financial statements in conformity with PFRS requires
management to make estimates and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. The estimates and assumptions used in the accompanying consolidated
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financial statements are based upon management’s evaluation of relevant facts and circumstances as of the date
of the consolidated financial statements. Actual results could differ from such estimates.
Judgments and estimates are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
3.1 Judgments
3.1.1 Leases
The Globe Group has entered into various lease agreements as lessee and lessor. The Globe Group
has determined that it retains all the significant risks and rewards on equipment and office spaces
leased out on operating lease and various items of property and equipment acquired through
finance lease.
3.1.2 Fair value of financial instruments
Where the fair values of financial assets and financial liabilities recorded on the consolidated
statements of financial position cannot be derived from active markets, they are determined using
a variety of valuation techniques that include the use of mathematical models. The input to these
models is taken from observable markets where possible, but where this is not feasible, a degree
of judgment is required in establishing fair values. The judgments include considerations of liquidity
and model inputs such as correlation and volatility for longer-dated derivatives.
As of December 31, 2010, 2009 and 2008, the fair value of financial assets and liabilities that were
determined using valuation techniques, inputs and assumptions are based on market observable
data and conditions and reflect appropriate risk adjustments that market participants would make
for credit and liquidity risks existing as of the periods indicated.
The Globe Group considers a market as active if it is one in which transactions take place regularly
on an arm’s-length basis. On the other hand, the Globe Group considers a market as inactive if
there is a significant decline in the volume and level of trading activity and the available prices vary
significantly over time among market participants or the prices are not current.
3.1.3 HTM investments
The classification as HTM investments requires significant judgment. In making this judgment, the
Globe Group evaluates its intention and ability to hold such investments to maturity. If the Globe
Group fails to keep these investments to maturity other than in certain specific circumstances - for
example, selling an insignificant amount close to maturity - it will be required to reclassify the entire
portfolio as AFS investments. The investments would therefore be measured at fair value and not
at amortized cost.
3.1.4 Financial assets not quoted in an active market
The Globe Group classifies financial assets by evaluating, among others, whether the asset is
quoted or not in an active market. Included in the evaluation on whether a financial asset is quoted
in an active market is the determination on whether quoted prices are readily and regularly available,
and whether those prices represent actual and regularly occurring market transactions on an arm’slength basis.
3.1.5 Allocation of goodwill to cash-generating units
The Globe Group allocated the carrying amount of goodwill to the mobile content and application
development services business CGU, for the Group believes that this CGU represents the lowest
level within the Globe Group at which the goodwill is monitored for internal management reporting
purposes; and not larger than an operating segment determined in accordance with PFRS 8.
3.1.6 Determination of whether the Globe Group is acting as a principal or an agent
The Globe Group assesses its revenue arrangements against the following criteria to determine
whether it is acting as a principal or an agent:
• whether the Globe Group has primary responsibility for providing the goods and services;
• whether the Globe Group has inventory risk;
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•
•
whether the Globe Group has discretion in establishing prices; and
whether the Globe Group bears the credit risk.
If the Globe Group has determined it is acting as a principal, the Group recognizes revenue on a
gross basis with the amount remitted to the other party being accounted for as part of costs and
expenses.
If the Globe Group has determined it is acting as an agent, only the net amount retained is recognized
as revenue.
The Globe Group assessed its revenue arrangements and concluded that it is acting as principal in
some arrangements and as an agent in other arrangements.
3.2 Estimates
3.2.1 Revenue recognition
The Globe Group’s revenue recognition policies require management to make use of estimates and
assumptions that may affect the reported amounts of revenues and receivables.
The Globe Group estimates the fair value of points awarded under its loyalty programmes, which
are within the scope of Philippine Interpretation IFRIC 13, based on historical trend of availment.
As of December 31, 2010 and 2008, the estimated liability for unredeemed points included in
“Unearned revenues” amounted to P121.81 million and P8.05 million, respectively. There are no
loyalty programs qualifying under IFRIC 13 as of December 31, 2009.
As a result of continuous improvements in the Globe Group’s estimation process, the Group
recognized a one-time upward adjustment (included in the “Service revenues” account of the
statements of comprehensive income) amounting to P526.00 million in the fourth quarter of 2010
representing prepaid load credits that have either expired or have already been used up.
3.2.2 Allowance for impairment losses on receivables
The Globe Group maintains an allowance for impairment losses at a level considered adequate to
provide for potential uncollectible receivables. The Globe Group performs a regular review of the age
and status of these accounts, designed to identify accounts with objective evidence of impairment
and provide the appropriate allowance for impairment losses. The review is accomplished using
a combination of specific and collective assessment approaches, with the impairment losses
being determined for each risk grouping identified by the Globe Group. The amount and timing
of recorded expenses for any period would differ if the Globe Group made different judgments or
utilized different methodologies. An increase in allowance for impairment losses would increase the
recorded operating expenses and decrease current assets.
Impairment losses on receivables for the years ended December 31, 2010, 2009 and 2008
amounted to P1,285.53 million, P754.63 million and P979.78 million, respectively (see Note 23).
Receivables, net of allowance for impairment losses, amounted to P8,374.12million, P6,583.23
million and P7,473.35 million as of December 31, 2010, 2009 and 2008, respectively (see Note
4).
3.2.3 Obsolescence and market decline
The Globe Group, in determining the NRV, considers any adjustment necessary for obsolescence
which is generally provided 100% for nonmoving items after a certain period. The Globe Group adjusts
the cost of inventory to the recoverable value at a level considered adequate to reflect market decline
in the value of the recorded inventories. The Globe Group reviews the classification of the inventories
and generally provides adjustments for recoverable values of new, actively sold and slow-moving
inventories by reference to prevailing values of the same inventories in the market.
126
The amount and timing of recorded expenses for any period would differ if different judgments were
made or different estimates were utilized. An increase in allowance for obsolescence and market
decline would increase recorded operating expenses and decrease current assets.
Inventory obsolescence and market decline for the years ended December 31, 2010, 2009 and
2008 amounted to P42.12 million, P58.74 million and P262.10 million, respectively (see Note
23).
Inventories and supplies, net of allowances, amounted to P1,839.33 million, P1,653.75 million and
P1,124.32 million as of December 31, 2010, 2009 and 2008, respectively (see Note 5).
3.2.4 ARO
The Globe Group is legally required under various contracts to restore leased property to its
original condition and to bear the costs of dismantling and deinstallation at the end of the contract
period. These costs are accrued based on an in-house estimate, which incorporates estimates of
asset retirement costs and interest rates. The Globe Group recognizes the present value of these
obligations and capitalizes the present value of these costs as part of the balance of the related
property and equipment accounts, which are being depreciated and amortized on a straight-line
basis over the EUL of the related asset or the lease term, whichever is shorter. The market risk
premium was excluded from the estimate of the fair value of the ARO because a reasonable and
reliable estimate of the market risk premium is not obtainable.
Since a market risk premium is unavailable, fair value is assumed to be the present value of the
obligations. The present value of dismantling costs is computed based on an average credit adjusted
risk free rate of 9.27%, 10.09% and 11.17% in 2010, 2009 and 2008, respectively. Assumptions
used to compute ARO are reviewed and updated annually.
The amount and timing of recorded expenses for any period would differ if different judgments were
made or different estimates were utilized. An increase in ARO would increase recorded operating
expenses and increase noncurrent liabilities.
The Globe Group updated its assumptions on timing of settlement and estimated cash outflows
arising from ARO on its leased premises. As a result of the changes in estimates, the Globe group
adjusted downward its ARO liability (included under “Other long-term liabilities” account) by P64.45
million, P7.20 million and P714.78 million in 2010, 2009 and 2008 against the book value of the
assets on leased premises (see Note 15).
As of December 31, 2010, 2009 and 2008, ARO amounted to P1,341.53 million, P1,269.29 million
and P1,081.41 million, respectively (see Note 15).
3.2.5 EUL of property and equipment, investment property and intangible assets
Globe Group reviews annually the EUL of these assets based on expected asset utilization as
anchored on business plans and strategies that also consider expected future technological
developments and market behavior. It is possible that future results of operations could be materially
affected by changes in these estimates brought about by changes in the factors mentioned.
A reduction in the EUL of property and equipment, investment property and intangible assets would
increase the recorded depreciation and amortization expense and decrease noncurrent assets.
127
The EUL of property and equipment of the Globe Group are as follows:
Years
Telecommunications equipment:
Tower 20
Switch 7 and 10
Outside plant, cellsite structures and improvements 10-20
Distribution dropwires and other wireline assets 2-10
Cellular equipment and others 3-10
Buildings 20
Leasehold improvements 5 years or lease term, whichever is shorter
Investments in cable systems 15
Office equipment 3-5
Transportation equipment 3-5
The EUL of investment property is 20 years.
Intangible assets comprising of licenses and application software are amortized over the EUL of
the related hardware or equipment ranging from 3 to 10 years or life of the telecommunications
equipment where it is assigned. Customer contracts acquired during business combination are
amortized over 5 years.
In 2010, 2009 and 2008, the Globe Group changed the EUL of certain wireless and wireline
telecommunications equipment resulting from new information affecting the expected utilization of
these assets. The net effect of the change in EUL resulted in higher depreciation of P119.03 million
and P347.62 million in 2010 and 2009, respectively, and lower depreciation of P159.76 million in
2008.
As of December 31, 2010, 2009 and 2008, property and equipment, investment property and
intangible assets amounted to P104,972.70 million, P104,586.34 million and P96,811.28 million,
respectively (see Notes 7, 8 and 9).
3.2.6 Asset impairment
3.2.6.1 Impairment of nonfinancial assets other than goodwill
The Globe Group assesses impairment of assets (property and equipment, investment
property, intangible assets and investments in joint ventures) whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. The factors that the Globe Group considers important which could trigger
an impairment review include the following:
•
•
•
significant underperformance relative to expected historical or projected future
operating results;
significant changes in the manner of use of the acquired assets or the strategy
for the overall business; and
significant negative industry or economic trends.
An impairment loss is recognized whenever the carrying amount of an asset or investment
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s net
selling price and value in use. The net selling price is the amount obtainable from the sale of
an asset in an arm’s length transaction while value in use is the present value of estimated
future cash flows expected to arise from the continuing use of an asset and from its disposal
at the end of its useful life. Recoverable amounts are estimated for individual assets or
investments or, if it is not possible, for the CGU to which the asset belongs.
For impairment loss on specific assets or investments, the recoverable amount
represents the net selling price.
128
For the Globe Group, the CGU is the combined mobile and wireline asset groups of
Globe Telecom and Innove. This asset grouping is predicated upon the requirement
contained in Executive Order (EO) No.109 and RA No.7925 requiring licensees of
Cellular Mobile Telephone System (CMTS) and International Digital Gateway Facility
(IGF) services to provide 400,000 and 300,000 LEC lines, respectively, as a condition
for the grant of such licenses.
In determining the present value of estimated future cash flows expected to be generated
from the continued use of the assets or holding of an investment, the Globe Group is
required to make estimates and assumptions that can materially affect the consolidated
financial statements.
Property and equipment, investment property, intangible assets, and investments in
joint ventures amounted to P105,169.71 million, P104,820.14 million and P96,884.81
million as of December 31, 2010, 2009 and 2008, respectively (see Notes 7, 8, 9 and
10).
3.2.6.2 Impairment of goodwill
The Globe Group’s impairment test for goodwill is based on value in use calculations
that use a discounted cash flow model. The cash flows are derived from the budget for
the next five years and do not include restructuring activities that the Group is not yet
committed to or significant future investments that will enhance the asset base of the
CGU being tested. The recoverable amount is most sensitive to the discount rate used
for the discounted cash flow model as well as the expected future cash inflows and the
growth rate used for extrapolation purposes. As of December 31, 2010 and 2009, the
carrying value of goodwill amounted to P327.13 million (see Note 9).
Goodwill acquired through business combination with EGG Group was allocated to the
mobile content and applications development services business CGU, which is part of
the “Others” reporting segment.
The recoverable amount of the CGU which exceeds the carrying amount by P165.30
million and P63.00 million as of December 31, 2010 and 2009, respectively, has
been determined based on value in use calculations using cash flow projections from
financial budgets covering a 5-year period. The pretax discount rate applied to cash
flow projections is 12% in 2010 and 2009, and cash flows beyond the 5-year period are
extrapolated using a 3% long-term growth rate in 2010 and 2009.
3.2.7 Deferred income tax assets
The carrying amounts of deferred income tax assets are reviewed at each reporting date and
reduced to the extent that it is no longer probable that sufficient taxable income will be available
to allow all or part of the deferred income tax assets to be utilized (see Note 24).
As of December 31, 2010, 2009 and 2008, Innove and EGG Group has net deferred income
tax assets amounting to P670.59 million, P742.54 million and P523.72 million, respectively. As
of December 31, 2010, 2009 and 2008, Globe Telecom has net deferred income tax liabilities
amounting to P4,620.49 million, P4,627.29 million and P4,590.43 million, respectively (see Note
24). Globe Telecom and Innove have no unrecognized deferred income tax assets as of December
31, 2010, 2009 and 2008. GXI has not recognized deferred income tax assets since there is no
assurance that GXI will generate sufficient taxable income to allow all or part of it to be utilized.
As of December 31, 2010 and 2009, Innove and EGG Group’s recognized deferred income tax
assets from NOLCO amounted to P13.50 million and P138.05 million and MCIT amounted to
P0.95 million and P46.71 million, respectively (see Note 24).
3.2.8 Financial assets and liabilities
Globe Group carries certain financial assets and liabilities at fair value, which requires extensive
use of accounting estimates and judgment. While significant components of fair value
129
measurement were determined using verifiable objective evidence (i.e., foreign exchange rates,
interest rates), the amount of changes in fair value would differ if the Globe Group utilized
different valuation methodologies. Any changes in fair value of these financial assets and
liabilities would affect the consolidated statements of comprehensive income and consolidated
statements of changes in equity.
Financial assets comprising AFS investments and derivative assets carried at fair values as of
December 31, 2010, 2009 and 2008, amounted to P121.77 million, P118.03 million and P230.34
million, respectively, and financial liabilities comprising of derivative liabilities carried at fair values
as of December 31, 2010, 2009 and 2008, amounted to P245.87 million, P92.46 million and
P185.65 million, respectively (see Note 28.10).
3.2.9 Pension and other employee benefits
The determination of the obligation and cost of pension is dependent on the selection of certain
assumptions used in calculating such amounts. Those assumptions include, among others,
discount rates, expected returns on plan assets and salary rates increase (see Note 18). In
accordance with PAS 19, Employee Benefits, actual results that differ from the Globe Group’s
assumptions, subject to the 10% corridor test, are accumulated and amortized over future
periods and therefore, generally affect the recognized expense and recorded obligation in such
future periods.
As of December 31, 2010, 2009 and 2008, Globe Group has unrecognized net actuarial losses
of P781.01 million, P799.54 million, and P115.40 million, respectively (see Note 18.2).
The Globe Group also determines the cost of equity-settled transactions using assumptions on
the appropriate pricing model. Significant assumptions for the cost of share-based payments
include, among others, share price, exercise price, option life, risk-free interest rate, expected
dividend and expected volatility rate.
Cost of share-based payments in 2010, 2009 and 2008 amounted to P104.79 million, P126.44
million and P182.32 million, respectively (see Notes 16 and 18.1).
The Globe Group also estimates other employee benefit obligations and expenses, including
cost of paid leaves based on historical leave availments of employees, subject to the Globe
Group’s policy. These estimates may vary depending on the future changes in salaries and actual
experiences during the year.
The accrued balance of other employee benefits (included in the “Accounts payable and accrued
expenses” account and in the “Other long-term liabilities” account in the consolidated statements
of financial position) as of December 31, 2010, 2009 and 2008 amounted to P406.14 million,
P371.61 million and P340.47 million, respectively.
While the Globe Group believes that the assumptions are reasonable and appropriate, significant
differences between actual experiences and assumptions may materially affect the cost of
employee benefits and related obligations.
3.2.10 Contingencies
Globe Telecom and Innove are currently involved in various legal proceedings. The estimate of the
probable costs for the resolution of these claims has been developed in consultation with internal
and external counsel handling Globe Telecom and Innove’s defense in these matters and is based
upon an analysis of potential results. Globe Telecom and Innove currently do not believe that
these proceedings will have a material adverse effect on the consolidated statements of financial
position. It is possible, however, that future results of operations could be materially affected by
changes in the estimates or in the effectiveness of the strategies relating to these proceedings
(see Note 26).
130
3.2.11 Purchase Price Allocation
As of December 31, 2008, the purchase price allocation relating to the Globe Group’s acquisition
of EGG Group has been prepared on a preliminary basis. The provisional fair values of the assets
acquired and liabilities assumed as of date of acquisition were based on the net book values
of the identifiable assets and liabilities since these approximate the fair values. The difference
between the total consideration and the net assets amounting to P346.99 million was initially
allocated to goodwill as of December 31, 2008.
The valuation of the intangible assets was completed in June 2009 and showed that the fair value
at the date of acquisition was P28.38 million. The 2008 comparative information has been restated
to reflect this adjustment. The value of intangible assets and deferred tax liability increased by
P28.38 million and P8.51 million, respectively. This resulted in a reduction in goodwill by P19.87
million (see Note 9).
4. Receivables
This account consists of receivables from:
Notes Subscribers
28.2.2 Traffic settlements - net 16, 28.2.2 Others 28.2.2 Less allowance for impairment losses
Subscribers 28.2.2 Traffic settlements and others 28.2.2 2010 2009 (In Thousand Pesos)
P8,038,451 P4,980,195 2,130,238 2,319,273
658,878 634,751 10,827,567 7,934,219 P4,563,825
3,618,010
478,170
8,660,005
2,173,912 279,532 2,453,444 P8,374,123 785,812
400,847
1,186,659
P7,473,346
1,162,792 188,199 1,350,991 P6,583,228 2008
Subscriber receivables arise from wireless and wireline communications and data services provided under
postpaid arrangements.
Amounts collected from wireless subscribers under prepaid arrangements are reported under “Unearned revenues”
in the consolidated statements of financial position and recognized as revenues upon actual usage of airtime value
or upon expiration of the prepaid credit. The unearned revenues from these subscribers amounted to P2,402.75
million, P2,981.88 million and P3,247.71 million as of December 31, 2010, 2009 and 2008, respectively.
Traffic settlements receivable are presented net of traffic settlements payable from the same carrier amounted
to P4,099.08 million, P3,130.28 million and P5,297.07 million as of December 31, 2010, 2009 and 2008,
respectively.
Receivables are non-interest bearing and are generally collectible in the short-term.
131
5. Inventories and Supplies
This account consists of:
2010 At cost:
Modems and accessories Spare parts and supplies Handsets, devices and accessories SIM packs Tattoo prepaid kits Callcards and others At NRV:
Handsets, devices and accessories Spare parts and supplies Modems and accessories SIM packs Tattoo prepaid kits Call cards and others 2009 (In Thousand Pesos)
2008
P592,709 1,454 98 –
–
22,244 616,505 P– 98 980 1,624 81,842 154,466 239,010 P–
899
–
2,749
29,693
21,235
54,576
518,145 298,331 240,578 42,928 27,738 95,108 1,222,828 P1,839,333 260,442 464,476 615,514 69,347 –
4,961 1,414,740 P1,653,750 439,028
351,676
200,005
76,172
–
2,865
1,069,746
P1,124,322
Inventories recognized as expense during the year amounting to P4,281.08 million, P3,006.69 million and
P3,379.28 million in 2010, 2009 and 2008, respectively, are included as part of “Cost of sales” and “Impairment
losses and others” accounts (see Note 23) in the consolidated statements of comprehensive income. An
insignificant amount is included under “General, selling and administrative expenses” as part of “Utilities, supplies
and other administrative expenses” account (see Note 21).
Cost of sales incurred consists of:
Handsets, devices and accessories
Tattoo prepaid kits SIM packs Modems and accessories Spare parts and supplies
Callcards and others 2010 2009 (In Thousand Pesos)
P3,185,163 P1,602,018 597,430 810,655 274,882
367,120 141,272 129,616 13,164 16,630 27,049 21,911 P4,238,960 P2,947,950 2008
P1,931,915
234,428
517,542
138,305
7,256
287,726
P3,117,172
6. Prepayments and Other Current Assets
This account consists of:
Notes Prepayments
Advance payments to suppliers and
contractors 25.3 Input VAT – net Creditable withholding tax Loan receivable from Globe Telecom
retirement fund 11, 28.10 Miscellaneous receivables - net 28.10 Other current assets 16, 28.10 132
2010 2009 (In Thousand Pesos)
P983,545 P534,304 2008
P617,379
764,699 954,636 494,942 1,143,891 889,941 334,723 2,114,203
334,579
210,182
–
476,050 1,030,326 P4,704,198 –
853,243 443,218 P4,199,320 800,000
515,966
514,120
P5,106,429
As of December 31, 2010, Innove, GXI and EGG reported net input VAT amounted to P954.64 million, net of
output VAT of P102.45 million. As of December 31, 2009, Innove and GXI reported net input VAT amounted to
P889.94 million, net of output VAT of P89.26 million. As of December 31, 2008, Innove, GXI and EGG Group
reported net input VAT amounted to P334.58 million, net of output VAT of P157.05 million.
The “Prepayments” account includes prepaid insurance and rent, among others.
In 2008, the Globe Group granted a loan to the retirement fund amounting to P800.00 million with interest at
6.20%. Upon maturity in 2009, the loan was rolled over until September 2014 with 7.75% interest and reclassified
under “Other noncurrent assets” account (see Note 11).
The “Other current assets” account includes accrued interest receivable and other receivables, among others.
7. Property and Equipment
The rollforward analysis of this account follows:
2010
Buildings and
Telecommunications
Leasehold Investments in
Equipment Improvements Cable Systems
Cost
At January 1 Additions Retirements/disposals Reclassifications/adjustments At December 31 Accumulated Depreciation,
Amortization and
Impairment Losses
At January 1 Depreciation and amortization Retirements/disposals At December 31 P161,393,653 P24,088,931 1,071,562 185,264 (408,040) (29,092) 12,041,649 1,299,564 174,098,824 25,544,667 Office Transportation
Equipment
Equipment
Land
(In Thousand Pesos)
P14,444,009 –
–
(1,415,706) 13,028,303 P6,049,431 228,646 (87,113) 197,602 6,388,566 P2,074,149 305,186 (237,996)
11,883
2,153,222 P1,551,558 504 (14,025) (23,705) 1,514,332 99,668,498 14,403,724 (585,504) 113,486,718 11,009,763 1,054,839 (109,091) 11,955,511 4,758,210 899,440 (921,615) 4,736,035 5,065,820 693,641 (116,595) 5,642,866 1,431,233 265,153 (199,296) 1,497,090 –
–
–
–
P60,612,106 P13,589,156 P8,292,268 P745,700 P656,132 P1,514,332 Telecommunications
Equipment
Cost
Buildings and
Leasehold
Improvements
Investments in
Cable Systems
Net Book Value at December 31 Assets Under
Construction Total
P14,025,661 P223,627,392
17,506,382 19,297,544
(4,162) (780,428)
(15,100,321) (2,989,034)
16,427,560 239,155,474
–
–
–
–
121,933,524
17,316,797
(1,932,101)
137,318,220
P16,427,560 P101,837,254
2009
At January 1 Additions Retirements/disposals Reclassifications/adjustments At December 31 Accumulated Depreciation,
Amortization and
Impairment Losses
At January 1 Depreciation and amortization Retirements/disposals At December 31 Net Book Value at December 31 Office Transportation
Equipment
Equipment
Land
(In Thousand Pesos)
P148,988,985 1,308,160 (9,013,358)
20,109,866 161,393,653 P22,235,361 169,162 (13,228) 1,697,636 24,088,931 P10,185,208 353 –
4,258,448 14,444,009 P5,479,851 379,911 (9,418) 199,087 6,049,431 P2,125,186 225,515 (111,951) (164,601) 2,074,149 P1,495,841 50,511 –
5,206 1,551,558 91,235,779 13,800,566 (5,367,847) 99,668,498 9,984,888 969,115 55,760 11,009,763 3,918,995 787,648 51,567 4,758,210 4,558,370 497,005 10,445 5,065,820 1,252,372 305,715 (126,854)
1,431,233 –
–
–
–
P61,725,155 P13,079,168 P9,685,799 P983,611 P642,916 P1,551,558 Assets Under
Construction Total
P13,980,362 P204,490,794
22,469,550 24,603,162
(24,258)
(9,172,213)
(22,399,993) 3,705,649
14,025,661 223,627,392
–
–
–
–
110,950,404
16,360,049
(5,376,929)
121,933,524
P14,025,661 P101,693,868
133
2008
Telecommunications
Equipment
Cost
At January 1 Additions (see Note 9) Retirements/disposals Reclassifications/adjustments At December 31 Accumulated Depreciation,
Amortization and
Impairment Losses
At January 1 Depreciation and amortization Retirements/disposals At December 31 Net Book Value at December 31 Buildings and
Leasehold Investments in
Improvements Cable Systems
Office Transportation
Equipment
Equipment
Land
(In Thousand Pesos)
Assets Under
Construction Total
P139,902,905 5,134,081 (304,569)
4,256,568 148,988,985 P21,364,791 71,342 (5,377) 804,605 22,235,361 P9,928,378 97,936 –
158,894 10,185,208 P5,127,124 494,805 (13,325) (128,753) 5,479,851 P1,643,361 495,182 (226,391) 213,034 2,125,186 P948,315 547,526 –
–
1,495,841 P8,380,425 P187,295,299
13,345,254 20,186,126
(30,008) (579,670)
(7,715,309)
(2,410,961)
13,980,362 204,490,794
78,114,745 13,790,032 (668,998) 91,235,779 9,087,641 898,730 (1,483) 9,984,888 3,246,716 672,279 –
3,918,995 4,247,291 593,715 (282,636) 4,558,370 1,071,086 279,015 (97,729) 1,252,372 –
–
–
–
–
–
–
–
95,767,479
16,233,771
(1,050,846)
110,950,404
P57,753,206 P12,250,473 P6,266,213 P921,481 P872,814 P1,495,841
P13,980,362 P93,540,390
Assets under construction include intangible components of a network system which are reclassified to depreciable
intangible assets only when assets become available for use (see Note 9).
Investments in cable systems include the cost of the Globe Group’s ownership share in the capacity of certain
cable systems under a joint venture or a consortium or private cable set-up and indefeasible rights of use (IRUs) of
circuits in various cable systems. It also includes the cost of cable landing station and transmission facilities where
the Globe Group is the landing party.
Fully depreciated property and equipment still being used in the network amounted to P52,467.14 million,
P35,832.53 million and P29,537.04 million as of December 31, 2010, 2009 and 2008, respectively.
The carrying values of property and equipment held under finance leases where the Globe Group is the lessee
are immaterial.
The Globe Group uses its borrowed funds to finance the acquisition of property and equipment and bring it to its
intended location and working condition. Borrowing costs incurred relating to these acquisitions were included in
the cost of property and equipment using 5.61%, 3.96%, and 2.29% capitalization rates in 2010, 2009 and 2008,
respectively. The Globe Group’s total capitalized borrowing costs amounted to P1,091.21 million, P979.03 million
and P466.19 million for the years ended December 31, 2010, 2009 and 2008, respectively (see Note 22).
In 2009, the Globe Group entered into an exchange transaction with an equipment supplier whereby Globe Group
conveyed and transferred ownership of certain equipment and licenses in exchange for more advanced systems.
This exchange resulted in a gain amounting to P568.12 million (as part of “Gain on disposal of property and
equipment - net” in the consolidated statements of comprehensive income), equivalent to the difference between
the fair value of the new equipment stipulated in the purchase agreement and the carrying amount of the old
platforms and equipment at the time the exchange was consummated.
In 2008, the Globe Group purchased a parcel of land from a related party amounting to P547.53 million.
134
8. Investment Property
The rollforward analysis of this account follows:
Cost
At January 1 Reclassifications/adjustments At December 31 Accumulated Depreciation
At January 1 Depreciation Reclassifications/adjustments At December 31 Net Book Value at December 31 2010 2009
(In Thousand Pesos)
2008
P390,641 –
390,641 P390,641 –
390,641 P403,687
(13,046)
390,641
153,902 22,547 –
176,449 P214,192 131,418 22,547 (63)
153,902 P236,739 112,480
23,297
(4,359)
131,418
P259,223
Investment property represents the portion of a building that was held for lease to third parties in 2009 and 2008
(see Note 25.1b).
The details of income and expenses related to the investment property follow:
Lease income Direct expenses 2010 2009
(In Thousand Pesos)
P31,274 P– 23,450 23,396 2008
P41,690
19,973
The fair value of the investment property, as determined by market data approach, amounted to P595.54 million
based on the report issued by an independent appraiser dated September 23, 2010.
9. Intangible Assets and Goodwill
The rollforward analysis of this account follows:
2010
Licenses and
Total
Application
Customer
Intangible
Software
Contracts
Assets Goodwill
(In Thousand Pesos)
Cost
At January 1 P7,431,159 P28,381 P7,459,540 P327,125
Additions 169,329 –
169,329 –
Retirements/disposals (128,606)
–
(128,606) –
Reclassifications/
adjustments (Note 7) 884,907 –
884,907 –
At December 31 8,356,789 28,381 8,385,170 327,125 Accumulated Depreciation,
Amortization and
Impairment Losses
At January 1 4,795,295 8,514 4,803,809 –
Amortization 740,819 5,676 746,495
–
Retirements/disposals
(120,561) –
(120,561) –
Reclassifications/adjustments 34,176 –
34,176 –
At December 31 5,449,729 14,190 5,463,919 –
Net Book Value at December 31 P2,907,060 P14,191 P2,921,251 P327,125 Total
Intangible
Assets and
Goodwill
P7,786,665
169,329
(128,606)
884,907
8,712,295
4,803,809
746,495
(120,561)
34,176
5,463,919
P3,248,376
135
2009
Licenses and
Total
Application
Customer
Intangible
Software
Contracts
Assets Goodwill
(In Thousand Pesos)
Cost
At January 1 P6,968,572
P28,381 P6,996,953 P327,125 Additions 99,164 –
99,164
–
Retirements/disposals (685,577) –
(685,577) –
Reclassifications/
adjustments (Note 7) 1,049,000 –
1,049,000 –
At December 31 7,431,159 28,381 7,459,540 327,125 Accumulated Depreciation,
Amortization and
Impairment Losses
At January 1 3,985,282 –
3,985,282 –
Amortization 997,320 8,514 1,005,834 –
Retirements/disposals (211,736) –
(211,736) –
Reclassifications/adjustments 24,429 –
24,429 –
At December 31 4,795,295 8,514 4,803,809 –
Net Book Value at December 31 P2,635,864 P19,867 P2,655,731 P327,125 2008
Licenses and
Total
Application
Customer
Intangible
Software
Contracts
Assets Goodwill
(In Thousand Pesos)
Cost
P– P5,548,510 P– At January 1 P5,548,510 Additions 167,671
28,381 196,052 327,125 Retirements/disposals (11,904) –
(11,904) –
Reclassifications/
adjustments (Note 7) 1,264,295 –
1,264,295 –
At December 31 6,968,572 28,381 6,996,953 327,125 Accumulated Depreciation,
Amortization and
Impairment Losses
At January 1 3,113,887 –
3,113,887 –
Amortization 771,000 –
771,000 – Retirements/disposals (3,727) –
(3,727) –
Reclassifications/adjustments 104,122 –
104,122 –
At December 31 3,985,282 –
3,985,282 –
Net Book Value at December 31 P2,983,290 P28,381 P3,011,671 P327,125 Total
Intangible
Assets and
Goodwill
P7,324,078
99,164
(685,577)
1,049,000
7,786,665
3,985,282
1,005,834
(211,736)
24,429
4,803,809
P2,982,856
Total
Intangible
Assets and
Goodwill
P5,548,510
523,177
(11,904)
1,264,295
7,324,078
3,113,887
771,000
(3,727)
104,122
3,985,282
P3,338,796
Intangible assets pertain to 1) telecommunications equipment software licenses, corporate application software
and licenses and other VAS software applications that are not integral to the hardware or equipment; and 2)
intangible assets identified to exist during acquisition of EGG Group for its existing customer contracts. The fair
value of customer contracts was determined at P28.38 million based on multiple excess earnings approach using
a discount rate of 15%.
136
The fair values of the identified assets and liabilities of EGG Group acquired in 2008 were:
Notes
Receivables - net 4
Prepayments and other current assets - net 28 Property and equipment - net 7
Intangible assets - net Accounts payable and accrued expenses 12
Deferred tax liability 24 Net assets Goodwill arising from acquisition Total consideration, satisfied by cash
Final fair
value upon
acquisition
(In Thousand Pesos)
P35,308 8,842 8,306 28,381 80,837 47,949 8,514 56,463 24,374 327,125
P351,499 Provisional
fair value
upon acquisition
P35,308
8,842
8,306
–
52,456
47,949
–
47,949
4,507
346,992
P351,499
The goodwill is attributable to the significant synergies expected to arise after the Globe Group’s acquisition of
the EGG Group.
The business revenues and profit and loss of the EGG Group from June 26, 2008 to December 31, 2008 are
insignificant. If the acquisition had occurred on January 1, 2008, the Globe Group’s service revenues and net
income as of December 31, 2008 would have been P62,948.16 million and P11,260.38 million, respectively.
10. Investments in Joint Ventures
This account consists of:
2010 2009 (In Thousand Pesos)
2008
P252,610
–
252,610 P111,280 141,330
252,610 P111,280
–
111,280
(44,760)
(2,968)
(47,728)
(7,866) (55,594)
P197,016 (37,751) (7,009)
(44,760)
25,950 (18,810) P233,800 (28,023)
(9,728)
(37,751)
–
(37,751)
P73,529
Acquisition cost
At January 1 Acquisition during the year At December 31 Accumulated equity in net gains (losses):
At January 1
Equity in net losses Net foreign exchange difference At December 31 Carrying value at December 31 10.1 Investment in BPI Globe BanKO Inc., A Savings Bank (BPI Globe BanKO)
On July 17, 2009, Globe acquired a 40% stake in BPI Globe BanKO (formerly Pilipinas Savings Bank, Inc.
or PS Bank) for P141.33 million, pursuant to a Shareholder Agreement with Bank of the Philippine Islands
(BPI), AC and PS Bank, and a Deed of Absolute Sale with BPI. BPI Globe BanKO will have the capability to
provide services to micro-finance institutions and retail clients through mobile and related technology.
The Globe Group’s interest in BPI Globe BanKO is accounted for as follows:
Assets:
Current Non-current Liabilities:
Current
Non-current Income Expenses
2010 (In Thousand Pesos)
2009
P283,305 4,386 P147,745
3,650
(151,150)
–
16,409 (24,839) (10,064)
–
12,572
(9,627)
137
10.2 Investment in Bridge Mobile Pte. Ltd. (BMPL)
Globe Telecom and other leading Asia Pacific mobile operators (JV partners) signed an Agreement in 2004
(JV Agreement) to form a regional mobile alliance, which will operate through a Singapore-incorporated
company, BMPL. The JV company is a commercial vehicle for the JV partners to build and establish a
regional mobile infrastructure and common service platform and deliver different regional mobile services
to their subscribers.
Globe Group has a ten percent (10%) stake in BMPL. The other joint venture partners each with equal
stake in the alliance include SK Telecom, Co. Ltd., Advanced Info Service Public Company Limited, Bharti
Airtel Limited, Maxis Communications Berhad, Optus Mobile Pty. Limited, Singapore Telecom Mobile Pte,
Ltd., Taiwan Mobile Co. Ltd., PT Telekomunikasi Selular and CSL Ltd. Under the JV Agreement, each
partner shall contribute USD4.00 million based on an agreed schedule of contribution. Globe Telecom
may be called upon to contribute on dates to be determined by the JV. As of December 31, 2010, Globe
Telecom has invested a total of USD2.20 million in the joint venture.
The Globe Group’s interest in BMPL is accounted for as follows:
2010 2009 (In Thousand Pesos)
2008
P67,722 2,744 P104,280 1,769
P79,110
13,014
(7,023)
19,693 (14,231) (6,571) 17,872 (27,826)
(8,867)
18,083
(27,811)
Assets:
Current Non-current Liabilities:
Current Income Expenses The Globe Group has no share of any contingent liabilities as of December 31, 2010, 2009 and 2008.
11. Other Noncurrent Assets
This account consists of:
Notes 2010 Prepaid pension 18.2 Loan receivable from Globe Telecom
retirement fund 6
Loan receivable from Bethlehem
Holdings, Inc. (BHI) 25.5 Miscellaneous deposits Deferred input VAT AFS investment in equity
securities - net 28.10,
28.11 Others - net P951,083 2009 (In Thousand Pesos)
P1,055,444 2008
P1,140,923
968,000 968,000 –
295,000 473,862 43,320 295,000 431,221 372,618 –
386,678
751,000
101,877
42,544 P2,875,686 81,727 134,400 P3,338,410 61,324
20,270
P2,360,195
In 2008, the Globe Group granted a short-term loan to the Globe Telecom retirement fund amounting to
P800.00 million with interest at 6.20% (see Note 6). Upon maturity in 2009, the loan was rolled over until
September 2014 and bears interest at 7.75%. Further, in 2009, the Globe Group granted an additional
loan to the retirement fund amounting to P168.00 million which bears interest at 7.75% and is due also in
September 2014.
The Globe Telecom retirement fund utilized the loan to fund its investments in BHI, a company it organized
to invest in media ventures. In 2009, BHI acquired two operating companies.
138
On August 13 and December 21, 2009, the Globe Group granted five-year loans amounting to P250.00
million and P45.00 million, respectively, to BHI at 8.275% interest. The P250.00 million loan is covered by
a pledge agreement whereby in the event of default, the Globe Group shall be entitled to offset whatever
amount is due to BHI from any unpaid fees of Broadcast Enterprises and Affiliated Media Inc. (BEAM),
BHI’s subsidiary, from the Globe Group. The P45.00 million loan is fully secured by a chattel mortgage
agreement dated December 21, 2009 between Globe Group and BEAM (see Notes 16.3 and 25.5).
12. Accounts Payable and Accrued Expenses
This account consists of:
Notes Accrued project costs 25.3 Accounts payable 16 Accrued expenses 16 Traffic settlements - net Output VAT Dividends payable 17.3 2010 P8,638,119 5,716,859 5,587,799 2,172,426 –
–
P22,115,203 2009 (In Thousand Pesos)
P8,081,684 5,769,355 4,898,403 1,866,012 172,735 50,492
P20,838,681 2008
P5,258,619
5,156,011
4,837,196
1,545,539
174,472
60,637
P17,032,474
Traffic settlements payable are presented net of traffic settlements receivable from the same carrier amounting
to P2,335.95 million, P1,019.65 million and P4,313.98 million as of December 31, 2010, 2009 and 2008,
respectively.
As of December 31, 2010, Globe Telecom reported net output VAT amounting to P99.48 million, net of input VAT
of P359.93 million. As of December 31, 2009, Globe Telecom and EGG Group reported net output VAT amounting
to P172.74 million, net of input VAT of P361.59 million. As of December 31, 2008, Globe Telecom reported net
output VAT amounting to P174.47 million, net of input VAT of P330.34 million.
The “Accrued expenses” account includes accruals for general, selling and administrative expenses.
13. Provisions
The rollforward analysis of this account follows:
Notes At beginning of year Provisions/ reversals 23 Adjustments At end of year 2010 2009 (In Thousand Pesos)
P89,404 P202,514 138,760
(88,047)
(3,776)
(25,063)
P224,388 P89,404 2008
P219,687
(5,031)
(12,142)
P202,514
Provisions relate to various pending unresolved claims and assessments over the Globe Group’s mobile and
wireline business. The information usually required by PAS 37, Provisions, Contingent Liabilities and Contingent
Assets, is not disclosed on the grounds that it can be expected to prejudice the outcome of these claims and
assessments. As of February 8, 2011, the remaining pending claims and assessments are still being resolved.
The provisions for National Telecommunications Commission (NTC) permit fees amounting to P117.26 million
for an assessment by the NTC on March 27, 1996 and contested by Innove and other members of the
Telecommunications Operators of the Philippines was reversed in 2009 after taking into account all available
evidence including the merits of the ruling of the Court of Appeals (CA) in favor of another telecommunications
service provider.
139
14. Notes Payable and Long-term Debt
Notes payable consist of short-term promissory notes from local banks for working capital requirements amounting
to P2,000.83 million and P4,002.16 million as of December 31, 2009 and 2008, respectively. These notes bear
interest ranging from 4.35% to 10.00%, and 8.38% to 10.00% per annum in 2009 and 2008, respectively. There
are no outstanding notes payable as of December 31, 2010.
Long-term debt consists of:
2010 Banks:
Local Foreign Corporate notes Retail bonds Less current portion P20,352,194 7,317,483 17,729,939 4,971,854 50,371,470 8,677,209 P41,694,261 2009 (In Thousand Pesos)
P15,933,027 6,810,357 17,775,866 4,956,772 45,476,022 5,667,965 P39,808,057 2008
P15,160,390
4,836,265
13,846,398
2,742,885
36,585,938
7,742,227
P28,843,711
The maturities of long-term debt at nominal values excluding unamortized debt issuance costs as of December
31, 2010 follow (in thousand pesos):
Due in:
2011 2012 2013 2014 2015 and thereafter P8,725,621
12,410,350
9,770,085
9,761,586
9,983,065
P50,650,707
Unamortized debt issuance costs included in the above long-term debt as of December 31, 2010, 2009 and 2008
amounted to P279.24 million, P197.99 million and P84.67 million, respectively.
The interest rates and maturities of the above debt are as follows:
Maturities Banks:
Local
2011-2015
Interest Rates
2.26% to 7.03% in 2010
5.12% to 7.87% in 2009
5.21% to 9.11% in 2008
Foreign 2011-2016 0.74% to 4.13% in 2010
0.74% to 6.44% in 2009
3.14% to 6.44% in 2008
Corporate notes 2011-2016 2.67% to 8.38% in 2010
5.62% to 8.80% in 2009
5.77% to 13.79% in 2008
Retail bonds 2012-2014 7.50% to 8.00% in 2010
7.50% to 8.00% in 2009
5.49% to 11.70% in 2008
14.1 B
ank Loans and Corporate Notes
Globe Telecom’s unsecured bank loans and corporate notes, which consist of fixed and floating rate notes
and peso-denominated bank loans, bear interest at stipulated and prevailing market rates.
The loan agreements with banks and other financial institutions provide for certain restrictions and
requirements with respect to, among others, maintenance of financial ratios and percentage of ownership
of specific shareholders, incurrence of additional long-term indebtedness or guarantees and creation of
property encumbrances.
140
As of February 8, 2011, the Globe Group is not in breach of any loan covenants.
14.2 R
etail Bonds
On February 25, 2009, Globe Group issued P5,000.00 million fixed rate bonds. This amount comprises
P1,974.00 million and P3,026.00 million fixed rate bonds due in 2012 and 2014, respectively, with interest
of 7.50% and 8.00%, respectively. The proceeds of the retail bonds will be used to fund Globe Group’s
various capital expenditures.
The five-year retail bonds may be redeemed in whole, but not in part, on the twelfth (12th) interest payment
date at a price equal to 102.00% of the principal amount of the bonds and all accrued interest to the date
of redemption. Globe Group may not redeem the retail bonds unless allowed under conditions specified
in the agreements with respect to redemption for tax reasons, purchase and cancellation and change in
law or circumstance.
The Globe Group has to meet certain bond covenants including a maximum debt-to-equity ratio of 2 to 1.
As of February 8, 2011, the Globe Group is not in breach of any bond covenants.
15. Other Long-term Liabilities
This account consists of:
Notes ARO Accrued lease obligations and others 25.1
Noninterest bearing liabilities 25.4 Advance lease 25.4 Less current portion 2010 2009 (In Thousand Pesos)
P1,341,526 P1,269,291 640,927 647,416 –
735,944 –
67,673 1,982,453 2,720,324 –
803,617 P1,982,453 P1,916,707 2008
P1,081,408
591,642
821,805
79,929
2,574,784
99,145
P2,475,639
The maturities of other long-term liabilities at nominal amounts as of December 31, 2010 follow (in thousand
pesos):
Due in:
2011 2012 and thereafter P–
1,982,453
P1,982,453
In 2008, Globe Group updated its assumptions on the timing of settlement and estimated cash outflows arising
from ARO on its leased premises. As a result of the changes in estimates reckoned as of January 1, 2008, Globe
Group adjusted downward its ARO liability by P714.78 million against the book value of the assets on leased
premises.
The rollforward analysis of the Globe Group’s ARO follows:
Notes At beginning of year Capitalized to property and equipment
during the year - net of reversal 30 Accretion expense during the year 22 Adjustments due to changes in estimates At end of year 2010 2009 (In Thousand Pesos)
P1,269,291 P1,081,408 P1,623,830
41,473 95,207
(64,445) P1,341,526 95,086
77,269
(714,777)
P1,081,408
96,959 98,117 (7,193) P1,269,291 2008
141
16. Related Party Transactions
Globe Telecom and Innove, in their regular conduct of business, enter into transactions with their major stockholders,
AC and STI, joints ventures and certain related parties. These transactions, which are accounted for at market
prices normally charged to unaffiliated customers for similar goods and services, include the following:
16.1 Entities with joint control over Globe Group
• Globe Telecom has interconnection agreements with STI. The related net traffic settlements
receivable (included in “Receivables” account in the consolidated statements of financial position)
and the interconnection revenues earned (included in “Service revenues” account in the consolidated
statements of comprehensive income) are as follows:
Traffic settlements receivable - net Interconnection revenues •
2010 2009 (In Thousand Pesos)
P124,319 P34,487 1,857,336 2,097,734 2008
P216,348
1,817,912
Globe Telecom and STI have a technical assistance agreement whereby STI will provide consultancy
and advisory services, including those with respect to the construction and operation of Globe
Telecom’s networks and communication services (see Note 25.6), equipment procurement and
personnel services. In addition, Globe Telecom has software development, supply, license and support
arrangements, lease of cable facilities, maintenance and restoration costs and other transactions with
STI.
The details of fees (included in repairs and maintenance under the “General, selling and administrative
expenses” account in the consolidated statements of comprehensive income) incurred under these
agreements are as follows:
Technical assistance fee Maintenance and restoration costs and
other transactions Software development, supply, license
and support 2010 2009 (In Thousand Pesos)
P149,662 P99,903 2008
P83,514
86,901 216,701 216,813
26,904 26,924 2,637
The net outstanding balances due to STI (included in the “Accounts payable and accrued expenses”
account in the consolidated statements of financial position) arising from these transactions are as
follows:
Technical assistance fee Software development, supply, license
and support Maintenance and restoration costs and
other transactions •
2009 (In Thousand Pesos)
P48,870 P24,180 2008
P23,838
26,640 45,734
28,569
28,818 33,555 115,243
Globe Telecom earns subscriber revenues from AC. The outstanding subscribers receivable from
AC (included in “Receivables” account in the consolidated statements of financial position) and the
amount earned as service revenue (included in the “Service revenues” account in the consolidated
statements of comprehensive income) are as follows:
Subscriber receivables Service revenues
142
2010 2010 2009 (In Thousand Pesos)
P920 P103 5,696 4,034 2008
P173
5,235
•
Globe Telecom reimburses AC for certain operating expenses. The net outstanding liabilities to AC
related to these transactions amounted to P31.34 million and P23.68 million as of December 31,
2009 and 2008, respectively. There is no outstanding liability as of December 31, 2010. Balances
related to these transactions (included in “General, selling and administrative expenses” account in the
consolidated statements of comprehensive income) amounted to P26.85 million, P21.12 million and
P70.76 million, as of December 31, 2010, 2009 and 2008, respectively.
16.2 Joint Ventures in which the Globe Group is a venturer
• Globe Telecom has preferred roaming service contract with BMPL. Under this contract, Globe Telecom
will pay BMPL for services rendered by the latter which include, among others, coordination and
facilitation of preferred roaming arrangement among JV partners, and procurement and maintenance of
telecommunications equipment necessary for delivery of seamless roaming experience to customers.
Globe Telecom also earns or incurs commission from BMPL for regional top-up service provided
by the JV partners. The net outstanding liabilities to BMPL related to these transactions amounted
to P2.89 million and P1.02 million and P2.12 million as of December 31, 2010, 2009 and 2008
respectively. Balances related to these transactions (included in “General, selling and administrative
expenses” account in the consolidated statements of comprehensive income) amounted to P12.07
million, P23.98 million and P9.69 million, as of December 31, 2010, 2009 and 2008, respectively.
•
On October 2009, the Globe Group entered into an agreement with BPI Globe BanKO for the pursuit
of services that will expand the usage of GCash technology. As a result, the Globe Group recognized
revenue amounting to P9.99 million in 2009. The related receivables amounted to P9.19 million and
P11.19 million in 2010 and 2009, respectively.
16.3 Transactions with the retirement fund (see Note 11)
• On February 1, 2009, the Globe Group entered into a memorandum of agreement (MOA) with BEAM
for the latter to render mobile television broadcast service to Globe subscribers using the mobile
TV service. As a result, the Globe Group recognized an expense (included in “Professional and
other contracted services”) amounting to P250.00 million and P245.58 million in 2010 and 2009,
respectively.
•
On October 1, 2009, the Globe Group entered into a MOA with Altimax Broadcasting Co., Inc.
(Altimax), a subsidiary of BHI, for the Globe Group’s co-use of specific frequencies of Altimax’s for the
rollout of broadband wireless access to the Globe Group’s subscribers. As a result, the Globe Group
recognized an expense (included in “General, selling and administrative Expenses” account in the
consolidated statements of comprehensive income) amounting to P90.00 million and P70.00 million
in 2010 and 2009, respectively.
16.4 Transactions with other related parties
Globe Telecom has subscriber receivables (included in “Receivables” account in the consolidated
statements of financial position) and earns service revenues (included in the “Service revenues” account
in the consolidated statements of comprehensive income) from its other related parties namely, Ayala
Land Inc., Ayala Property Management Corporation, BPI, Manila Water Company, Inc., Integrated
Microelectronics, Inc., eTelecare Global Solutions, Inc., HR Mall Incorporated, Honda Cars, Inc. and Isuzu
Automotive Dealership, Inc. These amounted to:
Subscriber receivables Service revenues 2010 2009 (In Thousand Pesos)
P158,275 P99,689 245,490 149,232 2008
P99,769
203,586
The total expenses incurred on leases, utilities, customer contact services, other miscellaneous services
and purchase of vehicles provided to the Globe Group by these other related parties included under
“General, selling and administrative expenses” account in the consolidated statements of comprehensive
income amounted to P270.82 million, P282.06 million and P248.89 million as of December 31, 2010, 2009
and 2008, respectively, and “Property and equipment” in the consolidated statements of financial position
amounted to P78.32 million, P55.99 million and P114.22 million as of December 31, 2010, 2009 and
2008, respectively. The outstanding balances due related to these expenses amounted toP21.50 million,
P14.91 million and P5.72 million as of December 31, 2010, 2009 and 2008, respectively.
143
These related parties are either controlled or significantly influenced by AC.
16.5 Transactions with key management personnel of the Globe Group
The Globe Group’s compensation of key management personnel by benefit type are as follows:
Notes 2010 Short-term employee benefits 21 Share-based payments 18 Post-employment benefits 18 P1,948,311 104,788 132,406 P2,185,505 2009 (In Thousand Pesos)
P1,867,128 126,437 53,290 P2,046,855 2008
P1,833,508
182,324
112,620
P2,128,452
There are no agreements between the Globe Group and any of its directors and key officers providing for
benefits upon termination of employment, except for such benefits to which they may be entitled under the
Globe Group’s retirement plans.
The Globe Group granted short-term loans to its key management personnel amounting to P30.66 million,
P33.37 million and P21.32 million in 2010, 2009 and 2008, respectively, included in the “Prepayments and
other current assets” in the consolidated statements of financial position.
The summary of consolidated outstanding balances resulting from transactions with related parties follows:
Notes 2010 Subscriber receivables (included in
“Receivables” account) Traffic settlements receivable - net
(included in “Receivables” account) 4
Other current assets 6
Accounts payable and accrued expenses 12 2009 (In Thousand Pesos)
2008
P168,381 P110,978 P99,942
124,319 5,461 128,719 34,487 1,475 150,747 216,348
2,602
199,172
In May 2008, the NTC approved the assignment of Innove’s prepaid consumer subscriber contracts in favor
of Globe Telecom. The transfer did not result in the recognition of a gain or loss in the consolidated financial
statements.
17. Equity and Other Comprehensive Income
Globe Telecom’s authorized capital stock consists of:
Preferred stock - Series “A” P5 per share Common stock - P50 per share 2010 2009 2008
Shares Amount Shares Amount Shares Amount
(In Thousand Pesos and Number of Shares)
250,000 P1,250,000 179,934 8,996,719 250,000 P1,250,000
179,934 8,996,719 250,000 P1,250,000
179,934 8,996,719
Globe Telecom’s issued and subscribed capital stock consists of:
Preferred stock Common stock Total shares issued and fully paid Less subscriptions receivable 144
2010 2009 2008
Shares Amount Shares Amount Shares Amount
(In Thousand Pesos and Number of Shares)
158,515 P792,575
158,515
P792,575
158,515
P792,575
132,348 6,617,424 132,346 6,617,280 132,340 6,617,008
7,409,999 7,409,855 7,409,583
–
(776) –
(776) –
(1,508)
P7,409,223 P7,409,079 P7,408,075
17.1 Preferred Stock
Preferred stock - Series “A” has the following features:
(a) Convertible to one common share after 10 years from issue date on June 29, 2001 at not less than
the prevailing market price of the common stock less the par value of the preferred shares;
(b) Cumulative and nonparticipating;
(c) Floating rate dividend;
(d)
Issued at P5 par;
(e)
With voting rights;
(f) Globe Telecom has the right to redeem the preferred shares at par plus accrued dividends at any
time after 5 years from date of issuance; and
(g) Preferences as to dividend in the event of liquidation.
The dividends for preferred shares are declared upon the sole discretion of the Globe Telecom’s BOD. As
of December 31, 2010, the Globe Group has dividends in arrears to its preferred stockholders amounting
to P45.40 million.
17.2 Common Stock
The rollforward of outstanding common shares are as follows:
At beginning of year 2010 2009 2008
Shares Amount Shares Amount Shares Amount
(In Thousand Pesos and Number of Shares)
132,346 P6,617,280 132,340 P6,617,008 132,334 P6,616,677
Exercise of stock options 2
144 At end of year 132,348 P6,617,424 6
272 6
132,346 P6,617,280 331
132,340 P6,617,008
17.3 Cash Dividends
Information on Globe Telecom’s declaration of cash dividends follows:
Date
Per share Amount Record Payable
(In Thousand Pesos, Except Per Share Figures)
Preferred stock dividends declared on:
December 2, 2008
P0.38 P60,637 December 18, 2008 March 17, 2009
December 4, 2009 0.32 50,492 December 18, 2009 March 18, 2010
Common stock dividends declared on:
February 4, 2008 P37.50 P4,962,508 February 18, 2008
March 13, 2008
August 5, 2008 87.50 11,579,763 August 21, 2008 September 15, 2008
February 3, 2009 32.00 4,234,885 February 17, 2009 March 10, 2009
August 4, 2009 32.00 4,234,979 August 19, 2009 September 15, 2009
November 6, 2009 50.00 6,617,280 November 20, 2009 December 15, 2009
February 4, 2010 40.00 5,293,926 February 19, 2010 March 15, 2010
August 3, 2010 40.00 5,293,939 August 17, 2010 September 13, 2010
The dividend policy of Globe Telecom as approved by the BOD is to declare cash dividends to its common
stockholders on a regular basis as may be determined by the BOD. The dividend payout rate starting 2006
is approximately 75% of prior year’s net income payable semi-annually in March and September of each
year. This is reviewed annually, taking into account Globe Telecom’s operating results, cash flows, debt
covenants, capital expenditure levels and liquidity.
On August 5, 2008, the BOD approved the declaration of the second semi-annual cash dividends in 2008
of P4,962.61 million (P37.50 per common share) and additional special dividend of P6,616.81 million
(P50.00 per common share) to common stockholders of record as of August 21, 2008 and payable on
September 15, 2008.
On November 6, 2009, the BOD amended the dividend payment rate from 75% to a range of 75% - 90%
and declared a special dividend of P50.00 per common share based on shareholders on record as of
November 20, 2009 with the payment date of December 15, 2009.
145
On February 4, 2010, the BOD approved the declaration of the first semi-annual cash dividend in 2010 of
P5,293.93 million (P40.00 per common share) and additional special dividend of P5,293.93 million (P40.00
per common share) to common stockholders of record as August 17, 2010 and payable on September
13, 2010.
Cash Dividends after the End of Reporting Period
On February 8, 2011, the BOD approved the declaration of the first semi-annual cash dividend of P31.00
per common share, payable to common stockholders of record as of February 22, 2011. Total dividends
amounting to P4,102.80 million will be payable on March 18, 2011.
The BOD also approved the declaration of the cash dividend on preferred shares amounting to P0.29
per preferred share, payable to preferred stockholder of record as of February 22, 2011. Total dividends
amounting to P45.40 million will be payable on March 18, 2011.
17.4 Retained Earnings Available for Dividend Declaration
The total unrestricted retained earnings available for dividend declaration amounted to P8,510.85 million as
of December 31, 2010. This amount excludes the undistributed net earnings of consolidated subsidiaries,
accumulated equity in net earnings of joint ventures accounted for under the equity method, and unrealized
gains recognized on asset and liability currency translations and unrealized gains on fair value adjustments.
The Globe Group is also subject to loan covenants that restrict its ability to pay dividends (see Note 14).
17.5 Other Comprehensive Income
Other Reserves
Exchange
differences arising
from translations
Cash flow hedges
AFS financial
assets of foreign
investments Total
For the Year Ended December 31, 2010 (In Thousand Pesos)
As of January 1, 2010 (P22,554) P14,882 P26,190 P18,518
Fair value changes (116,679) 20,150 –
(96,529)
(16,578) –
–
(16,578)
39,977 –
–
39,977
–
–
(33,698) (33,698)
(P115,834) P35,032 (P7,508) (P88,310)
Transferred to income and expenses Tax effect of items taken directly
to or transferred from equity Exchange differences As of December 31, 2010 For the Year Ended December 31, 2009 (In Thousand Pesos)
As of January 1, 2009 (P37,219) P329 P1,508
(P35,382)
Fair value changes (35,116) 14,553 –
(20,563)
Transferred to income and expenses 60,156 –
–
60,156
(10,375) –
–
(10,375)
–
–
24,682 24,682
(P22,554) P14,882 P26,190 P18,518
Tax effect of items taken directly
to or transferred from equity
Exchange differences As of December 31, 2009 For the Year Ended December 31, 2008 (In Thousand Pesos)
As of January 1, 2008 P164,345 P20,063 P– P184,408
Fair value changes (457,080) (19,734) –
(476,814)
Transferred to income and expenses 146,981 –
–
146,981
108,535 –
–
108,535
–
–
1,508 1,508
(P37,219) P329 P1,508 (P35,382)
Tax effect of items taken directly
to or transferred from equity Exchange differences As of December 31, 2008 146
18. Employee Benefits
18.1 Stock Option Plans
The Globe Group has a share-based compensation plan called the Executive Stock Option Plan (ESOP).
The number of shares allocated under the ESOP shall not exceed the aggregate equivalent of 6% of the
authorized capital stock.
On October 1, 2009, the Globe Group granted additional stock options to key executives and senior
management personnel under the ESOP. The grant requires the grantees to pay a nonrefundable option
purchase price of P1,000.00 until October 30, 2009, which is the closing date for the acceptance of the
offer. In order to avail of the privilege, the grantees must remain with Globe Telecom or its affiliates from
grant date up to the beginning of the exercise period of the corresponding shares.
The following are the stock option grants to key executives and senior management personnel of the Globe
Group under the ESOP from 2003 to 2010:
Number of
Fair Value
Options
of each
Date of Grant
Granted Exercise Price
Exercise Dates
Option
50% of options exercisable from
P283.11 April 4, 2003 680,200 P547.00 per share April 4, 2005 to April 14, 2013; the
remaining 50% exercisable from
April 4, 2006 to April 14, 2013
Fair Value
Measurement
Black-Scholes
option pricing
model
July 1, 2004 803,800 P840.75 per share 50% of options exercisable from
P357.94 July 1, 2006 to June 30, 2014; the
remaining 50% from July 1, 2007 to
June 30, 2014
Black-Scholes
option pricing
model
March 24, 2006 749,500 P854.75 per share 50% of the options become
P292.12 exercisable from March 24, 2008 to
March 23, 2016; the remaining 50%
become exercisable from March 24,
2009 to March 23, 2016
Trinomial option
pricing model
May 17, 2007 604,000 P1,270.50 per share 50% of the options become
P375.89 exercisable from May 17, 2009 to
May 16, 2017, the remaining 50%
become exercisable from May 17,
2010 to May 16, 2017
Trinomial option
pricing model
August 1, 2008 635,750 P1,064.00 per share 50% of the options become
P305.03 exercisable from August 1, 2010 to
July 31, 2018, the remaining 50%
become exercisable from August 1,
2011 to July 31, 2018
Trinomial option
pricing model
October 1, 2009 298,950 P993.75 per share 50% of the options become
P346.79 exercisable from October 1, 2011
to September 30, 2019, the
remaining 50% become exercisable
from October 1, 2012 to
September 30, 2019
Trinomial option
pricing model
The exercise price is based on the average quoted market price for the last 20 trading days preceding the
approval date of the stock option grant.
147
A summary of the Globe Group’s ESOP activity and related information follows:
Outstanding, at beginning of year Granted Exercised Expired/forfeited Outstanding, at end of year Exercisable, at end of year 2010 2009 2008
Weighted
Weighted
Weighted
Average
Average
Average
Number of
Exercise
Number of
Exercise
Number of
Exercise
Shares
Price
Shares
Price
Shares
Price
(In Thousands and Per Share Figures)
1,929,732 P1,035.76 1,617,114 P994.57
2,038,106 P1,041.62 –
–
298,950 993.75 650,450 1,052.32
(34,900) 817.79 (137,626) 843.22 (247,332) 846.80
(155,125) 1,018.39 (52,950) 1,073.58 (90,500) 935.02
2,038,106 P1,041.62 1,929,732 P1,035.76
1,848,081 P1,047.80 828,281 P962.78 363,032
P792.12
1,267,506 P1,055.41 The average share prices at dates of exercise of stock options as of December 31, 2010, 2009 and 2008
amounted to P948.65, P975.26 and P1,461.82, respectively.
As of December 31, 2010, 2009 and 2008, the weighted average remaining contractual life of options
outstanding is 6.65 years, 7.59 years, and 8.13 years, respectively.
The following assumptions were used to determine the fair value of the stock options at effective grant
dates:
Share price Exercise price Expected volatility Option life Expected dividends Risk-free interest rate October 1, 2009 August 1, 2008 May 17, 2007 March 24, 2006 P1,130.00 P1,340.00 P930.00 P995.00 P1,064.00 P1,270.50 P854.75 P993.75 48.49% 31.73% 38.14% 29.51% 10 years 10 years 10 years 10 years 6.43%
6.64% 4.93% 5.38% 8.08% 9.62% 7.04% 10.30% July 1, 2004 April 4, 2003
P835.00 P580.00
P840.75 P547.00
39.50% 34.64%
10 years 10 years
4.31% 2.70%
12.91% 11.46%
The expected volatility measured at the standard deviation of expected share price returns was based on
analysis of share prices for the past 365 days.
Cost of share-based payments for the years ended December 31, 2010, 2009 and 2008 amounted to
P104.79 million, P126.44 million and P182.32 million, respectively.
18.2 Pension Plan
The Globe Group has a funded, noncontributory, defined benefit pension plan covering substantially all of
its regular employees. The benefits are based on years of service and compensation on the last year of
employment.
The components of pension expense (included in staff costs under “General, selling and administrative
expenses”) in the consolidated statements of comprehensive income are as follows:
Pension expense
2010 Current service cost Interest cost on benefit obligation Expected return on plan assets Net actuarial losses Total pension expense Actual return (loss) on plan assets 148
P245,766 181,638 (232,747)
47,110 P241,767 P234,071 2009 (In Thousand Pesos)
P163,382 156,182 (234,018) (41) P85,505 P181,051
2008
P221,289
136,160
(138,301)
28,314
P247,462
(P184,599)
The funded status for the pension plan of Globe Group is as follows:
Benefit obligation
Plan assets Unrecognized net actuarial losses
Asset recognized in the consolidated statements
of financial position* 2010 2009 (In Thousand Pesos)
P2,186,228
P2,079,316 (2,355,730)
(2,334,772)
(169,502)
(255,456) (781,014) (799,539) (P950,516)
(P1,054,995) 2008
P1,319,742
(2,344,764)
(1,025,022)
(115,403)
(P1,140,425)
* Of this amount, P951.08 million is included in “Other noncurrent assets” account, while the P0.57 million is included in “Accrued
expenses” under “Accounts payable and accrued expenses” account as of December 31, 2010.
The following tables present the changes in the present value of defined benefit obligation and fair value
of plan assets:
Present value of defined benefit obligation
2010 P2,079,316 181,638 245,766 (167,620) (152,872) P2,186,228 Balance at beginning of year Interest cost Current service cost
Benefits paid
Actuarial losses (gains) Balance at end of year 2009 (In Thousand Pesos)
P1,319,742 156,182 163,382
(129,761)
569,771 P2,079,316
2008
P1,690,615
136,160
221,289
(87,941)
(640,381)
P1,319,742
Fair value of plan assets
2010 P2,334,772
232,747 137,287 (167,620)
(181,456) P2,355,730 Balance at beginning of year Expected return Contributions Benefits paid Actuarial losses Balance at end of year 2009 (In Thousand Pesos)
P2,344,764 234,018 104 (129,761)
(114,353) P2,334,772 2008
P1,341,568
138,301
1,225,345
(87,941)
(272,509)
P2,344,764
The recommended contribution for the Globe Group retirement fund for the year 2011 amounted to
P119.52 million. This amount is based on the Globe Group’s actuarial valuation report as of December 31,
2010.
As of December 31, 2010, 2009 and 2008, the allocation of the fair value of the plan assets of the Globe
Group follows:
Investments in fixed income securities:
Corporate Government
Investments in equity securities Others
2010 2009 2008
12.66% 20.96% 63.89% 2.49% 12.40% 18.71% 66.81% 2.08% 21.02%
12.80%
64.12%
2.06%
In 2008, Globe, Innove and GXI pooled its plan assets for single administration by the fund managers. The
EGG Group’s retirement fund is being managed separately and the amount of defined benefit obligation
is immaterial.
As of December 31, 2010, the pension plan assets of the Globe Group include shares of stock of Globe
Telecom with total fair value of P14.79 million, and shares of stock of other related parties with total fair
value of P52.90 million.
149
The assumptions used to determine pension benefits of Globe Group are as follows:
Discount rate Expected rate of return on plan assets Salary rate increase 2010 8.50% 10.00% 6.00% 2009 9.00% 10.00% 7.00% 2008
12.33%
10.00%
7.00%
In 2010, 2009 and 2008, the Globe Group applied a single weighted average discount rate that reflects the
estimated timing and amount of benefit payments and the currency in which the benefits are to be paid.
The overall expected rate of return on plan assets is determined based on the market prices prevailing on
that date, applicable to the period over which the obligation is to be settled.
Amounts for the current and previous four years are as follows:
Defined benefit obligation Plan assets Deficit (surplus) 2010 P2,186,228 2,355,730 (169,502) 2009 2008 2007 (In Thousand Pesos)
P2,079,316 P1,319,742 P1,690,615 2,334,772
2,344,764 1,341,568 (255,456) (1,025,022) 349,047 2010 2009 (In Thousand Pesos)
Experience adjustments:
Gain (loss) on plan liabilities Gain (loss) on plan assets (P23,901)
(181,456)
P18,390 (114,327) 2006
P1,267,209
1,254,906
12,303
2008 2007
(P51,340)
(272,539) (P170,819)
29,780
19. Interest Income
Interest income is earned from the following sources:
Short-term placements
Cash in banks Others 2010 2009 (In Thousand Pesos)
P90,889
P145,623 23,121 67,288 104,522 58,895 P271,806 P218,532
2008
P394,824
23,033
2,568
P420,425
The “Others” account pertains to interest income from loans receivables from BHI and Globe Telecom retirement
fund (see Note 11).
20. Other Income
This account consists of:
Notes 2010 Foreign exchange gain - net 22, 28.2.1.2 Lease income 8, 25.1.b Others P465,373 173,261 218,307 P856,941 2009 (In Thousand Pesos)
P286,530 204,505 573,441 P1,064,476 2008
P–
210,003
490,871
P700,874
The peso to US dollar exchange rates amounted to P43.811, P46.425 and P47.655 as of December 31, 2010,
2009 and 2008, respectively.
The Globe Group’s net foreign currency-denominated liabilities amounted to USD267.77 million, USD207.18
million and USD85.37 million as of December 31, 2010, 2009 and 2008, respectively (see Note 28.2.1.2).
150
These combinations of net liability movements and peso rate depreciation/appreciation resulted in foreign
exchange gains in 2010 and 2009 and loss in 2008 (see Note 22).
The “Others” account includes actual recoveries of operating losses recognized in previous years.
21. General, Selling and Administrative Expenses
This account consists of:
Notes Staff costs 16.5, 18 Selling, advertising and promotions Professional and other contracted services 16 Utilities, supplies and other administrative
expenses 5
Repairs and maintenance 16 Rent 25
Insurance and security services Taxes and licenses Courier, delivery and miscellaneous
expenses Others 2010 2009 (In Thousand Pesos)
P5,088,990 P4,980,769 4,268,843 3,766,390 3,587,635 2,695,598 2008
P5,076,635
4,494,329
2,429,615
3,338,608 3,272,514 2,808,906 1,701,258
1,175,417 2,692,958 2,581,565 3,469,319 1,732,888 1,131,280 2,709,850
2,495,162
2,883,397
1,731,878
575,481
984,274 465,659 P26,692,104 906,451 539,664 P24,496,882 898,488
462,291
P23,757,126
The “Others” account includes miscellaneous expenses, delivery charges and various other items that are
individually immaterial.
22. Financing Costs
Notes 2010 Interest expense* 7
Swap and other financing costs - net Loss (gain) on derivative instruments 28 Foreign exchange loss - net 20, 28.2.1.2 P1,981,785 58,321 28,295 –
P2,068,401 2009 (In Thousand Pesos)
P2,096,945 38,993 46,943 –
P2,182,881
2008
P2,255,878
(13,105)
(1,681)
759,299
P3,000,391
* This account is net of capitalized expense and amortization of debt issuance costs.
In 2010 and 2009, net foreign exchange gain amounting to P465.37 million and P286.53 million, respectively,
was presented as part of “Others - net” account in the consolidated statements of comprehensive income (see
Note 20).
Interest expense - net is incurred on the following:
Notes 2010 14 14 15, 25.4 P1,768,861 39,237 173,687 P1,981,785 Long-term debt Short term notes payable Accretion expense 2009 (In Thousand Pesos)
P1,751,423 170,205 175,317 P2,096,945 2008
P2,035,281
57,391
163,206
P2,255,878
151
23. Impairment Losses and Others
This account consists of:
Notes 2010 Impairment loss (reversal of impairment loss) on:
Receivables 28.2.2
Property and equipment Provisions for (reversal of):
Inventory obsolescence and market decline 5
Other probable losses
13 2009 (In Thousand Pesos)
2008
P1,285,533 83,040 P754,633 85,631 P979,779
(31,172)
42,115 138,760
P1,549,448 58,743
(88,047)
P810,960 262,103
(5,031)
P1,205,679
24. Income Tax
The significant components of the deferred income tax assets and liabilities of the Globe Group represent the
deferred income tax effects of the following:
2010 Deferred income tax assets on:
Unearned revenues already subjected to
income tax Allowance for impairment losses on receivables ARO Accrued rent expense under PAS 17 Accumulated impairment losses on property
and equipment Accrued vacation leave Provision for other probable losses Unrealized loss on derivative transactions
Inventory obsolescence and market decline NOLCO Cost of share-based payments MCIT
Unrealized foreign exchange losses Others Deferred income tax liabilities on:
Excess of accumulated depreciation and
amortization of Globe Telecom equipment
for tax reporting(a) over financial reporting(b) Undepreciated capitalized borrowing costs
already claimed as deduction for tax reporting Unrealized foreign exchange gain Unamortized discount on noninterest bearing liability Prepaid pension Customer contracts of acquired company
Net deferred income tax liabilities (a) Sum-of-the-years digit method
(b) Straight-line method
152
2009 (In Thousand Pesos)
2008
P744,504 737,311 374,106 120,753
P918,938 400,352 346,668 130,805 P1,003,875
369,120
317,732
122,030
98,389 84,168 73,592 67,793 43,265 13,499 5,819 954 125 –
2,364,278 88,808 76,402 33,097 16,845 87,311 138,054 23,555
46,711
21,202 –
2,328,748 67,195
52,095
27,928
4,993
94,045
–
7,796
–
21,607
235
2,088,651
4,799,099 5,116,298 5,342,712
1,166,689
279,037 39,718 23,059
6,572 6,314,174 P3,949,896
839,330 160,761 67,178 21,709
8,228 6,213,504
P3,884,756 591,238
92,504
108,041
12,349
8,514
6,155,358
P4,066,707
Net deferred tax assets and liabilities presented in the consolidated statements of financial position on a net basis
by entity are as follows:
Net deferred tax assets (Innove and EGG Group) Net deferred tax liabilities (Globe Telecom)
2010 2009 (In Thousand Pesos)
P670,594 P742,538 4,620,490 4,627,294 2008
P523,722
4,590,429
GXI did not recognize its deferred income tax assets amounting to P64.53 million, P38.60 million and P47.75
million as of December 31, 2010, 2009 and 2008, respectively, which includes deferred income tax assets on
NOLCO amounting to P58.54 million, P33.90 million and P43.90 million as of December 31, 2010, 2009 and
2008, respectively, because the management believes that there is no assurance that GXI will generate sufficient
taxable income to allow all or part of its deferred income tax assets to be utilized.
The details of Innove’s, GXI’s and EGG Group’s NOLCO and MCIT and the related tax effects are as follows (in
thousand pesos):
Inception Year MCIT 2010
P322 2009
48,236 2008 238 P48,796 Tax Effect of
NOLCO P129,956 425,753 97,884 P653,593 NOLCO P38,987
127,726 29,365
P196,078
Expiry Year
2013
2012
2011
GXI’s NOLCO amounting to P47.82 million expired in 2010.
The reconciliation of the provision for income tax at statutory tax rate and the actual current and deferred provision
for income tax follows:
Provision at statutory income tax rate Add (deduct) tax effects of:
Deferred tax on unexercised stock options and
basis differences on deductible and reported
stock compensation expense Tax rate difference arising from the change in
expected timing of deferred tax
assets’/liabilities’ reversal Equity in net losses of joint ventures Income subjected to lower tax rates
Others Actual provision for income tax 2010 2009 (In Thousand Pesos)
P4,211,458 P5,391,811 47,806
–
890 (51,205) 84,609 P4,293,558
2008
P6,246,107
15,405 294,620
–
2,103 (62,175) 56,685 P5,403,829 25,911
3,405
(77,364)
77,463
P6,570,142
The current provision for income tax includes the following:
Regular corporate income tax Final tax 2010 2009 (In Thousand Pesos)
P4,166,153 P5,543,242 21,472 40,567 P4,187,625 P5,583,809 2008
P7,194,104
74,480
P7,268,584
The corporate tax rate is 30% in 2010 and 2009 and 35% in 2008.
Globe Telecom and Innove are entitled to certain tax and nontax incentives and have availed of incentives for tax
and duty-free importation of capital equipment for their services under their respective franchises.
153
25. Agreements and Commitments
25.1 Lease Commitments
(a) Operating lease commitments - Globe Group as lessee
Globe Telecom and Innove lease certain premises for some of its telecommunications facilities and
equipment and for most of its business centers and network sites. The operating lease agreements
are for periods ranging from 1 to 10 years from the date of the contracts and are renewable
under certain terms and conditions. The agreements generally require certain amounts of deposit
and advance rentals, which are shown as part of the “Other noncurrent assets” account in the
consolidated statements of financial position. The Globe Group also has short term renewable leases
on transmission cables and equipment. The Globe Group’s rentals incurred on these various leases
(included in “General, selling and administrative expenses” account in the consolidated statements
of comprehensive income) amounted to P2,808.91 million, P3,469.32 million and P2,883.40 million
for the years ended December 31, 2010, 2009 and 2008, respectively (see Note 21).
As of December 31, 2010, the future minimum lease payments under these operating leases are as
follows (in thousand pesos):
Not later than one year After one year but not more than five years After five years (b) P2,002,201
7,431,735
2,363,687
P11,797,623
Operating lease commitments - Globe Group as lessor
Globe Telecom and Innove have certain lease agreements on equipment and office spaces. The
operating lease agreements are for periods ranging from 1 to 14 years from the date of contracts.
These include Globe Telecom’s lease agreement with C2C Pte. Ltd. (C2C) (see Note 25.4).
Total lease income amounted to P172.50 million, P171.48 million and P198.10 million for the years
ended December 31, 2010, 2009 and 2008, respectively.
The future minimum lease receivables under these operating leases are as follows (in thousand
pesos):
Within one year After one year but not more than five years After five years (c) P156,370
625,479
39,092
P820,941
Finance lease commitments - Globe Group as lessee and lessor
Globe Telecom and Innove have entered into finance lease agreements for various items of property
and equipment. The said leased assets are capitalized and are depreciated over the EUL of three
years, which is also equivalent to the lease term. As of December 31, 2010, 2009 and 2008,
residual present value of net minimum lease payments due and receivable are immaterial.
25.2 Agreements and Commitments with Other Carriers
Globe Telecom and Innove have existing international telecommunications service agreements with various
foreign administrations and interconnection agreements with local telecommunications companies for their
various services. Globe also has international roaming agreements with other foreign operators, which
allow its subscribers access to foreign networks. The agreements provide for sharing of toll revenues
derived from the mutual use of telecommunication networks.
154
25.3 Arrangements and Commitments with Suppliers
Globe Telecom and Innove have entered into agreements with various suppliers for the development or
construction, delivery and installation of property and equipment. Under the terms of these agreements,
advance payments are made to suppliers and delivery, installation, development or construction commences
only when purchase orders are served. While the development or construction is in progress, project costs
are accrued based on the billings received. Billings are based on the progress of the development or
construction and advance payments are being applied proportionately to the milestone billings. When
development or construction and installation are completed and the property and equipment is ready
for service, the balance of the value of the related purchase orders is accrued. In 2009, the Globe Group
reclassified its Advances to Suppliers and Contractors to “Prepayments and other current assets” based
on agreed contract terms. The impact of the reclassification is an increase in prepayment and other current
assets by P1,143.89 million and P2,114.20 million as of December 31, 2009 and 2008, respectively (see
Note 6).
The consolidated accrued project costs as of December 31, 2010, 2009 and 2008 included in the “Accounts
payable and accrued expenses” account in the consolidated statements of financial position amounted to
P8,638.12 million, P8,081.68 million and P5,258.62 million, respectively (see Note 12). As of December
31, 2010, the consolidated expected future billings on the unaccrued portion of purchase orders issued
amounted to P11,822.92 million. The settlement of these liabilities is dependent on the payment terms and
project milestones agreed with the suppliers and contractors. As of December 31, 2010, the unapplied
advances made to suppliers and contractors relating to purchase orders issued amounted to P764.70
million (see Note 6).
25.4 Agreements with C2C
In 2001, Globe Telecom signed a cable equipment supply agreement with C2C. In March 2002, Globe
Telecom entered into an equipment lease agreement for the said equipment with GB21 Hong Kong Limited
(GB21).
Subsequently, GB21, in consideration of C2C’s agreement to assume all payment obligations pursuant
to the lease agreement, assigned all its rights, obligations and interest in the equipment lease agreement
to C2C. As a result of the said assignment of payables by GB21 to C2C, Globe Telecom’s liability arising
from the cable equipment supply agreement with C2C was effectively converted into a noninterest bearing
long-term obligation accounted for at net present value under PAS 39 starting 2005 with carrying values
amounting to P642.31 million, P735.94 million and P821.81 million as of December 31, 2010, 2009 and
2008, respectively (see Note 15).
In January 2003, Globe Telecom received advance lease payments from C2C for its use of a portion of
Globe Telecom’s cable landing station facilities. Accordingly, based on the amortization schedule, Globe
Telecom recognized lease income amounting to P12.26 million, P12.26 million and P11.90 million for the
years ended December 31, 2010, 2009 and 2008, respectively.
The current and noncurrent portions of the said advances shown as part of the “Other long-term liabilities”
account in the consolidated statements of financial position are as follows (see Note 15):
Current Noncurrent 2010 2009 (In Thousand Pesos)
P– P67,673 –
–
P– P67,673 2008
P12,256
67,673
P79,929
On November 17, 2009, Globe Telecom and Pacnet Cable Ltd. (Pacnet), formerly C2C, signed a
memorandum of agreement (MOA) to terminate and unwind their Landing Party Agreement dated August
15, 2000 (LPA). The MOA further requires Globe Telecom, being duly licensed and authorized by the NTC
to land the C2C Cable Network in the Philippines and operate the C2C Cable Landing Station (CLS) in
Nasugbu, Batangas, Philippines, to transfer to Pacnet’s designated qualified partner, the license of the C2C
CLS, the CLS, a portion of the property on which the CLS is situated, certain equipment and associated
facilities thereof.
155
In return, Pacnet will compensate Globe Telecom in cash and by way of C2C cable capacities deliverable
upon completion of certain closing conditions. The MOA also provided for novation of abovementioned
equipment supply and lease agreements and reciprocal options for Globe Telecom to purchase future
capacities from Pacnet and Pacnet to purchase backhaul and ducts from Globe Telecom at agreed
prices.
In the second quarter of 2010, the specific equipment, portion of the property and facilities and the liabilities
associated with the transfer were identified and were classified as current and shown separately in the
consolidated statement of financial position as “Assets classified as held for sale” and “Liabilities directly
associated with the assets classified as held for sale”.
The closing documents are expected to be fully executed within 2011.
As of December 31, 2010, assets classified as held for sale amounted to P778.32 million. Liabilities directly
associated with assets classified as held for sale amounted to P697.73 million.
25.5 Agreement with BHI
On August 11, 2009, Globe Telecom signed a credit facility agreement with BHI amounting to P750.00
million. The total drawdown under this loan made by BHI in 2009 amounted to P295.00 million. The loan is
payable in one full payment, five years from the date of initial drawdown with a prepayment option in whole
or in part on an interest payment date. Interest is at the rate of 8.275% payable semi-annually in arrears and
the loan is secured by a pledge and chattel mortgage agreement. As of December 31, 2010, the undrawn
balance of the credit facility is P455.00 million (see Note 11).
25.6 Agreement with STI
In 2009, STI agreed to sell to Globe Telecom its own capacity in a certain cable system. In 2009 also, Globe
Telecom agreed to sell to STI capacities that it owns in a certain cable system (see Note 16). Completion
of the final agreement between parties will happen in 2011.
25.7 Construction Maintenance Agreement for South-East Asia Japan Cable System (SJC)
Globe Telecom signed a Construction Maintenance Agreement with 5 other international carriers to
construct the SJC system, a 6-fiber pair, high capacity submarine cable system that will link Singapore,
Hong Kong, Indonesia, Philippines and Japan. Globe Telecom’s estimated investment for this project
amounts to USD60.00 million and total expenditures incurred was at 15% as of December 31, 2010.
25.8 Commitment to increase GXI’s paid-up capital
On May 5, 2009, the BOD of Globe Telecom approved the issuance of a guarantee to the Bangko
Sentral ng Pilipinas (BSP) for the proposal of GXI to increase its paid-up capital to P100.00 million on
a staggered basis over a period of two (2) years to meet the required minimum capital and qualify as
E-Money Issuer-Others in compliance with BSP Circular No. 649. On August 27, 2009, the Monetary
Board of the BSP approved GXI’s compliance with this circular under Resolution No. 1223.
On August 3, 2010, the BOD of Globe Telecom approved the transfer of GXI’s related assets booked
under Globe Telecom to GXI books in compliance with BSP’s first tranche requirement to increase
GXI’s paid up capital to at least P50.00 million by 2010. Globe Telecom made the additional capital
infusion to GXI through transfer of assets and GXI recorded the assets at its fair value amount of
P53.69 million increasing its total paid-up capital to P82.69 million as of September 30, 2010. After
consolidation, where the additional infusion and transfer of assets are eliminated, the assets remain
under Globe Telecom at its net book value amount of P20.38 million.
156
26. Contingencies
On July 23, 2009, the NTC issued NTC Memorandum Circular (MC) No. 05-07-2009 (Guidelines on Unit of Billing
of Mobile Voice Service). The MC provides that the maximum unit of billing for the cellular mobile telephone service
(CMTS) whether postpaid or prepaid shall be six (6) seconds per pulse. The rate for the first two (2) pulses, or
equivalent if lower period per pulse is used, may be higher than the succeeding pulses to recover the cost of the
call set-up. Subscribers may still opt to be billed on a one (1) minute per pulse basis or to subscribe to unlimited
service offerings or any service offerings if they actively and knowingly enroll in the scheme.
On December 28, 2010, the CA rendered its decision declaring null and void and reversing the decisions of the
NTC in the rates applications cases for having been issued in violation of Globe and the other carrier’s constitutional
and statutory right to due process. However, while the decision is in Globe’s favor, there is a provision in the
decision that NTC did not violate the right of petitioners to due process when it declared via circular that the per
pulse billing scheme shall be the default.
Last January 21, 2011, Globe and two other telecom carriers, filed their respective Motions for Partial
Reconsideration (MR) on the pronouncement that “the Per Pulse Billing Scheme shall be the default.” The MR is
pending resolution as of February 8, 2011.
The Globe Group is contingently liable for various claims arising in the ordinary conduct of business and certain
tax assessments which are either pending decision by the courts or are being contested, the outcome of which
are not presently determinable. In the opinion of management and legal counsel, the eventual liability under these
claims, if any, will not have a material or adverse effect on the Globe Group’s financial position and results of
operations.
27. Earnings Per Share
The Globe Group’s earnings per share amounts were computed as follows:
Net income attributable to common shareholders
for basic earnings per share Add dividends on preferred shares Net income attributable to shareholders for diluted
earnings per share Weighted average number of shares for basic
earnings per share Dilutive shares arising from:
Convertible preferred shares Stock options Adjusted weighted average number of common
stock for diluted earnings per share Basic earnings per share Diluted earnings per share 2010 2009 2008
(In Thousand Pesos and Number of Shares,
Except Per Share Figures)
P9,744,634 –
P12,518,381 50,492 P11,215,241
60,637
9,744,634 12,568,873 11,275,878
132,343 132,342 132,337
42 890 66 867 262
674
133,275 P73.63 133,275 P94.59 P94.31 133,273
P84.75
P84.61
P73.12 28. Capital and Risk Management and Financial Instruments
28.1 General
The Globe Group adopts an expanded corporate governance approach in managing its business risks. An
Enterprise Risk Management Policy was developed to systematically view the risks and to provide a better
understanding of the different risks that could threaten the achievement of the Globe Group’s mission,
vision, strategies, and goals, and to provide emphasis on how management and employees play a vital role
in achieving the Globe Group’s mission of transforming and enriching lives through communications.
157
The policies are not intended to eliminate risk but to manage it in such a way that opportunities to create
value for the stakeholders are achieved. Globe Group risk management takes place in the context of
the normal business processes such as strategic planning, business planning, operational and support
processes.
The application of these policies is the responsibility of the BOD through the Chief Executive Officer. The Chief
Financial Officer and concurrent Chief Risk Officer champions and oversees the entire risk management
function. Risk owners have been identified for each risk and they are responsible for coordinating and
continuously improving risk strategies, processes and measures on an enterprise-wide basis in accordance
with established business objectives.
The risks are managed through the delegation of management and financial authority and individual
accountability as documented in employment contracts, consultancy contracts, letters of authority, letters
of appointment, performance planning and evaluation forms, key result areas, terms of reference and
other policies that provide guidelines for managing specific risks arising from the Globe Group’s business
operations and environment.
The Globe Group continues to monitor and manage its financial risk exposures according to its BOD
approved policies.
The succeeding discussion focuses on Globe Group’s capital and financial risk management.
28.2 Capital and Financial Risk Management Objectives and Policies
The primary objective of the Globe Group’s capital management is to ensure that it maintains a strong
credit rating and healthy capital ratios in order to support its business and maximize shareholder value.
The Globe Group monitors its use of capital using leverage ratios, such as debt to total capitalization and
makes adjustments to it in light of changes in economic conditions and its financial position.
The Globe Group is not subject to externally imposed capital requirements. The ratio of debt to total
capitalization for the years ended December 31, 2010, 2009 and 2008 was at 52%, 50% and 45%,
respectively.
The main purpose of the Globe Group’s financial risk management is to fund its operations and capital
expenditures. The risks arising from the use of financial instruments are market risk, credit risk and liquidity
risk. Globe Telecom also enters into derivative transactions, the purpose of which is to manage the currency
and interest rate risk arising from its financial instruments.
Globe Telecom’s BOD reviews and approves the policies for managing each of these risks. The Globe Group
monitors market price risk arising from all financial instruments and regularly reports financial management
activities and the results of these activities to the BOD.
The Globe Group’s risk management policies are summarized below:
28.2.1Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in market prices. Globe Group is mainly exposed to two types of market risk:
interest rate risk and currency risk. Financial instruments affected by market risk include loans and
borrowings, AFS investments, and derivative financial instruments.
The sensitivity analyses in the following sections relate to the position as at December 31, 2010,
2009 and 2008. The analyses exclude the impact of movements in market variables on the carrying
value of pension and other postretirement obligations, provisions and on the non-financial assets
and liabilities of foreign operations.
158
The following assumptions have been made in calculating the sensitivity analyses:
•
•
•
The statement of financial position sensitivity relates to derivatives.
The sensitivity of the relevant income statement item is the effect of the assumed changes in
respective market risks. This is based on the financial assets and financial liabilities held as
at December 31, 2010, 2009 and 2008 including the effect of hedge accounting.
The sensitivity of equity is calculated by considering the effect of any associated cash flow
hedges for the effects of the assumed changes the underlying.
28.2.1.1
Interest Rate Risk
The Globe Group’s exposure to market risk from changes in interest rates relates
primarily to the Globe Group’s long-term debt obligations. Please refer to table
presented under 28.2.3 Liquidity Risk.
Globe Group’s policy is to manage its interest cost using a mix of fixed and variable
rate debt, targeting a ratio of between 31-62% fixed rate USD debt to total USD
debt, and between 44-88% fixed rate PHP debt to total PHP debt. To manage this
mix in a cost-efficient manner, Globe Group enters into interest rate swaps, in which
Globe Group agrees to exchange, at specified intervals, the difference between fixed
and variable interest amounts calculated by reference to an agreed-upon notional
principal amount.
After taking into account the effect of currency and interest rate swaps, 32% and 65%
of the Globe Group’s USD and PHP borrowings, respectively, as of December 31,
2010, 34% and 45% of the Globe Group’s USD and PHP borrowings, respectively,
as of December 31, 2009, 35% and 55% of the Globe Group’s USD and PHP
borrowings, respectively, as of December 31, 2008, are at a fixed rate of interest.
The following tables demonstrate the sensitivity of income before tax to a reasonably
possible change in interest rates after the impact of hedge accounting, with all other
variables held constant.
2010
USD* PHP Increase/decrease
in basis points
+35bps -35bps +100bps
-100bps Effect on income
before tax
Effect on equity
Increase (decrease) Increase (decrease)
(In Thousand Pesos)
P7,086
(P14,607)
14,622 (7,009)
(134,008) 153,121
133,980 (160,664)
* The Globe Group revised the USD interest rates to a more reasonable estimate due to declining USD LIBOR rates
2009
USD PHP Increase/decrease
in basis points
+200bps
-200bps +100bps -100bps
Effect on income
before tax
Effect on equity
Increase (decrease)
Increase (decrease)
(In Thousand Pesos)
(P31,983) P38,989
29,784
(17,214)
(121,820) –
121,747 –
159
2008
USD PHP Increase/decrease
in basis points
+200 bps -200 bps +100 bps -100 bps Effect on income
before tax
Effect on equity
Increase (decrease)
Increase (decrease)
(In Thousand Pesos)
(P29,780) P27,412
30,815 (28,606)
(63,938) (1,790)
63,840 1,818
The impact to equity is caused by the change in marked to market value of derivatives classified
as hedges.
28.2.1.2
Foreign Exchange Risk
The Globe Group’s foreign exchange risk results primarily from movements of the
PHP against the USD with respect to USD-denominated financial assets, USDdenominated financial liabilities and certain USD-denominated revenues. Majority of
revenues are generated in PHP, while substantially all of capital expenditures are in
USD. In addition, 15%, 14% and 12% of debt as of December 31, 2010, 2009 and
2008, respectively, are denominated in USD before taking into account any swap and
hedges.
Information on the Globe Group’s foreign currency-denominated monetary assets
and liabilities and their PHP equivalents are as follows:
2010
US
Peso
Dollar
Equivalent
Assets
Cash and cash equivalents $41,573
P1,821,337 Receivables 58,257 2,552,308 Prepayments and other
current assets
–
–
99,830 4,373,645 Liabilities
Accounts payable and accrued
expenses 197,586 8,656,460 Long-term debt
170,011
7,448,357
367,597 16,104,817 Net foreign-currency denominated
liabilities $267,767 P11,731,172 * This table excludes derivative transactions disclosed in Note 28.3
2009 US
Peso
Dollar
Equivalent
(In Thousands)
2008
US
Peso
Dollar
Equivalent
$45,684 50,359
P2,120,901
2,337,915
$40,776 68,004 P1,943,159
3,240,744
–
96,043 5
4,458,821 14 108,794 661
5,184,564
155,085 148,133 303,218 7,199,819 6,877,090 14,076,909
92,464 101,696 194,160 4,406,395
4,846,310
9,252,705
$207,175 P9,618,088 $85,366 P4,068,141
The following tables demonstrate the sensitivity to a reasonably possible change in the
PHP to USD exchange rate, with all other variables held constant, of the Globe Group’s
income before tax (due to changes in the fair value of financial assets and liabilities).
2010
2009
160
Increase/decrease
in Peso to
US Dollar exchange rate
+.40
-.40 Increase/decrease
in Peso to
US Dollar exchange rate
+.40
-.40 Effect on income before tax
Effect on equity
Increase (decrease)
Increase (decrease)
(In Thousand Pesos)
(P14,181)
(P106,051) 106,051
14,181
Effect on income before tax
Effect on equity
Increase (decrease)
Increase (decrease)
(In Thousand Pesos)
(P278)
(P81,857)
81,857 278
2008
Increase/decrease
in Peso to
US Dollar exchange rate
+.40 -.40 Effect on income before tax
Effect on equity
Increase (decrease)
Increase (decrease)
(In Thousand Pesos)
(P4,291)
(P37,971) 37,971 4,291
The movement on the income before tax is a result of a change in the fair value of
derivative financial instruments not designated in a hedging relationship and monetary
assets and liabilities denominated in US dollars, where the functional currency of the
Group is Philippine Peso. Although the derivatives have not been designated in a hedge
relationship, they act as economic hedge and will offset the underlying transactions
when they occur.
The movement in equity arises from changes in the fair values of derivative financial
instruments designated as cash flow hedges.
In addition, the consolidated expected future payments on foreign currency-denominated
purchase orders related to capital projects amounted to USD274.51 million, USD255.79
million, and USD264.66 million as of December 31, 2010, 2009 and 2008, respectively.
The settlement of these liabilities is dependent on the achievement of project milestones
and payment terms agreed with the suppliers and contractors. Foreign exchange
exposure assuming a +/-40 centavos in 2010, 2009 and 2008 movement in PHP to
USD rate on commitments amounted to P109.80 million, P102.32 million and P105.86
million gain or loss, respectively.
The Globe Group’s foreign exchange risk management policy is to maintain a hedged
financial position, after taking into account expected USD flows from operations and
financing transactions. Globe Telecom enters into short-term foreign currency forwards
and long-term foreign currency swap contracts in order to achieve this target.
28.2.2 Credit Risk
Applications for postpaid service are subjected to standard credit evaluation and verification
procedures. The Credit Management unit of the Globe Group continuously reviews credit policies
and processes and implements various credit actions, depending on assessed risks, to minimize
credit exposure. Receivable balances of postpaid subscribers are being monitored on a regular
basis and appropriate credit treatments are applied at various stages of delinquency. Likewise, net
receivable balances from carriers of traffic are also being monitored and subjected to appropriate
actions to manage credit risk. The maximum credit exposure relates to receivables net of any
allowances provided.
With respect to credit risk arising from other financial assets of the Globe Group, which comprise
cash and cash equivalents, short-term investments, AFS financial investments, HTM investments,
and certain derivative instruments, the Globe Group’s exposure to credit risk arises from the default
of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.
The Globe Group’s investments comprise short-term bank deposits and government securities.
Credit risk from these investments is managed on a Globe Group basis. For its investments with
banks, the Globe Group has a counterparty risk management policy which allocates investment
limits based on counterparty credit rating and credit risk profile.
The Globe Group makes a quarterly assessment of the credit standing of its investment
counterparties, and allocates investment limits based on size, liquidity, profitability, and asset
quality. For investments in government securities, these are denominated in local currency and
are considered to be relatively risk-free. The usage of limits is regularly monitored. For its derivative
counterparties, the Globe Group deals only with counterparty banks with investment grade ratings
and large local banks. Credit ratings of derivative counterparties are reviewed quarterly.
161
Following are the Globe Group exposures with its investment counterparties for cash and cash
equivalents as of December 31:
Local bank deposits Onshore foreign bank Offshore bank deposit Special deposit account 2010 52% 16%
3% 29% 2009 48% 25%
12%
15%
2008
53%
27%
13%
7%
The Globe Group has not executed any credit guarantees in favor of other parties. There is
minimal exposure to credit concentration risk within the Globe Group. Credit exposures from
subscribers and carrier partners continue to be managed closely for possible deterioration. When
necessary, credit management measures are proactively implemented and identified collection
risks are being provided for accordingly. Outstanding credit exposures from financial instruments
are monitored daily and allowable exposures are reviewed quarterly.
The tables below show the aging analysis of the Globe Group’s receivables as of December 31.
2010
Neither Past Past Due But Not Impaired Due Nor
Less than
31 to 60
61 to 90
More than
Impaired
30 days
days
days
90 days
(In Thousand Pesos)
Wireless receivables:
P739,554 P311,860 P139,330 P744,827 Consumer P521,771 Key corporate accounts 19,975 103,032 150,689 127,929 201,733 Other corporations and Small
and Medium Enterprises
(SME) 129,570 152,544 76,092 18,802 175,710
671,316 995,130 538,641 286,061 1,122,270
Wireline receivables:
Consumer 235,480 215,510 111,297 66,806 76,989
Key corporate accounts 3,066 182,566 165,621 216,576 823,085 Other corporations and
SME 86,869 50,922
30,474 16,125 49,166 325,415 448,998 307,392 299,507 949,240 Other trade receivables
–
–
8,447 5,186 4,214 Traffic receivables:
Foreign
1,731,708 –
–
–
–
Local
133,474 –
–
–
–
1,865,182 –
–
–
–
Other receivables 647,464 –
–
–
–
P854,480 P590,754 P2,075,724
Total P3,509,377 P1,444,128 162
Impaired
Financial
Assets
Total
P346,499 74,131 P2,803,841
677,489
83,920 504,550
636,638
4,117,968
1,252,527 179,015 1,958,609
1,569,929
140,542 1,572,084 –
374,098
3,902,636
17,847
175,241 1,906,949
89,815 223,289
265,056 2,130,238
11,414 658,878
P2,353,104 P10,827,567
2009
Wireless receivables:
Consumer Key corporate accounts
Other corporations and
SME Wireline receivables:
Consumer Key corporate accounts Other corporations and
SME Other trade receivables Traffic receivables:
Foreign Local Other receivables Total Neither Past
Due Nor
Less than
Impaired
30 days
Past Due But Not Impaired 31 to 60
61 to 90
More than
days
days
90 days
(In Thousand Pesos)
Impaired
Financial
Assets
Total
P262,965
32,777
P354,222 133,249
P151,239 106,967 P93,469
69,193 P255,714
116,094 P88,088 20,154 P1,205,697
478,434
110,527 406,269 103,315 590,786 39,450 297,656 20,535 183,197 49,246 421,054 47,690 155,932 370,763
2,054,894
158,475 16,282 152,776 97,368 82,966
153,984 79,941 242,937 129,685 804,630 610,142 76,400 1,213,985
1,391,601
71,041 245,798 –
48,108 298,252 16,407 25,663 262,613 2,715 13,690 336,568 –
46,182 980,497 –
93,228 779,770 2,681 297,912
2,903,498
21,803
1,838,777 303,090 2,141,867 626,640 P3,420,574 –
–
–
–
P905,445 –
–
–
–
P562,984 –
–
–
–
P519,765 –
–
–
–
P1,401,551 97,971 79,435 177,406 8,111 P1,123,900 1,936,748
382,525
2,319,273
634,751
P7,934,219
Past Due But Not Impaired 31 to 60
61 to 90
More than
days
days
90 days
(In Thousand Pesos)
Impaired
Financial
Assets
Total
2008
Wireless receivables:
Consumer
Key corporate accounts Other corporations and SME Wireline receivables:
Consumer
Key corporate accounts Other corporations and SME
Other trade receivables Traffic receivables:
Foreign
Local Other receivables Neither Past
Due Nor
Less than
Impaired
30 days
Total P403,189 20,824 100,212 524,225 P370,507 116,519 79,592 566,618 P193,777 104,325
42,246 340,348 P100,177
51,295 20,611 172,083 P255,357 53,863 50,781 360,001
P131,423 62,132 139,099 332,654 P1,454,430
408,958
432,541
2,295,929
211,371 280,441 77,210 569,022 –
120,056
246,790 37,900 404,746 12,625 91,340
172,183 20,637 284,160 3,281 71,724 116,128 15,581 203,433 3,686 –
339,174 9,132 348,306 1,667 288,433 87,958 60,579 436,970 –
782,924
1,242,674
221,039
2,246,637
21,259
2,879,081
349,642 3,228,723 466,610
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
79,559 309,728
389,287 11,560 2,958,640
659,370
3,618,010
478,170
P4,788,580
P983,989 P627,789 P379,202
P709,974 P1,170,471 P8,660,005
Total allowance for impairment losses amounted to P2,453.44 million, P1,350.99 million
and P1,186.66 million includes allowance for impairment arising from collective assessment
amounted to P328.72 million, P99.21 million and P16.19 million as of December 31, 2010,
2009 and 2008, respectively (see Note 4).
The table below provides information regarding the credit risk exposure of the Globe
Group by classifying assets according to the Globe Group’s credit ratings of receivables
as of December 31. The Globe Group’s credit rating is based on individual borrower
characteristics and their relationship to credit event experiences.
163
2010
Neither past-due nor impaired
High Quality Medium Quality Low Quality (In Thousand Pesos)
Wireless receivables:
Consumer P280,831 P64,889 P176,051 Key corporate accounts 9,817 1,183 8,975 Other corporations and SME 60,842 4,358 64,370
351,490 70,430 249,396 Wireline receivables:
Consumer 196,067 39,413 –
Key corporate accounts
2,912 154 –
Other corporations and SME 79,049 7,512 308 278,028 47,079 308 Total P629,518 P117,509 P249,704 2009
Neither past-due nor impaired
High Quality Medium Quality Low Quality (In Thousand Pesos)
Wireless receivables:
Consumer P183,594 P41,292 P38,079 Key corporate accounts 27,339 3,867 1,571 Other corporations and SME 25,054 37,693 47,780 235,987 82,852 87,430
Wireline receivables:
Consumer 70,395 10,563 77,517 Key corporate accounts 13,658 116 2,508 Other corporations and SME 34,676 4,036 32,329 118,729 14,715 112,354 Total P354,716 P97,567 P199,784 2008
Neither past-due nor impaired
High Quality Medium Quality Low Quality (In Thousand Pesos)
Wireless receivables:
P64,959
P59,708 Consumer P278,522 Key corporate accounts 17,006
2,338 1,480 Other corporations and SME 13,200 37,113 49,899 308,728 104,410 111,087
Wireline receivables:
Consumer
82,158 44,684 84,529 Key corporate accounts 273,941
6,499 1
Other corporations and SME 28,452 12,146 36,612 384,551 63,329 121,142 Total P693,279 P167,739 P232,229 Total
P521,771
19,975
129,570
671,316
235,480
3,066
86,869
325,415
P996,731
Total
P262,965
32,777
110,527
406,269
158,475
16,282
71,041
245,798
P652,067
Total
P403,189
20,824
100,212
524,225
211,371
280,441
77,210
569,022
P1,093,247
High quality accounts are accounts considered to be high value and have consistently exhibited good paying
habits. Medium quality accounts are active accounts with propensity of deteriorating to mid-range age buckets.
These accounts do not flow through to permanent disconnection status as they generally respond to credit actions
and update their payments accordingly. Low quality accounts are accounts which have probability of impairment
based on historical trend. These accounts show propensity to default in payment despite regular follow-up actions
and extended payment terms. Impairment losses are also provided for these accounts based on net flow rate.
Traffic receivables that are neither past due nor impaired are considered to be high quality given the reciprocal
nature of the Globe Group’s interconnect and roaming partner agreements with the carriers and the Globe Group’s
historical collection experience.
Other receivables are considered high quality accounts as these are substantially from credit card companies and
Globe dealers.
164
The following is a reconciliation of the changes in the allowance for impairment losses for receivables as of
December 31 (in thousand pesos) (see Notes 4 and 23):
2010
Subscribers
Other
Traffic
Key corporate corporations Settlements
Consumer
accounts
and SME and Others
At beginning of year P820,403 P176,973
P165,416 P188,199 Charges for the year 987,636 81,395 124,549 91,333 Reversals/write offs/
adjustments (130,348)
(12,746) (39,366) –
At end of year P1,677,691
P245,622 P250,599 P279,532 2009
Subscribers
Key corporate
Consumer
accounts
At beginning of year P400,926
P119,986 Charges for the year 856,184 35,900 Reversals/write offs/
adjustments
(436,707) 21,087
At end of year P820,403 P176,973 2008
Subscribers
Key corporate
Consumer
accounts
At beginning of year P481,599
P336,558 Charges for the year 501,426 146,725
Reversals/write offs/
adjustments
(582,099) (363,297)
At end of year
P400,926 P119,986 Non-trade
(Note 6)
P34,776 620 Total
P1,385,767
1,285,533
(14,351)
P21,045 (196,811)
P2,474,489
Other
corporations
and SME
P264,900 79,898 Traffic
Settlements
and Others
P400,847 (211,351)
Non-trade
(Note 6)
P43,753 (5,998) Total
P1,230,412
754,633
(179,382) P165,416
(1,297)
P188,199 (2,979)
P34,776
(599,278)
P1,385,767
Other
corporations
and SME
P279,266 187,523 Traffic
Settlements
and Others
P286,052
134,504 Non-trade
(Note 6)
P35,720 9,601
Total
P1,419,195
979,779
(201,889)
P264,900 (19,709)
P400,847
(1,568) P43,753 (1,168,562)
P1,230,412
28.2.3 Liquidity Risk
The Globe Group seeks to manage its liquidity profile to be able to finance capital expenditures
and service maturing debts. As of December 31, 2010, 2009 and 2008, Globe Group has
available uncommitted short-term credit facilities of USD59.00 million and P11,017.40 million,
USD19.00 million and P9,004.90 million, USD39.00 million and P5,297.10 million, respectively.
As of December 31, 2010, 2009 and 2008, the Globe Group has available committed long-term
facilities of P1,000.00 million, USD93.00 million and USD66.00 million, respectively, which remain
undrawn.
As part of its liquidity risk management, the Globe Group regularly evaluates its projected and actual
cash flows. It also continuously assesses conditions in the financial markets for opportunities to
pursue fund raising activities, in case any requirements arise. Fund raising activities may include
bank loans, export credit agency facilities and capital market issues.
165
166
2010
2015 and
Total
Total
2011 2012 2013 2014
thereafter (in USD)
(in PHP)
Liabilities:
Long-term debt
Fixed rate
P7,033,150 P3,397,450 P4,381,850 P4,008,900 $– P22,960,050 Philippine peso P4,138,700 Interest rate
5.97%, 6.68%, 5.97%, 6.68%, 5.97%, 6.68%,
7.03%, 7.4%,
7.03%, 8.36%
7.03%, 7.4%
7.03%, 7.4%, 7.03%, 7.4%
8%, 8.36%
7.5%
Floating rate
USD notes $87,721 $28,642 $14,273 $17,710 $21,665 170,011 –
Interest rate 6-mo. LIBOR+ 3.4%
6-mo. LIBOR+3.4%
6-mo. LIBOR+3.4%
6-mo.
6-mo. LIBOR+
margin; 6-mo. margin; 6-mo. LIBOR+
margin; 6-mo.
LIBOR+3.4%
3.4% margin
LIBOR+2.65%
2.65% margin; 3mo or
LIBOR+2.65%
margin; 6-mo.
margin; 3mo or 6mo
6mo LIBOR +.43%
margin
LIBOR+2.65%
LIBOR +.43%
margin (rounded to
margin
margin (rounded to
1/16%); 6mo LIBOR
1/16%); 6mo LIBOR
+3% margin
+3% margin; 1mo or
3mo or 6mo
LIBOR+2% margin;
6mo LIBOR+ .85%
P4,122,343 P5,747,343 P4,603,843 P5,025,000 –
20,242,300 Philippine peso P743,771 Interest rate PDSTF 3mo +
PDSTF 3mo + 0.75% PDSTF 3mo + 0.75%
PDSTF 3mo +
PDSTF 3mo +
0.75% margin;
margin; PDSTF3mo + margin; PDSTF3mo +
0.75% margin;
0.75% margin;
PDSTF3mo + 1.25%
1.25% margin;
1.25% margin;
PDSTF3mo +
PDSTF 3mo +
margin; PDSTF3mo
PDSTF3mo + 1%
PDSTF3mo + 1%
1.25% margin;
0.65% margin
+ 1% margin;
margin; PDSTF6mo + margin; PDSTF6mo +
PDSTF3mo + 1
PDSTF6mo + 1.25% 1.25% margin; PDSTF 3
1.25% margin
margin %;
margin
mo + 1.50% margin
PDSTF6mo +
1.25% margin
$170,011 P43,202,350 Interest payable*
P1,494,852 P1,152,815
P606,723 P416,655 P– P5,694,607 PHP debt P2,023,562 USD debt $4,578 $2,605
$1,918
$1,355
$1,061 $11,517 $– *Used month-end USD LIBOR and Philippine Dealing and Exchange Corporation (PDEX) rates.
*Using P43.81- USD exchange rate as of December 31, 2010.
Long-term Liabilities:
Carrying
Value
(in PHP)
P22,888,412 7,317,483 20,165,575 P50,371,470 P– $– Debt
Issuance
Costs
P 71,638 130,874 76,725 P279,237 P– $– P–
$–
P52,363,638
20,136,024
7,410,651
P24,816,963
Fair Value
(in PHP)
The following tables show comparative information about the Globe Group’s financial instruments as of December 31 that are exposed to liquidity risk and interest rate risk and
presented by maturity profile including forecasted interest payments for the next five years from December 31 figures (in thousands).
167
P718,771 P6,947,343
P7,566,093 P2,503,843 –
Philippine peso P2,580,873 Interest rate PDSTF3mo + 1%
PDSTF3mo + 1%
PDSTF3mo + 1% PDSTF3mo + 1% PDSTF3mo + 1%
margin; PDSTF
margin; PDSTF3mo+ margin; PDSTF 3mo+
margin; PDSTF3
margin;
3mo+ 1.30% ,
1.30% , PDSTF3mo + 1.30% , PDSTF3mo +
mo+ 1.30%,
PDSTF6mo +
PDSTF3mo + 1.10%
1.10% margin, 1.10% margin, PDSTF
PDSTF3mo +
1.25% margin
margin, PDSTF3mo +
PDSTF3mo + 1%
3mo + 1% margin;
1.10% margin,
1% margin; PDSTF
margin; PDSTF6mo + PDSTF6mo + 1.25% PDSTF3mo + 1%
6mo + 1.25% margin
1.25% margin margin; PDSTF3mo +
margin;
1.50% margin
PDSTF6mo +
1.25% margin
$148,133 Interest payable*
P2,181,085 P1,483,347 P1,020,253 P638,566 P– PHP debt P2,369,013 USD debt $2,727 $1,305 $157
$– $– $4,189
* Used month-end USD LIBOR and Philippine Dealing and Exchange Corporation (PDEX) rates.
* Using P46.425 - USD exchange rate as of December 31, 2009.
P197,992 P– $– P38,796,923 P7,692,264 $– 6,810,357 66,734 P– $– P45,476,022 20,281,269 P18,384,396 P95,604 35,654 Carrying
Value
(in PHP)
Debt
Issuance
Costs
20,316,923 2009
2014 and
Total
Total
2010 2011 2012 2013
thereafter
(in USD)
(in PHP)
Liabilities:
Long-term debt
Fixed rate
P4,093,700 P6,988,150 P933,700 P6,450,750 $–
P18,480,000 Philippine peso P13,700 Interest rate 5.97%;
5.97%;
5.97%;
7.24%; 7.50%;
6.68%; 7.03%;
6.68%;7.03%;
6.68%; 7.03%;
8.00%; 8.36%
7.24%; 8.36%
7.24%; 8.36%
7.50%; 8.00%
7.24%; 36%
Floating rate
USD notes $66,622 $68,511 $13,000 $– $– 148,133 –
Interest rate 6mo LIBOR+.85%
6mo LIBOR+ .85%;
6mo LIBOR + 3%
;6mo LIBOR+3%
6mo LIBOR + 3%
margin; 3mo or 6mo
margin; 1mo or 3mo margin; 1mo or 3mo or
LIBOR + .43%
or 6mo LIBOR+2%
6mo LIBOR+ 2%
margin (rounded to
margin; 3mo or 6mo
margin; 3mo or 6mo
1/16%)
LIBOR+.43% margin
LIBOR + .43% margin
(rounded to 1/16%)
(rounded to 1/16%)
P–
$–
P45,130,753
20,245,723
5,472,014
P19,413,016
Fair Value
(in PHP)
168
P– P4,080,000 P6,087,000 P920,000
–
Philippine peso P4,700,000 Interest rate
11.70%
–
13.79%; 5.97%;
13.79%; 5.97%; 13.79%; 5.97%;
6.68%; 7.03%
6.68%; 7.03%
6.68%; 7.03%
Floating rate
USD notes $32,222 $32,222 $26,112
$5,000
$– 95,556 Interest rate
3mo/6mo
3mo/6mo
3mo/6mo
3mo/6mo
LIBOR+.43%
LIBOR+.43%
LIBOR+.43%
LIBOR+.43%
margin (rounded
margin (rounded
margin (rounded
margin (rounded
to .06%);
to .06%);
to .06%);
to .06%)
LIBOR+.85%
LIBOR+.85%
LIBOR+.85%
P2,503,173
P25,000 P5,825,000 P6,443,750
–
Philippine peso P1,240,373 Interest rate PDSTF3mo+
PDSTF3mo+1.30%
PDSTF3mo+
PDSTF3mo+
PDSTF3mo+
1.38%;
;
1.30%;
1.30%;
1.30%;
PDSTF1mo+
PDSTF1mo+1.10%
PDSTF1mo+
PDSTF1mo+
PDSTF1mo+
1% margin
margin;
1.10% margin;
1.10% margin;
1.10% margin;
PDSTF3mo+1%
PDSTF3mo+1%
PDSTF3mo+1%
PDSTF3mo+
margin;
margin
margin;
1% margin;
PDSTF1mo+1%
PDSTF1mo+
PDSTF1mo+
margin
1.50% margin
1.25% margin
$101,696 Interest payable*
P1,870,132 P1,522,663 P845,511 P391,305
P– PHP debt P2,244,472 USD debt $1,775 $824
$263
$63
$– $2,925 * Used month-end USD LIBOR and Philippine Dealing and Exchange Corporation (PDEX) rates.
* Using P47.655-USD exchange rate as of December 31, 2008.
10,045 27,532 P84,668 P– $– –
16,037,296 P31,824,296 P6,874,083 $– P– $– P36,585,938 16,009,764 4,543,655 15,739,909 P292,610 P– 47,091
Carrying
Value
(in PHP)
Debt
Issuance
Costs
15,787,000 2008
2013 and
Total
Total
2009 2010 2011 2012
thereafter
(in USD)
(in PHP)
Liabilities:
Long-term debt
Fixed rate
USD notes $6,140 $– $– $–
$– $6,140 P–
Interest rate 6.44%
P–
$–
P37,212,371
16,009,764
4,588,401
16,314,939
P299,267
Fair Value
(in PHP)
169
Receive
2011
P4,048 146,821
Pay
P– 4,065 Receive
2012
Less than
1 year P19,906,644 93,336 –
P19,999,980 P2,572 51,911 Pay
1 to 2 years P– 152,529
–
P152,529 P– 16,745 Receive
2013
2 to 3 years
P– –
–
P– P– –
Pay
3 to 4 years P– –
–
P– P– 19,889 Receive
P– –
Pay
Over 5 years P– –
640,927 P640,927 2014
4 to 5 years
P– –
–
P– $– P1,539,082
2011
P– $35,000 Pay
$2,500 –
Receive
2012
P140,825 –
Pay
$- –
Receive
* Projected principal exchanges represent commitments to purchase USD for payment of USD debts with the same maturities.
Projected Principal Exchanges*:
Principal Only Swaps
Forward Sale of USD Receive
2013
P- –
Pay
$– –
Receive
2014
P– –
Pay
* Projected USD swap coupons were converted to PHP at the balance sheet rate. Further, it was assumed that 3m Libor, 3m PDSTF, and 6m PDSTF would stay at December 31, 2010 levels.
Projected Swap Coupons*:
Principal Only Swaps P– Interest Rate Swaps Derivative Instruments:
* Excludes taxes payable which is not a financial instrument.
On demand Accounts payable and accrued expenses* P426,696
Derivative liabilities –
Other long-term liabilities –
P426,696 Other Financial Liabilities:
2010
$– –
Receive
P–
–
Pay
P–
–
Pay
2015 and beyond
P– 11,388 Receive
2015 and beyond
Total
P20,333,340
245,865
640,927
P21,220,132
The following tables present the maturity profile of the Globe Group’s other liabilities and derivative instruments (undiscounted cash flows including swap costs payments/receipts
except for other long-term liabilities) as of December 31 (in thousands):
170
2010
P– –
Receive
P4,290 21,424
Pay
2011
P– –
Receive
Less than
1 year P16,458,817 85,867 2,000,829 735,944
P19,281,457 P5,436
4,401 Pay
1 to 2 years P– 5,515 –
–
P5,515 2012
P– 4,240 Receive
2 to 3 years
P– –
–
–
P– P2,726 –
Pay
3 to 4 years P– 1,074 –
–
P1,074 2013
P– –
Receive
4 to 5 years
P– –
–
–
P– Pay
P– –
Over 5 years P– –
–
647,416 P647,416 $– $20,000 P964,150 2010
P– P959,500 $20,000 Pay
2011
$–
–
–
Receive
Pay
P– –
–
2012
$2,500 –
–
Receive
*Projected principal exchanges represent commitments to purchase USD for payment of USD debts with the same maturities.
Projected Principal Exchanges*:
Principal Only Swaps Forward Purchase of USD Forward Sale of USD Receive
P140,825
–
–
Pay
Receive
$
–
–
2013
Pay
P– –
–
*Projected USD swap coupons were converted to PHP at the balance sheet rate. Further, it was assumed that 3m Libor, 3m PDSTF, and 6m PDSTF would stay at December 31, 2009 levels.
Projected Swap Coupons*:
Principal Only Swaps Interest Rate Swaps
Derivative Instruments:
*Excludes taxes payable which is not a financial instrument.
On demand Accounts payable and accrued expenses* P2,201,314 Derivative liabilities –
Notes payable –
Other long-term liabilities –
P2,201,314 Other Financial Liabilities:
2009
Pay
Receive
$– –
–
Pay
2014 and beyond
P– –
Receive
2014 and beyond
Total
P18,660,131
92,456
2,000,829
1,383,360
P22,136,776
P–
–
–
P–
–
171
2009
P– –
Receive
P5,580 3,293 Pay
2010
P– –
Receive
Less than
1 year P14,196,610 163,989
–
86,099 P14,446,698 P5,580 15,306 Pay
1 to 2 years P– –
–
93,632 P93,632 2011
P– 4,093
Receive
2 to 3 years
P–
–
–
102,107
P102,107 P5,580 –
Pay
3 to 4 years P– 21,665
–
111,348 P133,013 2012
P– 4,491
Receive
4 to 5 years
P– –
–
121,426 P121,426 P2,798
–
Pay
Over 5 years P– –
–
898,835 P898,835 P–
$22,000
P1,018,058 Pay
$– 2009
2010
–
$– Receive
Pay
–
P– 2011
–
$– Receive
*Projected principal exchanges represent commitments to purchase USD for payment of USD debts with the same maturities.
Projected Principal Exchanges*:
Principal Only Swaps Forwards (Deliverable and
Nondeliverable) Receive
Pay
–
P– 2012
–
$2,500 Receive
–
P140,825
Pay
*Projected USD swap coupons were converted to PHP at the balance sheet rate. Further, it was assumed that 3m Libor, 3m PDSTF, and 6m PDSTF would stay at December 31, 2008 levels.
Projected Swap Coupons*:
Principal Only Swaps Interest Rate Swaps Derivative Instruments:
*Excludes taxes payable which is not a financial instrument.
On demand Accounts payable and accrued expenses* P1,522,730 Derivative liabilities –
Notes payable 4,002,160
Other long-term liabilities
–
P5,524,890 Other Financial Liabilities:
2008
Pay
Receive
–
$– Pay
2013 and beyond
P– –
Receive
2013 and beyond
Total
P15,719,340
185,654
4,002,160
1,413,447
P21,320,601
–
P–
P–
–
28.2.4 Hedging Objectives and Policies Liquidity Risk
The Globe Group uses a combination of natural hedges and derivative hedging to manage its
foreign exchange exposure. It uses interest rate derivatives to reduce earnings volatility related to
interest rate movements.
It is the Globe Group’s policy to ensure that capabilities exist for active but conservative
management of its foreign exchange and interest rate risks. The Globe Group does not engage
in any speculative derivative transactions. Authorized derivative instruments include currency
forward contracts (freestanding and embedded), currency swap contracts, interest rate swap
contracts and currency option contracts (freestanding and embedded). Certain interest rate
swaps are entered with option combination or structured provisions.
28.3 Derivative Financial Instruments
The Globe Group’s freestanding and embedded derivative financial instruments are accounted for as
hedges or transactions not designated as hedges. The table below sets out information about the Globe
Group’s derivative financial instruments and the related fair values as of December 31 (in thousands):
2010
Notional
Amount Derivative instruments designated
as hedges:
Cash flow hedges:
Interest rate swaps
$57,000 Nondeliverable forwards* 35,000 Derivative instruments not designated
as hedges:
Freestanding:
Interest rate swaps 6,667 Currency swaps 2,500 Embedded
Currency forwards**
14,651 Net * All in sell position.
** The embedded currency forwards are at a net sell position.
Notional
Amount
Derivative
Asset
Derivative
Liability
P5,000,000 –
P– 6,255
P163,448
8,285
–
–
11,743 –
210
35,519
–
1,890 P19,888 38,403
P245,865
Derivative
Asset
Derivative
Liability
P– P32,221
14,424 15,468 –
9,775
5,084
26,789
6,413 P36,305 18,587
P92,456
2009
Notional
Notional
Amount Amount
Derivative instruments designated
as hedges:
Cash flow hedges:
Interest rate swaps $51,000 P– Derivative instruments not designated
as hedges:
Freestanding:
Nondeliverable forwards* 40,000 –
Interest rate swaps 10,000 –
Currency swaps
2,500 –
Embedded
Currency forwards** 9,972
–
Net * Buy position: USD20,000; Sell position: USD20,000.
** The embedded currency forwards are at a net sell position.
172
2008
Notional
Notional
Amount Amount
Derivative instruments designated
as hedges:
Cash flow hedges:
Nondeliverable forwards* $10,000 P– Interest rate swaps 25,000 –
Derivative instruments not designated
as hedges:
Freestanding:
Deliverable and nondeliverable forwards** 75,100 –
Interest rate swaps 13,333
2,000,000
Currency swaps 2,500 –
Embedded:
Currency forwards 25,564 –
Currency options*** 3
–
Net *All sell position
**Buy position: USD31,550; Sell position: USD43,550
****All embedded options are long call positions.
Derivative
Asset
Derivative
Liability
P– –
P19,456
37,804
109,454
8,086 –
70,705
14,752
29,731
51,470
2
P169,012 13,206
–
P185,654
The table below also sets out information about the maturities of Globe Group’s derivative instruments as
of December 31 that were entered into to manage interest and foreign exchange risks related to the longterm debt and US dollar-based revenues (in thousands).
2010
<1 year >1-<2 years >2-<3 years >3-<4 years >4-<5 years Total
Derivatives:
Currency Swaps:
Notional amount $– $2,500 $– $– $– $2,500
Weighted swap rate P56.33
Pay fixed rate 4.62%
Interest Rate Swaps
Fixed-Floating
Notional USD $– $5,000
$– $– $– $5,000
Pay-floating rate USD LIBOR+4.23%
Receive-fixed rate 9.75%
Floating-Fixed
P200,000 P625,000 P2,100,000 P2,025,000 $114,127
Notional Peso P50,000 Notional USD $43,667 $15,000 –
–
–
$58,667
Pay-fixed rate –
1.01% - 4.92%
Receive-floating rate USD LIBOR-3M PDSTF
Nondeliverable Forwards
Notional USD $35,000 $– $–
$– $– $35,000
Forward rate P42.84 –P45.21
2009
<1 year >1-<2 years >2-<3 years >3-<4 years >4-<5 years Derivatives:
Currency Swaps:
Notional amount
$–
$–
$2,500
$–
$– Weighted swap rate Pay fixed rate Interest Rate Swaps
Fixed-Floating
Notional USD
$– $– $5,000
$– $– Pay-floating rate Receive-fixed rate Floating-Fixed
Notional USD $27,333 $23,667 $5,000
$– $– Pay-fixed rate Receive-floating rate Nondeliverable Forwards
Notional USD
$40,000
$– $– $– $–
Forward rate Total
$2,500
P56.33
4.62%
$5,000
USD LIBOR+4.23%
9.75%
$56,000
1.64% - 4.84%
USD LIBOR
$40,000
P47.63 - P48.70
173
2008
<1 year >1-<2 years >2-<3 years >3-<4 years >4-<5 years Total
Derivatives:
Currency Swaps:
Notional amount $–
$– $– $2,500 $– $2,500
Weighted swap rate P56.33
Pay fixed rate 4.62%
Interest Rate Swaps
Fixed-Floating
P– P– P– P– $20,984
Notional Peso P1,000,000
Notional USD
$–
$–
$–
$5,000
$– $5,000
Pay-floating rate USD LIBOR+4.23% - Mart
+1.38%
Receive-fixed rate
9.75% - 11.70%
Floating-Fixed
P–
P– P– P– $20,984
Notional Peso P1,000,000
Notional USD $13,333 $13,333
$6,667
$– $–
$33,333
Pay-fixed rate 4.54% - 7.09%
Receive-floating rate USD LIBOR - Mart +1.38%
Deliverable and
Nondeliverable Forwards
Notional USD $85,100
$–
$– $–
$– $85,100
Forward rate P42.80 - P54.10
The Globe Group’s other financial instruments that are exposed to interest rate risk are cash and cash
equivalents. These mature in less than a year and are subject to market interest rate fluctuations.
The Globe Group’s other financial instruments which are non-interest bearing and therefore not subject
to interest rate risk are trade and other receivables, accounts payable and accrued expenses and
long-term liabilities.
The subsequent sections will discuss the Globe Group’s derivative financial instruments according to the
type of financial risk being managed and the details of derivative financial instruments that are categorized
into those accounted for as hedges and those that are not designated as hedges.
28.4 Derivative Instruments Accounted for as Hedges
The following sections discuss in detail the derivative instruments accounted for as cash flow hedges.
•
Interest Rate Swaps
As of December 31, 2010, 2009 and 2008, the Globe Group has USD57.00 million, USD51.00 million
and USD25.00 million, respectively, in notional amount of interest rate swap that has been designated
as cash flow hedge. The interest rate swaps effectively fixed the benchmark rate of the hedged loan
at 1.01% to 4.84% over the duration of the agreement, which involves semi-annual intervals up to
April 2012.
The Globe Group also has an outstanding interest rate swap contract with a notional amount of
P5,000.00 million, which effectively swaps a floating rate PHP–denominated loan into fixed rate, with
quarterly payment intervals up to September 2015.
As of December 31, 2010, 2009 and 2008, the fair value of the outstanding swap amounted to
P163.45 million loss, P32.22 million loss and P37.80 million loss, respectively, of which P114.41
million, P22.56 million and P26.46 million (net of tax), respectively, is reported as “Other reserves” in
the equity section of the consolidated statements of financial position.
Accumulated swap cost for the years ended December 31, 2010, 2009 and 2008 amounted to
P58.98 million, P40.21 million and P19.46 million, respectively.
174
•
Nondeliverable Forwards
The Globe Group entered into short-term nondeliverable currency forward contracts to hedge the
changes in the cash flows of USD revenues related to changes in foreign currency exchange rates
with maturities until December 2011. These currency forward contracts have a notional amount of
USD35.00 million and USD25.00 million as of December 31, 2010 and 2008, respectively. There was
no outstanding nondeliverable forward as of December 31, 2009. The fair value of the outstanding
short-term nondeliverable currency forwards as of December 31, 2010 and 2008 amounted to a loss
of P2.03 million and P19.46 million, respectively, of which P1.42 million and P13.62 million (net of tax),
respectively, is reported in the equity section of the consolidated statements of financial position.
Hedging gain loss on derivatives intended to manage foreign currency fluctuations on dollar based
revenues for the years ended December 31, 2010, 2009 and 2008 amounted to P75.56 million gain,
P18.47 million loss and P127.52 million loss, respectively. These hedging losses are reflected under
“Service revenues” in the consolidated statements of comprehensive income.
28.5 Other Derivative Instruments not Designated as Hedges
The Globe Group enters into certain derivatives as economic hedges of certain underlying exposures.
Such derivatives, which include embedded and freestanding currency forwards, embedded call options,
and certain currency and interest rate swaps with option combination or structured provisions, are not
designated as accounting hedges. The gains or losses on these instruments are accounted for directly in
the consolidated statements of comprehensive income. This section consists of freestanding derivatives
and embedded derivatives found in both financial and nonfinancial contracts.
28.6 Freestanding Derivatives
Freestanding derivatives that are not designated as hedges consist of currency forwards, options, currency
and interest rate swaps entered into by the Globe Group. Fair value changes on these instruments are
accounted for directly in the consolidated statements of comprehensive income.
•
Deliverable and Nondeliverable Forwards
As of December 31, 2010, the Globe Group has no more outstanding non deliverable currency forward
contracts not designated as hedges.
•
Interest Rate Swaps
The Globe Group has outstanding interest rate swap contracts which swap certain fixed and floating
USD-denominated loans into floating and fixed rate with semiannual payments interval up to April
2012. The swaps have outstanding notional of USD6.67 million as of December 31, 2010, USD10.00
million as of December 31, 2009 and USD13.33 million and P2,000.00 million as of December 31,
2008.
The fair values on the interest rate swaps as of December 31, 2010, 2009 and 2008 amounted to
P11.53 million net gain, P10.38 million net gain, and P6.67 million net loss, respectively.
•
Currency Swaps
The Globe Group also has an outstanding foreign currency swap agreement with a certain bank,
under which it swaps the principal of USD-denominated loans into PHP up to April 2012. Under these
contracts, swap costs are payable in semiannual intervals in PHP or USD. The notional of the swaps
amounted to USD2.50 million as of December 31, 2010, 2009, and 2008. The fair value loss of the
currency swaps as of December 31, 2010, 2009 and 2008 amounted to P35.52 million, P26.79
million and P29.73 million, respectively.
28.7 Embedded Derivatives
The Globe Group has instituted a process to identify any derivatives embedded in its financial or non
financial contracts. Based on PAS 39, the Globe Group assesses whether these derivatives are required
to be bifurcated or are exempted based on the qualifications provided by the said standard. The Globe
Group’s embedded derivatives include embedded currency derivatives noted in non-financial contracts.
175
•
Embedded Currency Forwards
As of December 31, 2010, 2009 and 2008, the total outstanding notional amount of currency
forwards embedded in nonfinancial contracts amounted to USD14.65 million, USD9.97 million
and USD25.56 million, respectively. The nonfinancial contracts consist mainly of foreign currencydenominated purchase orders with various expected delivery dates and unbilled leaselines receivables
and payables denominated in foreign currency. The net fair value of the embedded currency forwards
as of December 31, 2010, 2009 and 2008 amounted to P36.51 million loss, P12.18 million loss and
P38.26 million gain, respectively.
•
Embedded Currency Options
As of December 31, 2010, the Globe Group does not have an outstanding currency option embedded
in non-financial contracts.
28.8 Fair Value Changes on Derivatives
The net movements in fair value changes of all derivative instruments are as follows:
At beginning of year
Net changes in fair value of derivatives:
Designated as cash flow hedges
Not designated as cash flow hedges Less fair value of settled instruments At end of year December 31
2009 (In Thousand Pesos)
(P56,151) (P16,642) 2010 (116,679)
(27,631) (200,461)
25,516 (P225,977)
(35,116)
(44,253) (96,011) (39,860) (P56,151)
2008
P187,815
(457,080)
34,265
(235,000)
(218,358)
(P16,642)
28.9 Hedge Effectiveness Results
As of December 31, 2010, 2009 and 2008, the effective fair value changes on the Globe Group’s cash
flow hedges that were deferred in equity amounted to P115.83 million, P22.56 million and P40.08 million
loss, net of tax, respectively. Total ineffectiveness for the years ended December 31, 2010, 2009 and 2008
is immaterial.
The distinction of the results of hedge accounting into “Effective” or “Ineffective” represent designations
based on PAS 39 and are not necessarily reflective of the economic effectiveness of the instruments.
28.10 Categories of Financial Assets and Financial Liabilities
The table below presents the carrying value of Globe Group’s financial instruments by category as of
December 31:
2010 Financial assets:
Financial assets at FVPL:
Derivative assets designated as cash flow hedges Derivative assets not designated as hedges AFS investment in equity securities - net (Note 11)
Loans and receivables - net* Financial liabilities:
Financial liabilities at FVPL:
Derivative liabilities designated as cash flow hedges Derivative liabilities not designated as hedges Financial liabilities at amortized cost** *
**
176
2009 (In Thousand Pesos)
2008
P6,255 13,633
101,877 17,613,600
P– 36,305
81,727
14,704,734
P–
169,012
61,324
14,491,808
171,733 74,132 71,345,737
32,221
60,235 67,520,342 57,260
128,394
57,720,885
This consists of cash and cash equivalents, short-term investments and long-term investments, receivables, other nontrade
receivables and loans receivables.
This consists of accounts payable, accrued expenses, accrued project cost, traffic settlement-net, dividends payable, notes
payable, long-term debt (including current portion) and other long-term liabilities (including current portion).
As of December 31, 2010, 2009 and 2008, the Globe Group has no investments in foreign
securities.
28.11 Fair Values of Financial Assets and Financial Liabilities
The table below presents a comparison of the carrying amounts and estimated fair values of all the Globe
Group’s financial instruments as of:
December 31
2010
2009 2008
Carrying Value Fair Value Carrying Value Fair Value Carrying Value Fair Value
(In Thousand Pesos)
Financial assets:
P5,939,927 P5,939,927 P5,782,224 P5,782,224
Cash and cash equivalents P5,868,986 P5,868,986 Short-term investments
–
–
2,784
2,784
–
–
Receivables - net 8,374,123 8,374,123 6,583,228 6,583,228
7,473,346 7,473,346
Derivative assets 19,888 19,888
36,305 36,305 169,012 169,012
Other nontrade receivables* 3,481,882 3,481,882
2,178,795
2,178,795
1,236,238 1,236,238
AFS investment in equity
securities - net (Note 11) 101,877 101,877 81,727
81,727 61,324
61,324
Financial liabilities:
Accounts payable and accrued
expenses ** 20,333,340 20,333,340 18,660,131
18,660,131 15,719,340 15,719,340
Derivative liabilities (including
noncurrent portion) 245,865 245,865 92,456 92,456
185,654 185,654
Notes payable
–
–
2,000,829 2,000,829 4,002,160 4,002,160
Long-term debt (including
current portion) 50,371,470 52,363,670 45,476,022 45,130,753 36,585,938 37,212,371
Other long-term liabilities
(including current portion) 640,927
640,927 1,383,360
1,383,360 1,413,447 1,413,447
* This consists of loan, accrued interest and miscellaneous receivables included under “Prepayments and other current assets” and
“Other noncurrent assets” (see Notes 6 and 11).
** This consists of accounts payable, accrued expenses, accrued project cost, traffic settlement-net and dividends payable.
The following discussions are methods and assumptions used to estimate the fair value of each class of
financial instrument for which it is practicable to estimate such value.
28.11.1
Non-derivative Financial Instruments
The fair values of cash and cash equivalents, short-term investments, AFS investments,
subscriber receivables, traffic settlements receivable, loan receivable, miscellaneous receivables,
accrued interest receivables, accounts payable, accrued expenses and notes payable are
approximately equal to their carrying amounts considering the short-term maturities of these
financial instruments.
The fair value of AFS investments are based on quoted prices. Unquoted AFS equity securities
are carried at cost, subject to impairment.
For variable rate financial instruments that reprice every three months, the carrying value
approximates the fair value because of recent and regular repricing based on current market
rates. For variable rate financial instruments that reprice every six months, the fair value is
determined by discounting the principal amount plus the next interest payment using the
prevailing market rate for the period up to the next repricing date. The discount rates used
range from 0.08% to 1.64% (for USD floating loans) and from 4.37% to 6.55% (for PHP
floating loans). The variable rate PHP loans reprice every six months. For noninterest bearing
obligations, the fair value is estimated as the present value of all future cash flows discounted
using the prevailing market rate of interest for a similar instrument.
28.11.2 Derivative Instruments
The fair value of freestanding and embedded forward exchange contracts is calculated by
using the net present value concept.
177
The fair values of interest rate swaps, currency and cross currency swap transactions are
determined using valuation techniques with inputs and assumptions that are based on market
observable data and conditions and reflect appropriate risk adjustments that market participants
would make for credit and liquidity risks existing at the end each of reporting period. The fair
value of interest rate swap transactions is the net present value of the estimated future cash
flows. The fair values of currency and cross currency swap transactions are determined based
on changes in the term structure of interest rates of each currency and the spot rate.
Embedded currency options are valued using the simple option pricing model of Bloomberg.
28.11.3 Fair Value Hierarchy
The Globe Group held the following financial instruments measured at fair value.
The Group uses the following hierarchy for determining and disclosing the fair value of financial
instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair
value are observable, either directly or indirectly
Level 3: techniques which use inputs which have a significant effect on the recorded fair value
that are not based on observable market data.
2010 Level 1
AFS investment in equity securities - net
Level 2
Derivative assets Derivative liabilities (including noncurrent portion) December 31
2009 (In Thousand Pesos)
2008
P101,877 P81,727 P61,324
19,888 245,865
36,305 92,456 169,012
185,654
There were no transfers from Level 1 and Level 2 fair value measurements for the years ended
December 31, 2010, 2009 and 2008. The Globe Group has no financial instruments classified
under Level 3.
29. Operating Segment Information
The Globe Group’s reportable segments consist of: (1) mobile communications services; (2) wireline communication
services; and (3) others, which the Globe Group operate and manage as strategic business units and organize
by products and services. The Globe Group presents its various operating segments based on segment net
income.
Intersegment transfers or transactions are entered into under the normal commercial terms and conditions that
would also be available to unrelated third parties. Segment revenue, segment expense and segment result include
transfers between business segments. Those transfers are eliminated in consolidation.
Most of revenues are derived from operations within the Philippines, hence, the Globe Group does not present
geographical information required by PFRS 8. The Globe Group does not have a single customer that will meet
the 10% reporting criteria.
The Globe Group also presents the different product types that are included in the report that is regularly reviewed
by the chief operating decision maker in assessing the operating segments performance.
Segment assets and liabilities are not measures used by the chief operating decision maker since the assets and
liabilities are managed on a group basis.
178
The Globe Group’s segment information is as follows (in thousand pesos):
2010
REVENUES:
Service revenues
External customers:
Voice
Data Broadband Nonservice revenues:
External customers Segment revenues EBITDA Depreciation and amortization
EBIT NET INCOME (LOSS) BEFORE TAX2 Benefit from (provision for) income tax2 NET INCOME (LOSS) Other segment information
Intersegment revenues
Subsidy1
Interest income2 Interest expense Equity in net losses of joint ventures
Impairment losses and others
Capital expenditure
Cash Flows
Net cash provided by (used in):
Operating activities
Investing activities Financing activities
1
2
Mobile Wireline
Communications Communications
Services
Services
Others
Consolidated
P25,970,607 24,451,917 –
P2,815,565 3,487,999 5,748,266
P– 80,335 –
P28,786,172
28,020,251
5,748,266
2,374,542
52,797,066 618,759 12,670,589 –
80,335
2,993,301
65,547,990
31,907,454 (11,734,900)
20,172,554
1,716,592
(6,346,429) (4,629,837)
(84,928) (4,510)
(89,438) 33,539,118
(18,085,839)
15,453,279
18,768,054
(4,518,236) P14,249,818
(4,661,415)
246,150 (P4,415,265)
(89,919)
–
(P89,919) 14,016,720
(4,272,086)
P9,744,634
P35,545 (900,760)
168,300 (1,975,932)
(2,968)
(838,169)
(13,982,817)
(P191,933)
(344,899) 28,666 (5,823)
–
(711,279) (5,478,589) (P107,080)
–
94 (30)
–
–
(5,467)
(P263,468)
(1,245,659)
197,060
(1,981,785)
(2,968)
(1,549,448)
(19,466,873)
21,802,415
(12,194,022) (10,171,150) 5,338,255
(4,729,510)
–
7,707 (5,281)
(859) 27,148,377
(16,928,813)
(10,172,009)
Computed as non-service revenues less cost of sales
Net of final taxes
179
2009
REVENUES:
Service revenues
External customers:
Voice Data Broadband Nonservice revenues:
External customers Segment revenues EBITDA Depreciation and amortization
EBIT INCOME (LOSS) BEFORE TAX2 Benefit from (provision for) income tax2 NET INCOME (LOSS) Other segment information:
Intersegment revenues
Subsidy1 Interest income2 Interest expense Equity in net losses of joint venture Impairment losses and others Capital expenditure
Cash Flows
Net cash provided by (used in):
Operating activities Investing activities
Financing activities 180
1
2
Mobile Wireline
Communications Communications
Services
Services
Others
Consolidated
P26,497,050 26,736,627 –
P2,794,855 3,037,749 3,289,462 P– 87,775 –
P29,291,905
29,862,151
3,289,462
916,655 54,150,332 501,959 9,624,025 –
87,775 1,418,614
63,862,132
34,499,542
(12,881,171)
21,618,371
1,996,971
(4,495,831)
(2,498,860)
(33,605) (11,428)
(45,033) 36,462,908
(17,388,430)
19,074,478
20,526,499 (5,866,931) P14,659,568
(2,549,049) 501,115 (P2,047,934)
(45,315) 2,554
(P42,761)
17,932,135
(5,363,262)
P12,568,873
(P1,046,315)
(1,146,914)
192,620 (2,086,307)
(7,009) (694,335)
(17,609,324)
(P172,625)
(382,422) 38,511 (10,455)
–
(116,625) (7,086,349) (P57,013)
–
108 (183)
–
–
(6,653)
(P1,275,953)
(1,529,336)
231,239
(2,096,945)
(7,009)
(810,960)
(24,702,326)
29,576,009 (16,603,578)
(11,330,388) 3,796,387 (5,215,702)
(12,000) 3,818 (9,824)
(1,331)
33,376,214
(21,829,104)
(11,343,719)
Computed as non-service revenues less cost of sales
Net of final taxes
2008
REVENUES:
Service revenues
External customers:
Voice Data Broadband Nonservice revenues:
External customers Segment revenues EBITDA
Depreciation and amortization EBIT INCOME (LOSS) BEFORE TAX2
Benefit from (provision for) income tax2 NET INCOME (LOSS) Other segment information:
Intersegment revenues Subsidy1 Interest income2 Interest expense Equity in net losses of joint venture Impairment losses and others
Capital expenditure Cash Flows
Net cash provided by (used in):
Operating activities Investing activities
Financing activities
1
2
Mobile Wireline
Communications Communications
Services
Services
Others
(Audited and In Thousand Pesos)
Consolidated
P26,972,026 28,434,218 –
P3,087,685 1,892,073
2,477,900 P– 30,586 –
P30,059,711
30,356,877
2,477,900
1,582,653 56,988,897
340,907
7,798,565
–
30,586 1,923,560
64,818,048
36,188,596
(13,638,302) 22,550,294
1,238,778
(3,388,705)
(2,149,927)
(29,329) (1,061) (30,390) 37,398,045
(17,028,068)
20,369,977
19,601,890
(7,242,264)
P12,359,626
(1,798,988) 746,602 (P1,052,386)
(31,362) –
(P31,362) 17,771,540
(6,495,662)
P11,275,878
P459,577 (1,109,632)
300,596 (2,254,107)
(9,728) (498,227)
14,931,556 P155,665 (83,980) 45,326 (1,771) –
(707,452)
5,442,877 P14,140
–
23 –
–
–
7,745 P629,382
(1,193,612)
345,945
(2,255,878)
(9,728)
(1,205,679)
20,382,178
22,924,510
(15,711,964) (6,769,537)
1,981,905 (868,806)
(2,000,000)
8,228 (507)
(2,340)
24,914,643
(16,581,277)
(8,771,877)
Computed as non-service revenues less cost of sales
Net of final taxes
A reconciliation of segment revenue to the total revenues presented in the consolidated statements of
comprehensive income is shown below:
Segment revenues Interest income Other income - net Gain on disposal of property and equipment - net Total revenues
2010 P65,547,990
218,532 856,941 52,449 P66,675,912 2009 (In Thousand Pesos)
P63,862,132 271,806 1,064,476 608,400 P65,806,814 2008
P64,818,048
420,425
700,874
24,837
P65,964,184
The reconciliation of the EBITDA to income before income tax presented in the consolidated statements of
comprehensive income is shown below:
EBITDA Depreciation and amortization
Interest income Gain on disposal of property and equipment - net Financing costs
Equity in net losses of joint ventures Other items INCOME BEFORE INCOME TAX
2010 P33,539,118 (18,085,839) 218,532 52,449
(2,068,401)
(2,968)
385,301 P14,038,192 2009 (In Thousand Pesos)
P36,462,908 (17,388,430) 271,806 608,400 (2,182,881)
(7,009) 207,908 P17,972,702 2008
P37,398,045
(17,028,068)
420,425
24,837
(3,000,391)
(9,728)
40,900
P17,846,020
181
29.1 Mobile Communications Services
This reporting segment is made up of digital cellular telecommunications services that allow subscribers to
make and receive local, domestic long distance and international long distance calls, international roaming
calls and other value added services in any place within the coverage areas.
29.1.1 Mobile communication voice net service revenues include the following:
a) b) c) Monthly service fees on postpaid plans;
Charges for intra-network and outbound calls in excess of the consumable minutes for
various Globe Postpaid plans, including currency exchange rate adjustments (CERA) net
of loyalty discounts credited to subscriber billings; and
Airtime fees for intra network and outbound calls recognized upon the earlier of actual usage
of the airtime value or expiration of the unused value of the prepaid reload denomination (for
Globe Prepaid and TM) which occurs between 1 and 60 days after activation depending
on the prepaid value reloaded by the subscriber net of (i) bonus credits and (ii) prepaid
reload discounts; and revenues generated from inbound international and national long
distance calls and international roaming calls.
Revenues from (a) to (c) are net of any settlement payouts to international and local carriers.
29.1.2 Mobile communication data net service revenues consist of revenues from value-added services
such as inbound and outbound SMS and MMS, mobile broadband data services and infotext,
subscription fees on unlimited and bucket prepaid SMS services net of any settlement payouts to
international and local carriers and content providers.
29.1.3 Globe Telecom offers its wireless communications services to consumers, corporate and SME
clients through the following three (3) brands: Globe Postpaid, Globe Prepaid and Touch Mobile.
The Globe Group also provides its subscribers with mobile payment and remittance services
under the GCash brand.
29.2 Wireline Communications Services
This reporting segment is made up of fixed line telecommunications services which offer subscribers
local, domestic long distance and international long distance voice services in addition to broadband and
fixed mobile internet services and a number of VAS in various areas covered by the Certificate of Public
Convenience and Necessity (CPCN) granted by the NTC.
29.2.1 Wireline voice net service revenues consist of the following:
a) b) c) d) e)
Monthly service fees including CERA of voice-only subscriptions;
Revenues from local, international and national long distance calls made by postpaid,
prepaid wireline subscribers and payphone customers, as well as broadband customers
who have subscribed to data packages bundled with a voice service. Revenues are net of
prepaid and payphone call card discounts;
Revenues from inbound local, international and national long distance calls from other
carriers terminating on our network;
Revenues from additional landline features such as caller ID, call waiting, call forwarding,
multi-calling, voice mail, duplex and hotline numbers and other value-added features;
and
Installation charges and other one-time fees associated with the establishment of the
service.
Revenues from (a) to (c) are net of any settlement payments to domestic and international carriers.
29.2.2 Wireline data net service revenues consist of the following:
a) b) c) d) 182
Monthly service fees from international and domestic leased lines. This is net of any
settlement payments to other carriers;
Other wholesale transport services;
Revenues from value-added services; and
One-time connection charges associated with the establishment of service.
29.2.3 Broadband service revenues consist of the following:
a)
b)
Monthly service fees on mobile and wired broadband plans and charges for usage in
excess of plan minutes; and
Prepaid usage charges consumed by mobile broadband subscribers.
29.2.4 Innove provides wireline voice communications (local, national and international long distance), data
and broadband and data services to consumers, corporate and SME clients in the Philippines.
•
Consumers - the Globe Group’s postpaid voice service provides basic landline services
including toll-free NDD calls to other Globe landline subscribers for a fixed monthly fee.
For wired broadband, consumers can choose between broadband services bundled with
a voice line, or a broadband data-only service. For fixed wireless broadband connection
using 3G with High-Speed Downlink Packet Access (HSDPA) network, the Globe Group
offers broadband packages bundled with voice, or broadband WIMAX data-only service.
For subscribers who require full mobility, Globe Broadband Tattoo service come in
postpaid and prepaid packages and allow them to access the internet via 3G with HSDPA,
Enhanced Datarate for GSM Evolution (EDGE), General Packet Radio Service (GPRS) or
WiFi at hotspots located nationwide.
•
Corporate/SME clients - for corporate and SME enterprise clients wireline voice
communication needs, the Globe Group offers postpaid service bundles which come
with a business landline and unlimited dial-up internet access. The Globe Group also
provides a full suite of telephony services from basic direct lines to Integrated Services
Digital Network (ISDN) services, 1-800 numbers, International Direct Dialing (IDD) and
National Direct Dialing (NDD) access as well as managed voice solutions such as Voice
Over Internet Protocol (VOIP) and managed internet Protocol (IP) communications. Valuepriced, high speed data services, wholesale and corporate internet access, data center
services and segment-specific solutions customized to the needs of vertical industries.
29.3 Others
This reporting segment represents mobile value added data content and application development services.
Revenues principally consist of revenue share with various carriers on content downloaded by their
subscribers and contracted fees for other application development services provided to various partners.
30. Notes to Consolidated Statements of Cash Flows
The principal noncash transactions are as follows:
2010 Increase (decrease) in liabilities related to the
acquisition of property and equipment Capitalized ARO Dividends on preferred shares P612,613
41,473 –
2009 (In Thousand Pesos)
P2,548,409 96,959 50,492 2008
P870,346
95,086
60,637
The cash and cash equivalents account consists of:
Cash on hand and in banks Short-term placements
2010 2009 (In Thousand Pesos)
P1,104,231 P944,866 4,924,120 4,835,696 P5,868,986 P5,939,927 2008
P1,479,948
4,302,276
P5,782,224
Cash in banks earn interest at the respective bank deposit rates. Short-term placements represent short-term money market
placements.
The ranges of interest rates of the above placements are as follows:
2010 Placements:
PHP 2.00% to 4.25% USD 0.09% to 1.55%
2009 2008
2.00% to 5.00% 0.05% to 1.63% 2.50% to 6.50%
0.05% to 4.30%
183
Global Reporting Initiative (GRI) Index
STANDARD DISCLOSURES PART I: Profile Disclosures
1. Strategy and Analysis
Profile Disclosure
Description
Reference
1.1
Statement from the most senior decision-maker of the organization.
1.2
Description of key impacts, risks, and opportunities.
Profile Disclosure
2.1
Description
Chairman’s Message
President and CEO’s Message
Sustainability and Corporate Social
Responsibility
Reference
Name of the organization.
Comments
Comments
Corporate Information
2.2
Primary brands, products, and/or services.
Corporate Information
2.3
Operational structure of the organization, including main divisions,
operating companies, subsidiaries, and joint ventures.
Corporate Information
2.4
Location of organization's headquarters.
Corporate Information
2.5
Number of countries where the organization operates, and names of
countries with either major operations or that are specifically relevant
to the sustainability issues covered in the report.
Corporate Information
2.6
Nature of ownership and legal form.
Corporate Information
2.7
Markets served (including geographic breakdown, sectors served, and
types of customers/beneficiaries).
Corporate Information
2.8
Scale of the reporting organization.
Corporate Information
2.9
Significant changes during the reporting period regarding size,
structure, or ownership.
2.10
Awards received in the reporting period.
There were no significant
changes during the
reporting period regarding
size, structure or
ownership
Our 2010 Milestones
3. Report Parameters
Profile Disclosure
184
Description
Reference
Comments
3.1
Reporting period (e.g., fiscal/calendar year) for information provided.
About the Report
3.2
Date of most recent previous report (if any).
About the Report
This is our third
sustainability report.
3.3
Reporting cycle (annual, biennial, etc.)
About the Report
We report on an annual
basis.
3.4
Contact point for questions regarding the report or its contents.
3.5
Process for defining report content.
About the Report
3.6
Boundary of the report (e.g., countries, divisions, subsidiaries, leased
facilities, joint ventures, suppliers). See GRI Boundary Protocol for
further guidance.
About the Report
3.7
State any specific limitations on the scope or boundary of the report.
About the Report
3.8
Basis for reporting on joint ventures, subsidiaries, leased facilities,
outsourced operations, and other entities that can significantly affect
comparability from period to period and/or between organizations.
3.9
Data measurement techniques and the bases of calculations,
including assumptions and techniques underlying estimations applied
to the compilation of the Indicators and other information in the report.
Explain any decisions not to apply, or to substantially diverge from, the
GRI Indicator Protocols.
Corporate Information
This is not applicable
as this report focuses
mainly on the Philippine
operations.
About the Report
3. Report Parameters
Profile Disclosure
Description
3.10
Explanation of the effect of any re-statements of information provided
in earlier reports, and the reasons for such re-statement (e.g.,mergers/
acquisitions, change of base years/periods, nature of business,
measurement methods).
Reference
Comments
3.11
Significant changes from previous reporting periods in the scope,
boundary, or measurement methods applied in the report.
About the Report
There were no significant
changes in terms of
materiality and scope. We
added indicators and met
the requirements for a
B-level reporting.
3.12
Table identifying the location of the Standard Disclosures in the report.
GRI Index
3.13
Policy and current practice with regard to seeking external assurance
for the report.
About the Report
4. Governance, Commitments, and Engagement
Profile Disclosure
Description
Reference
4.1
Governance structure of the organization, including committees under
the highest governance body responsible for specific tasks, such as
setting strategy or organizational oversight.
Corporate Governance
4.2
Indicate whether the Chair of the highest governance body is also an
executive officer.
Corporate Governance
4.3
For organizations that have a unitary board structure, state the
number of members of the highest governance body that are
independent and/or non-executive members.
Corporate Governance
4.4
Mechanisms for shareholders and employees to provide
recommendations or direction to the highest governance body.
Corporate Governance
4.5
Linkage between compensation for members of the highest
governance body, senior managers, and executives (including
departure arrangements), and the organization's performance
(including social and environmental performance).
Corporate Governance; Our People
4.6
Processes in place for the highest governance body to ensure
conflicts of interest are avoided.
Corporate Governance
4.7
Process for determining the qualifications and expertise of
the members of the highest governance body for guiding the
organization's strategy on economic, environmental, and social topics.
Corporate Governance
4.8
Internally developed statements of mission or values, codes of
conduct, and principles relevant to economic, environmental, and
social performance and the status of their implementation.
4.9
Procedures of the highest governance body for overseeing the
organization's identification and management of economic,
environmental, and social performance, including relevant risks and
opportunities, and adherence or compliance with internationally
agreed standards, codes of conduct, and principles.
Corporate Governance; Sustainability and
Corporate Social Responsibility
4.10
Processes for evaluating the highest governance body's own
performance, particularly with respect to economic, environmental,
and social performance.
Corporate Governance
4.11
Explanation of whether and how the precautionary approach or
principle is addressed by the organization.
Corporate Governance
4.12
Externally developed economic, environmental, and social charters,
principles, or other initiatives to which the organization subscribes or
endorses.
Sustainability and Corporate Social
Responsibility
4.13
Memberships in associations (such as industry associations) and/
or national/international advocacy organizations in which the
organization: * Has positions in governance bodies; * Participates in
projects or committees; * Provides substantive funding beyond routine
membership dues; or * Views membership as strategic.
Sustainability and Corporate Social
Responsibility
Comments
Corporate Governance; Our Company;
Sustainability and Corporate Social
Responsibility
185
4.14
List of stakeholder groups engaged by the organization.
Sustainability and Corporate Social
Responsibility
4.15
Basis for identification and selection of stakeholders with whom to
engage.
Sustainability and Corporate Social
Responsibility
4.16
Approaches to stakeholder engagement, including frequency of
engagement by type and by stakeholder group.
Sustainability and Corporate Social
Responsibility
4.17
Key topics and concerns that have been raised through stakeholder
engagement, and how the organization has responded to those key
topics and concerns, including through its reporting.
Sustainability and Corporate Social
Responsibility
STANDARD DISCLOSURES PART II: Disclosures on Management
Approach (DMAs)
G3 DMA
Description
DMA EC
Disclosure on Management Approach EC
Sustainability and Corporate Social
Responsibility
Cross-reference/Direct answer
DMA EN
Disclosure on Management Approach EC
Sustainability and Corporate Social
Responsibility
DMA LA
Disclosure on Management Approach EC
Sustainability and Corporate Social
Responsibility
DMA HR
Disclosure on Management Approach EC
Sustainability and Corporate Social
Responsibility
DMA SO
Disclosure on Management Approach EC
Sustainability and Corporate Social
Responsibility
DMA PR
Disclosure on Management Approach EC
Sustainability and Corporate Social
Responsibility
Explanation
STANDARD DISCLOSURES PART III:
Performance Indicators
Economic
Performance Indicator
Description
Cross-reference/Direct answer
Explanation
Economic performance
Sustainability and Corporate Social
Responsibility
EC1
Direct economic value generated and distributed, including revenues,
operating costs, employee compensation, donations and other
community investments, retained earnings, and payments to capital
providers and governments.
EC3
Coverage of the organization's defined benefit plan obligations.
Our People
Range of ratios of standard entry level wage compared to local
minimum wage at significant locations of operation.
Our People
Market presence
EC5
Indirect economic impacts
EC8
Development and impact of infrastructure investments and services
provided primarily for public benefit through commercial, in-kind, or
pro bono engagement.
Enjoy your Globe, your way;
Sustainability and Corporate Social
Responsibility
EC9
Understanding and describing significant indirect economic impacts,
including the extent of impacts.
Enjoy your Globe, your way;
Sustainability and Corporate Social
Responsibility
Environmental
Performance Indicator
Description
Cross-reference/Direct answer
Explanation
Materials
186
EN1
Materials used by weight or volume.
This is immaterial as we do
not manufacture products.
EN2
Percentage of materials used that are recycled input materials.
This is immaterial as we do
not manufacture products.
Energy
EN3
Direct energy consumption by primary energy source.
Environmental Responsibility
Details to be reported by
mid 2011
EN4
Indirect energy consumption by primary source.
Environmental Responsibility
Details to be reported by
mid 2011
EN5
Energy saved due to conservation and efficiency improvements.
Environmental Responsibility
EN6
Initiatives to provide energy-efficient or renewable energy based
products and services, and reductions in energy requirements as a
result of these initiatives.
Environmental Responsibility
EN14
Strategies, current actions, and future plans for managing impacts on
biodiversity.
Environmental Responsibility
Biodiversity
Emissions, effluents and waste
EN16
Total direct and indirect greenhouse gas emissions by weight.
Environmental Responsibility
EN22
Total weight of waste by type and disposal method.
Environmental Responsibility
Details to be reported by
mid 2011
Social: Labor Practices and Decent Work
Performance Indicator
Description
Cross-reference/Direct answer
Explanation
Employment
LA1
Total workforce by employment type, employment contract, and
region.
Our People
LA2
Total number and rate of employee turnover by age group, gender,
and region.
Our People
LA3
Benefits provided to full-time employees that are not provided to
temporary or part-time employees, by major operations.
Our People
LA4
Percentage of employees covered by collective bargaining
agreements.
Our People
LA5
Minimum notice period(s) regarding significant operational changes,
including whether it is specified in collective agreements.
Our People
Labor/management relations
Occupational health and safety
LA7
Rates of injury, occupational diseases, lost days, and absenteeism,
and number of work-related fatalities by region.
Our People
LA8
Education, training, counseling, prevention, and risk-control programs
in place to assist workforce members, their families, or community
members regarding serious diseases.
Our People
LA10
Average hours of training per year per employee by employee
category.
Our People
LA12
Percentage of employees receiving regular performance and career
development reviews.
Our People
Training and education
Diversity and equal opportunity
LA13
Composition of governance bodies and breakdown of employees per
category according to gender, age group, minority group membership,
and other indicators of diversity.
Our People
LA14
Ratio of basic salary of men to women by employee category.
Our People
187
Social: Human Rights
Performance Indicator
Description
Cross-reference/Direct answer
Explanation
Non-discrimination
HR4
Total number of incidents of discrimination and actions taken.
HR6
Operations identified as having significant risk for incidents of child
labor, and measures taken to contribute to the elimination of child
labor. actions taken.
We have not been
subjected to any legal
action for incidents of
discrimination.
Child labor
Our People
Social: Society
Performance Indicator
Description
Cross-reference/Direct answer
Explanation
Community
SO1
Nature, scope, and effectiveness of any programs and practices
that assess and manage the impacts of operations on communities,
including entering, operating, and exiting.
Sustainability and Corporate Social
Responsibility
Public policy positions and participation in public policy development
and lobbying.
Sustainability and Corporate Social
Responsibility
Public policy
SO5
Anti-competitive behavior
SO7
Total number of legal actions for anti-competitive behavior, anti-trust,
and monopoly practices and their outcomes.
We have not been
subjected to any legal
action for anti-competitive
conduct during the
reporting period.
Compliance
Social: Product Responsibility
Performance Indicator
Description
Cross-reference/Direct answer
Explanation
Marketing communications
PR6
188
Programs for adherence to laws, standards, and voluntary codes
related to marketing communications, including advertising,
promotion, and sponsorship.
Globe abides by the
standards and Code
of Ethics of set by the
Advertising Board of the
Philippines.
We include this GRI Application Level table in our
report to support our self-declaration of this report
at Application Level B.
OUTPUT
B+
Report on all criteria
listed for C plus:
1.2
3.9, 3.13
4.5-4.13, 4.16-4.17
Management
Approach
Disclosures for each
Indicator Category
Report on a
minimum of 20
Performance
Indicators, at least
one from each
of economic,
environment,
human rights, labor,
society, product
responsibility.
A
A+
Same as requirement
for Level B
Management
Approach disclosed
for each Indicator
Category
Respond on each
core G3 and Sector
Supplement indicator
with due regard
to the materiality
Principle by either:
a) reporting on
the indicator or b)
explaining the reason
for its omission.
REPORT EXTERNALLY ASSURED
Report on a
minimum of 10
Performance
Indicators, including
at least one from
each of social,
economic, and
environment.
B
REPORT EXTERNALLY ASSURED
G3
Performance
Indicators
& Sector
Supplement
Performance
Indicators
OUTPUT
G3
Management
Approach
Disclosures
C+
Report on:
1.1
2.1-2.10
3.1-3.8, 3.10-3.12
4.1-4.4, 4.14-4.15
Not Required
OUTPUT
STANDARD DISCLOSURE
G3 Profile
Disclosures
C
REPORT EXTERNALLY ASSURED
Report
Application Level
The Global Reporting Initiative (GRI) is an organization that focuses on developing a set of sustainability reporting guidelines that
cover an organization’s social, economic and environmental performance. It develops and advocates a reporting framework
that will enable businesses to disclose information absent from conventional financial reports. It is considered the most
comprehensive and credible set of sustainability performance disclosure guidelines ever produced, to which thousands of
sustainability reports have been checked against.
189
Our Store Directory
GMA REGION
North GMA
ALI MALL CUBAO
Space 35 Ali Mall II Upper
Ground Flr., Araneta Cubao,
Q.C.
912-6193
TRINOMA*
M1 Unit 1034, Trinoma Mall,
EDSA, Q.C.
916-9027
Fax: 916-9028
GATEWAY*
3/F Gateway Mall, Araneta
Center, Cubao, Q.C.
912-7750
QUEZON AVENUE*
Unit 103-A, G/F National
Bookstore Inc., Quezon
Ave., Q.C.
374-7453
SM FAIRVIEW*
Unit 2004, 2nd Level SM
Fairview, Quirino Highway
cor. Regalado Ave., Greater
Lagro, Q.C.
972-3870 / 936-6331
SM VALENZUELA*
338-339, 3/F SM
Valenzuela Super center,
Mc Arthur Highway,
Valenzuela City
293-1845
Fax: 291-0448
SM TAYTAY*
2/F Bldg. B SM City Taytay,
Manila East Rd., Taytay,
Rizal
286-1944 to 45
EASTWOOD MALL
Unit A 414 4/F, Eastwood
Mall, Eastwood City
CyberPark, E. Rodriguez
Ave., Bagumbayan, Q.C.
635-9863
Fax: 633-1449
UP TECHNO STORE
UP Ayalaland Technohub,
Diliman Commonwealth,
Q.C.
508-7350
ROBINSONS GALLERIA*
Unit 440-441 Level 1 East
Wing, Robinson's Galleria
Mall, Ortigas St., Q.C.
914-3693
SM NORTH EDSA
4/F Cyberzone Bldg, New
SM Annex, SM City North
Edsa, Q.C.
501-2157 / 738-6986
SM MARIKINA
Unit 148 & 149, G/F
Cyberzone SM City
Marikina, Marcos Highway,
Calumpang, Marikina
799-6113
CALOOCAN - GPS
2/F Victory Central Mall,
Caloocan City
508-6148
MARKET MARKET*
Unit 444 & 445 4/F Market
Market, Lot C, Bonifacio
Global City, Taguig
757-2693
GREENHILLS HUB*
G/F Greenhills Connecticut
Carpark 1 Bldg., Ortigas
Ave., San Juan
744-0875
Fax: 744-0866
GLORIETTA GLOBE
STORE
G/F Glorietta 3, Ayala
Center, Makati City
752-7739
Central GMA
SM MEGAMALL GLOBE
STORE
4/F Cyberzone Area, SM
Megamall Bldg. B, Ortigas
Center, Pasig City
910-6521
PARK SQUARE 1*
Park Square 1 South Drive
Ayala Center Makati City
752-8137
GREENBELT 4*
2/F, Greenbelt 4, Ayala
Center, Makati City
757-0944
SM MAKATI*
4th Level, Concourse Area,
SM Makati Dept. Store,
Ayala Center, Makati City
Telefax: 818-3382
GT PLAZA - GPS
Upper Ground Flr., Globe
Telecom Plaza Tower 1, cor.
Pioneer & Madison Sts.,
Mandaluyong City
730-4149 / 730-2828
PODIUM HUB*
5th Level, The Podium Bldg
ADB Ave., Ortigas Center,
Madaluyong City
914-3842
SHANGRI-LA*
Level 1, Shangri-la Plaza,
EDSA cor. Shaw Blvd.,
Mandaluyong City
910-2048
* Globe stores accepting Globelines payment
Flagship Store
190
TOWER ONE*
G/F Unit C Tower One and
Exchange Plaza Ayala Ave.,
Makati City
759-4132
Fax: 759-4128
South GMA
ALABANG TOWN
CENTER
3/F New Wing ATC
Alabang, Muntinlupa City
850-5236
BINONDO*
G/F & 2/F Enrique T.
Yuchengco Bldg., 484
Quintin Paredes St.,
Binondo, Manila
245-9046
SM MALL OF ASIA*
Unit 202 2/F North Parking
Bldg., SM Mall of Asia,
Pasay City
915-1690
Fax: 915-1692
ROBINSONS PLACE
MANILA*
Space 020 Level 3 Pedro
Gil Wing, Robinsons Place,
Manila
400-1430
SM CENTERPOINT
3/F Unit 310 Magsaysay
Blvd. cor Araneta Ave., Sta
Mesa, Manila
713-1606
UN AVENUE - GPS
G/F Globe Telecom UN
Bldg., United Nations Ave.,
Ermita, Manila
759-7014
LUZON REGION
SM BICUTAN*
Bldg. B, Unit 212 2/F SM
Bicutan
776-1408
South Luzon Area 1
SM MANILA*
LGF Cyberzone, SM City
Manila, Arroceros cor.
Marcelino Sts., Manila
522-8894
CALAMBA*
G/F Calamba Executive
Bldg., Crossing, Calamba
Laguna
(02) 420-8248 / 49
SM SAN LAZARO*
"3/F SM San Lazaro,
Feliz Huertas cor. Lacson
Sts.
Sta. Cruz, Manila"
786-2624
SAN PABLO*
Unit 30 Ultimart Shopping
Mall, M. Paulino St., San
Pablo, Laguna
(049) 561-2003
SM SOUTHMALL
2/F Cyberzone, SM
Southmall, Zapote-Alabang
Road, Las Piñas City
805-2979
SM SUCAT*
3rd Level, SM Center
Sucat, Sucat Road,
Paranaque City
820-7734
SM MUNTINLUPA
2/F Unit 240 SM
Supercenter Muntinlupa
National Rd., Tunasan,
Muntinlupa City
659-2358
FESTIVAL SUPERMALL
Unit 4064 A&B, 4/F Alabang
Zapote Wing, Filinvest
Festival Supermall, Filinvest
Corporate City, Alabang
Muntinlupa
850-1937
Fax: 842-8026
TAGAYTAY*
K1-K3 Magallanes Square,
Tagaytay City
(046) 413-3051
SM STA. ROSA*
Unit 281, 2/F SM City Sta.
Rosa, Brgy. Tagapo, Sta.
Rosa City, Laguna
(02) 900-1013
SM LIPA
2/F SM City Lipa, Ayala
Highway, Lipa City,
Batangas
(043) 981-6032
SM BACOOR
3rd Level SM Bacoor
Aguinaldo Highway cor.
Tirona, Bacoor, Cavite
(046) 970-8134
SM BATANGAS
2nd Level SM City
Batangas, Units 229 & 230,
Pastor Village, Pallocan
West, Batangas City
(043) 980-5039
SM DASMARINAS
GT 2/F Level SM
Dasmarinas, Governors
Drive 1 Brgy., Sampaloc,
Dasmarinas, Cavite
(046) 973-0376
SM MOLINO
2nd Level, SM Supercenter
Molino, Molino IV, Bacoor,
Cavite
(046) 519-3962
SM ROSARIO
Unit 250, 2nd Level, SM
City Rosario, Gen. Trias
Drive, Rosario, Cavite
LEMERY - GPS
CJ Bldg., Independencia
St., Lemery, Batangas
(043) 409-0074
South Luzon Area 2
LEGASPI
2nd Level Pacific Mall,
Landco Business Park,
Bitano, Legaspi City
(052) 480-8134
SM NAGA
Unit 212 2/F SM City Naga,
Central Business II, Brgy
Triangulo, Naga City
(054) 811-6169
SM LUCENA*
Unit 343 L3 SM City
Lucena, Dalahican Road
cor. Pagbilao Rd., Bgy.
Ibabang Dupay Red V,
Lucena City
(042) 710-3439
PUERTO PRINCESA*
G-7 & M-7, Pacific Plaza
Bldg., Rizal Ave., Puerto
Princesa City, Palawan
(048) 434-7855
CALAPAN
014 JP Rizal St., San
Vicente Central, Calapan
City, Oriental Mindoro
(043) 441-0652
* Globe stores accepting Globelines payment
191
North Luzon
CANDON
KanPing Commercial Bldg.
Maharlika Highway, Bgy.
San Antonio Candon City,
Ilocos Sur
(077) 742-5565
DAGUPAN*
G/F 127 Nepo Mall
Dagupan Arellano Ave.,
Dagupan, Pangasinan
(075) 523-0527
LAOAG
G/F Lazo Bldg., Abadilla
cor. Bonifacio Sts., Bgy.
San Lorenzo, Laoag City
(077) 770-3895
SANTIAGO, ISABELA
Unit 7 VMG Bldg.,
Maharlika Highway, Centro
East, Santiago City, Isabela
(078) 682-3844 / 682-3955
SM BAGUIO*
Unit 349 & 350 Level 3,
SM City Baguio, Luneta
Hill, Upper Session Road,
Baguio City
(074) 304-1223
SOLANO
225 J.P. Rizal Ave.,
Maharlika Highway, Solano,
Nueva Vizcaya 3709
(078) 326-7413
TUGUEGARAO
Unit 57-B Chowking Bldg.
Balzain Rd. Tuguegarao
City, Cagayan Valley
(078) 844-5528
SM ROSALES
Unit 1102 G/F, SM City
Rosales MacArthur
Highway Brgy., Carmen
East, Rosales, Pangasinan
(075) 202-4113 to 115
VIGAN
Collegio Business Center,
Mart 1 Nueva Segovia St.,
Vigan City
(077) 722-1697
SAN FERNANDO,
LA UNION
G/F La Union Provincial
Administrative Commercial
Bldg., Quezon Ave., 2500
San Fernando, La Union
(02) 246-3003
Central Luzon Stores
SM MARILAO*
Unit 219 Level 2, SM City
Marilao, Km. 21 Brgy.
Ibayo, McArthur Highway,
Bulacan
(044) 933-2026
SM CLARK GLOBE
STORE
Unit 203-204 2nd Level,
SM City Clark, Clarkfield,
Pampanga
(045) 449-0034
OLONGAPO GLOBE
STORE
1750 Rizal Ave., East
Bajac-Bajac, Olongapo City
(047) 304-5074
PLARIDEL*
Grid E-F & 1-2 Walter Mart
Supermarket Cagayan
Valley Road, Barrio Banga
1, Plaridel, Bulacan
(044) 795-3095
Eastern Visayas
SM BALIWAG
SM City Baliwag Doña
Remedios Trinidad Highway,
Pagala Baliwag, Bulacan
(044) 308-0420 to 22
CALBAYOG*
Unit #2, Crown Bldg.,
Magsaysay Blvd., Calbayog
City, Western Samar
(055) 533-9126
SM PAMPANGA*
Unit 148 Ground Flr., SM
City Pampanga, Lagundi,
Mexico, Pampanga
(045) 875-1741
TAGBILARAN
Door 5, EB Gallares Bldg.,
Carlos P. Garcia Ave.,
Tagbilaran City
(038) 501-7666
(038) 501-0090
BALANGA*
G/F Recar Commercial
Complex, J.P. Rizal St.,
Balanga City, Bataan
(02) 246-8201
(047) 237-7747
TACLOBAN
22 P. Burgos St., Tacloban
City
(053) 523-1972
CABANATUAN*
Ground Level GL-4B
NE Pacific Mall, Km.
111, Maharlika Highway,
Cabanatuan City, Nueva
Ecija
(02) 246-5006
TARLAC*
G/F Metrotown Mall, Juan
Luna St. cor. McArthur
Highway, Tarlac City
(045) 982-4372
* Globe stores accepting Globelines payment
192
MARQUEE MALL
Space 1053 G/F, Level 1,
Angeles City, Pampanga
(045) 304-0629
VISAYAS REGION
ORMOC - GPS
MFT Bldg., Real St.,
Ormoc City
(053) 561-4400
MAASIN - GPS
Maasin Port Terminal
Commercial Complex,
Demetrio St., Agbao,
Maasin City
(053) 570-8452
BORONGAN - GPS
2nd Level, Wilsam Uptown
Mall, Borongan, Samar
(055) 560-9881
UBAY - GPS
N. Reyes St., Poblacion,
Ubay, Bohol
(038) 518-8108
ISLAND CITY MALL - GPS
UG Island City Mall, Dao
District, Tagbilaran City
(038) 501-0029
Western Visayas
ROBINSONS BACOLOD*
3rd Level, Robinsons Place,
Mandalagan, Bacolod City
(034) 709-7600
SM BACOLOD*
Unit 115 Southwing SM
City, Poblacion Reclamation
Area, Bacolod City
(034) 707-1100
(034) 707-9595
SM DELGADO
G/F SM Delgado, cor.
Valeria & Delgado Sts.,
Iloilo City
(033) 508-7605
SM ILOILO
Level 2 SM City Iloilo, B.
Aquino Ave., Mandurriao,
Iloilo City 5000
(033) 509-6777
GAISANO ROXAS
Area #9 Gaisano Arcade,
Arnaldo Blvd., Roxas City
(036) 522-2082
KALIBO, AKLAN
Unit 3 Waldolf Bldg.,
Kalibo, Aklan
(036) 500-7243
(036) 500-7244
BACOLOD - GPS
Area #9 Gaisano Arcade,
Arnaldo Blvd., Roxas City
(034) 709-8100
GAISANO - GPS
2/F Gaisano City, La Paz,
Iloilo City
(033) 508-0000
Central Visayas
AYALA CENTER CEBU
3rd Level Expansion Bldg.,
Ayala Center Cebu, Cebu
City
(032) 412-2525 / (032) 4122216
SM CEBU
Cyberzone 2nd Level SM
City Cebu Northwing,
North Reclamation Area,
Cebu City
(032) 412-9957
(032) 412-9435
DUMAGUETE
G/F Sol y Mar Bldg., cor.
Rizal Blvd. & San Juan Sts.,
Dumaguete City
(035) 422-9284
GAISANO TABUNOK
2FF-17 2nd flr Gaisano
Grand Fiesta Mall, Highway
Tabunok, Talisay City, Cebu
(032) 491-8114
ELIZABETH MALL, CEBU
T-020 3rd Level Elizabeth
Mall, cor. N Bacalso & Keon
Kilat Sts., Cebu City
(032) 417-7792
(032) 417-7798
AYALA CENTER
CEBU - GPS
2nd Level, West Entrance,
Paseo Ciudad, Ayala Center
Cebu, Cebu Business Park,
Cebu City
(032) 415-8575
SM CEBU - GPS
2nd Level SM City Cebu,
North Reclamation Area,
Cebu City
(032) 412-8979
MANDAUE - GPS
2nd Level Fortune Square
Bldg., MC Briones Highway
cor. AS Fortune St.,
Mandaue City
(032) 420-6039
BOGO - GPS
G/F Sim Bldg, P. Rodriguez
St., Bogo City, Cebu
(032) 434-8308
CARCAR - GPS
Door 2 Sharon Uy Bldg.,
Poblacion 3, Awayan,
Carcar, Cebu
(032) 487-9100
PARDO - GPS
Prince Warehouse Club,
Bulacao, Pardo, Cebu City
(032) 416-3811
TOLEDO - GPS
G/F Unit 14 Toledo
Commercial Village,
Reclamation Area,
Poblacion, Toledo City
(032) 467-8607
TANJAY - GPS
Kyles' Foodshoppe,
Magallanes St., Tanjay City
(035) 415-8080
MINDANAO REGION
North Mindanao
BUTUAN*
3rd Level Gaisano Mall, J.C.
Aquino Ave., Butuan City
(085) 300-0300
SM CAGAYAN DE ORO*
Unit 313, 3rd Level SM
City-CDO, Gran Via St. cor.
Mastersons Ave., Cagayan
De Oro City 9000
(088) 859-1150
CDO LIMKETKAI*
Unit M2-101 Limketkai
Mall, Entrance 2, Lapasan
Highway, Cagayan De Oro
(088) 856-6750
ILIGAN*
3/F Gaisano Mall, Roxas
Ave., Villa Verde, Iligan City
(063) 492-2093
* Globe stores accepting Globelines payment
Flagship Store
193
OZAMIZ
B-5 G/F Gaisano Ozamis
City Mall, cor. Rizal Ave. &
Zamora Extension, Ozamiz
City, Misamis Occidental
(088) 521-4054
South Mindanao
COTABATO CITY*
BPI Bldg., Makakua St.,
Cotabato City
(064) 482-0000
DAVAO GAISANO MALL
3rd Level Gaisano Mall, JP
Laurel Ave., Davao City
Telefax: (082) 221-6283
SM DAVAO*
3rd Level, SM City Davao,
Ecoland Subd., Quimpo
Blvd., Davao City
(082) 297-7727
GENERAL SANTOS*
201, 2/F KCC Mall of
Gensan J. Catololico Ave.,
General Santos City
(083) 553-1303
TAGUM*
4 & 5 Upper Ground Flr.,
Gaisano Grand Mall Tagum,
Apokon Road, Visayan
Village, Tagum City
(084) 400-4362
ZAMBOANGA
Door 2 & 3 ARV Bldg.,
San Jose Road,
Zamboanga City
(062) 992-1015
DAVAO - GPS
3rd Flr., NCCC Mall,
McArthur Highway, Matina,
Davao
(082) 321-0500
DAVAO VP*
2/F Victoria Plaza, J.P.
Laurel Ave., Bajada,
Davao City
(082) 300-3666
* Globe stores accepting Globelines payment
194
Corporate Offices Directory
GLOBE TELECOM PLAZA
Pioneer corner Madison Streets
Mandaluyong City
VALERO TELEPARK
111 Valero Street,
Salcedo Village, Makati City
THE PROFESSIONAL TOWER
6th, 7th, & 9th Floors,
The Professional Tower
37 EDSA, Mandaluyong City
BPI-BUENDIA CENTER
11th, 12th, & 14th Floors,
BPI Buendia Center
Buendia Avenue, Makati City
IT CEBU
6th Floor Asia Town IT Park
Salinas Drive, Lahug, Cebu City
NEW SOLID BUILDING
2nd, 3rd, & 4th Floors
New Solid Building
357 Buendia Avenue, Makati City
CAGAYAN DE ORO CORPORATE
OFFICE
Don Alfredo Gothong Building,
Caanbucayan Street,
Cagayan de Oro City
DAVAO CORPORATE OFFICE
15th Floor Pryce Tower
Condominium
Pryce Business Park,
J.P. Laurel Avenue, Davao City
INNOVE PLAZA
Innove IT Plaza Samar Loop corner
Panay Road
Cebu Business Park, Cebu City
ENTERTAINMENT GATEWAY
GROUP
3/F Bloomingdale Building
Salcedo Street, Legaspi Village
Makati City
Corporate Information
Head Office
Stock Trading Information
Subsidiaries
Shareholder Services
GLOBE TELECOM, INC.
Globe Telecom Plaza
Pioneer corner Madison Streets,
1552 Mandaluyong City
Trunkline: (02)730-2000
Fax: (02) 739-2000
Website: www.globe.com.ph
Globe Telecom, Inc. is listed on the
Philippine Stock Exchange
Ticker symbol: GLO
INNOVE COMMUNICATIONS,
INC.
18th Floor Innove IT Plaza
Samar Loop corner Panay Road
Cebu Business Park,
6000 Cebu City
Trunkline: (032) 415-8888
For inquiries regarding dividend
payments, change of address,
account status, and lost/damaged
stock certificates, please contact
our stock transfer agent:
Investor Relations
5th Floor, Globe Telecom Plaza 1
Pioneer corner Madison Streets
1552 Mandaluyong City,
Philippines
Tel: (02) 730-2820/3251
Fax: (02) 739-0072
Email: ir@globetel.com.ph
Corporate Communications
5th Floor, Globe Telecom Plaza 1
Pioneer corner Madison Streets
1552 Mandaluyong City,
Philippines
Tel: (02) 730-2627
Fax: (02) 739-3075
Customer Services
For inquiries about our products
and services, please contact:
Mobile: 211
Hotline: (02) 730-1000
Email: custhelp@globetel.com.ph
& talk@globetel.com.ph
G-XCHANGE, INC.
4th Floor Globe Telecom Plaza 2
Pioneer corner Madison Streets
1552 Mandaluyong City
Trunkline: (02) 730-3392
Globe Chat Assist:
www.globe.com.ph/support
Twitter
http://twitter.com/talk2Globe
Facebook:
http://facebook.com/GlobePH
ENTERTAINMENT GATEWAY
GROUP
3rd Floor Bloomingdale Building
Salcedo Street, Legaspi Village
1200 Makati City
Trunkline: (02) 892-8101
BANK OF THE PHILIPPINE
ISLANDS
Stock Transfer Office
16th Floor, BPI Building
Ayala Avenue corner
Paseo de Roxas
Makati City, Philippines
Tel: (02) 816-9067, (02) 816-9898
Fax: (02) 845-5515
Globe 2010 Annual Report
For further information, please
contact:
Ma. Yolanda C. Crisanto
Head, Corporate Communications
e-mail: yccrisanto@globetel.com.ph
195
I Love Playing
I am passionate about realizing possibilities,
Leveling up, stepping up, winning,
Half the game is won when we begin to try.
I am Inan Perillo
Loving Globe since 1998
Read, Play
& Win 2011
1) Contest Background
• Participant must answer ALL the
questions correctly for a chance to win 1 of
5 Globe Tattoo Sticks.
Get to know your Globe as it presents to the
public its 2010 highlights of achievements.
Log on to this link for more details and
win: http://bit.ly/TheGlobeQuiz.
• Participant must also answer the Globe
Annual Report Survey found in this link:
http://bit.ly/TheGlobeSurvey to be eligible to
win.
2) Contest Mechanics
• On May 31, 2011, 5 winners will be randomly
chosen from participants who answer all the
questions correctly and participate in the
survey.
• From April 12 to May 31,
2011, Globe subscribers
can participate by
answering The Globe Quiz.
The Globe Quiz can also
be found in the Facebook
fanpage of Globe.
• Announcements will be made
via Globe corporate website and
Facebook fanpage.
• Winners will also be notified by SMS.
• All answers to The Globe Quiz are
found in the Annual Report 2010 of Globe.
• Winners can claim the prize at
the Globe Head Office c/o Corporate
Communications, 5th Floor, GT Tower 1,
Pioneer corner Madison Streets, Mandaluyong
City. Winners must bring 1 valid ID as proof of
identification.
• Questions are as follows:
i) How many Globe Prepaid subscribers were there
at the end of the year 2010?
a. 14.8 million subscribers
b.18.3 million subscribers
c. 13.8 million subscribers
ii) Which one of these was a milestone for Globe?
a. Launched the new concept Flagship Store
b.Closed 2010 with P62 billion in service
revenues
c. Won several consumer awards
iii)What does GFT stand for?
a. Global Filipino Teacher
b.Global Features of Technology
c. Great Features in Technology
iv)How many employees did Globe hire in 2010?
a. 1,282
b.12,800
c. 1,822
3) Eligible Participants
• This contest is open to Globe subscribers.
• Only 5 winners will be chosen.
•
4)Prizes
5 Globe Tattoo Sticks (with PhP 300 Load) will be given away.
GLOBE TELECOM, INC.
Globe Telecom Plaza
Pioneer corner Madison Streets
1552 Mandaluyong City
Philippines
www.globe.com.ph