Full version

Transcription

Full version

million
Mobile
Subscribers
in the
Philippines.
About the Report
This is the sixth Sustainability Report produced by Globe Telecom,
Inc., a telecommunications company at the forefront of innovation.
This report is issued to convey the relentless commitment of the
company towards transparency and accountability to create a
wonderful world for its stakeholders.
Since the past, Globe remained an agent of change in the
telecommunications arena in fulfilling its mission to transform
and enrich lives. In 2013, transformation continued to take place
paving the way towards a wonderful world using information and
communications technology.
The report will present data and metrics documented by key
divisions within Globe. Keeping track of company operations
provides opportunity for overall growth and improvement with
consideration of its impacts economically, environmentally and
socially.
REPORTING PERIOD AND CYCLE
The coverage of this report is from January 2013 to December
2013, which is based on the company’s fiscal year. It also includes
data from the previous year, 2012 to quantify and show yearon-year comparison on any operational developments and
improvements.
REPORTING SCOPE AND BOUNDARIES
The focus of the report only presents all operations of Globe
Telecom in the Philippines from its corporate offices and network
sites.
REPORTING FRAMEWORK
The Globe 2013 Annual and Sustainability Report is the first
report from a telecommunications company in the ASEAN to be
aligned with Global Reporting Initiative (GRI) G4, the guideline on
sustainability reporting.
EXTERNAL ASSURANCE
The report has undergone third party external assurance
conducted by ECC International. GRI G4 guidelines were used as
an update from the previous GRI G3.1.
About the Cover
Globe Telecom is the nation's second largest mobile network operator serving over
38 million subscribers. To date, the Philippines has approximately 109 million subscribers
which provide unique opportunities for growth in the business. As Filipinos adopt
the practice of having multi-SIMs, Globe is poised to take advantage of this market
opportunity with the most innovative products and superior customer experience. We
will continue to prosper and create a wonderful world wherever we go, hand-in-hand
with our loyal and future customers. We are committed to provide unique and wonderful
offers that include voice and call innovations, and value-added services encompassing
overall data connectivity.
2
2013 Annual and Sustainability Report
Table of Contents
2
About the Report
4
Conversation with the Chairman
7
Conversation with the President & CEO
10
Our Business
18
Empowering You
28
Corporate Governance
46
Our People, Our Globe
54
Greening the Globe
64
Bridging Communities
70
Management’s Discussion and Analysis
73
Report of the Audit Committee of the Board of Directors
74
Statement of Management's Responsibility for Financial Statements
75
Certification on Full Compliance with the Manual of Corporate Governance
76
Public Ownership Report
80
Independent Auditors' Report
173
GRI Index Sheet
179
Independent Assurance Statement
181
List of Stores
183
Acknowledgement
3
Conversation with the Chairman
Q: The Philippine economy sustained the momentum that was built
in 2013 and was one of the fastest growing economies in the AsiaPacific region. How has Globe contributed and benefitted from this
economic growth?
A: In 2013, Philippine GDP grew by 7.2%, sustaining the
momentum of the prior year. This growth ranked second only to
China in the whole of the Asia-Pacific region. This also marked
the first time in the past 24 years that the country registered
two straight years of economic growth in excess of 6%. The
country’s excellent economic performance was underpinned
by a combination of increased government spending and a rise
in private consumption, the latter driven in part by a recordbreaking US$22.8 billion of remittances from overseas Filipinos.
Overall, consumer confidence was palpably buoyant.
Clearly Globe was a direct beneficiary of this robust economic
environment. The Company registered another banner year in 2013,
with service revenues reaching record levels across its mobile,
broadband and fixed line data businesses. This was underpinned
by the market’s positive response to the Company’s product and
technology innovations and service enhancements. With 38.5
million mobile and two million broadband subscribers, more and
more Filipinos are now connected through a myriad of Globe
services, ranging from the traditional voice and SMS services to
data-enabled communication, as telecom services continue to be
more ingrained and pervasive in people’s daily lives.
The importance of an efficient telecommunications infrastructure
to support the needs of a growing economy cannot be
underscored enough. Globe, as a public service company,
plays a central role in enabling the growth of many industries.
Undoubtedly, some of the key growth drivers of our economy
today, such as the business process outsourcing industry, have
become successful in no small part due to telecommunications
services that are at par with global standards. As the needs of
the country evolve, Globe continues to be in the forefront of
telecommunications technology. We continue to invest in world
class network and IT transformation programs to meet the
needs of a growing economy and an evolving consumer market.
Over the past two years we have invested over US$790 million
to increase capacities and ensure we meet both the country’s
telecommunication needs today and those even well into the
future. Our continued investments have in turn, directly and
indirectly, created jobs, increased business for our suppliers and
partners, and more importantly, supported and enabled multiple
industries and businesses.
Our success as a company, has in turn allowed us to sustain our
commitment to create shared value for all our stakeholders.
Central to this is Globe Telecom’s advocacies in quality education,
active environmentalism, social entrepreneurship and responsive
governance which we address through our corporate social
responsibility arm, Globe Bridging Communities (Bridgecom).
Our work at Globe is also very critical in times of crisis. The
devastation left by Typhoon Haiyan last year called for swift
response. Globe provided volunteers, relief goods, and services
to the many areas affected by the disaster. In the 24 hours after
the typhoon struck, Globe quickly restored communications,
reconnected the severely affected Tacloban City, and opened
important emergency communication lines. With the dedicated
service of Globe employees, more than 50% of the affected sites
were restored in less than a week following the disaster. Moreover,
the GCash brand, under Globe Telecom’s subsidiary G-Xchange,
Inc. (GXI), was able to quickly provide a mobile donation platform
for several non-government organizations, significantly aiding
relief and rehabilitation efforts. Even up to this time, the company
continues to actively aid in the relief and rebuilding efforts
through its Bangon Pinoy and Project Wonderful programs.
4
Q: How has Globe remained competitive amidst continued
pressures from the competition and the rising demand for
data-related products and services?
A: Globe has aimed to build its infrastructure and service
platform in a way that allows it to deliver quality service at low
price points. Subscribers, particularly in the prepaid segment,
continue to benefit from flat-rate, value-based and unlimited
offers. The industry has, however, seen a resurgence in the
mobile postpaid segment, with record-levels of acquisitions.
This was driven by higher-end prepaid subscribers upgrading
to a postpaid service, which is a reflection of greater consumer
confidence drawn from a much-improved economy. In addition,
the growing affordability and availability of smartphones,
tablets and other devices, and the Filipino’s penchant for social
networking and connecting online, have resulted in higher
demand for mobile browsing, broadband and fixed line data
services.
Against this backdrop, Globe has remained competitive as
it is steadfastly committed to provide its subscribers with a
differentiated level of customer service. Globe has continued to
innovate on its services, its distribution methods, and redefined
convenience. Some of these innovations include pioneering
customizable postpaid plans and prepaid offers, the new Globe
concept stores, the increase in the number of customer touch
points, among many others. These initiatives have kept the
company in step with competition and have resulted in very
favorable operating performance. Globe reported a 9% growth
in service revenues from the previous year, reaching ₱90.5
billion from ₱82.7 billion. Revenue growth was broad-based
and robust, with the mobile business segment, which accounted
for 80% of total service revenues, up 8% year-on-year. The
broadband and fixed line segments likewise grew by 20% and
13% respectively. All these contributed to a core net income of
₱11.6 billion, 13% higher than the ₱10.3 billion in 2012.
The sustained revenue growth across all these segments
can be attributed to the rising demand for data and internet
connectivity. As evidenced by the company’s financial results,
data continues to be a key source of growth and the necessary
steps have been taken to invest in this growing trend. The
company has also launched various promos and plans along
with the latest data-capable devices with the intention of
capturing the growing market of mobile data users. Globe
remains on track with its network modernization initiatives
in preparation for this growing demand for data and internet
connectivity. The first phase of network modernization has
been completed. The focus is now on building more sites,
boosting capacity, and enhancing network performance.
Presently, Globe has well over 22,000 base stations, with 90%
3G footprint and 4G activation nationwide, to support the
service requirements of its subscribers.
Q: In other markets, telecommunication has evolved from call
and SMS services to more robust and pervasive service. Where
do we plan to take the Globe of the future?
A: Globe has clearly evolved from simply offering traditional
call and SMS services to providing its customers with a
differentiated service experience. The company tailors new
products and services for subscribers, even offering fully
customizable and personalized promos and plans. There have
also been partnerships with the most popular over-the-top
(OTT) players to bundle their voice and chat services in various
promos. But it cannot be denied that these OTT players serve
as an alternative to international voice services. Consistent with
the global trend, Globe Telecom’s international voice revenues
have been affected by the presence of these alternatives. In an
effort to stay relevant and to mitigate this potential decline,
Globe has been offering several retail-based products targeting
overseas Filipino communities around the world. The company
has launched the DUO International service in the USA,
Canada, Korea, and United Kingdom, which makes connectivity
especially for Filipinos overseas as easy as making a local call.
Globe has also launched local SIM Cards in the UK and Italy,
giving subscribers the best rates to stay in touch with their
families back home.
Globe is not limiting itself to the core mobile business and
continues to invest in adjacent services such as mobile money
and banking, through GXI and BPI Globe BanKO. GCash, a
mobile payment and remittance service under GXI, continues
to solidify its presence in the mobile commerce industry.
During the year, the GCash brand continued to partner with
more entities from both the private and public sector. One
such successful partnership is with the Home Development
Mutual Fund (HDMF) or Pag-IBIG Fund, in which payments of
contributions and housing loans of over 12.6 million members
can be made through GCash. Such breakthrough service is one
among many that GCash has introduced over the course of the
year. GCash continues to grow its user base and portfolio of
services, wholly committed to providing an easy, secure, and
pervasive payment method through mobile phones.
90.5
₱
billion
service revenues
5
BPI Globe BanKO (BanKO), a microfinance-focused savings
bank committed to providing financial empowerment to
the low-income segment and microfinance institutions, has
been making efforts to reach out to the rural communities
throughout the year. BanKO has partnered with several
Local Government Units (LGUs) to provide much needed
financial services in far-flung areas. BanKO has also extended
over ₱900 million in wholesale loans to 31 micro-finance
institutions, which has successfully reached 60,000 microentrepreneurs. To date, BanKO has nearly 2,000 partner
outlets throughout the Philippines servicing roughly 460,000
retail customers.
Aside from providing mobile banking services, Globe is also
committed to the growth of Philippine technopreneurs
and the web/mobile ecosystems. Kickstart Ventures, Inc.,
launched in 2012, is a business incubator which provides
aspiring technopreneurs with the necessary capital, facilities,
expertise, and business connections to start up their business.
The expertise, connections, and support will come through
the network of Kickstart’s partners, which includes Globe,
Ayala Corporation, and SingTel, offering these startups the
additional advantage of growing their business faster and
also increasing their chances of success. Currently, Kickstart’s
portfolio consists of 17 startup companies, spanning digital
media, technology innovations, and web and mobile platform
plays.
Q: What does this all mean to us shareholders?
A: Globe Telecom’s strong performance, in terms of revenues,
earnings and improvements in market positions, has been
reflected in the significant growth of its shareholder value.
Globe Telecom’s stock price was one of the highest gainers in
the PSE in 2013, growing by 49.2% in 2013, outperforming the
Philippine composite index, which remained steady over the
same period.
6
HISTORY AT GLOBE
1993
1994
1995
1996
1997
1998
Furthermore, consistent with Globe Telecom’s aim to provide
sustainable dividends to its shareholders, the Company paid
out a total of ₱8.9 billion in dividends in 2013, representing
approximately 86% of 2012 core net income, in line with the
company’s policy of distributing dividends between 75% to
90% of prior year’s core net income. This translated to a 6.2%
dividend yield, which was once again one of the highest in
the local market and highly competitive when compared to
the average yield of listed Philippine corporates and two- to
five-year government securities. Coupled with the rise in share
price, total shareholder return in 2013 was at 55.4%.
As the Company continues to invest in its subscribers through
quality acquisitions, its network and IT infrastructure through
its ongoing transformation programs, and its product portfolio
through product and service innovations, Globe stands to reap
the benefits of these initiatives moving forward. With the
continued commitment of the Board of Directors, the hard
work and dedication of the management team and the over
5,900 employees of the Company, and the continued support
of all our shareholders, the Company is in great position to
sustain the momentum it has built over the past two years.
We remain optimistic that Globe will overcome the challenges
of a highly competitive market, while also capitalizing
on the opportunities brought about by the changing
telecommunications landscape.
Jaime Augusto Zobel de Ayala , Chairman
1999
2000
2001
2002
2003
Joint Venture of Ayala Corporation and Singapore Telecommunications
Ayala Corporation and Singapore Telecommunications formed a joint venture to manage
GMCR, Inc. GMCR was subsequently renamed Globe Telecom, Inc. in 1998.
2004
Conversation with the
President & CEO
Q: How did Globe fare in 2013, given the competitive environment,
rising demand for mobile data services and the ongoing transformation
initiatives?
A: At the start of 2013, we anticipated that this will be a transition
year for Globe, given the network and IT transformation initiatives we
were undertaking and amidst expectations of a sustained competitive
environment. Despite all the challenges and initiatives we undertook during
the year, we are delighted with what we have accomplished in 2013, as our
transformation initiatives have started to bear fruit and have provided the
backbone for our pioneering efforts in product innovation and differentiated
customer experience.
As a result, consolidated service revenues reached another record high
of ₱90.5 billion, up 9% against last year, driven by the continued demand
for data connectivity across our mobile, broadband and fixed line data
segments. Mobile revenues also scaled to a new high of ₱72.8 billion, up by
8% from last year, with Globe Postpaid and TM growing by 18% and 8%,
respectively. The growth was driven by strong subscriber expansion across
all three Globe brands, with total mobile subscribers reaching 38.5 million
by the end of the year, 16% higher versus 2012. In the fourth quarter alone,
Globe Prepaid and TM enjoyed record gross acquisitions of 3.8 million
and 4.8 million, respectively, owing in part to Globe Telecom’s unique and
market-relevant product offerings and promotions launched during the
quarter.
Our broadband business continued to thrive in 2013, with revenue growth
of 20% year-on-year to ₱10.4 billion. Our Globe Tattoo brand maintained its
status as the fastest growing broadband service in the country, topping over
two million subscribers at the end of the year, through our Tattoo On-the-Go
and Tattoo@Home product offerings. Our corporate data segment likewise
posted an impressive growth of 13% from 2012 to ₱4.7 billion and now
contributes 5% of our total revenues. The strong growth in our corporate
data segment was driven in part by the rising demand for stable and reliable
data connectivity across different sectors and industries, buoyed by the
continued positive economic outlook of the country.
EBITDA for 2013 registered at ₱36.5 billion, up 4% from ₱35.0 billion in
2012, as the growth in our revenues outpaced the increase in operating
expenses. Excluding the impact of non-recurring accelerated depreciation
charges related to assets replaced by our modernization efforts, and
charges related to foreign exchange and mark-to-market movements, core
net income reached ₱11.6 billion, a robust 13% higher over 2012 and the
highest in the past four years.
Q: What role did product innovation play in enhancing the performance
of the mobile segment?
A: Globe Telecom’s strong performance in the mobile segment was
driven by our continued commitment to product innovation as evidenced
by two of the most popular products – My Best Ever Super Plan for our
postpaid subscribers and GoSakto for prepaid subscribers. Since 2010, your
Company has been first in the market in introducing a unique proposition
through its My Super Plan and My Fully Loaded Plan, which offer Globe
postpaid subscribers the ability to customize their plans according to
their budget and communication requirements, and complemented this
with the widest array of gadgets and smartphones. Taking this a step
further, Globe upgraded to My Best Ever Super Plan, allowing our postpaid
subscribers flexibility to customize even their contract periods from as short
as six months to as long as 30 months. We also launched Globe Prepaid’s
GoSakto offer, which allows our Globe Prepaid subscribers to tailor-fit their
promotions according to their budget and the number of SMS, voice and
data volume they need. During last February’s 19th Annual Global Mobile
Awards by the GSM Association (GSMA), the global trade association for
the world's 800 mobile networks, GoSakto won in the Best Mobile Service
category, receiving the Best Network-based Solution for Serving Customers
Award. Both of these offers have been resounding successes for Globe and
are proofs of our continued dedication to be the innovator in the Philippine
telecom market.
7
Q: What are the latest updates on the Globe Telecom’s ongoing
network modernization and IT transformation programs?
A: With respect to the ongoing network modernization program,
the first phase covering the change-out of access network is already
complete. We are presently concentrating on the fiberization of
the remaining balance of the targeted sites for improved network
scalability and traffic handling capabilities. In step with the lay-out of
the last leg of the 12,000 kilometers of additional fiber optic cable for
our existing transport infrastructure and submarine fiber network,
we are firing up more 3G and 4G sites nationwide and LTE sites in the
key commercial business districts and tourist destinations. This will
result in faster speeds and enhanced mobile browsing experience to
our subscribers. In addition, we continue to build more sites to boost
capacity and fill in identified gaps in the network to improve network
performance.
net voice and SMS promotions with free unlimited Viber chat
(GoUnli25), Facebook and other OTT services (GoUnli30).
In November 2013, your Company, through an exclusive and
groundbreaking partnership with Facebook, launched an
unprecedented offer to allow our 38.5 million subscribers free
access to Facebook on the Globe data network. We shared the
technology capacity and network infrastructure to drive this
ambitious commercial proposition, premised on seeding greater
mobile browsing adoption in the Philippines. Coupled with the
immense popularity of Facebook among Filipinos and increased
smartphone penetration, these became the basis for a very
successful promotion that more than doubled the number of
Globe subscribers actively using mobile browsing services.
Moving forward, we will continue to tread boldly into the mobile
data space. Our brand new network and IT system, and our efforts
to build on our leadership in the postpaid segment, will pave the
way for more innovative forays into mobile data. Let it be said that
Globe is pushing a future-proof agenda in this regard.
As for the IT transformation initiative, we continue to stabilize the
new business support system (BSS) for our postpaid subscribers,
which have resulted in marked performance improvements in
our billing processes. Likewise, we are refining the related order
processing and account management modules in order to improve
customer experience. Given the magnitude of modernizing our
systems delivery infrastructure, we have decided to take a more
deliberate approach on the second and third phases of this
migration, making sure that the challenges met from the first phase
migration serve as important learnings for the scope, design and
development of the succeeding phases. The second phase migration
is expected to be completed by the second half of 2014, with third
phase to be completed subsequently.
Q: What were Globe Telecom’s key initiatives in the adjacencies
to the mobile business?
A: Equally important as we stake claim in the mobile data space,
we will aggressively push into adjacent spaces for growth. We
look optimistically to mobile commerce through the lens of
GCash and micro-finance through BPI Globe BanKO (BanKO).
To further complement GCash’s mobile wallet functions, Globe
Xchange Inc. (GXI) partnered with American Express® to launch
the GCash American Express® Virtual Card, a prepaid virtual card
linked to a subscriber’s GCash mobile wallet and allowed users
to shop conveniently online from both local and international
sites. Further, it gives the user a personalized US address to allow
delivery of purchases from international online sites which may
not be directly shipping goods to the Philippines.
Q: What are the challenges ahead for Globe and what do we do
to sustain the momentum built?
A: We have long anticipated the age of mobile data, and the expected
a surge of communication options beyond traditional voice and SMS
that it presents. We understand how our customers want the easiest
and most convenient means to communicate, and soon enough, most
of their communication needs may be filled by a simple connection to
the internet. This presents a clear challenge to our core business and
requires our business strategies to constantly evolve.
Also in 2013, BanKO joined hands with US Agency for
International Development (USAID), in helping rural communities
gain access to formal financial services (i.e. cash in and cash out
transactions, bills payment, airtime loading, money remittance,
and micro-insurance purchase) using their mobile phones. This
partnership was announced during the launch of the mobile
money financial service for the llijan Multi-Purpose Cooperative.
In addition, subscribers can now also apply for BanKO loan
via GCash with low interest rate, fast approval and hassle-free
loan payments. Loan credit and collection will be through their
GCashPowerPay+ wallet.
As we strive to put our customer first, it is imperative for us to be
fast and first whenever possible to bring ease and access to our
customers. It is likewise critical to leverage the new technologies and
applications that enable communication via mobile data. Over-thetop (OTT) players like Skype and Viber, applications that provide
communication through internet connectivity, provide alternatives
to traditional telephony services, and in that sense, represent a
threat to the viability of a telecommunications company like Globe.
But we would like to think differently, and as a service-oriented
company enshrining the spirit of customer first, we have since come
to view OTT’s as potential alliances and strategic opportunities.
Our pioneering efforts to support and develop the country’s
dynamic and growing technopreneur community through Kickstart
Ventures, Inc. (Kickstart) continues to gain momentum. In May
2013, Kickstart tapped California-based global accelerator Plug and
Play Tech Center (PnP) as an international corporate partner, giving
select Philippine tech startups a bridge to Silicon Valley, providing
the kind of game-changing exposure to the best-in-class learning,
capabilities and collaboration needed for success. Kickstart
currently has 17 companies in its portfolio covering the digital
media and technology, and web/mobile platform space.
Q: More specifically, how did Globe operationalize/productize
these potential alliances and strategic opportunities with the
OTT players?
A: In this vein, we have formed partnerships with the providers
of the most popular OTT applications, such as Viber, Facebook
Messenger, KakaoTalk, WeChat!, Whatsapp and Line. Through
these partnerships, our over 36 million Globe Prepaid and TM
subcribers now have the option to communicate through these
OTT applications via a myriad of promotions we offer, including
Viber20 for unlimited Viber voice and chat, Viber10 and Viber30
for unlimited Viber chat for one and three days, respectively, and
Unlichat25 for unlimited access to OTT messaging applications.
Globe also offers bundled services, complementing unlimited on-
8
HISTORY AT GLOBE
2002
2003
2004
2005
2006
2007
In the end, we are committed to build Globe around the needs
of our customers, putting them first in everything we do. We
are dedicated to build on your Company’s strengths to remain
relevant to our customers in the midst of the ever changing world
of telecommunications.
2008
2009
2010
2011
2012
Transforming Globe Telecom
Globe embarked on a US$790 million company-wide transformation on commercial, network,
IT, people and culture. The transformation program significantly improves network quality and
customer experience, increases capacity, drives down costs, as well as prepares the network to
meet the needs of customers today and in the future.
2013
Q: In order to meet the challenges of the future, what are our
biggest strengths?
A: Time and time again, we have maintained that our biggest
strength is the commitment of our over 5,900 dedicated employees.
We strive to build a culture of engaged difference makers, built
around the mantra of putting the customer first. Engaged
employees really do bring out the best in a company and the
multiple recognitions we earned throughout 2013 are a testament
to the kind of employee engagement prevalent in Globe. Among
many other awards and recognitions tallied in another section
of this report, we were adjudged Mobile Service Provider of the
Year by Frost and Sullivan, and voted Best Telco in the Philippines
in the CNET Asia Readers’ Choice Awards. Further, in testament
to the unwavering commitment of Globe Telecom to integrity,
transparency and best practices, the company has once again
received a Platinum Award for Excellence in Management and
Corporate Governance from The Asset, an integrated multi-media
company serving the elite community of leading corporate and
financial decision makers in Asia.
Such engagement was harnessed and fortified through programs
like iLead Globe which is our holistic professional development
program for emerging talent, and Uplifting Service which is an
enterprise-wide set of training sessions designed to inculcate a
deeper service culture in our organization.
Q: How did overall employee engagement and sentiment fare in
2013?
A: For 2013, our Employee Satisfaction Index (ESI) remaining strong
by international and industry standards at 73.48%, buoyed in part by
our move to The Globe Tower (TGT) in Bonifacio Global City.
Our new headquarters exceeded expectations in aesthetics
and functionality. Employees harbored great pride from widely
publicized praise and public awe, but even more significantly, they
benefitted from the efficiency and collaborative environment
that TGT offers. With open work spaces, a cashless dining hall
offering a wide variety of cuisines, outdoor gardens above ground,
LEED-certification, and state-of-the-art facilities, are the building’s
features that continue to excite Globe employees. But ultimately, I
believe that having a home to call our own nourishes tremendous
family spirit and corporate pride. And certainly, our colleagues in the
Visayas and Mindanao are brandishing a revitalized sense of pride,
too. As they felt what a brand new workplace could do for morale,
they also eagerly await the final completion of TGT-like corporate
offices in their areas in 2014.
With a committed and dedicated workforce, complemented by a
modernized network and IT infrastructure, we are confident that we are
equipped with the necessary tools to face the challenges of the future.
Q: How did the company mobilize itself in the face of the natural
calamities we faced in 2013?
A: The engagement of our dedicated workforce was put on display
amidst the challenges brought by the devastation of Typhoon
Haiyan and other major calamities in 2013. Within 24 hours of the
destruction of Typhoon Haiyan, spurred by the malasakit of our
employees, Globe restored connectivity in the toughest hit areas in
Leyte, recognizing that communication is a lifeline. We re-activated
our Bangon Pinoy relief efforts immediately after Typhoon Haiyan’s
wrath abated. Originally launched in the aftermath of Typhoon
Ondoy, Bangon Pinoy once again became the platform for our
corporate social responsibility (CSR) to alleviate the suffering of
Typhoon Haiyan’s victims. Taking shape in the tried and tested relief
efforts of Globe Bridging Communities (Bridgecom), our flagship
CSR program, the company triggered the immediate deployment of
Libreng Tawag and Charging Stations, and the collection, re-packing
and distribution of relief goods. No less than employee volunteers
bravely led by our senior executives actively participated in relief
and rebuilding work, even making their way to the hardest hit areas.
In the worst of times, The Globe Way inspired us to give back to the
communities we serve and make a positive difference.
Q: How do you operationalize sustainability into your regular
operations?
A: First and foremost, we continue to pursue the greening of
our network operations. We have switched over more sites to
solar-power and utilize deep cycle battery solutions. The need for
air-conditioning has also been minimized with the conversion of
indoor sites to outdoor formats, significantly reducing our energy
consumption and carbon footprint. In the primary interest of
energy efficiency, we likewise leverage a comprehensive Facilities
Management System (FMS) that allows real-time monitoring
of energy consumption and environmental conditions across
all regional operations centers. To lessen industrial waste and
preserve the environment, we properly dispose of used lead acid
batteries from cell sites and corporate offices and turn it over to
the Department of Environment and Natural Resources' (DENR)
registered hazardous waste recycler.
Moreover, Globe has always been very deliberate in inculcating
eco-friendly work practices among employees. Our new
headquarters is LEED-certified (or Leadership in Energy and
Environmental Design, an internationally-recognized rating
system for the design, construction, operation, and maintenance
of green buildings) in order to minimize its carbon footprint. Inside
the building, we strongly advocate a paperless office, encouraging
online collaboration via file sharing and editing in a collaborative
cloud environment.
We deeply understand the impact our overall operations
bear on the environment. Thus Globe has long adhered to an
environmental sustainability policy, and we are committed to it
wholeheartedly.
Q: What will the Globe of the future look like?
A: Back in 2010, we began a transformation journey to serve
customers better. We set out to build a new network, upgrade our
IT and back office systems, and cultivate a service culture among
our people. This was massive transformation hinged on the
customer, for and all about the customer.
Today in the age of social media connectivity and the dawn of
mobile data, we commit to remain relevant through continued
innovation and technology advancements. All because this is what
we know our customers seek and demand.
Thus looking to the future, Globe will still find its soul and
purpose in the hands of the customer. In a more mature
mobile data environment, or perhaps with the advent of a
new communications platform yet to be born, Globe shall be
trailblazing at the forefront of industry in service of the customer,
its employees, shareholders and the public in general.
Last year I concluded that the best of Globe was yet to come.
Trust that it will keep on coming, with our bar of customer
experience set even higher moving forward, as we keep getting
better every day - creating a wonderful world.
Ernest Cu, President and CEO
9
10
About Globe
Globe Telecom is a telecommunications company and a dynamic organization that continues to work on delivering the best and
personalized products and services to customers and at the same time, bringing happiness to its employees and shareholders. The
Company’s products and services endlessly enrich the lives of its millions of subscribers.
Creating a wonderful world is what the company pursues to achieve, encapsulated in the Company’s philosophy of Our Circle of
Happiness - the ecosystem of engaged employees, delighted customers and satisfied shareholders. The employees make this possible
by providing excellent services, allowing them to receive wonderful employee benefits in return. This builds a service culture that will
differentiate us in the market and enable us to become a more trusted brand, ensuring our customers will keep coming back. In the
end, shareholders feel wonderful about the organizational performance as our new mission, vision and values are greatly fulfilled. This
vision of a wonderful world puts the satisfaction of customers at the heart of all things Globe has to offer.
Mission:
We create a wonderful world for
people, businesses and the nation.
Vision:
Happiest customers, employees
and shareholders.
Our Values:
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.
11
GROWING ACHIEVEMENTS
Year 2013 brings several international and local recognitions to Globe for being able to deliver wonderful and groundbreaking products and
services as well as, efforts towards sustainability.
Mobile Service Provider of the Year
Frost & Sullivan Philippines Excellence Awards
Emerging Infrastructure as a Service Vendor of the Year
Frost & Sullivan Philippines Excellence Awards
Best Telco in the Philippines
CNET Asia Readers’ Choice Awards
Platinum Award for Excellence in Management and Corporate
Governance
2013 Asset Excellence in Management and Corporate Governance
Benchmarking Awards
Asia's Outstanding Company in Corporate Governance
Corporate Governance Asia Recognition Awards
Most Consistent Dividend Policy
3rd Annual Southeast Asia Institutional Investor
Corporate Awards
2nd in Most Committed to a Strong Dividend Policy
Finance Asia's Best Companies in Asia Poll
Globe Telecom was honored as Frost & Sullivan Philippines Mobile Service
Provider of the Year for 2013 following its remarkable performance in 2012
despite intense competition in mobile markets. Receiving the award is Globe
President & CEO Ernest Cu (right) from Nitin Bhat, Frost & Sullivan Partner
and Head of Consulting. The leading telecommunications company was
also recognized by the business consulting firm as Philippines Emerging
Infrastructure-as-a-Service Vendor of the Year
10th in Best Investor Relations
Finance Asia's Best Companies in Asia Poll
Asia's Best Brand Award
4th CMO Asia Awards
Best Customer Experience in 2013
2013 World Communications Awards
Best Customer Service Initiative
2013 Asia Communications Awards
Most Innovative Telecom Project Award for Globe
mySUPERPLAN
16th Telecom Asia Awards
Gold Award on the Combined Annual & Sustainability Report for
Globe 2012 Annual and Sustainability Report
2013 Mercomm International ARC
Gold Quill Award of Merit on Social Media Programs for GCASH
American Express Virtual Pay
2013 Gold Quill Awards
Gold Award on New Product or Service Introduction of the Year
for GCASH American Express Virtual Pay Launch Campaign
2013 International Business Awards
Reinforcing its position as one of the preferred telco brands in Asia,
Globe Telecom was recognized as the Best Telco in the Philippines in the
prestigious CNET Asia Reader's Choice Awards held in Singapore. Receiving
the award is Globe Corporate Communications Senior Vice President Yoly
Crisanto from CNET Asia Senior Editor Reuben Lee
12
HISTORY AT GLOBE
1993
1994
1995
1996
1997
1998
Bronze Award on Corporate Social Responsibility Program of
the Year in Asia, Australia and New Zealand for My Fair Share
Program
2013 International Business Awards
1999
2000
2001
2002
2003
2004
Intro to SMS
Globe, formerly known as GMCR, Inc., pioneered the basic SMS messaging service in the Philippines.
Silver Award on Programs Effectivity for Awareness for Globe
Prepaid GoSakto
2013 IMMAP Boomerang Awards
Most Innovative xCommerce Enabler Award
2013 IDC Telecom Service Provider Innovation Awards
Award of Excellence on Communication Management for
Talk2Globe
2013 IABC Philippine Quill Awards
Merit Award for Network Transformation Program
Transparency Plan
Public Relations Society of the Philippines’ 48th Anvil Awards
Merit Award for Globe 2011 Annual & Sustainability Report
Merit Award for Globe Gets Me Campaign
Merit Award for Buo ang Pasko Campaign
Globe Telecom's Customer Service Innovation on Social Media was declared
the winner in the Best in Customer Service Initiative category at the Asia
Communication Awards. Globe Customer Experience Management Head
Chris Lipman (left) proudly shows off the award with Michael Christopher
Dela Cruz, Head, Customer Communication & Knowledge Management
Merit Award for My Fair Share Program
Top 10 Listed Firms for Good Governance
2013 PSE Bell Awards
ISO 20000-1:2011 IT Service Management System (ITSMS)
Certification
ISO 27001:2005 Information Security Management System
Certification
ISO 9001:2008 Quality Management System (QMS) Certification
ISO 14001:2004 Environmental Management System
Certification
ISO 22301:2012 Business Continuity Management System
Certification
Metro Ethernet Forum-Carrier Ethernet 2.0
(MEF CE 2.0) Certification
Globe Telecom was cited by Finance Asia, the leading financial publication
in the region, for its commitment to a strong dividend policy and investor
relations. This marks the tenth straight year that Globe has figured
prominently in Finance Asia’s survey of best managed companies in Asia.
Receiving the award is Tek Olaño, Globe Head of Financial Planning (center)
and Jomari Fajardo, Head of Investor Relations (right) from Ramon Arnaiz,
Maybank ATR Kim Eng Capital Partners Chairman
13
TRANSFORMATION
Globe Telecom continues to move forward with meaningful transformation to deliver superior customer experience and world class
network performance. This in turn creates a wonderful world in areas it serves with happy customers, employees and shareholders. The
transformation of Globe Telecom's capabilities starting with the network, IT, business, as well as talent and culture underpin the Company's
steady growth and consistent performance.
President Benigno S. Aquino and Globe Telecom Chairman of the Board Jaime Augusto Zobel de Ayala led the ceremonial inauguration of the Globe-South-East
Asia Japan Cable (SJC) interconnection. Witnessing the momentous occasion in the region's telecommunications industry with President Aquino and Jaime
Augusto Zobel de Ayala is Globe SVP of Enterprise Group Nikko Acosta, Globe SVP of International Business Markets Rizza Maneigo-Eala, Department of Trade and
Industry Secretary Gregory Domingo, Globe Chief Operating Officer for Business and International Markets Gil Genio, KDDI President Yukiya Oda, Singtel VP for
Carrier Services International Business Unit and SJC Consortium Management Committee Head Ooi Seng Keat and Brunei International Gateway Sendirian Berhad
Managing Director Song Dai
Network
Since Globe Telecom’s transformation efforts in 2011, the Company’s
network significantly improved year-on-year, augmented by
greater capacity and coverage. Improvements in network speed
and reliability, especially on mobile data coverage, attracted more
consumers. Expanding its 4G HSPA+ provided faster mobile browsing
experience for customers, complemented with pilot deployment
of LTE in key Central Business Districts (CBD) across the country.
The Company’s transformation efforts delivered the most
modernized telecommunications infrastructure in the Philippines,
putting in a brand new access, transport, and core network
nationwide within a two year period. This enhances coverage in
major points of convergence and provides a more reliable network
for messaging and voice calls, high-speed internet surfing, seamless
video streaming, fast upload of photos and videos to social media sites.
In addition to providing all of its base stations with state-ofthe art equipment, Globe continues to optimize its modernized
cellsites for maximum performance while aggressively building on
its transport network. The company’s fiber optic footprint in the
country now includes undersea cable systems in strategic sites
such as those in Boracay and Coron in Palawan, boosting linkages
of these two premier tourist destinations with the rest of the
country and the world. The company’s interconnection with the
Southeast-Asia Japan Cable system, which was activated in mid
2013, further strengthens the Philippines’ regional connectivity.
Resiliencies and protection systems were also increased for better
network availability and delivery, providing support for expanding
business requirements especially for data.
As a proactive measure, Globe deployed agents and performance
management tools to provide the Company the ability to measure
real time experience of subscribers and diagnose the performance
of each and every network element. During Typhoon Yolanda,
aggressive network restoration and business programs contributed
to the strong recovery in Western and Central Visayas, while
Eastern Visayas gradually increased towards pre-Yolanda level.
Globe Telecom also transformed telecommunications to offer
a greener and more sustainable nation. Indoor base transceiver
stations (BTS) decreased from 70% to 53% and are now converted
into outdoor models. This has contributed to energy efficiency
measures as cell site dependence on traditional cooling systems
such as air-conditioners was eliminated.
14
BTS sites located beyond 1km radial distance from shorelines
also implemented reduction of air-conditioning use with 577 out
of 600 indoor sites already in use of free cooling systems (FCS)
along with Constant Temperature Battery Cooler (CTBC) units.
CTBC acts like mini refrigerators using energy efficient coolers
used to store telecom batteries. The new equipment welcomed
ambient air to flow freely into BTS cabins while still maintaining
the ideal thermal conditions for the telecom batteries in
prolonging its life. Significantly, about 12% savings have been
generated by reducing air-conditioning use on these sites.
The Facility Management System (FMS), which was activated for
real-time monitoring of energy consumption and environmental
conditions, positively resulted to the visibility of 1300 sites within
the Network Operations Centers (NOC). FMS enabled Globe
to monitor and trace network power related issues and readily
address them before it transpires.
Presently, a total of 5,874 out of the 6,429 Globe sites have already
been transformed, which have contributed in OPEX savings. It is
expected to achieve full site transformation by mid-2014. Once the
plan is completed, savings of up to 30% is projected but as early as
now, almost 20% savings have already been observed.
IMPACT OF NETWORK TRANSFORMATION TO THE ENVIRONMENT
Information Technology (IT)
Designed to enable a better customer experience across channels,
and tighten delivery of increasingly personalized products,
services, and rewards, the first phase of Globe Telecom’s Business
Support Systems (BSS) Transformation was implemented in the
first quarter of 2013.
This effort included data migration into the new system and the
consolidation of 22 systems retired for mobile postpaid. The entire
transformation effort, including the implementation of mobile
prepaid and wireline solutions, is expected to be completed by
year 2015.
To ensure optimum customer experience following implementation
of mobile postpaid, Globe embarked on an extensive stabilization
effort, which led to significant improvements on system performance
by the end of 2013. Among the changes include: customers now
being able to walk out of the stores with a working device, integrated
front-end that allows for a 360 degree view of the customer’s profile,
and the optimization of the bill run cycle, which now takes faster to
complete compared to the experience with the legacy system.
The new Enterprise Data Warehouse also replaced legacy data
systems, boasting top-tier data warehouse components that guarantee
the delivery of superior data processing performance, comprehensive
intelligence, and an enhanced information value chain.
Moving forward, the new BSS and Enterprise Data Warehouse will
serve as platforms that will continue to power business growth
and deliver new and wonderful customer experiences for the
Philippine market.
Business
Innovative products and services place Globe on top when it
comes to unique customer experience. While transformation
is in full blast, the network launched more groundbreaking
offers from messaging, voice, data/broadband, gadgets, up to
expanding its reach making them totally incomparable.
For 2013 alone, first to market offers were launched. Many
have seen the mobile messaging and voice service enhanced
through more customization features for both postpaid and
prepaid. Further breakthroughs were witnessed through several
partnerships offering free access to social networking sites
and other value for money offers. Data and broadband offers
amplified, digital services expanded and gadgets where first
brought in by Globe - all these speak of premiere innovations in
the Philippine telecommunications industry. More information is
available on the Empowering You section of this report.
Globe Telecom and Facebook collaborate to provide Internet access to more
Filipinos with Free Facebook. In photo sealing the partnership are (from
left) Chief Operating Advisor Peter Bithos, Facebook Founder and CEO
Mark Zuckerberg, and Globe President and CEO Ernest Cu in Menlo Park,
California, USA
Talent and Culture
Globe Telecom’s transformation plan has brought in more ways
on how employees can engage themselves with the Globe Way.
The main highlights include the strengthening of the customer
service culture by giving every Ka-Globe a deeper understanding
and involvement in transforming their attitude towards work and
adding more value to customer service.
The leadership capabilities of the employees, whether new and
old, also continue to be nurtured. With such non-stop execution,
it has meaningfully contributed to the success of the organization
and the employees are inspired to do their best with the help of
their equally brilliant and supportive leaders. More information is
available on Our People, Our Globe section of this report.
15
MATERIALITY ANALYSIS
For the 2013 Annual and Sustainability Report, Globe focused on the issues that are most material to its business and stakeholders.
The Company identified the key material aspects on sustainability and relevant areas through stakeholder engagement and provide
the methods, means and results of each engagement.
The concerns and issues identified during stakeholder engagement were discussed, prioritized based on the materiality matrix and
formed the basis for key considerations and reporting in 2013 performance report.
Globe Telecom, in its endeavor, will continue stakeholders’ engagements to better understand their concerns and material issues, and
address them using only the most favorable approach beneficial to all parties concerned.
16
STAKEHOLDER ENGAGEMENT METHODOLOGY
Stakeholders
Mode of Engagement
Section of 2013
Sustainability
Report
Frequency
Stakeholder Concerns
Our Response
Shareholders/
Annual Stockholders Meeting (ASM)
Investors/ Management Extraordinary General Meetings (EGM)
Board
These meetings result to quarterly
reports submission and annually review
and address individual and institutional
investor’s expectations
Annually
• Higher Financial Return
• Higher Dividends
• Financial
Performance
• ROI
Financial Report
Employees
Employee Satisfaction Survey (ESAT)
Internal Customer Satisfaction Survey
(ICSAT)
Allows open communication and feedback
and provides equal opportunities to
share their thoughts, views and opinions
between the Company and its employees.
Annually
• Career Development
Programs
• Safe Work Environment
• Open Communication
• Regular Trainings / Learning
Management
• Employee Benefits
• Employee Relationship
• Meetings / Kapihan
Sessions
• Ka-Globe Jam
• Townhalls
• Trainings
• Various Committee
Formation
• Globe Employees
Portal (ICON)
Our People
Our Globe
Customers
Customer Satisfaction Survey (CSAT)
Customer Feedback Management
Customer engagements include constant
monitoring, research and study on the
affordability and accessibility of products
and services, strive to minimize customer
complaints and increase customer
satisfaction.
Annually
• Better network quality
• Uninterrupted services
• Customized Plans
• Faster resolution of
complaints
• Loyalty / Rewards Program
• Easy access to support
•Transformation Plan
• 360 Degree Quality
Feedback program
• TALK2GLOBE
channels
• Globe Community
Empowering You
Local Communities
Community Engagement through social
activities
Globe Telecom shows that it cares and
supports local communities by executing
life-improving programs and social
activities.
Quarterly
• Care and support for
community
• Life-improving programs
• Support for good governance
through ICT
• Globe Labs
• Various Globe
Bridgecom
Programs
Service Providers/
Suppliers
Procurement Management
Apply ethical supplier management
system to all service providers to ensure
that relationships adhere to prescribed
policy and guidelines.
Vendor
Screening for
every new
applicant.
Random
Audits
Annually
• Transparency
• Long-term partnership
• Ethical behavior
• Clear procurement policies
• Transformation Plan
• Sourcing Green
Equipment
Empowering You /
Our Business
Partners
Conferences and Industry Workshops
Globe Telecom is a member of
telecommunications industry specific
associations and has remained to be a
respected member of the local business
community.
As scheduled
• Continuing support and long
term membership
• Transformation Plan
• BPI Globe BanKO
Our Business /
Greening the Globe /
Local Government
Authorities
Compliance to Government legislative
framework
Communicate commercial, policy,
regulatory and other relevant matters to
government authorities and regulators and
continue compliance to all government
requirements as prescribed by law.
Annual
Audits on
compliance
• Regulatory disclosures
• Transparency
• Accountability
• Building partnership
• Policy alignment with areas
of national interest eg. green
initiative, biodiversity
protection
About the Report
• Annual Financial
Report
• Quarterly Report
• Sustainability Report
• Public Disclosures
Non Governmental
Organizations
Partnership for community development
projects
Globe Telecom supports developmental
causes and maintains partnerships with
various NGOs, local and international, for
various community development projects.
As and when
required
during the
project life
• Building Partnership
• Community Development
• Governance
• Environment protection and
preservation
• Various Globe
Bridgecom
Programs
17
18
Service at Globe
Ever since 2010, Globe has been changing the telecommunications scene with customer focused offerings. The Company empowers
every subscriber to choose and personalize their mobile and internet needs by offering the most diverse and flexible products and
services to provide a wonderful experience for all.
Globe broke ground by introducing GoSakto, the first prepaid offer where subscribers can create their own promo that best suits their
needs and lifestyle. Taking the customization to the next level, Globe enhanced its postpaid plan with Best Ever MySuperPlan with
bigger plan value and more contract periods to choose from. The Company expanded its reach through collaboration with Over-thetop (OTT) messaging services that revolutionized the way the market consumed bundle offers. With a strong local foundation, Globe
also expanded to more OFW localities to cater to the growing number of kababayans in Italy, UK and Korea, among others.
Globe imbibes the value of innovation in providing game-changing products and services to the market. With the objective to surprise
and delight customers at all times, Globe aims to be first in offering communication solutions and packages that are most relevant
to everyday needs. More so, it fosters incubation hubs to crowdsource ideas from industry experts and practitioners in the fields of
communication and information technology. This allows Globe Telecom to be ahead of the curve in forecasting the mobile and digital
trends that can fill in consumer gaps.
The Best-Ever MySuperPlan
The latest and improved plan with a corresponding ‘peso value’
(PV) that subscribers can continuously avail and enjoy with added
customizable features. The corresponding ‘peso value‘ (PV) can be
converted to combo call, text or surf services, free or discounted
gadgets and monthly consumables for more calls, texts and
surfing.
GoSakto
Through GoSakto, Globe prepaid users can create
and personalize their own mobile subscription
promos without the hurdles of maintaining
balance, capping and limited price points.
19
Postpaid
Globe Telecom maintained its leadership in the postpaid segment with the continued growth in customer acquisitions throughout the year,
closing 2013 with over 2.0 million subscribers, a 17% growth from 1.7 million in the previous year. The continued success of the awardwinning and fully-customizable mySUPERPLAN bundled with the latest devices and smartphones helped boost gross additions to reach
711,190, 21% higher than a year ago, and revenues of ₱27.1 billion, an 18% improvement year-on-year. The consistent performance and solid
contribution of the postpaid segment to total mobile business is attributed to the steady take-up of postpaid offers and deals, strengthened
by customer service and after-sales support systems with a dedicated hotline, remodeled stores, extensively-trained stores personnel and
relationship managers, and partnerships with the world’s leading device manufacturers.
Widest LTE
Smartphone
Selection
Globe Platinum
Plans
Globe brings eleven of
the finest LTE handsets in the
country, where each handset
offers great plan deals that
provide the best and wonderful
smartphone experience for
subscribers.
iPhone Forever
Plan Promo
Through the All-Net
Plans 5000 and 10000,
Globe Platinum subscribers
have unlimited calls and texts
to all networks including
unlimited mobile internet
connection with monthly
consumable values for local
and international services.
A first-of-its-kind promo
where both existing
and new Globe subscribers
can trade-in their existing
iPhone for a new iPhone with a
corresponding Pay-One-Time
trade-in cash out. Customers
are sure to get hold of the
latest iPhone model every time.
Rewards
Over 12 million
subscribers are now
actively using their
rewards points to redeem
movie tickets in select
cinemas, enjoy meals in
dozens of restaurants, avail
of products and services
in partner merchants and
convert to Philippine Airlines
flight miles.
Prepaid
In 2013, Globe moved aggressively to capture market share for its prepaid business, paving the way for the consolidation of its prepaid
and TM segments into one Prepaid Business for greater focus.
Serving the needs of the youth, whose access to the Internet has increased, the integrated prepaid segment has evolved into a digital
brand, offering services beyond calls and texts and harnessing the power of social media to deliver a richer mobile experience. The
revolutionary service GoSAKTO was the segment’s flagship offer in 2013, allowing prepaid customers to create and personalize their own
prepaid promo based on their budget, needs and lifestyle. Towards the last quarter of the year, Globe Prepaid unveiled GoUNLI30 which
provides subscribers unlimited calls to Globe/TM, unlimited texts to all networks, and free access to the best chat applications for only
₱30 valid for 1 day.
TM sustained its stronghold in the prepaid market amidst a maturing mobile industry after recording a 25% growth in subscriber base as
of end-2013 year-on-year. The value brand of Globe Telecom also generated the highest gross acquisitions among all business segments
particularly during the fourth quarter of 2013, achieving a record-high of 4.8 million new SIMs or 20% better than previous quarter’s level.
TM’s sustained growth momentum was boosted by its innovative, customized, and value-for-money offerings such as AstigCombo10,
AstigCombo15, Combo15, Combo20, TM Extend, as well as Free Facebook to all TM subscribers, leading the market with affordable call,
text and mobile internet services.
TM Extend Promo
For only ₱5.00, TM Extend gives subscribers another 24
hours to continue and enjoy using their remaining and
unconsumed SMS and call minutes. The promo is valid
for AstigTxt10, AstigCombo10, Combo10, Combo15, AstigTxt15,
AstigTxt20 and AstigTxt30.
Most Affordable Call & Text Promo
The biggest and most affordable call and text promos are
available through Globe GoUNLITXT49 and GOCALL100 good
for 7 days. With GoUNLITXT49, subscribers will enjoy unlimited
call and text to Globe/TM for 1 week. Meanwhile, GOCALL100 is a
week-long subscription that gives subscribers 500 minutes of calls to
Globe and TM.
Mobile Data Services
With smartphone penetration growing at a faster pace given affordability and accessibility of purchase, Globe strengthened its focus
to its mobile data services business with plans and offers that allow customers to surf the Internet on their mobile devices. In 2013,
mobile browsing and other data revenues which accounted for 16% of total mobile service revenues increased to ₱11.6 billion as of end2013, up 42% from ₱8.2 billion in 2012 on the back of its PowerSurf consumable data plans, giving subscribers bulk megabytes (MB) of
internet data to stay in control of their mobile browsing without the fear of billshock. Towards the end of 2013, the segment also led the
introduction of the telco’s world-first partnership with Facebook, providing over 38 million subscribers access to the top social networking
site alongside customer service innovations that address the fear of mobile browsing.
Free Facebook for Over
38 Million Subscribers
The world’s first-ever collaboration
between Globe and Facebook paves the
way for the telco to address key issues
on mobile internet use in the country.
Customer experience innovations such
as availability of access on feature
phones and smartphones across all
Facebook mobile platforms, proactive
advice of charge notifications, one-click
registration to data plans, and data
lending service for a seamless browsing
experience was made possible through
this partnership.
20
Instant Messaging Made
More Reachable
Globe becomes the world’s first
to offer all major global over-thetop (OTT) messaging services for
free as part of its core call and text
bundle. Its unlimited call and text
service includes Viber with 200
million users, Facebook Messenger
with 60 million users, Kakao Talk
with 90 million users, and other
major OTT players with over 650
million users around the world.
Data Plan Profiler and
Device Simulator
Globe continues to keep up with
the country’s increasing mobile
browsing demand through its Data Plan
Profiler and Device Simulator, an online tool
to educate subscribers on mobile browsing.
The program provides assistance for common
troubleshooting problems with regard to
mobile internet access.
Job Search Made More
Accessible
The MAIL20 Plus enables users with
unlimited access to Facebook, Gmail,
Ymail and Jobstreet to search for job vacancies,
receive personalized job alerts, e-mail resumes
and instantly apply for jobs anytime, anywhere
using their mobile phones.
Connecting Users
Worldwide
GoUNLI30 offers unlimited texts
to all networks, unlimited calls to
Globe & TM users and unlimited access to
major Over-the-top (OTT) messengers valid
for 1 day without additional data charges
or the need for Wi-Fi connection. Moreover,
UNLICHAT25, a dedicated mobile internet
promo for frequent mobile chat application
users, offers unlimited use for the same
instant messaging applications valid for 1
day with no Wi-Fi needed.
Broadband
Tattoo, Globe Telecom’s broadband brand, flourished in 2013 with revenues increasing by 20% amounting to ₱10.4 billion alongside its
growing customer base, which reached over 2 million subscribers. The outstanding revenue performance of the broadband business
was due to the continued aggressive acquisitions campaigns, attractive pricing offers and product bundles. Tattoo On-the-Go products
continued to dominate the market with its affordable Tattoo 4G and LTE mobile broadband devices that give customers the fastest
browsing speeds, as well as innovative tablet bundle offers. Tattoo Home Broadband, on the other hand, consistently gained ground with
its enhanced and reliable product bundles that come with high-speed internet, free landline, and free unlimited landline to mobile (Globe
and TM) call services. Lastly, with its customer-focused strategy, Tattoo also introduced its first rewards program, Tattoo+ Rewards, where
qualified subscribers earn rewards points and freebies by subscribing, loading and using Tattoo services.
Tattoo Home
In 2013, the broadband bundle that
comes with unlimited calls to Globe and
TM became a standard feature for the
Tattoo Home Broadband brand, giving
subscribers the convenience to connect
to their loved ones without paying for
both services separately. The latest LTE
connectivity technology is included in all
Tattoo Home Broadband plan bundles,
and being experienced in selected key
cities in Luzon, Visayas and Mindanao.
Tattoo Consumable Plans
Starting at ₱299, Tattoo
Consumable Plans let subscribers
control how they consume their
broadband with speeds of up to 12Mbps
without lock-in period. LTE speed boost
is available at ₱300 per month for faster
connection of up to 42 Mbps.
Tattoo LTE Postpaid
Starting at ₱1299, Tattoo Postpaid
LTE offers the lowest LTE plan with
browsing speed of up to 42 Mbps.
Tattoo Prepaid LTE Stick
Priced at ₱3,995, Tattoo Prepaid LTE
stick utilizes Globe LTE infrastructure
providing the best overall broadband
experience with speeds of up to 42 Mbps.
Tattoo Platinum
Home Broadband
The premium broadband in the
country utilizing Gigabit-capable
Passive Optical Network (GPON) internet
service. Residents from Forbes, Urdaneta,
Bel-Air, Serendra and Rockwell Makati
can surf, stream, download and play with
speeds of up to 100 Mbps.
Tattoo 4G Flash
Priced at ₱995, Tattoo 4G Flash
provides the best value for money
4G device with speeds of up to
7.2 Mbps. It also comes with free all-day
Facebook access, once a week, for 6
months.
Tattoo Nomadic
Tattoo continues to provide unique
internet offers for its subscribers on the
go. Priced at ₱1,995, Tattoo Prepaid
Mobile WiFi can easily connect up to 10
devices with speed of up to 12 Mbps. The
device comes with free 1 hour surfing
access valid for 1 day. Meanwhile, priced
at ₱4,995, Tattoo Prepaid LTE Mobile
WiFi gives subscribers a faster speed of
42 Mbps, powers up to 10 WiFi-enabled
devices and fully-charges smartphones
with its Powerbank feature.
Tattoo Prepaid Tablet
Bundles
Starting at ₱1,298, Tattoo Tablet
Bundles gives three free devices Skyworth S73 tablet or a Cloudpad 705W,
a Blackberry Curve 9220 mobile phone,
and the country’s fastest broadband Wi-Fi
stick which can power up to 10 devices.
The plan promises connectivity speeds of
up to 7.2 Mbps giving everyone a great
tablet experience both personal and
business use.
Tattoo Lifestyle Stick
Priced at ₱1,295, Globe Tattoo
brings more personas to online
surfing as they introduce the new
Lifestyle Sticks, designed by world-famous
furniture designer Kenneth Cobonpue.
The smallest stick in the market, with
speeds of up to 12 Mbps, comes with
freebies from partner merchants in
Manila, Boracay, Cebu, Davao and
Cagayan de Oro, and a free Tattoo-Enjoy
Privilege card.
21
Enterprise
The enterprise ICT arm of Globe Telecom was at the forefront of the newest technologies by offering to the corporate workforce an
unbeatable suite of mobility and voice portfolio – from the latest mobile devices and wireline technologies available to enable organizations
to maximize not only their current resources but also their work efficiencies.
Early in the year, the company also pushed for the adoption of cloud computing, which it pioneered in the country. Its world-class data
centers, which earned numerous industry accreditations, also empowered businesses with best-in-class data storage solutions. In terms of
recognitions, Globe Business also earned milestones for its Metro Ethernet Forum Carrier Ethernet (MEF-CE) 2.0, one of the first in the world
and in Asia.
Globe Business Enterprise Group (EG) also exhibited its expertise in information and communications technology (ICT) with various
engagements with its technology partners as well as ICT organizations in the country and abroad, fielding in in-house thought-leaders to
speak and tackle on topics.
Speaking of thought leaders, EG stamped its seal of innovation by flying in world-renowned speakers in the persons of Luke Williams and
Martha Rogers during its annual Enterprise Innovation Forum, attracting local and regional corporate and ICT leaders.
Unmatched Telecommunications Services
Globe Business, through its Enterprise Group, sets a milestone for the country’s advancement in telecommunications
as it formally interconnects with the South-East Asia Japan Cable (SJC), enabling unmatched data connectivity while
boosting Globe Telecom’s capabilities to deliver ultra-high bandwidth traffic in the Asia Pacific region. The US$400
million underwater cable spanning 9,000 kilometers is fully operational with available data traffic, streaming an initial
design capacity of 28 terabits-per second deployed by six fiber pairs.
Autoload MAX
Corporate Edition
An automatic load facility
for companies, which
sends prepaid credit to multiple
employees in the network.
Tattoo Mobile
Broadband
An enterprise internet
service with individual or
Wi-Fi sharing bundles and packages
with speeds of up to 42 Mbps.
Session Initiation Protocol
(SIP) Trunk
A business solution allowing
companies with an IP-PBX to use
the IP network in lieu of conventional
telephone trunks to communicate with
fixed and mobile telephone subscribers.
Txt Connect Service
A corporate web-based
value-added service to
broadcast SMS to a broad
base of customers or employee
without sacrificing cost efficiency.
Business Capped
A cost-efficient business solution
which keeps communication
expenses at a minimum as
subscriptions are fixed and communications
allowances are budgeted. Employees are
also given an allowance and the ability to
top-up outside their budget.
Business Flex
A corporate wireless
communications
package bundling
consumable amounts,
unlimited mobile services
and handsets, depending
on an individual employee's
communication requirements.
Business Plus
A postpaid service enabling
business clients to create their
own mobile subscription through
tack-on services ranging from unlimited
calls, texts and data, addressing the need
for a holistic mobility solution for an entire
work force.
Small and Medium Business
As their trusted business advisor helping grow the trade of small and medium businesses (SMBs), the Small and Medium Business Group
(SG) of Globe Business introduced to them the concept of customization and personalization of postpaid plans. This enabled them to
experience convenience of regular consumer-based plans for business applications.
The segment also created more value for SMBs with the mySUPERPLAN for business, featuring a complete range of features and services
tailor-fit to their requirements suited to their budget, covering call, text and data applications. With monthly consumable credits, it comes
with free gadgets and discounts in flexible contract periods, in postpaid and prepaid variants.
With its new offerings, SG also crossed boundaries and reached out to fledgling businesses in the rural areas and countryside with its Storeson-the-Go initiative, as well as myNEGOSYOlution suite of products and services right at their doorsteps.
Best Ever My Super Plan for Business
Super Broadband’s New “Static IP” Booster
A redefined product and service for small and medium
entrepreneurs (SMEs) that empower them to avail of
subscription plans based on specific communication
needs and monthly budgets of their organization.
22
HISTORY AT GLOBE
1994
1995
1996
1997
1998
1999
An IP address booster for micro-business subscribers,
manually configured for a device and is available at
₱699/month.
2000
2001
2002
2003
2004
2005
Joining Regional Mobile Alliance
Globe joined Bridge Mobile Alliance, a joint venture from 7 leading Asia Pacific mobile operators,
aimed at driving commercial and other benefits for the operators and delivering regional mobile
services to their subscribers.
IT-Enabled Services
Recognizing the evolution of Globe Telecom as the enabler of services beyond core telco offerings, 2013 saw the creation of the company’s
IT-Enabled Services Group (IG). From core mobile and broadband services to solutions that harness the company’s information technology
(IT) arsenal, Globe Business IG is mandated to cater to IT requirements of corporate entities, from SMBs to large enterprises.
Offerings include data storage solutions powered by the company’s data centers, cloud services and business applications. Apart from
industry accreditations it received last year, IG also made a mark early in its inception with a Frost and Sullivan award for its Infrastructureas-a-Service cloud offering.
IG also created a breakthrough in the local healthcare delivery system with the revolutionary Globe HealthCloud, addressing pain points
in carrying out services by doctors and health maintenance organizations, as well as encouraging participation of patients in terms of
information gathering in the entire ecosystem.
Globe HealthCloud
An automated solution, residing in a public cloud, that helps streamline processes in the entire health delivery ecosystem through
communications, access to health information, and interface with healthcare providers. The solution will benefit doctors, patients and health
maintenance organizations with its key built-in features such as healthcare providers directory referencing, online appointment booking,
electronic messaging via chat or email, and patient health record keeping.
International
Globe International Business Group (IBG) continues to enable and create opportunities for Filipinos to connect to family, friends, loved
ones and business associates through communications products and services available to communities across the world.
Serving over 11 million overseas Filipinos, IBG lets them connect through local-based prepaid SIMs, seafarer SIMS, DUO calls as well as
value-for-money offers. This is made possible with the various partnerships established between network operators in the countries where
it has retail presence: USA, United Kingdom, Italy, Singapore, Hong Kong and the Kingdom of Saudi Arabia.
Globe IBG also keeps in close and constant touch with the overseas communities it serves by staging quarterly events, providing venues
for Filipinos abroad to enjoy its affordable offerings and more importantly, giving them a sense of home, while being away from home.
Reaching Filipinos Globally
Globe Telecom expands its international
footprint to reach more Filipinos around
the world with the establishment of
an operating company in the United
Kingdom and Italy. UK Globetel Limited,
a member of the Globe group of
companies, handles the offering of various
telecommunications services such as
voice, SMS, MMS, load top-up and mobile
data to Filipinos residing in and visiting
the United Kingdom. Meanwhile, Globe
Mobile Italy S.r.L (GMI) offers the same
services in Italy.
Expanding Globe DUO
International
Globe DUO International expands
its reach making it available in
Korea, Canada and United Kingdom in
2013. This international market expansion
shows the strong performance of the
International Business Group to serve
established OFW regions around the
world with affordable voice services.
Seafarer SIM
Globe, in partnership with
UK-based iVitta, addresses
the communication needs of
the 400,000 strong Filipino maritime
community through the Seafarer SIM. This
allows Filipino seafarers to communicate
with their loved ones wherever they may
be in the world.
International LTE
Connectivity
Globe and SK Telecom makes
traveling and roaming in South
Korea better through the latest LTE
network services for customers of the
two networks. Instant connectivity is now
within reach via Aicent’s LTE Roaming
Exchange, providing better roaming
quality and consistent 4G LTE experience
for subscribers. This is a continuous
effort as Globe ended the year with 14
LTE roaming partners, the highest for
any Philippine mobile network and other
leading mobile networks in Asia.
23
G-Xchange, Inc.
Major cash transactions including bills payments, cash-in/cash-out as well as domestic and international remittances are now made
easier and faster through GCash. Since the launch of this mobile payments service in 2004, G-Xchange, Inc., a wholly-owned subsidiary of
Globe Telecom, has been engaged in a modernization program to improve services in the area of mobile payments. To date, GCash has
over 1 million subscribers who are now able to enjoy the easy, hassle-free, and secure platform for money transfer.
GCash
Globe Telecom, through GCash, is engaged in various partnerships in its commitment to expand the range of its
mobile commerce service. Among its recent partners are Puregold, Moneygram, Home Development Mutual Fund
(HDMF) or Pag-IBIG and Quezon City local government. With the GCash-Puregold partnership, GCash services
were made available in its 200 branches nationwide and were brought all the way to Mindanao to serve more
Filipinos. Moreover, through the GCash-Moneygram partnership, Filipinos overseas can now send money from
310,000 Moneygram retail agent locations in more than 197 countries around the globe. With the GCash-Pag-IBIG
partnership, 12 million Pag-IBIG members can choose to pay their monthly mandatory savings and housing loan
amortization in a hassle-free manner without the need to visit Pag-IBIG offices or accredited Pag-IBIG centers.
Meanwhile, through the GCash partnership with Quezon City local government under USAID’s Scaling Innovation
through Mobile Money (SIMM), Quezon City residents can use GCash to pay their Real Property Tax (RPT).
Growing its User Base
GCash partners with TORCHe Global Marketing, Inc.
(TGMI) to offer state-of-the-art technologies in the areas
of mobile commerce and disbursement of funds. GCash
services are now made available among TGMI affiliate companies
and organizations such as the Philippine Chamber of Commerce
and Industry (PCCI) and the Franchise Corporation of the
Philippines (FranCorp).
CoreonCash
GCash, in partnership with IT Corea, offers the first-ever
Filipino-Korean debit card called CoreonCash card. The
partnership also offers m-commerce mobile money
services to Korean tourists, residents, and businesses in over 3,000
local Korean merchants.
BPI Globe BanKO
BPI Globe BanKO, the country's first mobile-based, microfinance-focused bank and Globe Telecom's joint venture with BPI and Ayala
Corporation leveraged on partnerships with local and international institutions to make significant progress in promoting financial inclusion
Improved Retail Lending Portfolio
BPI Globe BanKO started to offer retail loans in 2013, growing its retail lending portfolio to ₱50 million in the
same year. BanKO achieved this by expanding its relationships with more consumer goods companies including
Nestlé, Unilever and Globe Telecom and their distributors to extend loans to small and medium-sized retailers. The
unique business model of BPI Globe BanKO allows it to work with distributors to extend financing for additional
inventory of goods for retailers at competitive rates.
Financial Service
Assistance
Fund Disbursement Service
BPI Globe BanKO works with the USAIDfunded Scaling Innovations in Mobile
Money (SIMM) project to help develop
mobile money ecosystems in Pulilan, Bulacan,
Quezon City and Batangas City. In Pulilan, BPI
Globe BanKO launches the very first mobile
money-enabled payroll disbursements to local
government employees, and enables Pulilan
residents to make payments to the Pulilan
Water District for water bills using their BanKO
account. In Quezon City, the local government
is using BanKO to disburse allowances and
stipends to public school teachers and
government scholars. BPI Globe BanKO also
enables cooperatives in hard-to-reach areas
in Batangas City as BanKO partner outlets to
make them community banks, catering to their
members and their barangays.
24
HISTORY AT GLOBE
1993
1994
1995
1996
Leveraging Partnership
To respond quickly to the
need for financial services in
Typhoon Yolanda (Haiyan) affected
areas, BPI Globe BanKO partnered with
international aid agencies Mercy Corps
and Goal International, among others,
to facilitate emergency cash transfers
to beneficiaries in the affected areas.
To date, BPI Globe BanKO successfully
disbursed to more than 1,500
beneficiaries in Iloilo and Cebu and is
forging more partnerships with other
aid agencies and NGOs to reach more
beneficiaries.
1997
1998
1999
2000
BPI Globe BanKO leverages
on its relationship with Globe
Telecom to tap into its subscriber
base by giving incentives to Globe and
TM subscribers for opening BanKO
accounts through partner outlets. Also,
BPI Globe BanKO partners with GCash
to offer salary loans to payroll accounts.
2001
2002
2003
2004
Pay Virtually
Globe, through its subsidiary G-Xchange, Inc., introduced GCash, the company’s mobile financial
service that allows subscribers to store and safely send money as well as pay bills virtually and
securely.
Kickstart Ventures, Inc.
Kickstart Ventures, Inc. became the country’s most active early-stage investor with US$1.4 Million
direct investment funding deployed across 17 portfolio companies ranging in maturity from seed to
Series A. These investee companies attracted US$1.9 Million in third-party follow-on funding from
both local and overseas investors which proves that Kickstart was able to develop and significantly
support the startups for further growth. Kickstart is a hub that brings together innovation and
commercialization, entrepreneurs and big enterprises, the change-makers and the cheque-writers.
Vast Opportunities
Kickstart funded start-ups create 177 jobs and serve
521,262 aggregate users, including 33,985 paying
customers.
Networking Guru
Kickstart Ventures, Inc. President Minette Navarrete (2nd from Left) and Plug and
Play Tech Center Co-Founder and Vice President Jojo Flores (2nd from Right) ink a
major partnership agreement to allow tech startups under Kickstart to connect with
other startups, mentors, and investors in the United States. Witnessing the contract
signing are Globe President and CEO Ernest L. Cu (left) and Plug and Play Founder and
CEO Saeed Amidi (right) who took time to listen to the Kickstart portfolio companies'
pitches. As part of the agreement, Kickstart will send selected investee teams from the
Philippines to join Plug and Play's three-month Startup Acceleration Program while
operating in the Kickstart pavilion at the Plug and Play Tech Center in Silicon Valley
Beyond the numbers, Kickstart has evolved into the
country's most active early-stage investor. Its signature
Kickstart Startup Mixers and #raidthefridge are the
community's most popular networking events. The
mentors like global marketing strategist and social
business architect Braden Kelley, are among the most
credible; and its incubation programs are the most
coveted, attracting serious applications from the
Philippines and abroad.
Globe Labs
Globe Labs is a product of Globe Telecom supporting talented application developers to sustain the continuously
growing application industry in the country. Globe Labs community base by the end of 2013 increased to 5,341,
compared to 4,180 in 2012, with 72 organised and supported events.
Application Programming Interface
Globe Labs Application Programming Interface (API) launches
its beta version last November 23, 2013 with more than 120
attendees composed of developers, business managers and
students. The program enables attendees to create innovative
apps and services utilizing telco capabilities using a standard
GSMA OneAPI compliant set of APIs. It also enables both SMS
and voice and helps developers monetize using the Charging
APIs where subscribers can purchase any digital goods such
as In-App Purchases, Paid Download and Subscriptions
by using their prepaid credits or charge to their bill. The
event includes a developer “hackathon”, where interested
participants hacked and created apps or services in more or
less 24 hours using the new Globe Labs API. More than 25
ideas were submitted and 10 (ten) apps were selected and
rewarded with a generous prize of ₱40,000 each.
DevFest
In partnership with Google Developers Group (GDG), Globe
Labs holds the DevFest and DevFestW, nationwide events in
learning various Google platforms. DevFest is communityled with technical and non-technical sessions on Google
developer technologies and platforms. The event is participated
by developers wanting to build applications using Google
technologies, members of the academe wanting to learn Google
Apps for online collaboration and global classrooms creation on
YouTube, and business owners and content publishers wanting to
boost website traffic and creating an effective online marketing
strategy. Meanwhile, DevFestW, held simultaneously in 19 cities
and 13 countries worldwide in celebration of International
Women’s Day, focuses on women to be able to learn, teach,
code and network with regard to application development. The
event is also open to males to create mindful awareness on the
presence of women among the community and that such group
is also capable of creativity with the use of technology.
Voxeo Labs Chief Technology Officer Jose de Castro gives young developers
hands-on training on the use of voice APIs during the Globe Labs
Developers Day mini hackathon. The session teaches over 100 developers
how to build and launch apps with voice capabilities that can be easily
integrated to the popular programming languages of Ruby, PHP, Javascript,
Python, and Groovy
25
Developers Day
Globe Labs partners with Voxeo Labs from Menlo Park, California
for the “Power up with Voice” program teaching participants
to build and launch apps with voice capabilities, which can be
easily integrated to popular programming languages. One of the
goals is to avoid stagnation and immobilization of voice calls
by developing apps that allow calls to actual phone numbers,
routing or rejecting, making conference calls, speech recognition,
speech to text transcription and recording of conversation as
audio files. Globe Labs also partners with Nokia for the Asha
Developers Day to introduce to various business opportunities
developers the Nokia Asha interface and the Nokia Asha SDK,
a suite of tools in developing Java apps for the Nokia Asha
platform.
Firefox OS App Days
Globe Labs, together with the Mozilla Philippines Community
(MozillaPH), leads the Manila leg of Firefox OS App Days, a
worldwide set of more than 20 hack days hosted in 24 cities from
January – February 2013. Aiming to reach out to more individuals
or teams of developers, Firefox OS App Days showcase Mozilla’s
open source operating system for the mobile web as well as teach
tech developers to create mobile applications for the Firefox OS.
Using Firefox OS, developers can simply create cross-browser
applications both for the web and portable devices.
Self-Service Channels
In line with our continuing efforts to improve our service,
various self-service infrastructure give customers a seamless
experience across any channel that they choose to reach Globe.
The Company values its relationship with its customers, and
in an effort to strengthen this bond, the Company guarantees
honest, sincere and dedicated customer service approaches.
Globe takes customer service beyond the traditional call center
setting, making use of an online community and social media as
platforms that allow potential customers and existing subscribers
to interact with each other.
Globe Community (community.globe.com.ph), the pioneering
online telco community in the Philippines, serves as a medium for
interaction, and means to quickly respond to queries and posts on
social media channels such as Twitter and Facebook.
@Talk2GLOBE
www.facebook.com/GlobePH
26
accounts.globe.com.ph
www.globe.com.ph/help
The Globe Community reached 10,000 members, coinciding
with Globe Telecom’s September 17th (9/17) celebration to
mark the launching of The Globe Tower, its new corporate
headquarters in Bonifacio Global City.
www.globe.com.ph/talk2Globe
Text HELP to 1234
Dial *143#
Call 211 or 02-7301000 for
Globe; Call 808 or 02-7301500
for TM; Call 02-7301010 for
Globe Sales Hotline
Stores
In 2013, as part of the commitment in 2012 to convert majority of the stores to full-service concept stores, Globe opened 50 concept stores and
will open more concept stores in the country. This footprint expansion is aimed to deliver the wonderful customer service experience at any point
of contact with Globe at the retail level. For example, Globe launched a concept store at D’Mall, Station 2 in Boracay. The store atmosphere became
more trendy and welcoming with the help of the designer Kenneth Cobonpue for accent furniture, J. Antonio Mendoza for the store’s interior design
and Charina Sarte for the Globe staff’s uniform. Globe ends the year with a total of 183 stores nationwide that offers hands-on demonstration of topof-the-line gadgets and accessories, after sales support and a promise of client resolution at first contact.
Pop-up Stores
Micro Store
Pop-up stores are temporary fixtures that offer
the same shopping experience when visiting a
concept store.
Micro Store is an in-line store where retail
specialists and customers can sit together and
interact.
Globe Kiosk
Globe Premium Dealer Store
Through Premium dealer program, third party
investors gain competitive and comprehensive
support from Globe. This includes site sourcing
and evaluation, training and development
plans, business and marketing plans,
operations support and assistance, well-known
brand equity, and waived initial and continuing
fees thus allowing better service to customers.
Store on the Go
Globe Kiosk is a permanent fixture with selfserve machines for the payment of bills and
products on the go.
Deployed in far-flung areas, Store on the Go is
a fully-functioning mobile store on wheels that
offers Globe products and services.
Responsible Procurement and Communication
As Globe delivers innovative and value-driven products in this fast-paced world of telecommunications, integrity and social
responsibility in procurement and communications management is not compromised. The adherence to acceptable vendor
management practices and advertising standards is implemented in the whole product life cycle.
Reliable Marketing and Advertising
Globe Telecom conforms to fair, truthful and accurate advertising. Advertisement should not contain any exaggerations or sweeping
generalizations that may result to misleading the public regarding the company’s products and services. Furthermore, the consumer’s
health and safety are ensured during the marketing and communication stage of the products. In any case where claims or suspicions
arise, such must be justified and subject to substantial indications.
All the products and services of Globe undergo approval from the National Telecommunications Commission (NTC) and the
Department of Trade and Industry (DTI) prior to its launching. All the advertisements are also in fulfillment of the requirements of the
Ad Standards Council (ASC).
Procurement Management
Globe Telecom’s Procurement Management follows green procurement practices for all its vendors in compliance with environmental
requirements. Moreover, the team maximizes value, minimizes risk and provides the right total cost, value and innovation to
the business in the means of commodity management, selection of best-in-class suppliers and pursuit of process excellence in
procurement and supply chain management. Relationships with suppliers are also highly valued, with each considered as business
partners.
In 2013, Globe continues to recognize and foster strong business relations with its partners through its established programs like the
Business Partner Awards (BPA) and Globe Vendor Council (GVC). Vendor Clinics were also initiated for selected vendors to help improve
their performance and competitiveness.
Current Supplier Profile:
Accredited
Products and Services secured in 2013*
Vendors Used
Local Suppliers
90%
51%
84%
Foreign Suppliers
10%
49%
16%
*Based on the domicile of the vendors in PO-based purchases
27
28
Board of Directors
Jaime Augusto Zobel de Ayala
Mr. Zobel, 54, Filipino, has served as Chairman of the Board since December
1996 and a Director since March 1989. He is the Chairman and CEO of Ayala
Corporation. He also holds the following positions: Chairman of Bank of
the Philippine Islands, and Integrated Micro-Electronics, Inc.; Co-Chairman
of Ayala Foundation, Inc.; Vice Chairman of Ayala Land, Inc. and AC Energy
Holdings, Inc.; Chairman of Harvard Business School Asia-Pacific Advisory
Board and Asia Business Council; Vice Chairman of the Makati Business Club,
and member of the Harvard Global Advisory Council, Mitsubishi Corporation
International Advisory Committee, JP Morgan International Council,
International Business Council of the World Economic Forum; Philippine
Representative for APEC Business Advisory Council. He graduated with
B.A. in Economics (with honours) degree from Harvard College in 1981 and
obtained an MBA from the Harvard Graduate School of Business in 1987.
Ernest L. Cu
Mr. Cu, 53, Filipino, has served as Director since April 2009. He is currently
the President and Chief Executive Officer of Globe Telecom, Inc. Mr. Cu
joined Globe in October 2008 as Deputy CEO, and was officially appointed
President and Chief Executive Officer on 2 April 2009. Since then, he has
been passionately driving a sweeping transformation across the company,
ultimately to deliver a superior customer experience, anchored on his primary
advocacy of Customer First. Under Mr. Cu’s visionary leadership, Globe has
progressively risen as a fierce challenger that has successfully wrestled
significant market share from competition. In 2010, he was adjudged Best CEO
by Finance Asia and was moreover conferred the International Association
of Business Communicators (IABC) CEO EXCEL award for communication
excellence in telecom and IT. In 2012, Mr. Cu earned international accolade
as CEO of the Year by Frost & Sullivan Asia Pacific. In 2013, Ernest was the
highest ranked Filipino in the Power 100 of London-based Global Telecoms
Business Magazine that recognizes the 100 most influential telecom leaders
worldwide. Prior to joining Globe, he was the President and Chief Executive
Officer of SPI Technologies, Inc., where he received the Ernst & Young ICT
Entrepreneur of the Year award in 2003. Mr. Cu earned his Bachelor of
Science in Industrial Management Engineering from De La Salle University
in Manila, and his Master of Business Administration from the J.L. Kellogg
Graduate School of Management, Northwestern University.
29
Gerardo C. Ablaza, Jr.
Mr. Ablaza, 60, Filipino, has served as Director since
June 1997. He 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 also serves as director for Azalea International
Ventures Partners, AsiaCom Philippines, Inc., LiveIt
Investment Ltd.; AC Energy Holdings, Inc., Ayala
Foundation, Inc. and AG Holdings Limited. Mr. Ablaza
is currently the President and CEO of Manila Water
Company where he is responsible for overseeing the
financial and operational growth within Manila Water’s
service areas in the Metro Manila east zone and in its
expansion areas. From 1998 to April 2009, Mr. Ablaza
was the President and CEO of Globe Telecom, Inc. During
this period, he took the company from being the fourthranked mobile services provider to the second-largest
full-service telecom operator with a subscriber base
of 25 million in 2008. Before joining the Ayala Group,
Mr. Ablaza was Vice-President and Country Business
Manager for Philippines and Guam of Citibank, N.A.
for its Global Consumer Banking Business. Prior to
this, he headed the Credit Payments Products Division
of Citibank, N.A. Singapore. In 2004, Mr. Ablaza was
recognized by CNBC as the Asia Business Leader of the
Year, making him the first Filipino CEO to win the award.
In the same year, he was awarded by Telecom Asia as the
Best Asian Telecom CEO. In 2013, he was recognized
for his consistent leadership and innovation across the
banking, investment, telecommunications and utility
service industries through the Citi Distinguished Alumni
Award for Leadership and Ingenuity. He is the first and
the only Filipino to be awarded with such an honor. Mr.
Ablaza graduated summa cum laude from the De La
Salle University in 1974 with a degree in Liberals Arts,
Major in Mathematics (Honors Program). As one of the
most accomplished graduates of his alma mater, he sits as
a member of the Board of Trustees in various De La Salle
schools in the country.
30
Mark Chong Chin Kok
Mr. Chong, 50, Singaporean, previously served as
a Director for one year, from 6 October 2009 to 8
October 2010. He was elected again as Director at
the Annual Stockholders' Meeting on 16 April 2013.
Mr. Chong was appointed CEO of International,
Group Consumer, of Singapore Telecommunications
Limited (SingTel) on 14 January 2013 to oversee the
growth of SingTel Group’s international affiliates,
strengthen its relationship with overseas partners,
and drive regional initiatives for scale and synergies.
Prior to this appointment, he was Chief Operating
Officer of Advanced Info Service Plc (AIS), the
Group’s associate in Thailand, in charge of sales and
marketing products, network operations, IT solutions,
customer and services management. Mr. Chong
graduated with a Bachelor of Electronics Engineering
and Master in Research in Electronic Systems from
ENSERG, Grenoble, France, and obtained his Master of
Business Administration from the National University
of Singapore. He is also a senior fellow with the
Singapore Computer Society.
Delfin L. Lazaro
Mr. Lazaro, 66, 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 successive high growth levels up to the Asian
crisis in 1997.
Tay Soo Meng
Mr. Tay, 64, Singaporean, was elected as Director on 8
February 2011. Mr. Tay has served as the Group Chief
Technology Officer of Singapore Telecommunications
Limited (SingTel) since September 2012. He is
responsible for the networks strategy, procurement,
planning and operations across both Singapore and
Australia (Optus). He also provides engineering
support for SingTel’s joint venture partners: India
(Bharti), Philippines (Globe), Thailand (AIS), and
Indonesia (Telkomsel). Prior to this, Mr. Tay was the
Managing Director for Optus Networks from 2008
and returned to Singapore as Managing Director,
Networks from 2010. Mr. Tay has supported many
SingTel’s interest across Europe, Mauritius, Norway,
Sri Lanka, and Vietnam assisting in the divestment
of these operations to focus SingTel in becoming
Asia’s leading operator. He is a member of the Board
of Directors of Next Generation Mobile Networks
(NGMN) Ltd. since July 2013. The strategy for
NGMN, an alliance of mobile network operators is
to drive industry leadership in early standardization
process on key mobile technologies. He was the
GSM Association’s Asia Pacific Chairman in 1997,
and was responsible for looking after the interests
of GSM operators in the Asia Pacific region. Mr. Tay
holds an MBA degree from the University of Leicester
(England).
Fernando Zobel de Ayala
Mr. Zobel, Filipino, 53, has served as Director since
October 1995. He has been the President and
Chief Operating Officer of Ayala Corporation since
April 2006. He is also Chairman of Ayala Land,
Inc., Manila Water Company, Inc., AC International
Finance Ltd., AC Energy Holdings, Inc., and Hero
Foundation, Inc.; Co-Chairman of Ayala Foundation,
Inc.; Director of Bank of The Philippine Islands,
Integrated Micro-Electronics, Inc., LiveIt Investments,
Ltd., Ayala International Holdings Limited, Honda
Cars Philippines, Inc., Isuzu Philippines Corporation,
Pilipinas Shell Petroleum Corp., Manila Peninsula and
Habitat for Humanity International; Member of The
Asia Society, INSEAD East Asia Council, Chairman of
Habitat for Humanity's Asia-Pacific Capital Campaign
Steering Committee; and Member of the Board of
Trustees of Caritas Manila, Pilipinas Shell Foundation,
Kapit Bisig para sa Ilog Pasig Advisory Board and
National Museum.
Romeo L. Bernardo
Mr. Bernardo, 59, Filipino, has served as Director
since September 2001. He is Managing Director of
Lazaro Bernardo Tiu and Associates (LBT), a financial
advisory firm based in Manila. He is also a GlobalSource
economist in the Philippines. He is 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,
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.). 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 from Williams College in Williamstown,
Massachusetts.
31
Xavier P. Loinaz
Mr. Loinaz, 70, Filipino, Independent Director since
April 2009. He was formerly the President of the
Bank of the Philippine Islands (BPI) from 1982 to
2004. He was also President of Bankers Association of
the Philippines from 1989 to 1991. He currently holds
the following positions: Independent Director of BPI,
BPI/MS Insurance Corporation, BPI Family Savings
Bank, Inc. and Ayala Corporation; Trustee of E. Zobel
Foundation and PETA; and Chairman of Alay Kapwa
Kilusan Pangkalusugan.
32
Guillermo D. Luchangco
Mr. Luchangco, 74, Filipino, has served as Independent
Director since September 2001. He is also Chairman
and Chief Executive Officer of various companies
of the ICCP Group, including Investment & Capital
Corporation of the Philippines, Science Park of the
Philippines, Inc., Pueblo de Oro Development Corp.,
Cebu Light Industrial Park, Inc., Regatta Properties,
Inc., and RFM-Science Park of the Philippines, Inc.;
ICCP Venture Partners, Inc. and Manila Exposition
Complex, Inc.; Chairman and President of Beacon
Property Ventures, Inc.; Independent Director
of Phinma Corporation, Trans-Asia Oil & Energy
Development Corporation, and Roxas & Co., Inc.; and
a regular Director of Ionics, Inc. and Ionics EMS, Inc.
Manuel A. Pacis
Mr. Pacis, 69, Filipino, has served as Independent
Director since April 2011. He was formerly a Vice
President for Finance of the Procter & Gamble
Company (P&G) in Cincinnati, Ohio. He held positions
of increasing responsibility in the Philippines, the US,
Mexico, China, and Japan including Chief Financial
Officer of P&G Asia, and a Global Business Unit (GBU).
He also served as Vice President for Internal Controls
Worldwide and Financial Systems Worldwide at
P&G. His wide-ranging experiences throughout his
business career have included leadership roles in
corporate governance, strategic planning, internal
audit, management systems / IT, M&A, joint ventures,
and finance & accounting.
STRENGTHENING GOVERNANCE
Globe Telecom commits to strengthening the structure and processes of corporate governance in meeting the challenges brought by global
and national state of affairs. Integrity, accountability, and transparency are the three principles that continuously guide the company in
achieving its mission, vision and goals. The fruit of this effort has been evident in Globe Telecom’s strong foundation.
Among the legal documents that serve as the company’s operational framework include the Company’s Articles of Incorporation and ByLaws and Manual of Corporate Governance. The Company’s Articles of Incorporation and By-Laws maintain the basic structure of corporate
governance while the Manual of Corporate Governance supplements it. The Manual of Corporate Governance in particular was updated in
2010 to conform with the Securities and Exchange Commission Memorandum Circular No. 6, Series of 2009 (Revised Code of Corporate
Governance). The Manual undergoes regular review in compliance with government regulations.
Moreover, documents that balance control and governance at Globe Telecom include Code of Conduct; Conflict of Interest; and Whistle
Blower Policy. Formal policies on Unethical, Corrupt and Other Prohibited Practices were put in effect to guard against unbecoming activities
and serve as a guide to work performance, dealings with employees, customers and suppliers, and managing assets, records and information
including the proper reporting, handling of complaints and fraudulent reports and whistleblowers. These policies cover employees,
management and members of the Board. These documents are the key to the balance of control and governance at Globe Telecom.
Key Roles
The key roles of the Board of Directors are:
• Act as the supreme authority in matters of governance wherein
it establishes vision, mission and strategic direction of the
company
• Monitor overall corporate performance as well as ensure
transparency, accountability and fairness to protect long-term
interests of its stakeholders
• Oversee the responsibility for risk management wherein
adequacy of internal control mechanisms, reliability of financial
reporting and compliance with applicable laws are ensured
• Approve corporate operation and capital budgets, major
acquisition and disposal of assets, major investments, and changes
in authority and approval limits.
Board Composition
Eleven (11) board members are elected at the Annual
Stockholders Meeting (ASM). Elected board members shall hold
office for the ensuing year until the next ASM. The President/
CEO is elected as executive director while the other members are
elected as non-executive directors. The non- executives are not
involved in the day-to-day management of business.
The Board of Directors also includes three independent directors.
These independent directors, as defined by the Company,
are independent from management and major/substantial
shareholders and are free from any business or relationship that
could materially interfere in their exercise of independent judgment
in carrying out their responsibilities as a director.
The people that comprise the Board of Directors are highly
qualified and have the ability to thoroughly examine issues and
matters that affect the company. Prior to election, the Nomination
Committee, presided by an independent director, reviews the
qualification of each member. To execute their role well, training
on corporate governance is given prior to assuming office.
33
Key Officers
Consultants
Board Remuneration
The Board member’s remuneration is set at an optimum level to attract and retain high caliber directors to continue delivering their
services effectively. In accordance with the Company’s By-Laws, the Board members shall receive, pursuant to a resolution of the
stockholders, fees and other compensation for their services as directors and members of committees of the Board of Directors.
As approved by the shareholders during the ASM held on April 1, 2003, the Board members shall receive a per diem of ₱100,000
per board or committee meeting. The remuneration is a form of recognition for the responsibilities of the Board for delivering high
standard services for continuous growth of the Company.
Board Performance
The shareholders’ meeting, held annually, serves as an opportunity for shareholders to raise questions and clarify issues relevant to
the Company. The Board members, President/CEO, together with the external auditors, are in attendance. Prior to meeting, the Board
receives board documents. These documents contain reports on the Company’s strategic, operational, and financial performance,
and other regulatory matters. The corporate secretary (1) acts as adviser to directors regarding their responsibilities and obligations
and (2) oversees the flow of information prior to meetings. At the meeting, the Board may also clarify with management regarding the
matters/items submitted for consideration.
A self-assessment is also conducted annually to ensure effectiveness of processes and to identify areas of improvement. An executive
session also takes place every last meeting of the year to evaluate and discuss matters concerning the board. This includes an
evaluation of the Company’s performance and its management team.
34
In 2013, a total of seven (7) meetings were held by the Board
of Directors and one (1) Annual Stockholders' Meeting. The
attendance of each board member is enumerated below:
Mr. Hui Weng Cheong served as Director until 16 April 2013.
Mr. Mark Chong Chin Kok was elected Director on 16 April 2013.
1
2
Board Committees
The Board may create
committees as it
deems necessary, in
accordance with the
Company By-Laws and
Manual of Corporate
Governance, to support
it in its performance of
its functions and to aid
in corporate governance.
Currently, there are five
(5) board committees.
All the committees
have their own charters
that are aligned with
the objectives of each
committee.
35
Committee Meeting
1
2
Mr. Hui Weng Cheong served as ExCom member until 16 April 2013.
Mr. Mark Chong Chin Kok was elected to the ExCom on 16 April 2013.
MANAGEMENT COMMITMENT
Globe Telecom management continually commits to high standards of disclosure, transparency and accountability. The management
established the sustainability policy and reviews its adequacy at the highest level periodically and allocated resources to ensure
effective implementation. The practice of sustainability reporting was implemented as a means to provide fair, accurate and meaningful
assessment of its overall performance on triple bottom line (viz. Economic, Environment and Social) responsibility to its stakeholders
including investors.
As for the investor community, the Company practices regular disclosure of financial results. Quarterly financial results are immediately
disclosed after the approval by the Board to PSE (Philippine Stock Exchange) and Securities and Exchange Commission (SEC). Quarterly
and year-end financial statements and detailed management’s discussion and analysis are filed within forty five (45) and one hundred and
five (105) calendar days respectively from the end of financial period. The Company’s financial reporting disclosures are in compliance
with the PSE and SEC requisites. These reports are made available to the analysts after disclosure and posting on the Company’s website.
Any market-sensitive information such as dividend declaration is also disclosed to the SEC and PSE and then released through various
modes of communication.
36
HISTORY AT GLOBE
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Best in Corporate Governance
Globe Telecom bested 247 other listed companies in the country to win the first ever
Bell Award for Corporate Governance given by the Philippine Stock Exchange (PSE).
2013
FUNCTIONS OF AUDIT
Audit Committee
The Audit Committee’s roles and responsibilities are defined
clearly in the Audit Committee Charter approved by the Board.
The Committee supports the corporate governance of the
Company by fulfilling its oversight responsibility relating to:
a) the integrity of the financial statements and the financial
reporting process and principles; b) internal controls; c) the
qualifications, independence, remuneration and performance of
the independent auditors; d) staffing, focus, scope, performance
and effectiveness of the internal audit function; e) risk
management; and f) compliance with legal, regulatory and
corporate governance requirements. Management however, has
primary responsibility for financial statements and reporting
process, internal controls, legal and regulatory compliance 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, 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
and 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 Finance
Officer, and released to the public and/or submitted to the 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.
• The Committee provides oversight of 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 Board. (Also see
Annual Report of the Audit Committee to the Board of Directors
on page 73 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 most recent Charter review was done in
August 2013 with no significant changes therein.
The Committee conducts an annual assessment of its
performance to benchmark its practices against the expectations
set out in the approved Charter, in compliance with the Manual
of Corporate Governance and with SEC Memo Circular No. 4
(Series of 2012). The results of the self-assessment and any
ensuing action plans formulated to improve the Committee’s
performance are reported to the Board.
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. Globe Internal Audit (IA) assists and supports
Management in continuously instilling and nurturing Operational
Risk and Control Self-Assessment (ORCA) environment at
Globe Telecom through facilitation of self-assessment exercises
among various business groups. The Audit Committee regards
its relationship with Internal Audit as having a vital role in
supporting the Committee in the effective discharge of its
oversight role and responsibilities.
Globe IA 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.
Internal Audit maintains, reviews and assesses the adequacy
of its Charter annually to ensure conformance with the
International Standards for the Professional Practice of Internal
Auditing (the Standards) and appropriateness for enabling good
corporate governance. Any amendments to the Charter are
submitted to the Audit Committee for approval.
Globe IA 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 adequately
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 IA governs its internal audit activities in conformance
with the Institute of Internal Auditor’s Code of Ethics, and the
Company’s Code of Conduct. To ensure consistent conformance
37
with the Standards, the group subjected its activities to its 2nd
external Quality Assurance Review (QAR) which resulted in a
“Generally Conforms” rating, the highest rating that can be
achieved in the QAR process.
Geared towards excellence, Globe Internal Audit provides for
continuing professional and personal development for all auditors
through its Learning Ladder Framework to equip them in the
conduct of reviews, with focus on acquiring expertise on Globe
Telecom’s business processes, network and IT systems, internal
controls, new accounting and auditing standards and regulatory
updates. In addition, the group has been actively participating
in Ayala Group and SingTel Internal Audit Network that aims to
benchmark and share leading internal audit practices including
information on process development, methodology and knowledge
to develop a network of world class, multi-skilled, internal audit
professionals.
The Audit Committee has reviewed the nature of all nonaudit services rendered by SGV & Co. and EY India and the
corresponding fees and concluded that these do not impair
their independence. SGV & Co. has confirmed to the Audit
Committee that the non-audit services rendered by them and
EY India are services that are allowed to be provided to an
audit client under existing regulations and the Code of Ethics
of Professional Accountants in the Philippines and does not
conflict with their role as external auditors of the Company.
The aggregate fees billed by SGV & Co. and other EY firms are
shown below (with comparative figures for 2012):
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. The
most recent tender bid process was conducted in Q4/2012.
Also, the Company conducts on an annual basis an independent
auditor’s performance appraisal. From the results, the Audit
Committee evaluates and proposes to the Board for endorsement
and approval of the shareholders, 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.), a member firm
of Ernst and Young (EY), 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 2011.
There were no disagreements with the Company’s independent
auditors on any matter of accounting principles or practices,
financial statement disclosures, or auditing scope or procedures.
Fees approved in connection with the audit and audit-related
services rendered by SGV & Co. and other EY firms, pursuant to
the regulatory and statutory requirements for the years ended
31 December 2013 and 2012 both amounted to ₱16.04 million,
inclusive of 10% out-of-pocket expenses (OPE). In addition to
performing the audit of Globe Group’s financial statements, SGV
& Co. and other EY firms were also selected in accordance with
established procurement policies, to provide other services in
2013 and 2012.
The Audit Committee has an existing policy to review and to
pre-approve the audit and non-audit 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.
38
*Excludes 2013 audit fees performed by EY HK for GTI HK
amounting to ₱398K (₱508K in 2012) and by Wellden and
Turnbull LLP for GT EU ₱303K and GT UK ₱457K in 2013.
Audit and Audit-Related 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 2013 and
2012. This also includes assurance and related services that are
reasonably related to the performance of the audit or review
of the Globe Group’s financial statements pursuant to the
regulatory requirements.
Non-Audit Fees. The 2013 non-audit fees include charges
on review of data migration, user acceptance and integration
testing related to the on-going transformation projects
incurred by the Company during its modernization period. This
also includes special projects, trainings and seminars rendered
by the SGV & Co and its affiliates.
The fees presented above include out-of-pocket expenses
incidental to the independent auditors services.
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 Telecom’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 to those with access to such material non-public
information. Also, all key officers are required to submit a report on their trades to the compliance officer, for submission to the SEC in
accordance with the Securities Regulation Code.
Ownership Structure (as of December 31, 2013)
*
*
*
* Number of shares
Globe Telecom regularly discloses the top 100 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.
As of December 31, 2013, public float was at 22.22%. See Public Ownership Report on page 76.
Enterprise Risk Management
Globe Telecom believes that effective enterprise risk management practices are crucial in the success of the company. Hence, the
company ensures that risk management remains a core capability and an integral part of all business units and activities of the
company.
Globe Telecom's objectives in managing risk include:
• Aligning and embedding risk and opportunity management into the culture and strategic decision making of the organization;
• Anticipating and responding to changing social, environmental and regulatory conditions and emerging changes in technology;
• Managing risk in accordance with best practices and demonstrating due diligence in decision making;
• Promoting sound management practices, enhance the quality of decision making, and protect governance and accountability
principles, and;
• Balancing the cost of managing risk with the anticipated benefits
Risk Management Approach
An enterprise wide assessment of risks is performed by senior management and key leaders as part of Globe Telecom’s annual planning
cycle. This assessment focuses on identifying the (1) key risks that threatens Globe Telecom’s achievement of its business objectives at
corporate and business unit level and (2) specific plans in the mitigation of such risks.
The identified risks are managed and prioritized based on the degree of impact to the business activities and its likelihood of
occurrence. Actions and strategies to address the risks are continuously being developed, updated, improved, and reviewed for
effectiveness. The monitoring of the actions taken to minimize risk undergoes a two dimensional view which include the monitoring
made by the Business unit and Functional Group Level Leaders and the monitoring made by the senior management . The business unit
and group level leaders monitor the operational, legal, and project risks while senior management monitors enterprise level risks such as
strategic risks, major programme risks, and regulatory risks.
In Q4 2013, Globe rolled-out the Operational Risk Management (ORM) program, a cyclical, coordinated end-to-end approach to identify,
assess, treat, monitor and communicate operational risks for effective & informed business decisions. Management believes that ORM is an
essential foundation for a strong Enterprise Risk Management (ERM) process as it reinforces the lines of defense against key operational risks.
39
One of the risks the Company faces is the threat of natural
calamities. In order to develop disaster-proof telecom services,
the company is committed to a network transformation plan
wherein advanced equipment is continuously being deployed
on several sites. Aside from this, Globe prepares an amplified
Business Continuity Management wherein continuity of services
and operations is ensured despite natural calamities and
disasters.
Roles and Responsibilities
The Board of Directors, as supported by the Executive Committee
(ExCom) and Audit Committee, are responsible for the Company’s
Risk Management and the approval of risk management policies
and framework. ExCom, in particular, handles the non-financial risk
such as strategic operation, human capital and regulatory, while
the Audit Committee handles financial risks.
The Chief Finance Officer and concurrent Chief Risk Officer (CRO)
supports the President in acting as risk executive. Their role is
to ensure that (1) risk management processes and activities are
embedded in the normal policy business cycles and operational
decisions, (2) the responsibilities for managing specific risk are
clear, (3) the level of risk accepted by the company is appropriate,
and (4) an effective control environment exists for the company
as a whole.
In addition, the Enterprise Risk Management Services Division
(ERMSD) supports the CRO in undertaking his role. It assists all
levels of the organization in achieving key objectives through a
systematic approach of evaluating and improving effectiveness
of risk management.
Chief Technical Advisor Robert Tan (Left) and Chief Human Resource
Officer Ato Jiao (Right) distributes relief goods to the victims of
Typhoon Yolanda
The CRO reports semi-annually to the Board through the Audit
Committee regarding Globe Telecom’s critical risks and key
mitigation strategies.
The Company believes that risks could be managed well by the
employees closest to the process.
Thus, Globe Telecom ensures that risk owners at the senior
executive level are identified and made accountable for specific
risks.
Business Continuity Management
In the effort to mitigate the risk of business disruption and
improve the capabilities to prepare for, respond to and recover
immediately from any incident that could compromise the
safety of its people and disrupt service, Globe sustains its
enterprise-wide Business Continuity Management (BCM)
Program. BCM, an integral component of the Company’s ERM
program, is internationally certified to BS (British Standards)
25999 in 2011 and 2012, and has recently been aligned to and
certified on the new international business continuity standard,
ISO 22301. The program remains to have top management
support, organizational structure, framework and funding in its
maintenance and implementation. While there is no assurance
that severe disruptive events will not occur, BCM ensures
readiness when it comes to responding and recovering from any
incident of interruptions.
Globe has expanded the scope of its BCM implementation to
cover more mission-critical sites across the archipelago. The
scope expansion translates to the enhanced BCM capabilities
resulting from controls establishment and consistent program
implementation, documented procedures that ensure discipline
and best practices, and improved preparedness to respond to
and recover from incidents.
40
Globe Telecom set up Libreng Tawag and Charging services within the
Bangon Pinoy camp and strategic Typhoon Yolanda affected areas
Globe Telecom’s BCM is comprehensive. It encompasses main
elements such as employee safety, service continuity and
immediate return to normalcy. Ensuring employee safety
includes tasks such as Search and Rescue, Sheltering, Mass Care
and Security not only of the employees but of their families. For
service continuity, deployment of critical resources in strategic
locations has become a standard strategy which is executed
prior to the onslaught of incoming typhoon to ensure their
availability and faster recovery and continuation of network
services after the typhoon has passed. Community Disaster
Responses are also on hand for relief operations and assistance
in terms of communication to keep the affected communities
connected.
To ensure uniformity of response to the various kinds of threats
such as natural calamities and crashing of hardware and
software system, Globe established and maintains an Incident
Management Plan (IMP) and formed Business Continuity Task
Forces (BCTF), such as Emergency Response Team (ERT), in all
critical sites. The IMP undergoes regular monitoring, testing,
and improvement and the BCTF members undergo training to
improve skills and capabilities in responding to emergencies.
Globe recognizes the importance of a well maintained and
implemented IMP, wherein quick recovery from anticipated and
not anticipated disruptive events is guaranteed.
For specific threats to sites, such as typhoons, floods and
earthquakes, Globe developed and regularly tests its Site
Disaster Management Plan (SDMP) to ensure readiness of the
network sites in times of disasters. With such plan prepared
and fully functioning, it enabled faster response during the
onslaught of calamities in 2013, such typhoons Santi and Vinta
that hit North Luzon, and the 7.2 magnitude earthquake that
hit Bohol.
Rock icon Bamboo (Left), together with VP for Tattoo Home
Broadband Jurist Gamban (Middle), hand out gifts, from Bamboo's
Christmas toy-drive concert Believe: Christmas at Home with
Bamboo, to the Children of Brgy. Tambulilid in Ormoc, Leyte
But no typhoon has challenged our readiness and tested but
proved our organizational resilience the way Super Typhoon
Yolanda did.
Globe prepared for and responded to Yolanda on the basis
of documented plans and the commitment, malasakit and
resilience of the organization.
Yolanda, which has become the strongest typhoon to ever
land Philippine territory with majority in the Visayas region,
affected a number of Globe employees and their families,
impaired and damaged mobile and fixed networks of the badly
hit areas, and destroyed the communities that Globe serves.
Fortunately, Globe prepared for Yolanda days before it made
landfall, and was able to execute good restoration strategies
through its prepared BCM practices and dedicated teams, which
restored communication lines in the areas and for citizens most
in need. Just like in previous calamities such as the Habagat
of 2012 and 2013, Globe Telecom's search and rescue teams
accounted for and provided immediate relief and assistance to
affected employees and their families, as well as some of Globe
Telecom's partners.
The documented BCM arrangements with critical vendors
were also invoked and successfully implemented which
provided immediate response to required resources and faster
restoration of the network services. Internal and external
communications were also in place providing 24/7 monitoring
and regular updates to Globe Telecom’s top management,
employees, customers, the media, government agencies and all
other stakeholders. The Corporate Social Responsibility team
was also quick to respond by providing Libreng Tawag, Libreng
Charging, and various relief efforts which will be detailed in the
Bangon Pinoy section.
Typhoon Yolanda has provided many lessons and learning
experience for the BCM team. As a never-ending commitment,
Globe will continue improving and enhancing the BCM Program
to be able to respond to any strong calamities that might
transpire in the future.
41
Bangon Pinoy
Globe is one with you in rebuilding lives and getting the country back on its feet.
Bangon Pinoy is an integrated program that allows communities devastated by the recent calamity to benefit from relief operations, free
call and text services, network restoration, and a series of community-rebuilding activities. It was first introduced by Globe in 2009 after
typhoons Ondoy and Pepeng wrecked havoc in the country.
Bangon Pinoy is Globe Telecom’s way of lending a hand to those who badly need assistance during these trying times through massive
relief efforts – from mobilizing volunteers for re-packing of relief goods, to deploying Libreng Tawag, Libreng Charging and Libreng Internet
stations, to assembling more assistance in cash and kind for distribution to the hardest hit communities.
Strategically located in Guiuan, Eastern Samar, the Bangon Pinoy camp served as the center for relief operations brought in by Globe and its partners
RESTORATION UPDATES
To know the latest advisories, service
restoration update and complete list of
mobile and home broadband network
availability, Globe subscribers can text
YOLANDA to 2910 for FREE.
RELIEF OPERATIONS
Globe provides various relief efforts for
our kababayan in Yolanda-affected areas.
HOW YOU CAN HELP
EMERGENCY SERVICES
These services includes Emergency Text
Services by texting GTSOS10 to 3733; free
updates by visiting LIBRE.PH; free FB to
connect with your family and friends; and
free charging , call and internet station in
selected locations.
Globe and TM subscribers can use their rewards points to donate to Typhoon
Yolanda relief operations and donate to Red Cross through texting RED <amount>
to 2899. Tattoo donates 100% of its profit from select Tattoo products and new plan
applications from November to December. Globe opened its stores as drop off areas
for used working phones for the communication needs of the victims. The Company
also set up caravans to accept relief goods.
42
43
The Globe Tower
As part of its dynamic business transformation journey, Globe envisions to create a wonderful world for its people, businesses and the
country by championing a culture of collaboration, innovation and efficiency. The company needs an environment that nurtures the right
attitudes and behaviors so employees can explore new ways of doing things, move to worlds unknown, and venture into a world that brings
delightful discoveries. Housing over 4,100 regular and contractual employees previously based in 5 different office locations, the Globe
Tower (TGT) now stands as an iconic landmark at Bonifacio Global City in Taguig City.
44
Collaboration
Employees’ workstations from the 9th to the 28th floors use an open office concept to break bureaucracy
within the organization and facilitate easier communication among colleagues. Globe also uses Google
Apps, a suite of online productivity and collaboration tools, as its business solution, providing Globe
employees greater freedom to connect and collaborate anytime, anywhere, using any device, while
further enhancing employee engagement. Tools that include products like Gmail, Google Drive, Google+
and Google Calendar provide in-house communication, allowing employees to hold meetings online,
share videos or data with ease, and chat and meet online. Meanwhile, the 109 meeting rooms, featuring
acoustically-treated branded walls, LED TV screens, speaker system, power-able table, room wizard, and
Polycom console for videoconferencing, give the company more flexibility, reducing the need for travel
and thus empowering its employees to deliver faster and better results for the benefit of its consumers.
Huddle rooms and themed breakout areas are also available for all employees to interact and collaborate.
Moreover, employees can welcome guests and accomplish engagements easier at the Forum at Basement
1. It is a multi-functional floor accommodating 500 people with 21 meeting rooms of varying seating
capacities. It also has alcoves for quick huddles, recruitment areas, a coffee bar and the Globe Art Gallery.
Themed breakout area
High-speed passenger
elevator system
Efficiency
Welcome to Converge, Globe Telecom’s employee center
at the 19th floor. It is a one-stop-shop that provides various
services such as HR helpdesk, after-sales service of IT tools, a
non-denominational prayer room, a St. Luke’s-run clinic and
a Unilab pharmacy, a Mom’s room for nursing employees,
a breakout area and pantry, a BPI banking center, as well as
a Globe boutique—all for the exclusive use of employees.
Having all of the services needed in one location makes it
more convenient for every Ka-Globe.
Paperless
The Globe Tower embraces a clutter-free and paperless
environment and thus has empowered its employees to
work through online platforms. Processes for cash advance,
reimbursement, liquidation, document and parcel tracking,
clinic appointments, among others, have their own automated
system available to all Ka-Globe.
Outdoor gardens
Double-glazed low E façade
Green and Smoke Free
Innovation
To showcase the latest in telecommunications technology,
Globe commissioned Huawei to provide an in-building
solution addressing the need for dedicated indoor coverage
and location based applications for its new corporate
headquarters. A leading global and communications
technology solutions provider, Huawei provided end-to-end
integration service solutions including in-building system and
power supply system at the new structure.
Cashless
Welcome to Taste at the 8th floor, a dining hall with a 600seat capacity powered by GCash, serving a wide selection
of cuisine from popular concessionaires for its employees.
Globe utilizes GCash as its virtual wallet for all its payment
transactions, cash advances and reimbursements. Linked
to the employee’s mobile number, every GCash transaction
comes with an SMS notification for ease of tracking.
The Globe Tower, a US Green Building Council Leadership in
Energy and Environmental Design (LEED) certified building, is
a non-smoking facility. Following energy-efficiency standards,
the building makes use of LED lights in the workstations,
significantly reducing lighting use and making the building
20-percent more energy efficient. The building is also designed
to reduce water consumption through a gray-water collecting
system that brings the building’s water efficiency to around 30
percent in terms of probable water consumption. Meanwhile,
the tower practices waste segregation and recycling, and
banning plastics, styrofoam, tarpaulins and other nonbiodegradable materials anywhere in the vicinity. Other features
such as shared/centralized services, double-glazed low E façade,
low-flow plumbing fixtures, harvesting of rainwater for flushing
and watering the 3 outdoor gardens, motion-sensor controls
in the restrooms, auto-dim and shut-off perimeter lighting
and environment-friendly furniture reinforce the company’s
commitment to LEED standards. The building also has a
high-speed passenger elevator system that groups together
passengers to help save time and energy.
45
46
Happy Employees
Globe creates a wonderful world by giving the best employee experience possible to every Ka-Globe. The Company continues to partner with
employees in building a workplace that is dynamic, entrepreneurial, collaborative and innovative. That is the Globe Way - care that threads
from selection, recruitment and hiring up until the development of individuals. A happy workplace recognizes the commitment of every
employee to deliver a wonderful customer experience. All these results to boundless company achievements driven by its employees, rooted
at the core of Globe Telecom’s Our Circle of Happiness philosophy: happy customers building more trust in our products and services, leading
to our increased growth and financial performance and making our shareholders feel wonderful about our success.
To provide the most satisfying work experience, continuous learning and development programs are available for every employee of any
job level or functional expertise. Globe provides vast opportunities for career enhancement through competency and leadership training
modules internally from the Globe University, and through external partners. These are documented through Individual Development Plans
and each employee is empowered to drive their careers at Globe.
It is essential in the Globe culture to provide numerous engagement touchpoints with every employee. The three main engagement pillars of
Fun At Work, Family Values and Wellness provide a holistic approach to improve personal growth and well-being of all Ka-Globe. Some of the
sports, volunteering and holiday programs are not only limited to the employees but also friends and relatives, which builds a sense of family
and a culture of happiness at the workplace.
The above-average performance and continuous increase in employee participation in the annual Globe Employee Satisfaction (ESAT) survey
is proof that the different People Development and Engagement initiatives influence the employee’s disposition and outlook towards the
company they work for.
• Valentine's Event
• Lenten Reflections
• First Friday Mass
• Simbang Gabi at TGT
• Globe Christmas
• Ayala
Group
Family Fun Run
• Globe Mother's Day
• Kids on the Bowl
• Trick or Treat
• Relief Operations
• Volunteerism
Salu-Salo
• Globe
Quarter Century
Club Outreach
• Globe Bowling Cup Open
• G-Slam
• Globe Invitational
Badminton
• Ayala JZA Tournament
• Fitness Classes
47
Commitment to Customer Service
We believe that creating a wonderful world can only start from every Ka-Globe. Now to take our customers on the journey to wonderful,
every ka-Globe must embrace and live out 10 service principles on which our goal of customer experience transformation is anchored:
CARE
I will treat every customer as an individual whom I
would like to know and care for.
SURPRISE
I go out of my way to deliver delightful surprises.
CREATE
I seek opportunities to innovate and create a
wonderful Globe experience.
ANTICIPATE
I understand and anticipate my customers’ needs and
engage them in the best possible way.
DELIGHT
I will turn unfortunate incidents into a delightful
Globe moment.
INFORM
I communicate clearly and keep my customers
informed at all times.
TAKE PART
I will play my part to make the Globe network
better every day.
ENGAGE
I represent all of Globe in every customer interaction.
RESOLVE
I am empowered to solve my customers' issues at
first contact.
ACT
I will do what I promise.
To help bring these 10 commitments to vivid life, Globe developed an enterprise-wide culture-building training initiative called Up Your
Services (UYS). UYS teaches employees how to raise the bar of customer experience and deliver on a transformation that delights and
truly brings wonderful to customers. Adopted from a book by Ron Kaufman, Uplifting Service, UYS aims to uplift the service culture within
the company, which is a key enabler to providing the best experience for every customer across all touch points. It challenges participants
to become Service Champions through Actionable Service Education in order to perpetuate a sustainable service culture within the
organization.
UYS covers three courses: Achieving Superior Service (Course 100), Building Service Partnerships (Course 200) and Increasing Customer
Loyalty (Course 300). Each Course is broken down further into four (4) Programs.
Employees who have participated in UYS have built among them a common service language making every employee understand one
another and follow the same service principles. As these principles are observed and practiced repeatedly, a culture from within will be
established, with every Ka-Globe stepping up and creating a wonderful world of superior customer experience.
In the first year of UYS implementation, 93% of all Globe employees have attended the fundamental programs – Programs 101 and 102 – making 9
out of 10 employees speak a common service language. UYS also became part of the onboarding program for newly hired employees. A total of
70 Course Leaders from different groups were certified by Globe through UYS and have taken the role as Service Educators.
Beyond classroom education, UYS has also succeeded in ensuring that participants are able to connect their learning to practical applications
by coming up with personal action plans.
Employee Empowerment
A wonderful world is a place where people flourish and continue to succeed. This is one of the commitments of Globe to its employees.
By building a surplus of leaders through iLeadGlobe; providing rewarding experiences for personal and professional growth through
Careers@Globe; one takes charge in building his career path with his supervisor and generate self-growth and delivery through
Performance Management.
The Globe Way Series
The Globe Way Series is a way for new hires in Globe to
imbibe the company’s culture, values and ideals through
a series of live case studies, experiential learning activities
and fun exercises. The series helps new Ka-Globe grasp the
information and knowledge of Globe Telecom’s history, background,
the business and industry and employee processes.
48
HISTORY AT GLOBE
1998
1999
2000
2001
2002
2003
Culture Change Workshop for Leaders
Targeted amongst the managers and leaders of
Globe, the workshop encourages participation and
commitment to push for an effective and positive
transformation for the benefit of the employees and the company.
2004
2005
2006
2007
2008
2009
Employer of Choice
Globe was hailed as Employer of the Year by the Personnel Management Association of the
Philippines (PMAP) fulfilling its people management responsibilities, as demonstrated by its
leadership, dynamism, professionalism, strategic thinking and implementation, continuous
improvement in HR processes and programs, linkage of HR to business objectives, and employee
focus.
Training Hours
The staff training hours per employee decreased due to the postponement of the Learning Expo in 2013. However, leadership courses –
iLeadGlobe and university partnerships – were fully rolled out increasing the number of training hours of Sr. Management.
Globe Telecom follows the same development plan on employee trainings through its 70/20/10 Development Plan. The 70% of the training
comprises the regular employee tasks of an employee’s office function, committee participation, customer immersion and job rotation.
The 20% is the learning acquired from colleagues or supervisors through coaching, mentoring and other knowledge transfer approaches.
The remaining 10% is the formal training given to employees out of the programs and courses offered by Globe. Morever, training modules
are subdivided into 5 focus areas - culture, core and professional development, safety, management and leadership and functional training
programs.
iLeadGlobe
Globe focuses on future leaders, imparting the Globe
Way and the 7 Globe Leadership Competencies. These
include customer orientation, people orientation,
personal values, entrepreneurial mindset, execution excellence,
innovation and strategic thinking. The series of trainings include
the Executive Development Program (for the next generation of
senior leaders), Fast Tracker Program (for the mid-career talents)
and Young Leaders Program (for emerging talents).
Partner University
Globe Telecom partners with the Asian Institute of
Management (AIM) and the Ateneo de Manila – Center
for Continuing Education in developing leadership and
management skills. The series of training programs is intended
for managers, mid-career professionals and juniors who aspire to
become leaders trained the Globe Way.
Graduate 2 Globe (G2G)
is a program in partnership with top colleges and
universities for high potential individuals who can
become future leaders of Globe. Activities under G2G
include Get-to-know-Globe (Company Orientation), Singtel
Undergraduates Scholarship, Globe Summer Internship and Post
Graduate Internship Program and Cadetship and Management
Development Program.
Junior Wizard: Some 23 high-school tech-savvy teens looking for
worthwhile summer activity are getting their chance under Globe
Telecom's Junior Wizard program, which is expected to provide them
valuable experiences and skills
Junior Mobile Wizard
is offered to employees’ children currently in secondary
school to develop an understanding of the Philippine
telecommunications arena. The participants are
deployed at several Globe concept stores within Metro Manila and
allowed to assist customers for demos of the latest products and
services and sell promo offers.
Customer First Circle
fosters and creates a customer-centric culture within
Globe by simplifying processes using a Lean Six Sigma
Methodology. The objectives are to drive down cost,
improve customer experience and increase revenue for the
company. Cross-functional groups are formed and the best ideas
are recognized and projectized into operations.
49
Employee Benefits, Protection and Recognitions
The Company strives to create and deliver work experiences that benefit both the employee and the company.
Globe believes that performance management is a partnership between the employee and the immediate superior. The tools in place such as
Individual Development Plan (IDP), Performance Plan Evaluation (PPE) and Multi-rater Feedback Form ensure that career and performance
discussions are an on-going process and not a one-time event. It is much focused on delivering targets and objectives in the spirit of
meritocracy, which becomes the basis of individual recognition of contributions and quality dialogues of development needs. The dynamics
manifest an individual employee's self-leadership and a leader's team leadership, having a firm grasp of current challenges, dependencies
and competencies of the direct reports to make critical decisions on rewards and benefits.
A more wonderful and unique Ka-Globe experience took place when Globe launched a new program called mySUPER choice. This allows
regular employees with the option of choosing their own tools for work (i.e. laptops, iPads). With mySUPER choice, the employees’ option is
expanded up to 4 devices which were pre-selected based on preferred specifications.
• Time-Off/Leave benefits
• Vacation Leave
• Short term sick leave
• Paternity leave (10 days)
• Maternity leave
(60-78 days depending upon type of delivery)
• Special leave for women (60 days)
• Leave due to illness in the family-confinement
• Paid time-off (for non-CBU only)
• Solo Parent Leave (7 days)
• Court Subpoena Leave
Company Loans:
• Emergency and
non-emergency loan
For CBU members:
• Leave due to illness in the family
(non-confinement)
• Bereavement leave
• Calamity leave
• Additional day-off
Other Benefits:
• Longevity Awards
• Handyphone Postpaid Plan
Availment
• Car Plan/Company Car Program
(for manager and executive level)
• Other cash allowances
Recognitions
• Globe Excellence Awards
• Spot Recognition Program
Healthcare Benefits:
• Health Insurance – Group
• Hospitalization (In-Patient) Plan
• Outpatient Healthcare
• Outpatient consultation/diagnostics
• Outpatient medicine reimbursement
• Dental Services
• Optical Services/Subsidy
• Other Outpatient Benefits – free medical
consultations at company designated clinics
Employee Satisfaction
Security and Protection Benefits:
• Group term Life Insurance
• Hazard Insurance (based on role)
• Retirement
Financial Assistance:
• Educational (CBU members)
• Rice Subsidy (CBU members)
• Calamity
• Bereavement
• Death
In measuring the effectiveness of employee programs and continuity of the Circle of Happiness, Globe continuously conducts its Employee
Satisfaction Survey (ESAT). ESAT results are consolidated yearly to present a comparison from previous years and be able to strongly
maintain or improve any positive outcomes for the succeeding years.
50
Health & Safety
Consistent policies on health and safety maintain a secure and happy environment for the employees. Practices are imposed by following
the standards on Occupational Health and Safety Management System (OHSAS 18001), which Globe acquired for its several offices.
Furthermore, internal guidelines are also followed, spearheaded by the Company’s committed health and safety committee. The committee
also implements protocols that involve accident incidence reporting, and the facilitation of awareness training programs that pertain to
health and safety inside and outside the workplace.
The Company conducts training and awareness programs for the relevant employees.
• Accident/Incident Reporting
• Advanced Defensive Driving
• Basic Occupational Safety and Health
• Confined Space Safety
• Construction Safety Management
• Electrical Safety
• Environmental, Health & Safety
• Industrial First Aid & Basic Life Support
• Legally Green Project
• OHSAS 18001:2007
• Pollution Control Officer
• Radcom Testing & Training
• Radiation Safety Officer (RSO)
• Radiation Safety Officer Certificate
• Smoke Free Globe Campaign
• Smoking Cessation Session
• Training on Greenhouse Gas
• Emergency Management
• Outside Plant Telecom Safety
• Industrial Climbing, Hauling and Rope Access
• Construction Occupational Safety and Health
The members of the Safety Committee increased as more
employees were recruited upon hiring to the Globe Tower. 10.69%
of the total Globe workforce is part of the dedicated health &
safety committee providing assistance nationwide where Globe
Telecom operates.
Office accidents recorded at the Globe Tower increased due
to unfamiliarity to new environment. To mitigate this, Globe
implemented safety measures to prevent recurrence of incidents.
The Company conducts training and awareness programs for the
relevant employees.
The employees also recognize the efforts of the Company with its provision of hiring qualified and licensed security guards from a
respectable body. The security staff receives additional training from Globe to enforce the company policies as a whole and with regard to
safety and security.
51
Employee Relations
Globe Telecom complies with RA 7160 – Special Protection of
Children Against Child Abuse, Exploitation and Discrimination
Act and observes the principles of the Human Rights Act and
Child Labor Law. Benchmarking such regulations generate a
happy workplace without presenting any fear of discrimination or
violation towards any employee. The company does not condone
the violation of the rights of indigenous people, nor does the
company promote any operational activities that would pose
hazardous risks or damages to children or young employees.
In conformance with the Department of Labor and Employment’s
(DOLE) Collective Bargaining Agreement (CBA), the Globe
Telecom Employees Union-Federation of Free Workers (GTEUFFW) remains active to pledge the right of every Ka-Globe to
form a collective bargaining unit. All employees are allowed to
participate in CBA and through GTEU-FFW, everyone is informed
and made aware of the mandate.
Percentage of Employees Covered
by Collective Bargaining Agreement
· 93.02% are Non-Collective Bargaining Unit Employees (NCBU)
and thus covered by regular performance planning and appraisal,
and career development reviews
· 6.98% are members of the Collective Bargaining Unit and are
exempt from performance and career development reviews
Employee Remuneration
Globe Telecom provides a 15% above-minimum wage to its
employees as covered by the Collective Bargaining Agreement
(CBA). Male employees however have a slightly higher rate on
basic salary ratio compared to female employees. Nonetheless,
there is no discrimination with regard to allocation of job profile to
both genders.
With regard to enhancement of cooperation, productivity,
customer service and other policy and procedural issues affecting
the employees, a Labor Management Council is present to provide
assistance.
As part of the CBA is to address the health needs of every
employee, medical, dental and optical care services provided
by the company at a certain expense with corresponding salary
deduction depending on the total cost. Emergency loans for
health services can also be availed by employees with immediate
dependents. Another component of CBA is the Family Planning
Program and Services. Recreational activities encouraging
employees to further encourage camaraderie and friendship is the
key focus.
The wonderful world of Globe provides a happy and safe
workplace, implementing certain rules and policies to promote
good conduct and behavior. Hence, employees who fail to follow
the Globe Code of Conduct (COC) are given corresponding
sanctions. This is to protect the company’s interests in consistently
creating a wonderful world for everyone. The sanctions apply
especially to major offenses related to corruption, extortion,
bribery or any form that disrespects the corporate values of
the company. From the beginning, employees will be obliged
to declare in writing any involvement or endeavors that may
potentially raise conflict with the company. Failure to do so will
subject the employee to a possible outright dismissal.
52
HISTORY AT GLOBE
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Socially Responsible
Globe bagged two outstanding achievement citations namely, Social Accountability, and
Strategic Visioning and Partnering for Business and Job Survival, from the Kapatiran sa
Industriya (KAPATID) Awards of the Employers Confederation of the Philippines (ECOP).
Employment Diversity and Retention
Globe Telecom is proud of its employees who continue to have the same passion the company espouses. Globe Telecom respects diversity
and recruits employees regardless of gender, age, religion and ethnicity.
In 2013, retention rate is higher at 92% compared to 88% from the previous year. With Globe Telecom giving the best in taking care of its
people, this just shows the Company’s commitment not only to its millions of subscribers but also for every valued employee.
Total Workforce
Employee - New Hires
Employee - Turnover
53
54
Protecting the Environment
Globe Telecom creates a wonderful world by having a positive impact on its customers through its innovative products and services, a
commitment to good corporate citizenship by helping communities and the nation at large, and operating responsibly thereby promoting
the greening of the planet. The environmental initiatives of the company continue to be observed and through its consistent efforts, a
sustainable telecommunications industry is envisioned in the future.
Environmental Sustainability Policy
We are committed to promote environmental sustainability by reducing the impact of our business operations to environment and we
shall achieve this together with the help of our employees, business partners and clients. We have robust systems in place to manage our
environment impact and integrate them into our corporate social responsibility management.
We commit to:
• Consciously move towards the continuous reduction of our
ecological footprints from our operations. Where possible, we
will move beyond regularly compliance and apply best practices
and global voluntary standards on environmental and social
responsibility.
• Manage emissions from our energy use, particularly to our
networks and ensure that we carry out regular assessments
on how energy is consumed within our network to monitor our
climate impact and identify opportunities to reduce it.
• Comply with all environmental laws and other laws relevant to
our business.
• Encourage and train our employees and business partners to
help us reduce our environment impact by communicating our
policies and programs.
• Partner with organizations which share the same environmental
values and find ways of cooperation to protect the environment.
• Conduct a review of our environmental management system to
ensure that the commitment of this policy are delivered and that
we strive for continuous improvement.
• Report our environmental performance to our stakeholders.
Protect environment in
our area of operation
Manage industrial waste
Develop products and
services with minimum
environmental impact
Manage our operation's
carbon footprint & identify areas
of reduction through alternative
energy sources
55
KEY PRACTICES FOR 2013
56
ENERGY MANAGEMENT
Cell Site Operation
Corporate Office Operation
2. Adopt solar power/wind power for most of the 99 primepowered sites.
The wonderful world of Globe is pervasive in its day-to-day
operations with respect to its environmental footprint. One of the
many initiatives on energy management is to minimize impact and
also generate savings to become a more sustainable business.
1. Turning off/dim lightings in unmanned Mobile Switch Centers
(MSC), Data Center, Network Operation Centers (NOC), IN, Switch
Room areas based in corporate buildings.
2. Switching off air conditioning units in offices 15 minutes earlier
than office closing time.
3. Replace all desktops workstations with laptops which consume
less power and do not require UPS system.
1. Network equipment refreshed with upscale battery autonomy
and delaying genset mode feature, as well as operating on natural
cooling methods, resulting in more efficient use of commercial
power and at least 30% worth of fuel savings.
Fleet operation
1. Efficient driving practices with the safe defensive driving
training for employees and third party vendor.
2. Adoption of cleaner fuel alternatives such as E10 for all service
vehicles.
4. Adopt the LED lighting technology for office lighting as this uses
less power and has a longer usage file.
3. Review and rationalize vehicle distribution based on territorial
usage e.g. 4x4 assigned in Metro Manila can be re-deployed in the
provinces.
5. Release new energy conservation (enercon) guidelines for
employees such as switching off of unnecessary lights, unplugging
of office equipment, recycling, etc.
Business Travel
Recommend the use of Google Hangouts, Google Chat and
teleconference to lower frequency of business air travels.
Results of Energy Management and Corporate Offices
57
Direct and Indirect Energy Consumption
WATER CONSUMPTION
The water consumption of Globe is continuously recorded and measured to implement any feasible water saving initiatives.
2013 Water Consumption for Sites and Stores
58
HISTORY AT GLOBE
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
First Sustainability Report
Globe Telecom launched its first corporate social responsibility and sustainability report in 2009,
highlighting various initiatives in 2008 that impact the triple bottomline – economic, social and
environment.
HAZARDOUS AND SOLID WASTE MANAGEMENT
Waste management efforts remain in full implementation on all Globe sites. The solid waste generated by the Company and its employees
as well as hazardous wastes are tracked whole year round. This consistently minimizes environmental impact and ensures not only a
wonderful but also a clean and green world.
Solid Waste
Summary of Solid Waste Collected from Globe Telecom Plaza , Valero Telepark and GTIT
Summary of Solid Waste Collected from Globe Telecom Plaza
Summary of Solid Waste Collected from Valero Telepark
Summary of Solid Waste Collected from GTIT
Globe started reporting on GTIT solid waste on 2013
59
Hazardous Waste
60
Benefits of Proper Hazardous
Waste Handling
Proceeds from Battery Recycling
PROTECTING BIODIVERSITY
The Philippines’ rich biodiversity is also a priority of Globe Telecom. In all operations of the company, minimizing its impact on natural
resources is fully considered.
Reforestation Area for 2013
61
MANAGING CARBON FOOTPRINT
As part of being a green and sustainable network, Globe Telecom regularly monitors its greenhouse gas (GHG) emissions to check on
performance and potential cost reduction and continuously develops more routines to operate efficiently in the future.
The Company still uses the International GHG Protocol Corporate Accounting and Reporting Standard to calculate emissions from fuel use,
CO2 emissions from mobile combustion, purchased electricity and from business travel. The calculation tools were developed by the World
Resources Institute (WRI) and are copyrighted.
Summary of Greenhouse Gas Emissions
In 2013, Globe deployed a total of ten (10) shuttles compared to four (4) in 2012.
62
HISTORY AT GLOBE
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Commitment to Sustainability
In an effort to positively contribute to the environment's general well-being, Globe adapted a Safety,
Health and Environment policy which calls for the need to conserve the country's natural resources
and prevent pollution through waste reduction.
Clean Fleet Program
Globe Telecom’s Clean Fleet Program continues to contribute to cleaner air through elimination of present air pollutants. Through the use
of a Clean Fleet Tool and together with the United Nations Environmental Protection (UNEP) Program, the Company is able to examine its
impact with regard to emissions of Particulate Matter (PM), Sulfur Dioxide (SO2), Nitrogen Dioxide (NO2), Volatile Organic Compounds (VOCs),
Carbon Monoxide (CO) and Lead (Pb). Such tool also helps in suggesting measures to minimize air pollution caused by the Company.
Expenditures on Environmental Program
The Company’s total expenditures for environmental programs summed up to ₱3,068,500.90 in the year 2013.
STRATEGIC PARTNERSHIPS & MEMBERSHIPS
Wonderful partnerships and memberships for the benefit of the environment are continued with both the public and private sector in the
year 2013.
List of Stakeholder Groups for Globe Environment Programs:
Forest Building Program
1 Bacolod - Benejiwan Integrated Social Forestry Farmers Association (BISSFA)
2 Batangas - De la Salle Canlubang
3 Bohol - Philippine Tarsier Foundation, Inc.
4 Bulacan - Green Earth Foundation Heritage, Inc
5 CDO - National Union to Restore the Environment, Inc. (NATURE)
6 Cebu - Guibuangan United Coastal Environmental Saver's Association (GUCESA)
7 Davao - Save Davao Gulf Foundation, Inc. and DENR-CENRO Region XI
8 Guimaras - San Roque Coastal Environment Program Association (SARCEPA), Inc. , La Paz Fisherfolks Aquatic Resources
and Mangrove Management Association (LAFARMA) Inc. and PENRO, Guimaras
9 Tacloban - KJ Ecological Development and Supplies Enterprises (KJ-EDSE) and CENRO-Palo, Leyte
10 Taytay, Palwan - Pancol Multi-Purpose Cooperative and CENRO Taytay-El Nido Palawan
11 DENR - Calabarzon
Biodiversity Program
12 Cordillera Conservation Trust
13 Philippine Eagle Foundation
14 Pusod, Inc.
Balik-Langis Program
15 ABS-CBN Foundation, Inc.
Battery Recycling Program
16 Oriental and Motolite Marketing Corporation
17 Evergreen Environmental Resources, Inc.
E-Waste Recycling Program
18 TES-AMM Philippines, Inc.
Other Industry Associations
19 Philippine Business for the Environment
20 Pollution Control Association of the Philippines, Inc.
21 Green Philippine Island of Sustainability
22 Business ContinuityManagers Association of the Philippines
23 Corporate Network for Disaster Response
63
64
Doing a Globe of Good
Globe Bridging Communities continues to fulfill its social responsibility by advocating meaningful initiatives to create a wonderful world for
every Filipino. The five (5) advocacy pillars of Globe Bridging Communities, namely, iLead, iProsper, iConserve, iAccess, and iGive, continue to
deliver sustainable solutions that address major economic, social, and environmental issues that impact our most vulnerable kababayan.
Globe Bridging Communities leverages the company’s expertise in technology-based solutions and works in partnership with numerous
stakeholders to improve the lives of people and communities all over the Philippines. Moreover, Globe Bridging Communities implements a
Communities of Practice (CoP) approach, which entails bringing all its advocacy pillars to a focus area and ensuring these are synergized to
promote economic, environmental, and social sustainability.
Driven by the mission to transform underserved communities nationwide, Globe Bridging Communities has set the wheels in motion for
bringing a wonderful world to its beneficiaries.
iConserve
iLead
iLead was born out of the need to
develop leaders with the ability and
integrity to help build a nation. This
pillar seeks to mold duty-bearers
to render excellent public service
and influence active citizenship for
upholding civil and human rights.
Moreover, in times of disaster, iLead
mobilizes the company’s various
assets to deliver essential relief
and communication services
to affected communities.
iConserve aims to preserve our natural
resources for future generations. Through
the conservation of protected areas, the
integration of sustainability initiatives
within the company’s operations,
and the promotion of an eco-friendly
lifestyle among Globe employees and
stakeholders, the pillar seeks to create a
future where progress is achieved while
keeping the environment at a healthy
balance.
iProsper
iProsper is hinged on the belief that
everyone should have a share in the
country’s economic growth. The pillar
works with micro-entrepreneurs, social
enterprises, and small producers by
providing them with resources, training,
and market access to help them grow
their businesses. In providing sustainable
livelihood and financial services to
those in underserved communities, this
pillar hopes to offer viable economic
opportunities – and with these, new
possibilities for prosperity.
Globe of
Good
iGive
iGive is the company’s way of
cultivating a society that cares for
humanity. By engaging employees and
the general public to share their time,
talent, and treasure with those from
underserved communities, the pillar
hopes to develop citizens who actively
contribute to nation-building.
iAccess
iAccess seeks to ensure each Filipino has
access to quality education. The pillar
strives to introduce relevant content, new
methodologies, and technology resources
that create a wonderful learning experience
for thousands of students nationwide.
65
66
Changing the Course of the Taal Volcano Protected Landscape
The majestic Taal Volcano Protected Landscape
Easily one of the most popular attractions near Metro Manila,
the Taal Volcano draws thousands of local and foreign tourists
every year. Meanwhile, the surrounding Taal Lake is home to a
diverse ecosystem and is the source of livelihood for roughly
2,000 fisher folk in the area. Given these, the site was classified
as a protected area under RA 7586 in order to preserve its
biodiversity and protect it from destructive human activity.
After empowering citizens, the next step is empowering the
youth. Globe Bridging Communities launched its Project Citizen
program in Batangas through its education advocacy pillar,
iAccess. Through this program, teachers train high school
students to find solutions that can best address issues affecting
their communities, such as poor sanitation, flooding, and
garbage segregation.
To boost conservation efforts for the Taal Volcano Protected
Landscape (TVPL), Globe Bridging Communities partnered with
non-profit organization Pusod, Inc. Together, they launched
the E-governance project under Globe Bridging Communities’
environmental conservation advocacy pillar, iConserve. The
E-governance project sought to raise awareness on the TVPL
and to maintain the water quality by empowering stakeholders
to take an active part in its protection.
While the E-governance project and Project Citizen catered to
the private sector, Globe Bridging Communities also provided
support to the LGUs through its Sagot Ka ni Kap program
through iLead, its advocacy pillar geared towards promoting
excellence in public service. Barangay officials were provided
with an emergency hotline and mobile phones, protective
and law enforcement gear, as well as insurance. Through
these, officials are not only able to quickly receive alerts on
emergencies, but they are also able to respond immediately and
are better equipped to do so.
Globe Bridging Communities powered Pusod’s communications
through internet and text facilities, as well as a radio show,
enabling the organization to disseminate and receive
information from stakeholders more easily and quickly.
Pusod Executive Director Ann Javier says, “2013 was the
milestone for the approval of the Unified Rules and Regulations
for Fisheries. Our participation in all of the meetings and
consultations was courtesy of Globe. Every step of the way,
when there’s an update on the Unified Rules and Regulations
for Fisheries, we update it through the radio program, SMS,
and social media. The E-governance project has helped us
democratize the management of the lake. The private sector
and individuals are able to participate more because of these
communication channels.”
However, it’s not enough to protect the TVPL. Globe Bridging
Communities also sought to enhance the quality of life of
residents by providing them access to economic opportunities.
To accomplish this, Globe Bridging Communities supported
Pusod’s sustainable tourism initiative through its sustainable
livelihood advocacy pillar, iProsper.
Pusod’s flagship program for sustainable tourism is its
Knowledge Tours – exciting excursions that enable tourists
to hike, bike, paddle, or trot on horseback through the
TVPL for half a day while learning about the area. Funding
provided by Globe Bridging Communities enabled Pusod to
provide residents with top-notch tour guide training for the
Knowledge Tours.
67
Ann says, “Our 20 guides are the only guides in the area
who are highly trained for touring guests. Because of their
effectiveness, some get tips of up to ₱1,000!” She adds, “We
see that the guides are happy with what they’re doing and that
they’ve really improved a lot. Before, they felt marginalized
because they live on the volcano – no man’s land. But now they
can assert themselves more and are more confident.”
Not just limited to empowering the tour guides, Globe Bridging
Communities also assisted Pusod in assessing the trail for their
Knowledge Tours. Through Globe Bridging Communities’ iGive
pillar, which advocates active citizenship through volunteerism,
Globe volunteers ventured to Pusod’s Taal Lake Conservation
Center to test the tours and provide feedback for their
improvement.
The holistic approach was key in bringing about the
transformation of the TVPL and its residents. By bringing
in and integrating its five advocacy pillars, Globe Bridging
Communities takes a giant leap in promoting economic,
environmental, and social sustainability in the TVPL.
Atty. Ipat Luna, Board of Trustees Member of Pusod, Inc., explains the
history of Taal to Globe volunteers during a knowledge tour
Methodology for Engaging in CSR Initiatives
68
HISTORY AT GLOBE
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Globe of Good
Bridging Communities (BridgeCom), the integrated corporate-community relations program was
launched in mid-2004 to provide capability-building assistance projects in the fields of education,
information technology and livelihood.
Partners in Community Development
69
Management's Discussion
and Analysis
OPERATIONAL PERFORMANCE
Results of Operations (₱ Mn)
31 Dec 2013
31 Dec 2012
YoY Change (%)
Net Operating Revenues
95,141
86,446
10%
Service Revenues
90,500
82,742
9%
72,764
67,189
8%
Mobile1
Broadband
10,440
8,721
20%
3
4,691
4,167
13%
Fixed Line Voice
2,605
2,665
-2%
4,641
3,704
25%
2
Fixed Line Data
4
Non-Service Revenues
Includes mobile voice and data revenues.
Includes revenues from wired, fixed wireless, and fully mobile broadband services.
Includes international and domestic data services, corporate internet access, and data center solutions.
4
Includes revenues from landline and DUO services.
1
2
3
Financial Performance
Globe Telecom closed the year 2013 with record-level
consolidated service revenues of ₱90.5 billion, up 9% against
₱82.7 billion in 2012, driven by the continued growth in the
demand for data connectivity across the mobile, broadband and
fixed line data businesses, which improved by 8%, 20% and 13%,
respectively. The robust top-line results prove Globe Telecom’s
sustained execution excellence of products and promotions
that remain relevant to its subscribers, backed by its improved
network performance, as Globe moves forward in its network
and IT transformation programs.
Mobile revenues rose by 8% year-on-year to ₱72.8 billion from
₱67.2 billion in 2012, owing to the sustained leadership of the
Globe Postpaid brand. Globe continued to invest in acquiring
and retaining high-quality postpaid customers, resulting in the
growth of the subscriber base to over two million, up 17% from
2012. The continued expansion of the postpaid subscriber base
has resulted in the sustained growth of postpaid revenues to
₱27.1 billion, an 18% improvement year-on-year. On the prepaid
segments, revenues grew 3% year-on-year despite the continued
pressures on yields due to the shift from pay-per-use to valuebased bucket and unlimited offers and the pervasiveness of
multi-SIM incidence in the market. Globe Prepaid closed the
year with 17.8 million subscribers, 8% higher than last year,
while TM ended the period with 18.6 million subscribers, 25%
growth from 2012. Globe’s total mobile subscriber base reached
38.5 million as of end-December, up 16% from the 33.1 million.
Globe Telecom’s broadband businesses flourished in 2013,
registering sharp growths on both revenues (+20%) and
customer base (+ 22%) year-on-year. Globe ended the year with
over 2 million broadband subscribers. The competitiveness
and affordability of the various offers launched throughout the
year and the expanded pervasiveness of the fixed and wireless
broadband network contributed to the robust performance in
2013.
70
trade and other provisions, and staff-and network-related
expenses. Notwithstanding this, Globe recorded consolidated
EBITDA of ₱36.5 billion in 2013, up 4% against ₱35.0 billion
in 2012, as the revenue gains fully covered the increase in
operating expenses. EBITDA margin for 2013 stood at 40%
against 42% as of end 2012.
Driven by the growth in EBITDA, Globe Telecom’s core net
income, which excludes the impact of non-recurring accelerated
depreciation charges related to network and IT transformation
programs, grew to ₱11.6 billion from ₱10.3 billion in 2012.
In 2013, Globe incurred non-cash accelerated depreciation
charges of ₱9.1 billion, up from ₱5.1 billion a year ago, which
negatively affected Globe’s net income. The Company ended
the year with net income of ₱5.0 billion.
Consolidated Return on Average Equity (ROE) registered at 11%
as of end-December 2013, compared to 14% in the same period
in 2012 using net income and based on average equity balances
for the year ended. Using annualized core net income excluding
the effects of accelerated depreciation on net income, return on
average equity for the year just ended was at 27% compared to
22% of 2012.
Accordingly, consolidated basic earnings per common share
were ₱37.25 and ₱51.45, while consolidated diluted earnings
per common share were ₱37.22 and ₱51.38 for the years ended
31 December 2013 and 2012, respectively.
Globe Telecom’s balance sheet and cash flows remain strong
with ample liquidity and gearing comfortably within bank
covenants albeit higher year-on-year with the additional debt as
a result of Globe Telecom’s transformation and modernization
program.
The Company’s fixed line data segment sustained its revenue
growth trajectory with revenues reaching ₱4.7 billion, 13%
higher than 2012 on account of the rising demand for data and
internet connectivity solutions.
Globe Group’s consolidated assets as of 31 December 2013
amounted to ₱159,079 million compared to ₱148,012 million
as of end 2012. Consolidated cash, cash equivalents and short
term investments (including investments in assets available for
sale and held to maturity investments) was at ₱7,421 million
at the end of the period compared to ₱6,760 million as of end
2012.
Operating expenses grew by 13% from ₱47.7 billion to ₱54.0
billion, largely on increases in subsidy and re-contracting costs,
Net cash flows provided by operating activities as of endDecember 2013 year stood at ₱33,233 million, up 37% year
on year. This year’s cash inflows from operating activities
were mainly used to fund capital expenditures on the network
transformation projects and other initiatives of Globe during
the period.
Meanwhile, net cash used in investing activities amounting to
₱27,368 million was up 11% driven by investments in property
and equipment as a result of continuing upgrade and migration
to a modernized network, and ongoing efforts to expand the
coverage and capacities of the broadband network and improve
the quality of its mobile service. Consolidated cash capital
expenditures as of end December 2013 amounted to ₱28,999
million, up 44% from last year’s ₱20,124 million.
The Company’s gearing ratios increased year-on-year but
are still within the covenant limits given the additional debt
during the period to fund the transformation initiatives and the
impact of accelerated depreciation on net income and retained
earnings. Globe ended the year with gross debt to equity ratio
on a consolidated basis at 1.66:1 and is well within the 2:1 debt
to equity limit dictated by Globe Telecom’s debt covenants.
Meanwhile net debt to equity ratio was at 1.49:1 as of end 2013
and 1.20:1 as of end December 2012.
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 value-added 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 and consumable G-Flex Plans, Load Allowance Plans,
Load Tipid Plans and Platinum Plans (for the high-end market).
In 2010, the Company introduced the MY SUPERPLAN and MY
FULLY LOADED PLAN which allow subscribers to personalize
their plans, choose and combine various unlimited call, text
and web browsing service options. In addition, Globe has made
available various add-on roaming and mobile browsing plans
to cater to the needs of its subscribers. In 2011, Globe further
improved postpaid offerings with the All New My Super Plan
where subscribers are given the flexibility to create their own
plans by either subscribing to an All-Unlimited Plan or an AllConsumable Plan. Subscribers also get to choose their freebies
and add-ons which they can change on a monthly basis. A
fully-customizable unlimited data plan (Unli Surf Combo Plan)
was also made available to its subscribers in mid-2011 which
provides uninterrupted unlimited mobile surfing without
the need for a Wi-fi connection. The data plan comes with
consumable amounts which the subscriber may use for local
and international calls and text messages. Taking the product
customization to the next level, the company launched in
the second quarter of 2013 the BEST-EVER MY SUPERPLAN
with fully-customizable plan components, bigger plan value
and more contract periods to choose from (6, 12, 18, and 30
months). Each plan has a corresponding “peso value” that
can be converted to avail of a combination of call, text, or surf
services, free or discounted gadgets, and a monthly consumable
amount for more calls, texts and surf.
Globe Prepaid and TM are the prepaid brands of Globe. Globe
Prepaid is focused on the mainstream market while TM caters
to the value-conscious segment of the market. Each brand is
positioned at different market segments to address the needs
of the subscribers by offering affordable innovative products
and services. In February 2012, the Company introduced a
self-service menu that provides Globe prepaid subscribers
easy access to avail of the latest promos and services of Globe
by simply dialing *143#. In early 2013, this menu was further
developed with Globe Prepaid’s GO SAKTO which allows the
subscribers to build their own promos (call, text and surf
promos) that are best suited for their needs and lifestyle.
Globe also provides its subscribers with mobile payment and
remittance services under the GCash brand. GCash transforms
a mobile phone into a virtual wallet, enabling a secure, fast, and
convenient way to transfer money at a cost of a text message.
This service enables our subscribers to perform international and
domestic remittance transactions, pay fees, utility bills, income
taxes, avail of micro-finance transactions, donate to charitable
institutions, and buy Globe prepaid reloads. A wide network of
local and international partnerships has been established over
the years including government agencies, utility companies,
cooperatives, insurance companies, remittance companies and
commercial establishments, in order to make GCash an accepted
mode of payment for various products and services.
Globe Prepaid and TM subscribers can reload airtime value or
credits using various reloading channels including prepaid
call and text cards, bank channels such as ATMs, credit cards,
and through internet banking. Subscribers can also topup via AutoLoad Max retailers nationwide, all at affordable
denominations and increments. A consumer-to-consumer top-up
facility, Share-A-Load, is also available to enable subscribers to
share prepaid load credits via SMS.
Globe has a loyalty and rewards program called My Rewards,
My Globe for Globe Prepaid subscribers, TM Astig Rewards for
TM subscribers and Tattoo+ Rewards for Tattoo Broadband
subscribers. Globe Postpaid subscribers can earn points based
on their monthly billed amounts in excess of their Monthly
Subscription Fee. Subscribers have the option to redeem
rewards instantly, or accumulate points to avail of higher value
rewards.
Redeemed points in the form of telecom services is netted out
against revenues whereas points redeemed in the form of nontelco services such as gift certificates and other products are
reflected as marketing expense. At the end of each period, Globe
estimates and records the amount of probable future liability for
unredeemed points.
The mobile business, which contributed over 80% of total
revenues, grew 8% year-on-year to ₱72.8 billion compared to the
prior year’s ₱67.2 billion, owing to the sustained leadership of
the Globe Postpaid brand. Globe continued to invest in acquiring
and retaining high-quality postpaid customers, resulting in the
growth of the subscriber base to over two million, up 17% from
last year. The continued expansion of the postpaid subscriber
base has resulted in the sustained growth of postpaid revenues
to ₱27.1 billion, an 18% improvement year-on-year. On the
prepaid segments, revenues grew 3% year-on-year despite the
continued pressures on yields brought about by the shift from
pay-per-use to value-based bucket and unlimited offers and the
pervasiveness of multi-SIM incidence in the market.
Globe closed the year with a total mobile subscriber base of
38.5 million, up 16% from 33.1 million subscribers last year.
Despite the elevated churn rate as of end December of 2013 of
5.95% from 5.69% of 2012, full year net incremental subscribers
leapt to 5,356,095, 74% higher than 2012 level of 3,078,635 net
additions.
Globe Postpaid maintained its leadership on this segment of the
market with the continued growth in acquisitions throughout
the year, closing 2013 with over 2.0 million subscribers from 1.7
million last year. The continued success of the fully customizable
BEST-EVER MY SUPERPLAN bundled with the latest devices
from Apple™, Samsung, and BlackBerry® helped boost gross
additions to reach 711,190 as of full year 2013, 21% higher
than 589,642 a year ago. Also, the Company’s postpaid plans
continued to attract subscriptions from the industry’s highend prepaid subscribers who switch to postpaid, as well as
unique and new subscribers. Full year net incremental postpaid
subscribers stood at 291,070, 4% above 2012 level of 279,762.
Globe Postpaid ARPU of ₱1,199 was 1% higher than last
year’s ₱1,191 as a result of a higher mix of higher-MSF plans.
Meanwhile, subscriber acquisition cost (SAC) declined year-onyear by 11% from last year’s ₱8,432 to ₱7,473 as of end 2013,
driven in part by the healthy mix of smartphones and gadgets
with lower subsidy levels. Globe Postpaid SAC remained
recoverable within the 24-month contract period.
71
Globe Prepaid gross acquisitions substantially improved by
20% or 631,156 new SIMs in the fourth quarter versus the third
quarter, bringing the full year gross additions in 2013 to reach
13.2 million or 12% higher than 2012 level of 11.8 million. This
is mainly attributed to continued popularity of unlimited and
bucket offers bundled with the best chat apps that have gained
traction this year, as well as the successful Free Facebook
campaign launched in November 2013. Full year 2013 net
incremental subscribers also improved by 43% to 1,396,299
from 977,710 in 2012 despite the elevated churn rates as of
end 2013 of 5.75% from 5.63% in 2012. Globe Prepaid ARPU
declined by 6% year-on-year resulting from the revenue dilution
from unlimited and bucket service offerings. Globe Prepaid
SAC, on the other hand, were significantly higher than last year
due to higher ads and promo spending and commissions. Globe
Prepaid SAC, however, remained recoverable within a month’s
ARPU.
TM on the other hand, generated the highest gross acquisitions
particularly during the fourth quarter, achieving a record
high of 4.8 million new SIMs or 20% better than previous
quarter level of 4,005,807. The free Facebook promo boosted
the fourth quarter acquisition and TM’s ramp-up in project
executions in order to stay in step with the competition’s
acquisition efforts. This brings the full year total gross
additions to nearly 17 million, up 38% from 12.3 million in 2012.
Even with the slightly elevated churn rates as of end December
2013, full year net incremental subscribers improved by 101%
from about 1.8 million in 2012 to 3.7 million. TM ARPU was
down by 8% year-on-year with the continued shift from regular
pay-as-you-use service to unlimited and value offers. TM
SAC, however, was up 69% year-on-year due to higher subsidy
and increased ads and promo spending. TM SAC remained
recoverable within a month’s 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 Telecom’s fixed line voice services include local, national
and international long distance calling services in postpaid and
prepaid packages through its Globelines brand. Subscribers
get to enjoy toll-free rates for national long distance calls with
other Globelines subscribers nationwide. Additionally, postpaid
fixed line voice consumers enjoy free unlimited dial-up internet
from their Globelines subscriptions. Low-MSF (monthly service
fee) fixed line voice services bundled with internet plans are
available nationwide and can be customized with value-added
services including multi-calling, call waiting and forwarding,
special numbers and voice mail. 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.
Globe’s product offerings include international and domestic
leased line services, wholesale and corporate internet access,
data center services and other connectivity solutions tailored to
the needs of specific industries.
Globe offers wired, fixed wireless, and fully mobile internet-onthe-go services across various technologies and connectivity
speeds for its residential and business customers. Tattoo@
Home consists of wired or DSL broadband packages bundled
with voice, or broadband data-only services which are available
at download speeds ranging from 1 mbps up to 15 mbps. In
selected areas where DSL is not yet available, Globe offers
Tattoo WiMAX, a fixed wireless broadband service using its
WiMAX network. Meanwhile, for consumers who require a fully
mobile, internet-on-the-go broadband connection, Tattoo Onthe-Go allows subscribers to access the internet using HSPA+,
3G with HSDPA, EDGE, GPRS or Wi-Fi at various hotspots
72
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 Tattoo
Torque broadband plans using leading edge GPON (Gigabit
Passive Optical Network) technology with speeds of up to
100 Mbps.
In 2013, Tattoo introduced a lower price proposition
for its 4G product suite (Tattoo 4G Flash for only ₱995;
Tattoo Prepaid Lifestyle sticks at ₱1,295). Meanwhile,
Tattoo At-Home offered free unlimited calls to Globe/
TM in addition to landline and internet service in every
Tattoo @ Home Broadband Bundle. Tattoo Prepaid &
Tattoo Postpaid launched several attractive promotions
such as: 4G SuperStick priced down to ₱1,995; LTE plans
which start at ₱1,299 now comes with a FREE LTE dongle;
Tattoo consumable plans were further improved with more
browsing hours for Plan 299 and for Plan 499. Also during
this period, Tattoo launched a revolutionary offer bannering
the most affordable tablet bundles, wherein its subscribers
can get three devices FREE with unlimited internet browsing
and mobile text and call starting at Plan 1,298. Tattoo
Prepaid tablet bundles was also made available during the
last quarter wherein subscribers can save as much as ₱2,845
with these new offers which carry affordable tablet selection
starting at ₱4,995 for a CloudPad 705W or a SkyWorth
S73 and ₱6,995 for a SkyWorth S82. All these bundles
come with FREE Tattoo Mobile Wi-Fi that connects up to
10 devices with speeds of up to 7.2 Mbps. Likewise, Tattoo
LTE Mobile Wi-Fi with LTE speed up to 42 Mbps (with power
bank feature which recharges your phone up to 2 times),
was made available for only ₱4,995 with FREE 5GB of data
for 7days. Tattoo Postpaid on the other hand, now offers
a FREE Mobile Wi-Fi with speed up to 12 Mbps with Tattoo
unlimited Plan 999.
Globe Tattoo Broadband ended 2013 with ₱10.4 billion, up
20% compared to 2012 as a result of the strong growth in its
customer base, reaching over two million subscribers as of
end-December 2013. The outstanding revenue performance
of the broadband business resulted from the continued
aggressive acquisitions campaigns, attractive pricing offers
and product bundles.
The fixed line data segment continued its revenue growth
with ₱4.7 billion, 13% higher year-on-year and 4% higher
quarter-on-quarter. The increase was due to the Company’s
continued push to expand its portfolio to remain responsive
to the evolving needs and increasing demand for high-speed
data nodes, transmission links, and bandwidth capacity
of its business and enterprise clients, including those in
the financial services, retail, offshoring and outsourcing
industries.
Total fixed line voice revenues declined by 4% quarter-onquarter bringing total revenues to close the year at ₱2.6
billion or 2% lower from ₱2.7 billion the previous year. The
decline was primarily caused by lower international airtime
rates.
73
74
75
10 January 2014
Philippine Stock Exchange
3/F Tower One and Exchange Plaza
Ayala Triangle, Ayala Ave., Makati City
Attention:
Ms. Janet A. Encarnacion
Head, Disclosure Department
Gentlemen:
In compliance with the Exchange’s Rule on Minimum Public Ownership, please find
attached our Public Ownership Report for the quarter-ended 31 December 2013.
We trust that you will find the report in order.
Thank you.
Very truly yours,
Solomon M. Hermosura
Corporate Secretary
cc:
Bureau of Internal Revenue
Office of the Assistant Commissioner
Large Taxpayers Service
Rm. 301, BIR National Office Building
BIR Road, Diliman, Quezon City
(submitted pursuant to Section 6.B of the Revenue Regulation No. 16-2012)
76
77
GLOBE TELECOM, INC.
Computation of Public Ownership as of December 31, 2013
A
Number of Issued Shares
Less: Number of Treasury Shares (if any)
Number of Issued and Outstanding Shares
Less:
Directors
Direct
Indirect (thru AC as nominee share)
Delfin L. Lazaro
Mark Chong Chin Kok
Indirect (thru STI as nominee share)
Direct
Indirect (thru PCD)
Romeo L. Bernardo
Direct
Indirect (thru PCD)
Tay Soo Meng
Indirect (thru STI as nominee share)
Manuel A. Pacis*
Indirect (thru PCD)
Xavier P. Loinaz
Direct
Direct
Sub-total
Officers
Rebecca V. Eclipse
Indirect (thru PCD)
Gil B. Genio
Indirect (thru PCD)
Alberto M. de Larrazabal
Direct
Marisalve Ciocson-Co
Direct
Direct
Bernard P. Llamzon
Direct
Vicente Froilan M. Castelo
Direct
Sub-total
Principal Stockholders
Singapore Telecom Int'l. Pte Ltd
Direct
Ayala Corporation
Direct
Sub-total
78
Number of Shares
B
Total
132,595,709
0
132,595,709
% to total
I/O Shares
A
B
Total
0.0000 %
0.0000 %
2
1
0.0000 %
1
0.0000 %
2
0.0000 %
1
0.0172 %
0.0294 %
0.0000 %
22,741
38,973
1
0.0008 %
0.0020 %
1,079
2,659
0.0000 %
2
0.0001 %
100
0.0000 %
10
0.0128 %
0.0623 %
17,000
82,572
0.0162 %
21,415
0.0391 %
51,838
0.0033 %
4,322
0.0012 %
1,539
0.0000 %
20
-
%
0
0.0006 %
0.0603 %
814
79,948
47.2462 %
62,646,487
30.4143 %
77.6606 %
40,328,090
102,974,577
Others
Government
Banks
Employees
Lock-Up Shares
Sub-total
-
TOTAL
-
%
77.7831 %
103,137,097
Total Number of Shares Owned by the Public
29,458,612
*Messrs. Pacis and Ernest Lawrence L. Cu directly hold one (1) preferred share each.
PUBLIC OWNERSHIP PERCENTAGE
Total Number of Shares Owned by the Public
29,458,612 shares
132,595,709 shares
=
22.22%
Number of Issued and Outstanding Common Shares
=
132,595,709
Number of Outstanding Common Shares
Number of Treasury Shares
Number of Listed Shares
Common Shares
Preferred Shares
Number of Foreign-Owned Shares
Common Shares
Preferred Shares
Foreign Ownership Level (%)
Foreign Ownership Limit (%)
=
=
132,595,709
0
=
=
131,933,828
158,515,021
=
=
=
=
86,299,042
0
29.64%
40%
References to the reported shareholdings:
Delfin L. Lazaro
Mark Chong Chin Kok
Romeo L. Bernardo
Tay Soo Meng
Manuel A. Pacis
Xavier P. Loinaz
Rebecca V. Eclipse
Gil B. Genio
Alberto M. de Larrazabal
Marisalve Ciocson-Co
Bernard P. Llamzon
Vicente Froilan M. Castelo
Singapore Telecom Int'l. Pte Ltd
Ayala Corporation
-
SEC Form 23-B dated Feb. 27, 2007
SEC Form 23-B dated December 2002
SEC Form 23-A dated April 19, 2013
SEC Form 23-B dated Feb. 27, 2007
SEC Form 23-B dated April 22, 2013
SEC Form 23-B dated May 23, 2013
SEC Form 23-A dated Feb. 9, 2011
SEC Form 23-A dated April 19, 2011
SEC Form 23-B dated April 2, 2009
SEC Form 23-B dated July 5, 2013
SEC Form 23-B dated Sept. 24, 2013
SEC Form 23-B dated July 18, 2013
SEC Form 23-B dated Aug. 8, 2013
SEC Form 23-B dated June 13, 2013
SEC Form 23-B dated Sept. 25, 2013
79
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 statements of financial position as at December 31, 2013 and 2012 and the
consolidated statements of comprehensive income, consolidated statements of changes in equity and
consolidated statements of cash flows for each of the three years in the period ended December 31, 2013, 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 consolidated 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 about 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 auditors’ judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s
preparation and fair presentation of the consolidated 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 at December 31, 2013 and 2012 and their financial performance and
their cash flows for each of the three years in the period ended December 31, 2013 in accordance with Philippine
Financial Reporting Standards.
SYCIP GORRES VELAYO & CO.
Gemilo J. San Pedro
Partner
CPA Certificate No. 32614
SEC Accreditation No. 0094-AR-3 (Group A),
February 4, 2013, valid until February 3, 2016
Tax Identification No. 102-096-610
BIR Accreditation No. 08-001998-34-2012,
April 11, 2012, valid until April 10, 2015
PTR No. 4225213, January 2, 2014, Makati City
February 10, 2014
80
GLOBE TELECOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
December 31
Notes
ASSETS
Current Assets
Cash and cash equivalents
Receivables
Inventories and supplies
Derivative assets
Prepayments and other current assets
Assets classified as held for sale
Noncurrent Assets
Property and equipment
Investment property
Intangible assets and goodwill
Deferred income tax assets - net
Derivative assets
Investments in an associate and joint ventures
Other noncurrent assets
28, 30
4, 28
5
28
6, 28
P
=7,420,735
15,200,923
3,544,887
1,834
9,462,823
35,631,202
–
35,631,202
P6,759,755
=
12,105,437
2,076,176
421
12,308,248
33,250,037
778,321
34,028,358
P5,159,046
=
10,119,505
1,911,190
9,766
5,586,419
22,785,926
778,321
23,564,247
7, 8
8
7, 9
24
28
10
11, 28
110,424,072
–
3,840,660
1,916,878
553,562
162,754
6,549,805
123,447,731
P
=159,078,933
101,422,364
–
3,793,958
1,016,856
–
183,193
7,567,050
113,983,421
=148,011,779
P
99,267,780
191,645
3,591,514
864,908
–
249,000
2,336,214
106,501,061
=130,065,308
P
12, 18, 28
14, 28
14, 28
4
24
28
13
P
=39,486,830
5,219,900
5,980,300
2,759,644
1,028,263
219,694
294,700
54,989,331
=29,734,126
P
2,053,900
9,294,888
2,502,903
1,341,583
235,633
203,191
45,366,224
=23,041,351
P
1,756,760
9,597,367
2,474,142
1,157,927
208,247
166,773
38,402,567
25.4
–
54,989,331
459,760
45,825,984
583,365
38,985,932
14, 28
24
28
58,100,749
–
–
50,430,632
2,271,345
5,021
37,324,579
3,667,435
58,370
15, 28
4,349,602
62,450,351
117,439,682
3,780,806
56,487,804
102,313,788
2,443,273
43,493,657
82,479,589
17
16, 18
17, 28
17
34,402,396
261,144
(739,575)
7,715,286
41,639,251
P
=159,078,933
34,095,976
472,911
(526,539)
11,655,643
45,697,991
=148,011,779
P
33,967,476
573,436
(404,355)
13,449,162
47,585,719
=130,065,308
P
25.4
Total Assets
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued expenses
Notes payable
Current portion of long-term debt
Unearned revenues
Income tax payable
Derivative liabilities
Provisions
Liabilities directly associated with the assets
classified as held for sale
Noncurrent Liabilities
Long-term debt - net of current portion
Deferred income tax liabilities - net
Other long-term liabilities - net of current
portion
Total Liabilities
Equity
Paid-up capital
Cost of share-based payments
Other reserves
Retained earnings
Total Equity
Total Liabilities and Equity
January 1
2012
2012
(As restated,
(As restated,
see Note 2.4)
see Note 2.4)
2013
(In Thousand Pesos)
See accompanying Notes to Consolidated Financial Statements.
81
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Notes
REVENUES
Service revenues
Nonservice revenues
INCOME
Interest income
Gain on disposal of property and equipment - net
Other income - net
COSTS AND EXPENSES
General, selling and administrative
Depreciation and amortization
Incremental effect of network modernization
Others
Cost of sales
Interconnect costs
Financing costs
Impairment losses and others
Equity in net losses of joint ventures
16, 29
P
=90,500,137
4,640,848
95,140,985
P
=82,742,565
3,703,584
86,446,149
P
=77,764,964
3,753,283
81,518,247
19, 25.5, 29
7
20, 25.1, 29
688,249
64,333
475,246
1,227,828
579,851
42,447
716,371
1,338,669
297,388
319,250
574,768
1,191,406
21
7, 8, 9, 29
37,318,839
33,602,411
29,413,606
9,065,966
18,411,528
9,953,106
9,280,229
2,911,785
2,482,628
79,959
89,504,040
5,080,471
18,502,946
7,678,359
8,859,309
2,362,609
1,863,584
83,582
78,033,271
–
18,941,227
5,887,589
9,953,663
2,509,505
1,918,583
27,345
68,651,518
6,864,773
9,751,547
14,058,135
4,995,416
(3,090,888)
1,904,528
4,355,699
(1,449,406)
2,906,293
5,049,479
(795,895)
4,253,584
4,960,245
6,845,254
9,804,551
5
14, 22, 25, 29
23
10, 29
INCOME BEFORE INCOME TAX
PROVISION FOR (BENEFIT FROM) INCOME TAX
Current
Deferred
24
NET INCOME
OTHER COMPREHENSIVE INCOME (LOSS)
Item that will not be reclassified into profit or loss:
Remeasurement losses on defined benefit plan
Income tax effect
17
Items that will be reclassified into profit or loss:
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
Income tax effect
TOTAL COMPREHENSIVE INCOME
Earnings Per Share
Basic
27
Diluted
Cash dividends declared per common share
17
82
Years Ended December 31
2011
2012
(As restated,
(As restated
see Note 2.4)
see Note 2.4)
2013
(In Thousand Pesos, Except Per Share Figures)
(492,009)
147,603
(344,406)
(289,283)
86,785
(202,498)
(399,219)
119,766
(279,453)
223,182
45,529
(53,194)
(22,500)
43,974
1,269
(2,357)
(66,955)
131,370
(213,036)
4,470
(13,659)
80,314
(122,184)
(625)
15,958
(36,592)
(316,045)
P
=4,747,209
P
=6,723,070
P
=9,488,506
P
=37.25
P
=51.45
P
=73.81
P
=37.22
P
=51.38
P
=73.57
P
=67.00
P
=65.00
P
=62.00
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Notes
Capital
Stock
(Note 17)
For the Year Ended December 31, 2013
Cost of
ShareOther
Based
Additional
Payments
Reserves
Retained
Paid-in
(Note 17)
Earnings
Capital (Note 16.5)
Total
(In Thousand Pesos)
As of January 31, 2013, as
previously presented
Effect of adoption of amendments
to PAS 19
As of January 1, 2013, as restated
Total comprehensive income
for the year
Dividends on:
Common stock
Preferred stock
Exercise of stock options
As of December 31, 2013
P
=7,412,866 P
=26,683,110
2.4
17.3
18.1
17.2
Notes
P
=472,911
–
7,412,866
–
26,683,110
–
472,911
–
–
–
–
–
–
–
–
–
9,494
296,926
P
=7,422,360 P
=26,980,036
Capital
Stock
–
–
50,000
(261,767)
P
=261,144
(P
=44,588) P
=12,230,385 P
=46,754,684
(481,951)
(574,742) (1,056,693)
(526,539) 11,655,643 45,697,991
(213,036)
4,960,245
4,747,209
– (8,876,764) (8,876,764)
–
(23,838)
(23,838)
–
–
50,000
–
–
44,653
(P
=739,575) P
=7,715,286 P
=41,639,251
Cost of
Other
ShareAdditional
Based
Reserves
Retained
Paid-in
(Note 17)
Earnings
Capital Payments
Total
(In Thousand Pesos)
As of January 1, 2012,
as previously presented
to PAS 19
for the year, as previously
presented
to PAS 19
for the year, as restated
Dividends on:
Common stock
Preferred stock
As of December 31, 2012,
as restated
P
=7,410,226 P
=26,557,250
2.4
2.4
P
=573,436
(P
=124,902) P
=14,012,146 P
=48,428,156
–
7,410,226
–
26,557,250
–
573,436
(279,453)
(562,984)
(842,437)
(404,355) 13,449,162 47,585,719
–
–
–
80,314
–
–
–
(202,498)
–
–
–
(122,184)
–
–
–
2,640
–
–
–
125,860
6,857,012
(11,758)
6,937,326
(214,256)
6,845,254
6,723,070
(8,605,628)
(33,145)
–
–
(8,605,628)
(33,145)
11,502
16,473
17.3
18.1
17.2
P
=7,412,866 P
=26,683,110
–
–
11,502
(112,027)
P
=472,911
–
–
–
–
(P
=526,539) P
=11,655,643 P
=45,697,991
83
Notes
Capital
Stock
Other
Cost of
Additional
Reserves
Retained
Paid-in Share-Based
(Note 17)
Earnings
Payments
Capital
Total
(In Thousand Pesos)
to PAS 19
presented
to PAS 19
Dividends on:
Common stock
Preferred stock
Collection of subscription
receivables
as restated
P
=7,409,223 P
=26,536,781
2.4
–
7,409,223
–
2.4
–
–
–
26,536,781
–
–
–
P
=544,794
–
544,794
–
–
–
(P
=88,310) P
=12,466,640
–
(535,730)
(88,310) 11,930,910
(36,592)
(279,453)
(316,045)
9,831,805
(27,254)
9,804,551
P
=46,869,128
(535,730)
46,333,398
9,795,213
(306,707)
9,488,506
17.3
18.1
17.2
–
–
–
–
–
–
776
227
–
20,469
P
=7,410,226 P
=26,557,250
–
–
49,338
–
(20,696)
P
=573,436
–
–
–
–
–
(8,205,605)
(80,694)
–
(8,205,605)
(80,694)
49,338
–
–
776
–
(P
=404,355)P
=13,449,162
P
=47,585,719
Notes
Capital
Stock
Other
Cost of
Additional
Reserves
Retained
Paid-in Share-Based
(Note 17)
Earnings
Payments
Capital
Total
(In Thousand Pesos)
to PAS 19
presented
to PAS 19
Dividends on:
Common stock
Preferred stock
Collection of subscription
receivables
as restated
P
=7,409,223 P
=26,536,781
2.4
(P
=88,310) P
=12,466,640
–
7,409,223
–
26,536,781
–
544,794
–
–
–
(36,592)
–
–
–
(279,453)
–
–
–
(316,045)
18.1
–
–
–
–
–
–
–
–
49,338
–
–
–
17.2
776
227
–
20,469
–
(20,696)
–
–
2.4
–
(535,730)
(88,310) 11,930,910
9,831,805
(27,254)
9,804,551
P
=46,869,128
(535,730)
46,333,398
9,795,213
(306,707)
9,488,506
17.3
P
=7,410,226 P
=26,557,250
84
P
=544,794
P
=573,436
(8,205,605)
(80,694)
–
(8,205,605)
(80,694)
49,338
–
–
776
–
(P
=404,355)P
=13,449,162
P
=47,585,719
CONSOLIDATED STATEMENTS OF CASH FLOWS
Notes
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax
Adjustments for:
Interest expense
Interest income
Foreign exchange losses (gains) - net
Provisions for (reversals of) claims and assessments
Equity in net losses of a joint venture
Gain on disposal of property and equipment
Loss (gain) on derivative instruments
Impairment losses on property and equipment and
intangible assets
Dividend income
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:
Unearned revenues
Other long-term liabilities
Cash generated from operations
Income tax paid
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to:
Intangible assets
Investment in joint ventures
Proceeds from sale of property and equipment
Decrease (increase) in other noncurrent assets
Interest received
Dividend received
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings:
Long-term
Short-term
Repayments of borrowings:
Long-term
Short-term
Payments of dividends to stockholders:
Common
Preferred
Interest paid
Collection of subscriptions receivable and exercise of stock
options
Net cash provided by (used in) financing activities
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
NET FOREIGN EXCHANGE DIFFERENCE ON CASH
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT
BEGINNING OF THE YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
7, 8, 9
22
19
20, 22
13, 23
10
7
20, 22
16, 18
23
7, 30
9
10
14
14
17
Years Ended December 31
2012
(As restated,
2013
see Note 2.4)
(In Thousand Pesos)
P
= 6,864,773
= 9,751,547
P
27,477,494
2,091,915
(688,249)
486,308
88,333
79,959
(64,333)
59,282
50,000
23,583,417
2,104,792
(579,851)
(318,334)
56,327
83,582
(42,447)
9,593
11,502
18,941,227
1,989,451
(297,388)
308,650
(47,916)
27,345
(319,250)
(25,495)
49,338
26,312
–
36,471,794
259,262
–
34,919,390
128,614
(503)
34,812,208
(3,607,858)
(1,468,350)
3,547,877
(2,235,848)
(164,986)
(6,996,121)
(1,678,456)
(67,358)
(774,230)
2,459,141
256,741
677,032
38,336,377
(5,103,438)
33,232,939
2,578,709
28,761
(106,783)
28,023,122
(3,802,665)
24,220,457
2,212,522
71,393
(180,080)
34,395,999
(4,508,758)
29,887,241
(28,999,480)
(101,956)
(59,010)
105,760
1,418,642
268,070
–
(27,367,974)
(20,124,476)
(152,056)
(20,990)
70,070
(4,854,588)
465,711
–
(24,616,329)
(18,007,055)
(145,208)
(79,010)
180,939
(360,944)
259,992
503
(18,150,783)
16,695,035
3,428,880
25,847,770
5,052,430
(13,613,525)
(432,070)
(12,810,082)
(4,694,020)
(11,552,501)
–
(8,876,764)
(56,983)
(2,665,459)
(8,605,628)
(35,295)
(2,573,745)
(8,205,605)
(45,399)
(2,456,763)
44,653
(5,476,233)
16,473
2,197,903
776
(12,520,892)
1,802,031
(784,434)
388,732
272,248
28, 30
2011
(As restated,
see Note 2.4)
6,759,755
P
= 7,420,735
(201,322)
5,159,046
P6,759,755
=
= 14,058,135
P
8,000,000
1,738,600
74,494
5,868,986
P5,159,046
=
85
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 Handyphone
(GHP), Touch Mobile (TM) and Tattoo brands using a fully digital network. It also offers domestic and
international long distance communication services or carrier services. Globe Telecom’s principal executive
office is located at The Globe Tower, 32nd Street corner 7th Avenue, Bonifacio Global City, Taguig,
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 International Pte Ltd. (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 broadband internet
and wireline voice and data communication services, as well as domestic and international long distance
communication services or carrier 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). GXI is a stock corporation organized under the laws of
the Philippines and 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 and electronic money issuer. 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 owns 100% of Entertainment Gateway Group Corporation (EGGC) and EGGstreme (Hong
Kong) Limited (EHL) (collectively referred here as “EGG Group”). EGG Group is engaged in the development
and creation of wireless products and services accessible through telephones or other forms of
communication devices. It also provides internet and mobile value added services, information technology
and technical services including software development and related services. EGGC is registered with the
Department of Transportation and Communication (DOTC) as a content provider. EHL was liquidated on
February 1, 2013. Accordingly, EHL was dissolved and the cost of investment amounting to P
=11.48 million
was derecognized.
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, provided that GTI shall not engage in the business of an
open-ended investment company as defined in the Investment Company Act (Republic Act 2629). 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 started commercial operations on April 1, 2011. In December
2011, GTI incorporated another wholly owned subsidiary, Globe Telecom HK Limited (GTHK), a limited
company organized under the Companies Ordinance (Chapter 32 of the Laws of Hong Kong). GTHK has
started commercial operations on August 1, 2012. On May 10, 2013, GTI incorporated wholly owned
subsidiary, Globetel European Limited (GTEU) and the latter’s wholly owned subsidiary, UK Globetel Limited
(UKGT). It was incorporated to act as holding company for the operating companies of Globe Telecom,
86
which proposed to establish operations in Europe, marketing and selling mobile telecommunications
services, as a mobile network operator, or through any other appropriate vehicle, to Filipino individuals and
businesses located within, and to Filipino visitors, initially, in the United Kingdom, Spain and Italy. These
entities are private limited companies under the Companies Act of 2006, wherein the registered address is in
England and Wales, and incorporated to market and sell mobile telecommunications, as a mobile virtual
network operator, to Filipino individuals and businesses located within the United Kingdom and to Filipino
visitors in the United Kingdom. Its commercial operations commenced on July 22, 2013.
On July 22, 2013 and October 4, 2013 respectively, GTEU incorporated additional two European wholly
owned subsidiaries which are Globe Mobile’ Italy S.r.l. (GMI), a limited liability company, wherein the
registered address is in Milan, Italy and Globetel Internacional European España, S.L.
On March 28, 2012, Globe Telecom incorporated Kickstart Ventures, Inc. (Kickstart), a stock corporation
organized under the laws of the Philippines and formed for the purpose of investing in individual, corporate,
or start-up businesses, and to do research, technology development and commercializing of new business
ventures. Kickstart has started commercial operations on March 29, 2012.
2.
Summary of Significant Accounting and Financial Reporting Policies
2.1 Basis of Financial Statement Preparation
The accompanying consolidated financial statements of Globe Telecom, Inc. and 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.
The consolidated financial statements provide comparative information in respect of the previous period. In
addition, the Globe Group presents an additional consolidated statement of financial position at the
beginning of the earliest period presented when there is a retrospective application of an accounting policy, a
retrospective restatement, or a reclassification of items in financial statements. An additional consolidated
statement of financial position as at January 1, 2012 is presented in these consolidated financial statements
due to retrospective application of amendments to PAS 19, Employee Benefits (see Note 2.4).
On February 10, 2014, the Board of Directors (BOD) approved and authorized the release of the consolidated
financial statements of Globe Telecom, Inc. and Subsidiaries as of December 31, 2013 and 2012 and for each
of the three years in the period ended December 31, 2013.
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 the
following subsidiaries:
Name of Subsidiary
Place of
Incorporation
Innove
Philippines
GXI
Philippines
Percentage of
Ownership
Principal Activity
2013
2012
Wireless and wireline voice and data
communication services
100%
100%
Software development for
telecommunications applications
and money remittance services
100%
100%
87
Name of Subsidiary
Place of
Incorporation
Percentage of
Ownership
Principal Activity
2013
2012
EGG Group
EGGC
Philippines
Mobile content and application
development services
100%
100%
EHL
Hong Kong
Mobile content and application
development services
–
100%
Philippines
Investment and holding company
100%
100%
GTIC
United States Wireless and data communication
services
100%
100%
GTHK
Hong Kong
Exclusive distributorship of Globe
Telecom products in the
international market (except the
United States)
100%
100%
GTI
Globetel European
Limited*
London
Investment and holding company
100%
–
UK Globetel
Limited*
London
Wireless and data communication
services
100%
–
Globe Mobile Italy
S.R.L. *
Italy
services
100%
–
services
100%
–
100%
100%
Globetel Internacional
Spain
European Espana, S.L. *
Kickstart
Philippines
Investment, research, technology
development and commercializing
for business ventures
*Globetel European Limited started commercial operations on the same date of incorporation.
UK Globetel Limited and Globe Mobile Italy S.R.L. started commercial operations on July 22 and November 24,
2013, respectively. Globetel Internacional European Espana, S.L. has not yet commenced its operations.
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.
Control is achieved when the Globe Group is exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns through its power over the investee. Specifically,
the Globe Group controls an investee if and only if the Globe Group has: (a) power over the investee (i.e.,
existing rights that give it the current ability to direct the relevant activities of the investee); (b) exposure, or
rights, to variable returns from its involvement with the investee; and (c) the ability to use its power over the
investee to affect its returns.
When the Globe Group has less than a majority of the voting or similar rights of an investee, the Globe Group
considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
(a) the contractual arrangement with the other vote holders of the investee; (b) rights arising from other
contractual arrangements; and (c) the Globe Group’s voting rights and potential voting rights.
The Globe Group re-assesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control.
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 in full
during consolidation in accordance with the accounting policy on consolidation.
88
2.4 Changes in Accounting Policies
The accounting policies adopted in the preparation of the consolidated financial statements are consistent
with those followed in the preparation of the Globe Group’s consolidated financial statements as of and for
the year ended December 31, 2012, except for the adoption of new and amended standards as of January 1,
2013.
The Globe Group applied for the first time the amendments to PAS 19, Employee Benefits, that require
restatement of previous consolidated financial statements.
Several other new standards and amendments apply for the first time in 2013. However, they do not
significantly impact the consolidated financial statements of the Globe Group.
The nature and the impact of each new standard/amendment are described below:
·
PFRS 7, Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities
These Amendments require an entity to disclose information about rights of set-off and related
arrangements (such as collateral agreements). The new disclosures are required for all recognized
financial instruments that are set-off in accordance with PAS 32, Financial Instruments: Presentation.
These disclosures also apply to recognized financial instruments that are subject to an enforceable
master netting arrangement or ‘similar agreement’, irrespective of whether they are set-off in
accordance with PAS 32. The amendments require entities to disclose, in a tabular format unless
another format is more appropriate, certain minimum quantitative information. This is presented
separately for financial assets and financial liabilities recognized at the end of the reporting period.
The Globe Group has offsetting arrangements with their derivative counterparties that are affected by
the amendments to PFRS 7. However, the amendments affected presentation only and had no impact
on the Globe Group’s financial position and performance. Additional disclosures required under the
amendment to PFRS 7 are disclosed in Note 28.11.
·
PFRS 10, Consolidated Financial Statements
PFRS 10 replaces the portion of PAS 27, Consolidated and Separate Financial Statements, that addresses
the accounting for consolidated financial statements. It also includes the issues raised in SIC-12,
Consolidation - Special Purpose Entities.
PFRS 10 establishes a single control model that applies to all entities including special purpose entities.
PFRS 10 changes the definition of control such that an investor controls an investee when it is exposed,
or has rights, to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee. To meet the definition of control in PFRS 10, all three
criteria must be met, including: (a) an investor has power over an investee; (b) the investor has exposure,
or rights, to variable returns from its involvement with the investee; and (c) the investor has the ability to
use its power over the investee to affect the amount of the investor’s returns.
The Globe Group has concluded that after the adoption of PFRS 10: (a) all existing subsidiaries shall
remain to be fully consolidated with the Globe Group’s consolidated financial statements as
management control over these entities remain the same; and (b) no new unconsolidated entity that will
have to be consolidated.
·
PFRS 11, Joint Arrangements
This Standard replaces PAS 31, and SIC-13, Jointly-controlled Entities - Non-monetary Contributions by
Venturers. It also removes the option to account for jointly controlled entities (JCEs) using
proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted
for using the equity method. The adoption of the standard did not have an impact to Globe Group as
they are already accounting for their joint ventures under the equity method.
·
PFRS 12, Disclosure of Interests in Other Entities
PFRS 12 sets out the requirements for disclosures relating to an entity’s interests in subsidiaries, joint
arrangements, associates and structured entities. The requirements in PFRS 12 are more comprehensive
than the previously existing disclosure requirements for subsidiaries (for example, where a subsidiary is
controlled with less than a majority of voting rights). Except for additional disclosures included in the
consolidated financial statements, the adoption of the standard has no impact on the Globe Group’s
financial position or performance. Additional disclosures required under the PFRS 12 are disclosed in
Note 10.
89
·
PFRS 13, Fair Value Measurement
PFRS 13 establishes a single source of guidance under PFRSs for all fair value measurements. PFRS 13
does not change when an entity is required to use fair value, but rather provides guidance on how to
measure fair value under PFRS. PFRS 13 defines fair value as an exit price. PFRS 13 also requires
additional disclosures.
As a result of the guidance in PFRS 13, the Globe Group re-assessed its policies for measuring fair values,
in particular, its valuation inputs such as non-performance risk for fair value measurement of liabilities.
The Globe Group has assessed that the application of PFRS 13 has not materially impacted the fair value
measurements of the Globe Group. Additional disclosures, where required, are provided in the individual
notes relating to the assets and liabilities whose fair values were determined. Fair value hierarchy is
provided in Note 28.12.3.
·
Amendments to PAS 1, Financial Statement Presentation, Presentation of Items of Other Comprehensive
Income
The Amendment changed the grouping of items presented in other comprehensive income. Items that
could be reclassified (or ‘recycled’) to profit or loss at a future point in time (for example, upon
derecognition or settlement) would be presented separately from items that will never be reclassified.
Other than the change in presentation, the amendment did not have significant impact on the
consolidated financial statements.
·
PAS 19, Employee Benefits (Revised PAS 19)
For defined benefit plans, the Revised PAS 19 requires all actuarial gains and losses to be recognized in
other comprehensive income and unvested past service costs previously recognized over the average
vesting period to be recognized immediately in profit or loss when incurred.
Prior to adoption of the Revised PAS 19, the Globe Group recognized actuarial gains and losses as
income or expense when the net cumulative unrecognized gains and losses for each individual plan at
the end of the previous period exceeded 10% of the higher of the defined benefit obligation and the fair
value of the plan assets and recognized unvested past service costs as an expense on a straight-line basis
over the average vesting period until the benefits become vested. Upon adoption of the Revised PAS 19,
the Globe Group changed its accounting policy to recognize all actuarial gains and losses in other
comprehensive income and all past service costs in profit or loss in the period they occur.
The Revised PAS 19 replaced the interest cost and expected return on plan assets with the concept of
net interest on defined benefit liability or asset which is calculated by multiplying the net balance sheet
defined benefit liability or asset by the discount rate used to measure the employee benefit obligation,
each as at the beginning of the annual period.
The Revised PAS 19 also amended the definition of short-term employee benefits and requires employee
benefits to be classified as short-term based on expected timing of settlement rather than the
employee’s entitlement to the benefits. In addition, the Revised PAS 19 modifies the timing of
recognition for termination benefits. The modification requires the termination benefits to be recognized
at the earlier of when the offer cannot be withdrawn or when the related restructuring costs are
recognized.
Changes to definition of short-term employee benefits and timing of recognition for termination
benefits do not have any significant impact to the Globe Group’s financial position and financial
performance.
The changes in accounting policies have been applied retrospectively. The effects of the adoption on the
consolidated financial statements are as follows:
As at December 31, 2012 As at January 1, 2012
(In Thousand Pesos)
Decrease in:
Consolidated statements of financial position
Net defined benefit asset
Deferred tax liability
Other comprehensive income
Retained earnings
90
(P
=1,509,561)
(452,868)
(481,951)
(574,742)
(P
=1,203,654)
(361,217)
(279,453)
(562,984)
Increase (decrease) in:
Consolidated statements of comprehensive
income
Financing costs
Provision for income tax - deferred
Net income
Remeasurement losses on defined benefit plan
Income tax effect
Other comprehensive income, net of tax
For the Years Ended December 31
2012
2011
(In Thousand Pesos)
(P
=1,916)
18,713
(16,797)
5,039
(11,758)
(289,283)
86,785
(202,498)
(P
=214,256)
=109,143
P
(70,209)
(38,934)
11,680
(27,254)
(399,219)
119,766
(279,453)
(P
=306,707)
Basic earnings per share
(P
=0.09)
(P
=0.21)
Diluted earnings per share
(P
=0.09)
(P
=0.20)
The adoption did not have significant impact on the consolidated statement of cash flows.
Change of Presentation
Upon adoption of the Revised PAS 19, the presentation of the statement of comprehensive income was
updated to reflect these changes. Net interest is now shown under the finance cost (previously included
in staff costs under “General, selling and administrative expenses” account). This presentation better
reflects the nature of net interest since it corresponds to the compounding effect of the long-term net
defined benefit liability (net defined benefit asset). In the past, the expected return on plan assets
reflected the individual performance of the plan assets, which were regarded as part of the operating
activities.
·
PAS 27, Separate Financial Statements (Revised)
As a consequence of the new PFRS 10 and PFRS 12, what remains of PAS 27 is limited to accounting for
subsidiaries, jointly controlled entities and associates in separate financial statements. The adoption of
the amended PAS 27 did not have a significant impact on the separate financial statements of the
entities in the Globe Group.
·
PAS 28, Investments in Associates and Joint Ventures (Revised)
As a consequence of the new PFRS 11 and PFRS 12, PAS 28 has been renamed PAS 28, Investments in
Associates and Joint Ventures, and describes the application of the equity method to investments in joint
ventures in addition to associates. The adoption of the standard did not have an impact to the Globe
Group as they are already accounting for their joint ventures under the equity method.
Annual Improvements to PFRS (2009 to 2011 cycle)
The Annual Improvements to PFRS (2009 to 2011 cycle) contain non-urgent but necessary amendments
to PFRS. The amendments are to be applied retrospectively. Earlier application is permitted. Except as
otherwise stated, the adoption of these improvements have no significant impact on the consolidated
financial statements.
·
PAS 1, Presentation of Financial Statements - Clarification of the Requirements for Comparative
Information
The Amendments clarify the requirements for comparative information that are disclosed
voluntarily and those that are mandatory due to retrospective application of an accounting policy,
or retrospective restatement or reclassification of items in the financial statements. An entity must
include comparative information in the related notes to the financial statements when it voluntarily
provides comparative information beyond the minimum required comparative period. The
additional comparative period does not need to contain a complete set of financial statements. On
the other hand, supporting notes for the third balance sheet (mandatory when there is a
retrospective application of an accounting policy, or retrospective restatement or reclassification of
items in the financial statements) are not required. As a result, the Globe Group has not included
comparative information in respect of the opening consolidated statement of financial position as at
January 1, 2012. The amendments affect presentation only and have no impact on the Globe
Group’s financial position or performance.
91
·
PAS 16, Property, Plant and Equipment - Classification of Servicing Equipment
The Amendment clarifies that spare parts, stand-by equipment and servicing equipment should be
recognized as property, plant and equipment when they meet the definition of property, plant and
equipment and should be recognized as inventory if otherwise. The amendment does not have any
significant impact on the Globe Group’s financial position or performance.
·
PAS 32, Financial Instruments: Presentation - Tax Effect of Distribution to Holders of Equity
Instruments
The Amendment clarifies that income taxes relating to distributions to equity holders and to
transaction costs of an equity transaction are accounted for in accordance with PAS 12, Income
Taxes. The amendment does not have any significant impact on the Globe Group’s financial position
or performance.
·
PAS 34, Interim Financial Reporting - Interim Financial Reporting and Segment Information for Total
Assets and Liabilities
The amendment clarifies that the total assets and liabilities for a particular reportable segment
need to be disclosed only when the amounts are regularly provided to the chief operating decision
maker and there has been a material change from the amount disclosed in the entity’s previous
annual financial statements for that reportable segment. The amendment affects disclosures only
and has no impact on Globe Group’s financial position or performance.
2.5 Future Changes in Accounting Policies
The Globe Group will adopt the following new and amended standards enumerated below when these
become effective. Except as otherwise indicated, the Globe Group does not expect the adoption of these
new and amended PAS and PFRS to have significant impact on the consolidated financial statements.
Effective January 1, 2014
·
Amendments to PAS 36, Impairment of Assets - Recoverable Amount Disclosures for Non-Financial Assets
These amendments remove the unintended consequences of PFRS 13 on the disclosures required under
PAS 36. In addition, these amendments require disclosure of the recoverable amounts for the assets or
cash-generating units (CGUs) for which impairment loss has been recognized or reversed during the
period. These amendments are effective retrospectively for annual periods beginning on or after
January 1, 2014 with earlier application permitted, provided PFRS 13 is also applied. The amendments
affect disclosures only and have no impact on Globe Group’s financial position or performance.
92
·
Investment Entities (Amendments to PFRS 10, PFRS 12 and PAS 27)
They provide an exception to the consolidation requirement for entities that meet the definition of an
investment entity under PFRS 10. The exception to consolidation requires investment entities to account
for subsidiaries at fair value through profit or loss. It is not expected that this amendment would be
relevant to Globe Group since none of the entities in the Group would qualify to be an investment entity
under PFRS 10.
·
Philippine Interpretation IFRIC 21, Levies
IFRIC 21 clarifies that an entity recognizes a liability for a levy when the activity that triggers payment,
as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum
threshold, the interpretation clarifies that no liability should be anticipated before the specified
minimum threshold is reached. The Globe Group does not expect that IFRIC 21 will have material
financial impact in the consolidated financial statements.
·
Amendments to PAS 39, Financial Instruments: Recognition and Measurement - Novation of Derivatives
and Continuation of Hedge Accounting
These amendments provide relief from discontinuing hedge accounting when novation of a derivative
designated as a hedging instrument meets certain criteria. The Globe Group has not novated its
derivatives during the current period. However, these amendments would be considered for future
novations.
·
Amendments to PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial
Liabilities
The amendments clarify the meaning of “currently has a legally enforceable right to set-off” and also
clarify the application of the PAS 32 offsetting criteria to settlement systems (such as central clearing
house systems) which apply gross settlement mechanisms that are not simultaneous. The amendments
affect presentation only and have no impact on the Globe Group’s financial position or performance.
Effective January 1, 2015
·
Amendments to PAS 19, Employee Benefits - Defined Benefit Plans: Employee Contributions
The amendments apply to contributions from employees or third parties to defined benefit plans.
Contributions that are set out in the formal terms of the plan shall be accounted for as reductions to
current service costs if they are linked to service or as part of the remeasurements of the net defined
benefit asset or liability if they are not linked to service. Contributions that are discretionary shall be
accounted for as reductions of current service cost upon payment of these contributions to the plans.
Annual Improvements to PFRS (2010-2012 cycle)
The Annual Improvements to PFRS (2010-2012 cycle) contain non-urgent but necessary amendments to
the following standards:
·
PFRS 2, Share-based Payment - Definition of Vesting Condition
The amendment revised the definitions of vesting condition and market condition and added the
definitions of performance condition and service condition to clarify various issues. This amendment
has no significant impact on the financial position or performance of the Globe Group.
·
PFRS 3, Business Combinations - Accounting for Contingent Consideration in a Business Combination
The amendment clarifies that a contingent consideration that meets the definition of a financial
instrument should be classified as a financial liability or as equity in accordance with PAS 32.
Contingent consideration that is not classified as equity is subsequently measured at fair value
through profit or loss whether or not it falls within the scope of PFRS 9 (or PAS 39, if PFRS 9 is not
yet adopted). Globe Group shall consider this amendment for future business combinations.
·
PFRS 8, Operating Segments - Aggregation of Operating Segments and Reconciliation of the Total of
the Reportable Segments’ Assets to the Entity’s Assets
The amendments require entities to disclose the judgment made by management in aggregating
two or more operating segments. This disclosure should include a brief description of the operating
segments that have been aggregated in this way and the economic indicators that have been
assessed in determining that the aggregated operating segments share similar economic
characteristics. The amendments also clarify that an entity shall provide reconciliations of the total
of the reportable segments’ assets to the entity’s assets if such amounts are regularly provided to
the chief operating decision maker. The amendments affect disclosures only and have no impact on
the Globe Group’s financial position or performance.
·
PFRS 13, Fair Value Measurement - Short-term Receivables and Payables
The amendment clarifies that short-term receivables and payables with no stated interest rates can
be held at invoice amounts when the effect of discounting is immaterial.
·
PAS 16, Property, Plant and Equipment - Revaluation Method - Proportionate Restatement of
Accumulated Depreciation
The amendment clarifies that, upon revaluation of an item of property, plant and equipment, the
carrying amount of the asset shall be adjusted to the revalued amount, and the asset shall be
treated in one of the following ways:
a. The gross carrying amount is adjusted in a manner that is consistent with the revaluation of the
carrying amount of the asset. The accumulated depreciation at the date of revaluation is
adjusted to equal the difference between the gross carrying amount and the carrying amount of
the asset after taking into account any accumulated impairment losses.
b. The accumulated depreciation is eliminated against the gross carrying amount of the asset.
The amendment shall apply to all revaluations recognized in annual periods beginning on or after
the date of initial application of this amendment and in the immediately preceding annual period.
The amendment has no impact on the Globe Group’s financial position or performance.
·
PAS 24, Related Party Disclosures - Key Management Personnel
The amendments clarify that an entity is a related party of the reporting entity if the said entity, or
any member of a group for which it is a part of, provides key management personnel services to the
reporting entity or to the parent company of the reporting entity. The amendments also clarify that
a reporting entity that obtains management personnel services from another entity (also referred to
as management entity) is not required to disclose the compensation paid or payable by the
management entity to its employees or directors. The reporting entity is required to disclose the
amounts incurred for the key management personnel services provided by a separate management
93
entity. The amendments are effective for annual periods beginning on or after July 1, 2014 and are
applied retrospectively. The amendments affect disclosures only and have no impact on the Globe
Group’s financial position or performance.
·
PAS 38, Intangible Assets - Revaluation Method - Proportionate Restatement of Accumulated
Amortization
The amendments clarify that, upon revaluation of an intangible asset, the carrying amount of the
asset shall be adjusted to the revalued amount, and the asset shall be treated in one of the
following ways:
a. The gross carrying amount is adjusted in a manner that is consistent with the revaluation of the
carrying amount of the asset. The accumulated amortization at the date of revaluation is
adjusted to equal the difference between the gross carrying amount and the carrying amount of
the asset after taking into account any accumulated impairment losses.
b. The accumulated amortization is eliminated against the gross carrying amount of the asset.
The amendments also clarify that the amount of the adjustment of the accumulated amortization
should form part of the increase or decrease in the carrying amount accounted for in accordance
with the standard.
The amendments are effective for annual periods beginning on or after July 1, 2014. The
amendments shall apply to all revaluations recognized in annual periods beginning on or after the
date of initial application of this amendment and in the immediately preceding annual period. The
amendments have no impact on the Globe Group’s financial position or performance.
Annual Improvements to PFRS (2011-2013 cycle)
The Annual Improvements to PFRS (2011-2013 cycle) contain non-urgent but necessary amendments to
the following standards:
·
PFRS 3, Business Combinations - Scope Exceptions for Joint Arrangements
The amendment clarifies that PFRS 3 does not apply to the accounting for the formation of a joint
arrangement in the financial statements of the joint arrangement itself. The amendment is effective
for annual periods beginning on or after July 1, 2014 and is applied prospectively.
·
PFRS 13, Fair Value Measurement - Portfolio Exception
The amendment clarifies that the portfolio exception in PFRS 13 can be applied to financial assets,
financial liabilities and other contracts. The amendment is effective for annual periods beginning on
or after July 1, 2014 and is applied prospectively. The amendment has no significant impact on the
Globe Group’s financial position or performance.
·
PAS 40, Investment Property
The amendment clarifies the interrelationship between PFRS 3 and PAS 40 when classifying
property as investment property or owner-occupied property. The amendment stated that
judgment is needed when determining whether the acquisition of investment property is the
acquisition of an asset or a group of assets or a business combination within the scope of PFRS 3.
This judgment is based on the guidance of PFRS 3. This amendment is effective for annual periods
beginning on or after July 1, 2014 and is applied prospectively. The amendment has no significant
impact on the Globe Group’s financial position or performance.
Effectivity not yet determined
·
94
PFRS 9, Financial Instruments
PFRS 9, as issued, reflects the first and third phases of the project to replace PAS 39 and applies to
the classification and measurement of financial assets and liabilities and hedge accounting,
respectively. Work on the second phase, which relate to impairment of financial instruments, and
the limited amendments to the classification and measurement model is still ongoing, with a view to
replace PAS 39 in its entirety. PFRS 9 requires all financial assets to be measured at fair value at
initial recognition. A debt financial asset may, if the fair value option (FVO) is not invoked, be
subsequently measured at amortized cost if it is held within a business model that has the objective
to hold the assets to collect the contractual cash flows and its contractual terms give rise, on
specified dates, to cash flows that are solely payments of principal and interest on the principal
outstanding. All other debt instruments are subsequently measured at fair value through profit or
loss. All equity financial assets are measured at fair value either through other comprehensive
income (OCI) or profit or loss. Equity financial assets held for trading must be measured at fair value
through profit or loss. For liabilities designated as at FVPL using the fair value option, the amount
of change in the fair value of a liability that is attributable to changes in credit risk must be
presented in OCI. The remainder of the change in fair value is presented in profit or loss, unless
presentation of the fair value change relating to the entity’s own credit risk in OCI would create or
enlarge an accounting mismatch in profit or loss. All other PAS 39 classification and measurement
requirements for financial liabilities have been carried forward to PFRS 9, including the embedded
derivative bifurcation rules and the criteria for using the FVO. The adoption of the first phase of
PFRS 9 will have an effect on the classification and measurement of the Group’s financial assets, but
will potentially have no impact on the classification and measurement of financial liabilities.
On hedge accounting, PFRS 9 replaces the rules-based hedge accounting model of PAS 39 with a
more principles-based approach. Changes include replacing the rules-based hedge effectiveness
test with an objectives-based test that focuses on the economic relationship between the hedged
item and the hedging instrument, and the effect of credit risk on that economic relationship;
allowing risk components to be designated as the hedged item, not only for financial items, but also
for non-financial items, provided that the risk component is separately identifiable and reliably
measurable; and allowing the time value of an option, the forward element of a forward contract
and any foreign currency basis spread to be excluded from the designation of a financial instrument
as the hedging instrument and accounted for as costs of hedging. PFRS 9 also requires more
extensive disclosures for hedge accounting.
PFRS 9 currently has no mandatory effective date. PFRS 9 may be applied before the completion of
the limited amendments to the classification and measurement model and impairment
methodology. The Globe Group will not adopt the standard before the completion of the limited
amendments and the second phase of the project.
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 (see Note 3.1.5).
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, 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 Revenues
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) 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
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 revenue during the period when earned. Telecommunications
95
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 statement 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.
Outstanding 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 statement of
financial position unless a legal right of offset exists in which case the net amount is shown
either under “Receivables” or “Accounts payable and accrued expenses” account.
2.6.1.1.3 GCash
Service revenues of GXI consist of SMS revenue arising from GCash transactions passing
through the telecom networks of Globe Telecom. Service revenue also includes transaction
fees and discounts earned from arrangements with partners and from remittances made
through GCash partners using the Globe Group’s facilities. The Globe Group earns service
revenue from one-time connection fee received from new partners. Depending on the
arrangement with partners and when the fee is nonconsumable, outright service revenue is
recognized upon cash receipt.
2.6.1.2 Nonservice Revenues
Proceeds from sale of handsets, devices and accessories, tattoo prepaid kits, SIM packs, modems
and accessories, spare parts and supplies, callcards and others are recognized as revenue upon
delivery of the items and the related cost or net realizable value are presented as “Cost of sales” in
the consolidated statement of comprehensive income.
2.6.1.3 Others
Interest income is recognized as it accrues using the effective interest 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 wireless and wireline voice subscribers
are charged against current operations, while the related acquisition costs of data communication and
broadband internet subscribers are capitalized. Subscriber acquisition costs primarily include
commissions, handset, phonekit, modems, mobile internet kit subsidies, device subsidies and selling
expenses. Subsidies represent the difference between the cost of handsets, devices and accessories,
tattoo prepaid kits, SIM packs, modems and accessories, spare parts and supplies, callcards and others
(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). The data communication and
96
broadband internet costs represent the acquisition cost of modems (included in the “Property and
Equipment” account) which are depreciated over a period of two years (included in the “depreciation and
amortization” 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 statement 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 statement 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
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, re-evaluates such
designation every reporting date.
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 or loss)
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 or loss 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. Financial assets or financial liabilities
are classified as held for sale if they are acquired for the purpose of selling or repurchasing in
the near term. Derivatives, including separated embedded derivatives, are also classified as
held for trading, unless they are designated as effective hedging instruments as defined by PAS
39.
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 or loss.
Interest earned or incurred is recorded as “Interest income or expense”, respectively, while
dividend income is recorded when the right to receive payment has been established. Both are
recorded in profit or loss.
97
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.
The Globe Group evaluates its financial assets held for trading, other than derivatives, to
determine whether the intention to sell them in the near term is still appropriate. When in rare
circumstances the Globe Group is unable to trade these financial assets due to inactive markets
and management’s intention to sell them in the foreseeable future significantly changes, the
Globe Group may elect to reclassify these financial assets. The reclassification to loans and
receivables, AFS or HTM depends on the nature of the asset. This evaluation does not affect
any financial assets designated at FVPL using the fair value option at designation because these
instruments cannot be reclassified after initial recognition.
Derivatives embedded in host contracts are accounted for as separate derivatives and recorded
at fair value if their economic characteristics and risks are not closely related to those of the
host contracts and the host contracts are not held for trading or designated at fair value though
profit or loss. These embedded derivatives are measured at fair value with changes in fair value
recognised in profit or loss. Reassessment only occurs if there is a change in the terms of the
contract that significantly modifies the cash flows that would otherwise be required.
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 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 or impaired, as well as through the
amortization process. The amortization is included in “Interest income” in the consolidated
statement of comprehensive income. The effects of restatement of foreign currencydenominated HTM investments are recognized in profit or loss.
There are no outstanding HTM investments as of December 31, 2013 and 2012.
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 statement 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”.
98
Receivables are recognized initially at fair value. After initial measurement, receivables are
subsequently measured at amortized cost using the effective interest 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 statement 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 method, less any
allowance for impairment losses.
2.6.4.1.5 AFS Investments
AFS investments are those investments which are designated as such or do not qualify to be
classified or 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.
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 value changes of AFS investments are
included in other comprehensive income and are reported as “Other reserves” (net of tax where
applicable) in the equity section of the consolidated statement 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 to receive payment has been established.
The losses arising from impairment of such investments are recognized as “Impairment losses
and others” in the consolidated statement 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 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 currencydenominated 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).
99
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).
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, 2013 and 2012, there were no derivatives designated and accounted
for as fair value hedges.
Cash Flow Hedges
The Company designates as cash flow hedges the following derivatives: (a) interest rate
swaps as cash flow hedge of foreign exchange and interest rate risk of United States Dollar
(USD) loans, (b) interest rate swaps as cash flow hedge of interest rate risk of a floating rate
obligation, and (c) certain foreign exchange forward contracts as cash flow hedge of
expected USD revenues.
100
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 recognized in OCI is retained in “Other reserves” 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 recognized in “Other
reserves” is immediately recycled in profit or loss.
For cash flow hedges of USD revenues, 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 upon
consummation of the transaction or when the hedge become ineffective.
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 is to 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 is 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.
101
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 risk profile of
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.
2.6.4.2.1.1 Subscribers
Management regularly reviews its portfolio and assesses if there are accounts requiring
specific provisioning based on objective evidence of high default probability. Observable
data indicating high impairment probability could be deterioration in payment status,
declaration of bankruptcy or national/local economic indicators that might affect payment
capacity of accounts.
Full allowance for impairment losses, net of average recoveries, is provided for receivables
from permanently disconnected wireless, wireline and broadband 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 due date.
Impairment losses are applied to active wireless, wireline and broadband accounts
specifically identified to be doubtful of collection where there is information on financial
incapacity after considering the other contractual obligations between Globe Group and
the subscriber. Allowance is applied regardless of age bucket of identified accounts.
Application of impairment losses to receivables, net of receivables with applied specific
loss, is also determined based on the results of net flow to permanent disconnection
methodology.
For wireless, net flow tables are derived from account-level monitoring of subscriber
accounts between different age brackets depending on the defined permanent
disconnection timeline, from current to 150 days past due and up. The net flow to
permanent disconnection 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 to permanent
disconnection. 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 bucket. Full allowance is provided for
receivables of active consumer accounts in the 150 days past due and up bucket.
For active wireline voice and broadband subscribers, the allowance for impairment loss is
also determined based on the results of net flow rate to permanent disconnection
computed from account-level monitoring of accounts from current to 90 days past due and
up age bucket except for consumer where impairment rate applied at 90 days past due and
up bucket is full allowance net of average recoveries prior to permanent disconnection.
2.6.4.2.1.2 Traffic
As per PAS 39, impairment provision is recognized in the light of actual losses incurred by
the Globe Group as a result of one or more events that occurred after the initial recognition
of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated
future cash flows of the financial asset or group of assets that can be reliably estimated.
For traffic receivables, impairment losses are made for accounts specifically identified to be
doubtful of collection regardless of the age of the account. For accounts that have no
established recovery rate yet, full provision for ten months and above traffic receivable is
being applied. For receivable balances that appear doubtful of collection, allowance is
provided after review of the status of settlement with each carrier and roaming partner,
102
taking into consideration normal payment cycles, recovery experience and credit history of
the counterparties.
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.
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 “passthrough” 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. Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at the lower of the original carrying amount
of the asset and the maximum amount of consideration that the Globe Group could be required
to pay.
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 Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to sell the asset or transfer the
liability takes place either:
103
·
·
In the principal market for the asset or liability, or
In the absence of a principal market, in the most advantageous market for the asset or
liability
The principal or the most advantageous market must be accessible to by the Globe Group.
The fair value of an asset or a liability is measured using the assumptions that market
participants would use when pricing the asset or liability, assuming that market participants act
in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s
ability to generate economic benefits by using the asset in its highest and best use or by selling
it to another market participant that would use the asset in its highest and best use.
The Globe Group uses valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, maximizing the use of relevant
observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the consolidated
financial statements are categorized within the fair value hierarchy, described as follows, based
on the lowest level input that is significant to the fair value measurement as a whole:
·
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or
liabilities
·
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair
value measurement is directly or indirectly observable
·
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair
value measurement is unobservable
For assets and liabilities that are recognized in the consolidated financial statements on a
recurring basis, the Globe Group determines whether transfers have occurred between Levels in
the hierarchy by re-assessing categorization (based on the lowest level input that is significant
to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Globe Group has determined classes of assets and liabilities
on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value
hierarchy as explained above.
2.6.6 Inventories and Supplies
Inventories and supplies are stated at the lower of cost and net realizable value (NRV). NRV for
handsets, modems, devices 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 80% for non-moving items after a certain period. Cost is
determined using the moving average method.
2.6.7 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 (and the related liabilities) 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.
Events or circumstances may extend the period to complete the sale beyond one year. An extension of
the period required to complete a sale does not preclude an asset from being classified as held for sale if
the delay is caused by events or circumstances beyond the entity's control and there is sufficient
evidence that the entity remains committed to its plan to sell the asset.
Items of property and equipment and intangible assets once classified as held for sale are not
depreciated/amortized.
104
Assets that ceases to be classified as held for sale are measured at the lower of its carrying value before
the assets were classified as held for sale, adjusted for any depreciation that would have been
recognized had the asset not been classified as held for sale, and its recoverable amount at the date of
the changes to the plan of sale. Adjustment is recognized in profit or loss.
2.6.8 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 specifically 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.
Expenditures incurred after the property and equipment have been put into operation, such as repairs
and maintenance, are normally charged to income in the period when the costs are incurred. In
situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the
future economic benefits expected to be obtained from the use of an item of property and equipment
beyond its originally assessed standard of performance, the expenditures are capitalized as additional
costs of property and equipment.
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.
Assets under construction (AUC) are carried at cost and transferred to the related property and
equipment account when the construction or installation, and the 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. Any resulting gain or
loss is credited to or charged against current operations.
2.6.9 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
carrying value of the related property and equipment accounts, and are depreciated on a straight-line
basis over the useful life of the related property and equipment or the contract period, whichever is
shorter.
The amount of ARO is recognized at present value and the related accretion is recognized as interest
expense.
105
2.6.10 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 to profit or loss in the period in which the costs are incurred.
Depreciation of investment property is computed using the straight-line method over its useful life. 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. In 2012, the Globe Group transferred the investment property to property and
equipment due to change in use.
2.6.11 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; 2) intangible
assets identified to exist during the acquisition of EGG Group for its existing customer contracts; and 3)
exclusive dealership right in Taodharma, Inc. (Taodharma). 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
statement of comprehensive income when the asset is derecognized.
2.6.12 Business Combinations and Goodwill
Business combinations are accounted for using the purchase method. The cost of an acquisition is
measured as the aggregate of the consideration transferred, measured at acquisition date fair value and
the amount of any non-controlling interest in the acquiree. For each business combination, the Globe
Group elects whether it measures the non-controlling interest in the acquiree either at fair value or at
the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed
and included in administrative expenses.
When the Globe Group acquires a business, it assesses the financial assets and financial liabilities
assumed for appropriate classification and designation in accordance with the contractual terms,
economic circumstances and pertinent conditions as at the acquisition date. This includes the separation
of embedded derivatives in host contracts by the acquiree.
106
If the business combination is achieved in stages, any previously held equity interest is re-measured at its
acquisition date fair value and any resulting gain or loss is recognized in profit or loss. It is then
considered in the determination of goodwill. Any contingent consideration to be transferred by the
acquirer will be recognized at fair value at the acquisition date. Subsequent changes to the fair value of
the contingent consideration that is deemed to be an asset or liability will be recognized in accordance
with PAS 39 either in profit or loss or as a change to OCI. If the contingent consideration is classified as
equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances
where the contingent consideration does not fall within the scope of PAS 39, it is measured in
accordance with the appropriate PFRS.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred
and the amount recognized for non-controlling interest over the net identifiable assets acquired and
liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognized in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the
purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the Globe Group’s cash-generating units (CGUs) that are expected to benefit from
the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those
units.
Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the
goodwill associated with the operation disposed of is included in the carrying amount of the operation
when determining the gain or loss on disposal of the operation. Goodwill disposed of in this
circumstance is measured based on the relative values of the operation disposed of and the portion of
the CGU retained.
2.6.13 Investments in Associate and Joint Ventures
An associate is an entity over which the Globe Group has significant influence. Significant influence is
the power to participate in the financial and operating policy decisions of the investee, but is not control
or joint control over those policies.
A joint venture (JV) is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities
require unanimous consent of the parties sharing control.
The considerations made in determining significant influence or joint control are similar to those
necessary to determine control over subsidiaries.
The Globe Group’s investments in its associate and joint venture are accounted for using the equity
method.
Under the equity method, the investments in associate and JV are carried in the consolidated statement
of financial position at cost plus post-acquisition changes in the Globe Group’s share in net assets of the
associate and JV, less any allowance for impairment losses. The profit or loss includes Globe Group’s
share in the results of operations of its associate or JV. Any change in OCI of those investees is
presented as part of the Globe Group’s OCI. In addition, where there has been a change recognized
directly in the equity of the associate or JV, the Globe Group recognizes its share of any changes and
discloses this, when applicable, in other OCI.
The financial statements of the associate or joint venture are prepared for the same reporting period as
the Globe Group.
Upon loss of significant influence over the associate or joint control over the joint venture, the Globe
Group measures and recognizes any retained investment at its fair value. Any difference between the
carrying amount of the associate or joint venture upon loss of significant influence or joint control and
the fair value of the retained investment and proceeds from disposal is recognized in profit or loss.
107
2.6.14 Impairment of Nonfinancial Assets
For nonfinancial 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 higher of its fair value less cost to sell
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 fair value less cost to sell.
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.
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.
2.6.15 Income Tax
2.6.15.1 Current Income 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 date.
2.6.15.2 Deferred Income Tax
Deferred income tax is provided using the balance sheet liability method on all temporary
differences, with certain exceptions, at the end of the reporting date 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 (RCIT) 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 an associate and JV.
Deferred income tax relating to items recognized directly in equity or OCI is included in the related
equity or OCI account and not in profit or loss.
The carrying amounts of deferred income tax assets are reviewed every end of 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.
108
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 date.
Movements in the deferred income tax assets and liabilities arising from changes in tax rates are
charged or credited to income for the period.
2.6.16 Provisions
Provisions are recognized when: (a) the Globe Group has a 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 statement of comprehensive
income.
2.6.17 Share-based Payment Transactions
Certain employees (including directors) of the Globe Group receive remuneration in the form of sharebased 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).
2.6.18 Capital Stock
Capital stock is recognized as issued when the stock is paid for or subscribed under a binding subscription
agreement and is measured at par value. The transaction costs incurred as a necessary part of
completing an equity transaction are accounted for as part of that transaction and are deducted from
equity.
109
2.6.19 Additional Paid-in Capital
Additional paid-in capital includes any premium received in excess of par value on the issuance of capital
stock.
2.6.20 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 paidin capital when the shares were issued and to retained earnings for the remaining balance.
2.6.21 Other Comprehensive Income
OCI are items of income and expense that are not recognized in the profit or loss for the year in
accordance with PFRS.
2.6.22 Pension Cost
The net defined benefit liability or asset is the aggregate of the present value of the defined benefit
obligation at the end of the reporting period reduced by the fair value of plan assets (if any), adjusted for
any effect of limiting a net defined benefit asset to the asset ceiling. The asset ceiling is 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 cost of providing benefits under the defined benefit plans is actuarially determined using the
projected unit credit method. Defined benefit costs comprise service cost, net interest on the net
defined benefit liability or asset and remeasurements of net defined benefit liability or asset.
Service costs which include current service costs, past service costs and gains or losses on non-routine
settlements are recognized as expense in profit or loss. Past service costs are recognized when plan
amendment or curtailment occurs. These amounts are calculated periodically by independent qualified
actuaries.
Net interest on the net defined benefit liability or asset is the change during the period in the net defined
benefit liability or asset that arises from the passage of time which is determined by applying the
discount rate based on government bonds to the net defined benefit liability or asset. Net interest on the
net defined benefit liability or asset is recognized as expense or income in profit or loss.
Remeasurements comprising actuarial gains and losses, return on plan assets and any change in the
effect of the asset ceiling (excluding net interest on defined benefit liability) are recognized immediately
in OCI in the period in which they arise. Remeasurements are not reclassified to profit or loss in
subsequent periods.
Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance
policies. Plan assets are not available to the creditors of the Globe Group, nor can they be paid directly to
the Globe Group. Fair value of plan assets is based on market price information. When no market price
is available, the fair value of plan assets is estimated by discounting expected future cash flows using a
discount rate that reflects both the risk associated with the plan assets and the maturity or expected
disposal date of those assets (or, if they have no maturity, the expected period until the settlement of
the related obligations). If the fair value of the plan assets is higher than the present value of the
defined benefit obligation, the measurement of the resulting defined benefit asset is limited to the
present value of economic benefits available in the form of refunds from the plan or reductions in future
contributions to the plan.
2.6.23 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
statement of financial position and are amortized using the effective interest method.
110
Other borrowing costs are recognized as expense in the period in which these are incurred.
2.6.24 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:
·
·
·
·
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.
2.6.24.1 Globe Group as Lessee
Finance leases, which transfer to the Globe Group substantially all the risks and rewards 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 statement 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 statement 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 rewards 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.
2.6.24.2 Globe Group as Lessor
Finance leases, where the Globe Group transfers substantially all the risk and rewards incidental to
ownership of the leased item to the lessee, are included in the consolidated statement 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 statement of comprehensive
income.
Leases where the Globe Group does not transfer substantially all the risk and rewards 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.
2.6.25 General, Selling and Administrative Expenses
General, selling and administrative expenses, except for rent, are charged against current operations as
incurred (see Note 2.6.24.1).
2.6.26 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) and GTHK and GTIC US whose functional
currency is the USD and GTEU, GT UK and GT Italy whose functional currency is Euro. Transactions in
foreign currencies are initially recorded at the functional currency rate prevailing at the date of the
transaction. Outstanding monetary assets and liabilities denominated in foreign currencies are
retranslated at the functional currency rate of exchange ruling at the end of reporting period.
111
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 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
OCI.
As at the reporting date, the assets and liabilities of EHL, GTIC US and GTHK, GTEU, GT UK and GT Italy
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, GTIC US, GTHK,
GTEU, GT UK and GT Italy, the cumulative translation adjustments shall be recognized in profit or loss.
2.6.27 EPS
Basic EPS is computed by dividing net income attributable 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.
2.6.28 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.
2.6.29 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.
2.6.30 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 periodend 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
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 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.
112
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
3.1.1.1 Operating Lease Commitments as Lessor
The Globe Group has entered into a lease agreements as a lessor. Critical judgment was exercised
by management to distinguish the lease agreement as either an operating or finance lease by
looking at the transfer or retention of significant risk and rewards of ownership of the properties
covered by the agreements. The Globe Group has determined that it retains all the significant risks
and rewards of ownership of the properties and so accounts for the agreement as an operating lease
(see Note 25.1.1).
3.1.1.2 Operating Lease Commitments as Lessee
The Globe Group has entered into various lease agreements as a lessee where it has determined that
the lessors retain all the significant risks and rewards of ownership of the properties and, as such,
accounts for the agreements as operating lease (see Note 25.1.1).
3.1.1.3 Finance Lease
The Globe Group has entered into a finance lease agreement related to hardware infrastructure and
information equipment. They have determined, based on the evaluation of the terms and conditions
of the arrangement, that they bear substantially all the risks and rewards incidental to ownership of
the said machineries and equipment and so account for the contracts as finance leases (see Note
25.1.2).
3.1.2 Fair Value of Financial Instruments
When the fair value of financial assets and financial liabilities recorded in the consolidated statement of
financial position cannot be derived from active markets, their fair value is determined using valuation
techniques including the discounted cash flow model. The inputs to these models are 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 inputs such as liquidity risk, credit risk
and volatility. Changes in assumptions about these factors could affect the reported fair value of
financial instruments.
3.1.3 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’s-length basis.
3.1.4 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 Globe 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.
3.1.5 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;
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.
113
The Globe Group assessed its revenue arrangements and concluded that it is acting as a principal in
some arrangements and as an agent in other arrangements.
3.1.6 Provisions and Contingencies
Globe Group is 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 Group’s defense in these matters and is based upon an analysis of potential results.
Globe Group currently does not believe that these proceedings will have a material adverse effect on the
consolidated statements of financial position and results of operations. 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).
3.1.7 Classification of Noncurrent Assets Held for Sale
The Globe Group classified certain non-current assets as held-for-sale in 2010. PFRS 5, Noncurrent
Assets Held for Sale and Discontinued Operations, requires that the sale should be expected to qualify for
recognition as a completed sale within one year from the date of classification, with certain exceptions.
Globe Group has determined that circumstances have occurred which will qualify as exception to the
timing of the recognition of the sale in previous years.
In 2013, the Globe Group ceased to classify these assets as held for sale due to the substantial delay in
the completion of the transaction. The Globe Group recognized a catch up depreciation amounting to
=397.00 million for the year ended December 31, 2013 (see Note 25.8).
P
As of December 31, 2012, the Globe Group retained the classification of its non-current assets as held for
sale, including the related liabilities. Globe Group expects no changes in the terms of agreement and on
the valuation as the considerations have already been fixed, and remains to be committed to its plan to
sell the assets.
3.1.8 Assessment of Investment in Bayan Telecommunications Inc. (BTI) and Receivables from BTI
The Globe Group purchased BTI’s outstanding debts from its creditors and was recognized at transaction
price which was considered its fair value. The total debt of BTI is comprised of sustainable Tranche A
and unsustainable Tranche B. A portion of the debt (Tranche B) was converted into equity and was
valued at nil while the total consideration at point of tender was assigned to the collectible portion of
Tranche A (see Notes 6, 11 and 16.6).
Critical judgment was exercised to assess the facts and circumstances indicating the elements of control
or level of influence of Globe Group over BTI. The Globe Group determines that it has significant
influence in the financial and operating policy decisions of BTI but not control over those policies. The
converted portion of debt (Tranche B) to the Globe Group’s interest is recognized as investment in
associate and is accounted for using the equity method.
The collectible portion of Tranche A is determined to be a financial asset classified as “Loans receivable”
and not as trading assets nor designated at FVPL or AFS since this has fixed or determinable payments
that are not quoted in an active market and is measured at amortized cost using the effective interest
rate reasonably determined by the Globe Group.
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 Group estimates the fair value of points awarded under its Loyalty programmes, which are within
the scope of Philippine Interpretation IFRIC 13, Customer Loyalty Programmes, by applying estimation
procedures using historical data and trends. The points expected to be redeemed is estimated based on
the remaining points, the run-rate redemption by the subscribers and the points to peso conversion. As
of December 31, 2013 and 2012, the estimated liability for unredeemed points included in “Unearned
revenues” amounted to P
=323.38 million and P
=244.25 million, respectively.
114
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, 2013, 2012 and 2011 amounted to
=2,046.52 million, =
P
P1,377.32 million and =
P1,599.97 million, respectively (see Note 23). Receivables, net
of allowance for impairment losses, amounted to P
=15,200.92 million and P
=12,105.44 million as of
December 31, 2013 and 2012, 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 80% 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.
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, 2013, 2012 and 2011
amounted to P
=321.46 million, P
=237.92 million, respectively (see Note 23).
Inventories and supplies, net of allowances, amounted to P
December 31, 2013 and 2012, 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 present value of dismantling costs is computed based on an average credit-adjusted risk-free rate of
6.67% and 6.85% in 2013 and 2012, 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 P
=16.03 million and
=26.80 million in 2013 and 2012, respectively, against the book value of the assets on leased premises
P
(see Note 15).
As of December 31, 2013 and 2012, ARO amounted to P
=1,594.63 million,
respectively (see Note 15).
115
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.
The EUL of property and equipment of the Globe Group are as follows:
Telecommunications equipment:
Tower
Switch
Outside plant, cellsite structures and improvements
Distribution dropwires and other wireline assets
Cellular equipment and others
Buildings
Leasehold improvements
Investments in cable systems
Office equipment
Transportation equipment
Years
20
7 and 10
10-20
2-10
3-10
20
5 years or lease term,
whichever is shorter
15
3-5
3-5
The EUL of investment property is twenty (20) years.
Intangible assets comprising of licenses and application software are amortized over the EUL of the
related hardware or equipment ranging from three (3) to ten (10) years or life of the
telecommunications equipment where it is assigned.
In 2013 and 2012, the Globe Group changed the EUL of certain wireless and wireline
telecommunications equipment and licenses resulting from new information affecting the expected
utilization of these assets. The net effect of the change in EUL resulted in higher depreciation of
P
=4,245.30 million in 2013 and 2012, respectively.
As of December 31, 2013 and 2012, the aggregate carrying value of property and equipment,
investment property and intangible assets amounted to P
=105,216.32 million,
respectively (see Notes 7, 8 and 9).
3.2.6 Estimation of Residual Value
The Globe Group estimates a residual value (RV) for assets subjected to accelerated depreciation caused
by network transformation. The group continues to retain the RV based on the progress of disposal of
decommissioned assets as of December 31, 2013.
The Globe Group regularly assesses the need to adjust the RV on a periodic basis.
3.2.7 Asset Impairment
3.2.7.1 Impairment of Nonfinancial Assets Other Than Goodwill
The Globe Group assesses impairment of assets (property and equipment, investment property,
intangible assets and investments in associate and 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:
·
·
·
116
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 fair value less cost to
sell and value in use. The fair value less cost to sell 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 fair
value less cost to sell.
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 Republic Act (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
Local Exchange Carrier 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.
The aggregate carrying value of property and equipment, investment property, intangible
assets, and investments in associate and joint ventures amounted to =
P114,427.49 million and
=105,399.52 million as of December 31, 2013 and 2012, respectively (see Notes 7, 8, 9 and 10).
P
3.2.7.2 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 Globe 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, 2013 and 2012, the carrying value of goodwill amounted to P
=327.13 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 (see Note 29).
The recoverable amount of the CGU, which exceeds the carrying amount of the related goodwill by
P
=962.34 million, as of December 31, 2013 and 2012, respectively, has been
determined based on value in use calculations using cash flow projections from financial budgets
covering a five-year period. The pretax discount rate applied to cash flow projections was 9.40 % in
2013 and 11% in 2012, and cash flows beyond the five-year period are extrapolated using a 3% longterm growth rate in 2013 and 2012.
3.2.8 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, 2013 and 2012, Innove, GXI and EGG Group has net deferred income tax assets
amounting to =
P840.73 million and P
=1,016.86 million, respectively.
As of December 31, 2013, Globe Telecom has net deferred income tax assets amounting to
=1,076.15 million and net deferred income tax liabilities amounting to P
P
December 31, 2012 (see Note 24). Globe Telecom and Innove have no unrecognized deferred income
tax assets as of December 31, 2013 and 2012.
As of December 31, 2012, GXI recognized deferred income tax assets from NOLCO amounting to
=16.02 million (see Note 24).
P
117
3.2.9 Financial Assets and Financial 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 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 financial 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, 2013 and 2012, amounted to P
=141.87 million, respectively, and
financial liabilities comprising of derivative liabilities carried at fair values as of December 31, 2013 and
2012, amounted to P
=240.65 million, respectively (see Note 28.12).
3.2.10 Estimation of Losses and Recognition of Claims from Insurer
The Globe Group assesses the extent of losses arising from natural calamities. Certain methodology and
reasonable estimates are exercised considering all factors including insurance coverage, type of losses
sustained. The Globe Group determines the recoverability of losses from insured assets.
Provision for impairment of assets recognized in 2013 amounted to =
P139.00 million.
3.2.11 Pension and Other Employee Benefits
The cost of defined benefit pension plans and as well as the present value of the pension obligation are
determined using actuarial valuations. The actuarial valuation involves making various assumptions.
These include the determination of the discount rates, future salary increases and mortality rates. Due
to the complexity of the valuation, the underlying assumptions and its long-term nature, defined benefit
obligations are highly sensitive to changes in these assumptions. All assumptions are reviewed at each
reporting date.
In determining the appropriate discount rate, management considers the interest rates of government
bonds that are denominated in the currency in which the benefits will be paid, with extrapolated
maturities corresponding to the expected duration of the defined benefit obligation.
The mortality rate is based on the 1994 Group Annuity Mortality Table developed by the Society of
Actuaries, which provides separate rates for males and females and is modified accordingly with
estimates of mortality improvements. Future salary increases and pension increases are based on
expected future inflation rates for the specific country.
The net pension liability as at December 31, 2013 and 2012 amounted to P
=1,607.30 million and
=843.91 million, respectively. Further details are provided in Note 18.
P
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, expected dividend and expected volatility rate.
Cost of share-based payments in 2013, 2012 and 2011 amounted to P
=50.00 million, P
=11.50 million and
=49.34 million, respectively (see Notes 16.5 and 18.1).
P
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, 2013 and 2012 amounted to P
=484.60 million,
respectively (see Notes 12 and 15).
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.
118
4.
Receivables
This account consists of receivables from:
Notes
Subscribers
Traffic settlements - net
Dealers
Others
Less allowance for impairment losses:
Subscribers
Traffic settlements and others
2013
2012
(In Thousand Pesos)
16, 28.2.2
12, 16, 28.2.2
28.2.2
28.2.2
P
=15,616,059
1,503,841
1,210,535
1,060,533
19,390,968
=11,508,305
P
2,611,358
844,838
679,008
15,643,509
28.2.2
28.2.2
3,970,421
219,624
4,190,045
P
=15,200,923
3,317,014
221,058
3,538,072
=12,105,437
P
Subscriber receivables arise from wireless and wireline voice, data communications and broadband internet
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 P
=2,258.65 million as of December 31, 2013 and 2012, respectively.
Traffic settlements receivable are presented net of traffic settlements payable from the same carrier
amounting to =
P2,249.60 million and P
Receivables are noninterest-bearing and are generally collectible in the short-term.
5.
Inventories and Supplies
This account consists of:
2013
2012
(In Thousand Pesos)
At cost:
Modems and accessories
Spare parts and supplies
Call cards and others
SIM cards and SIM packs
At NRV:
Handsets, devices and accessories
Nomadic broadband device
P
=112,668
3,110
2,805
61
118,644
=–
P
6,142
508
29
6,679
2,562,689
390,646
313,092
111,252
44,824
3,740
3,426,243
P
=3,544,887
1,139,463
62,639
246,103
36,160
375,037
210,095
2,069,497
=2,076,176
P
Inventories recognized as expense during the year amounting to P
=10,274.57 million, P
=6,142.34 million in 2013, 2012 and 2011, respectively, are included as part of “Cost of sales” and
P
“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).
119
Cost of sales incurred consists of:
2013
Handsets, devices and accessories
Nomadic broadband device
P
=8,028,405
1,314,176
349,558
251,692
8,014
1,261
P
=9,953,106
2012
(In Thousand Pesos)
=6,565,510
P
561,310
245,462
228,198
4,472
73,407
=7,678,359
P
2011
=4,928,921
P
545,354
245,418
77,033
1,440
89,423
=5,887,589
P
There are no unusual purchase commitments and accrued net losses as of December 31, 2013 and 2012.
6.
Prepayments and Other Current Assets
Notes
Current portion of loan receivable from:
Globe Group retirement plan (GGRP)
BTI
Bethlehem Holdings, Inc. (BHI)
Advance payments to suppliers and
contractors
Prepayments
Deferred input VAT
Input VAT - net
Creditable withholding tax
Miscellaneous receivables - net
Other current assets
2013
2012
(In Thousand Pesos)
11, 16.3, 18.2
11
11, 25.5
P
=968,000
481,366
158,620
=–
P
347,910
–
25.3
25.1
11
5,223,600
949,203
466,982
450,525
225,079
220,025
319,423
P
=9,462,823
8,815,534
1,050,731
527,276
638,626
300,680
425,426
202,065
=12,308,248
P
16
The “Prepayments” account includes prepaid insurance, rent, maintenance, and National
Telecommunications Commissions (NTC) spectrum users’ fee among others.
Deferred input VAT pertains to various purchases of goods and services which cannot be claimed yet as
credits against output VAT liabilities, pursuant to the existing VAT rules and regulations. However, these can
be applied on future output VAT liabilities.
As of December 31, 2013, Innove, GXI, GTI and KVI reported net input VAT amounting to P
=450.53 million, net
of output VAT of P
=125.84 million. As of December 31, 2012, Innove and GXI reported net input VAT
amounting to =
P638.63 million, net of output VAT of P
=110.94 million.
120
7.
Property and Equipment
The rollforward analysis of this account follows:
2013
Tele- Buildings and Investments
communicati
Leasehold
in
ons Improvement
Cable
Equipment
s
Systems
Cost
At January 1
Additions
Retirements/disposals
Reclassifications/
adjustments
At December 31
Accumulated
Depreciation
and Amortization
At January 1
Depreciation and
amortization
Incremental effect
of network
modernization
Others
Reclassifications/
adjustments
At December 31
Impairment Losses
At January 1
Additions (reversals)
Write-off/adjustments
At December 31
Net Book Value at
December 31
= 202,201,632 P
P
= 28,852,761 =
P14,144,444
13,784,885
348,336
251,136
(22,281,856)
(3,649)
–
Transportatio
Office
n
Equipment
Equipment
(In Thousand Pesos)
= 7,951,568
P
284,219
(32,931)
= 2,311,840
P
257,635
(243,245)
Assets Under
Land Construction
Total
= 1,573,994 P
P
= 17,596,471 =
P274,632,710
–
20,754,416
35,680,627
–
(1,015) (22,562,696)
(18,031,409) (1,288,880)
20,318,463 286,461,761
5,490,808
199,195,469
5,608,051
34,805,499
4,584,328
18,979,908
1,021,129
9,223,985
11,794
2,338,024
26,419
1,600,413
143,047,869
14,551,973
6,485,043
6,834,232
1,680,991
–
– 172,600,108
–
–
–
–
–
–
1,443
1,700,206
–
–
–
641,087
– 175,417,887
–
–
–
–
7,747,607
12,938,614
(22,239,228)
23,880
1,436,398
(3,386)
1,259
1,394,939
–
56,978
833,998
(32,139)
(14,316)
141,480,546
(5,290)
16,003,575
808,019
8,689,260
(148,769)
7,544,300
138,069
123,852
(18,099)
243,822
–
–
–
–
–
247,540
(229,768)
–
–
–
–
3,182
–
–
3,182
–
–
–
–
=
P57,471,101 P
= 18,801,924 =
P10,290,648
= 1,676,503
P
= 637,818
P
468,987
(97,540)
1,351
372,798
7,829,724
16,851,489
(22,504,521)
610,238
26,312
(16,748)
619,802
= 1,600,413 P
P
= 19,945,665 P
= 110,424,072
2012
Telecommunicatio Buildings and Investments
ns
Leasehold
in
Equipment Improvements Cable Systems
Cost
At January 1
= 187,924,112 =
P
P27,374,020 =
P13,129,153
Additions
5,026,981
58,025
351,345
Retirements/disposals (1,030,704)
(1,960)
–
Reclassifications/
adjustments
10,281,243
1,422,676
663,946
At December 31
202,201,632
28,852,761
14,144,444
Accumulated
Depreciation
and Amortization
At January 1
125,417,729
13,087,427
5,569,643
Depreciation and
amortization
Incremental effect of
network
modernization
4,202,766
8
5,043
Others
14,185,102
1,264,176
858,464
(999,456)
(1,797)
–
Reclassifications/
adjustments
241,728
202,159
51,893
At December 31
143,047,869
14,551,973
6,485,043
Impairment Losses
At January 1
159,837
–
–
Additions
–
–
–
Write-off/adjustments
(21,768)
–
–
At December 31
138,069
–
–
Net Book Value at
December 31
= 59,015,694 P
P
= 14,300,788
P
= 7,659,401
Transportatio
Office
n
Equipment
Equipment
(In Thousand Pesos)
Assets Under
Land Construction
= 7,333,754
P
212,107
(139,907)
= 2,206,974
P
257,696
(154,746)
545,614
7,951,568
1,916
2,311,840
46,619
1,573,994
6,152,934
1,582,493
–
–
–
–
–
–
–
–
–
1,680,991
–
–
–
–
3,182
–
–
3,182
–
–
–
–
–
–
–
–
209,687
259,262
38
468,987
= 1,114,154
P
= 630,849
P
37,488
815,831
(139,841)
(32,180)
6,834,232
–
241,031
(142,533)
Total
= 1,527,375 P
P
= 11,955,324 P
= 251,450,712
–
20,751,350
26,657,504
–
(5,600) (1,332,917)
(15,104,603) (2,142,589)
17,596,471 274,632,710
151,810,226
4,245,305
17,364,604
(1,283,627)
463,600
172,600,108
372,706
259,262
(21,730)
610,238
= 1,573,994 P
P
= 17,127,484 P
= 101,422,364
121
In the last quarter of 2011, Globe Group has announced to undertake a network and IT transformation
program for an estimated investment of USD790.00 million over the next two to three years. External
partners were engaged in 2011 to help manage the modernization effort. In the first quarter of 2012, the
EUL of certain wireless and wireline telecommunications equipment were changed as a result of continuing
upgrade and migration to a modernized network. The net effect of the change in EUL resulted in higher
depreciation expense of P
=4,245.30 million for the years ended December 31, 2013 and
2012, respectively.
Assets under construction include intangible components of a network system which are to be 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.
The costs of fully depreciated property and equipment that are still being used in the network amounted to
P
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 2.83%, 3.01% and 3.19% capitalization rates in 2013,
2012 and 2011, respectively. The Globe Group’s total capitalized borrowing costs amounted to P
=823.90
million,
P
=591.66 million for the years ended December 31, 2013, 2012 and 2011, respectively
(see Note 22).
In 2011, the Globe Group entered into an asset exchange transaction with an equipment supplier whereby
Globe Group conveyed and transferred ownership of certain hardware equipment and licenses nearing end of
economic life and then later purchased upgraded equipment from the same equipment supplier. This
transaction resulted in a gain amounting to P
=244.37 million (included under “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 and the carrying amount of the old platforms and equipment at
the time the transaction was consummated.
The Company is currently recovering decommissioned network assets affected by the conversion to new
upgraded equipment from its continuing network modernization project, including computer related assets,
from its IT transformation project.
The carrying value of the hardware infrastructure and information equipment held under finance lease
(included under “Telecommunications equipment” and “Asset under construction”) at December 31, 2013
and 2012 amounted to P
=738.09 million, respectively (see Note 25.1.2).
8.
Investment Property
The rollforward analysis of this account as of December 31, 2012 follows (in thousand Pesos):
Cost
At January 1 and December 31
Reclassification (Note 7)
At December 31
Accumulated Depreciation
At January 1
Depreciation
Reclassification (Note 7)
At December 31
Net Book Value at December 31
P390,641
=
(390,641)
–
198,996
6,457
(205,453)
–
=–
P
Investment property represents the portion of a building that was held for lease to third parties in 2009. In
2012, the Globe Group transferred the remaining book value of the Investment property to Property and
equipment (see Note 7).
122
9.
Intangible Assets and Goodwill
Licenses and
Application
Software
Cost
At January 1
P
=11,260,680
Additions
30,486
(351,474)
Reclassifications/adjustments
(Note 7)
2,742,187
At December 31
13,681,879
Accumulated Depreciation and
Amortization
At January 1
7,796,686
Amortization:
Incremental effect of
network modernization
1,236,242
Others
1,554,065
(351,474)
Reclassifications/adjustments
(Note 7)
(2,758)
At December 31
10,232,761
Net Book Value at December 31 P
=3,449,118
Customer
Contracts
2013
Exclusive
Total
Dealership
Intangible
Right
Assets
(Note 25.10)
Goodwill
Total
Intangible
Assets and
Goodwill
P
=327,125
–
–
P
=11,616,186
98,038
(351,474)
P
=28,381
–
–
P
=–
67,552
–
P
=11,289,061
98,038
(351,474)
–
28,381
–
67,552
2,742,187
13,777,812
–
327,125
2,742,187
14,104,937
25,542
–
7,822,228
–
7,822,228
–
2,839
–
–
3,135
–
1,236,242
1,560,039
(351,474)
–
–
–
1,236,242
1,560,039
(351,474)
–
28,381
P
=–
–
3,135
P
=64,417
(2,758)
10,264,277
P
=3,513,535
–
–
P
=327,125
(2,758)
10,264,277
P
=3,840,660
2012
Licenses and
Application
Software
Cost
At January 1
Additions
Reclassifications/adjustments (Note 7)
At December 31
Accumulated Depreciation and
Amortization
At January 1
Amortization:
Incremental effect of network
modernization
Others
Reclassifications/adjustments (Note 7)
At December 31
Net Book Value at December 31
P
=9,063,214
152,056
(119)
2,045,529
11,260,680
Total
Customer
Intangible
Contracts
Assets
(In Thousand Pesos)
P
=28,381
–
–
–
28,381
P
=9,091,595
152,056
(119)
2,045,529
11,289,061
5,807,340
19,866
5,827,206
835,166
1,126,209
(58)
28,029
7,796,686
P
=3,463,994
–
5,676
–
–
25,542
P
=2,839
835,166
1,131,885
(58)
28,029
7,822,228
P
=3,466,833
Goodwill
Total
Intangible
Assets and
Goodwill
P
=327,125
–
–
–
327,125
P
=9,418,720
152,056
(119)
2,045,529
11,616,186
–
–
–
–
–
–
P
=327,125
5,827,206
835,166
1,131,885
(58)
28,029
7,822,228
P
=3,793,958
No impairment loss on intangible assets was recognized in 2013, 2012 and 2011.
In the first quarter of 2012, the EUL of certain wireless and wireline licenses were changed as a result of
continuing upgrade and migration to a modernized network. The net effect of the change in EUL
resulted to higher amortization expense of =
P1,236.24 million and =
P835.17 million for the years ended
December 31, 2013 and 2012, respectively.
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; (2) costs of the web application system developed by a third party for Kickstart; (3) intangible
assets identified to exist during the acquisition of EGG Group for its existing customer contracts and (4)
exclusive dealership right in Taodharma.
123
10. Investments in an Associate and Joint Ventures
This account consists of the following as of December 31:
Associate
BTI
Joint Ventures
Country of
Incorporation
Philippines
BPI Globe BanKO Inc., A Savings Bank
(BPI Globe BanKO)
Philippines
Bridge Mobile Pte. Ltd. (BMPL)
Philippines
Principal Activities
Telecommunication
services
Micro-finance
enterprises banking
services
Mobile technology
infrastructure and
common service
2013
2012
38%
–
40%
40%
10%
10%
The movement in investment in an associate and joint ventures are as follows:
2013
2012
(In Thousand Pesos)
Acquisition Cost
At January 1
Acquisition during the year
At December 31
Accumulated Equity in Net Losses:
At January 1
Equity in net losses
Net foreign exchange difference
At December 31
Carrying Value at December 31
P
=352,610
59,010
411,620
=331,620
P
20,990
352,610
(169,417)
(79,959)
(249,376)
510
(248,866)
P
=162,754
(75,073)
(83,582)
(158,655)
(10,762)
(169,417)
=183,193
P
10.1 Investment in BTI
On October 1, 2013, Globe acquired 38% interest in BTI following the conversion of its unsustainable debt
(Tranche B) into 45 million common shares equity based on the confirmation of the Court dated August 27,
2013 on the Amended Rehabilitation Plan. Globe will further convert its share of the Tranche A debt upon
certain regulatory approvals. Globe’s acquisition of BTI is intended to augment its current data and DSL
businesses using BTI's existing platform. As of December 31, 2013, the equity in BTI was recognized as
investment in an associate carried at acquisition cost valued at nil. BTI remains in a capital deficiency after
Tranche B conversion with a negative book value of common shares at P
=57.62 per share.
The following is the financial information of BTI which is not considered material associate (amounts in
thousands) from October 2013 to December 2013:
Share in net loss - unrecognized
Share in other comprehensive income
Share in total comprehensive loss - unrecognized
=574,672
P
31,881
=606,553
P
The Globe Group has no share of any contingent liabilities as of December 31, 2013.
10.2 Investment in 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 P
=141.33 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.
124
On May 10, 2011, the BOD of Globe Telecom approved the additional investment of P
=100.00 million as share
for BPI Globe BanKO’s increase in capitalization to cover its expansion plan for the next three years. Globe
Telecom made the initial capital infusion of P
=79.01 million on May 10, 2011, and P
=20.99 million last
March 28, 2012. As of December 31, 2013 and 2012, the investment of Globe Telecom in BPI Globe BanKO
amounted to P
=85.63 million and =
P114.42 million, respectively, representing 40% interest.
10.3 Investment in 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, 2013 and 2012, Globe Telecom has
invested a total of USD2.20 million (P
=111.28 million) in the joint venture.
The following is the aggregate financial information of BPI Globe BanKO and BMPL, which are not considered
material joint ventures:
2013
2012
(In Thousand Pesos)
Share in net loss
Share in other comprehensive income
Share in total comprehensive loss
(P
=79,959)
510
(P
=79,449)
(P
=83,582)
(10,762)
(P
=94,344)
The Globe Group has no share of any contingent liabilities of the joint ventures as of December 31, 2013 and
2012.
11. Other Noncurrent Assets
Notes
Loan receivable from BTI - net of current
portion
Deferred input VAT
Miscellaneous deposits
AFS investment in equity securities
Loan receivable from BHI
Loan receivable from GGRP
Others - net
6
6
25.1
25.10, 28.10,
28.12
6, 16.3, 25.5
16.3, 18.2
2012
(As restated,
see Note 2.4)
2013
(In Thousand Pesos)
P
=4,556,287
1,013,833
694,487
=4,548,782
P
927,096
609,060
222,712
–
–
62,486
P
=6,549,805
141,446
295,000
968,000
77,666
=7,567,050
P
Loan Receivable from BTI
On November 5, 2012, Globe Telecom obtained internal approvals to commence offers to purchase up to
100% of the financial obligations of BTI and Radio Communications of the Philippines, Inc. (RCPI), a
subsidiary of BTI, collectively referred to as “BTI loans”, to their respective financial creditors.
125
On December 21, 2012, Globe Telecom settled its tender offers for:
i. 93.66% of the aggregate remaining principal amount of the USD-denominated notes originally due in
2006;
ii. 98.26% of the aggregate remaining principal amount of peso and USD-denominated BTI loans; and
iii. 100% of the aggregate remaining principal amount of peso and USD-denominated RCPI loans.
The total consideration for the tender offers is USD/P
=310.00 per USD/P
=1,000.00 face amount, for a total
payment of P
=5,354.76 million, composed of US Dollar and Philippine peso-denominated loans amounting to
USD110.55 million and P
The acquired loans were part of the original debt subjected to rehabilitation plan approved on June 28, 2004.
The plan was reviewed and evaluated by a court appointed receiver who was tasked to monitor and oversee
the implementation of the Plan. The implementing term sheet submitted by the receiver was approved on
March 15, 2005.
The restructured loan is divided into sustainable (Tranche A) and unsustainable debt (Tranche B) and is
denominated in existing currencies with an option for any of the creditors in Tranche B to convert their USDdenominated restructured debt into PHP at an agreed exchange rate on the date of implementation.
Tranche A is repayable semi-annually on a pari passu basis up to December 31, 2023 based on a table of debt
reduction computed at certain percentages of the principal. Tranche B is a non-interest bearing convertible
debt and to be repaid only if there are sufficient future cash flows and upon full repayment of Tranche A. At
the conclusion of the rehabilitation period, other than as the result of an event of default, Tranche B is to be
converted into new BTI shares, considering no conversion had been previously made. The conversion rights
in relation to Tranche B are up to a maximum of 40% of the authorized share capital as at the effective date.
The loans were initially accounted for at fair value, and the entire acquisition price was allocated to Tranche
A.
On May 30, 2013, Globe Telecom and BTI agreed to jointly file a motion with the court having jurisdiction
over BTI’s debt to significantly restructure the financial debt in order to prevent the recurrence of default
and ensure BTI’s continued viability. The joint motion is intended to achieve a successful rehabilitation at the
earliest possible date. The restructuring, including the debt to equity conversion feature would apply to all
BTI’s creditors equally upon receipt of certain regulatory approvals, including the confirmation of the court.
On July 1, 2013, Globe Telecom purchased additional BTI bonds with face value of USD2.80 million, part of
the BTI loans from their financial creditors, bringing total aggregate principal amount of the USDdenominated notes originally due in 2006 from 93.66% to 95.10% (see Note 11.i).
On August 27, 2013, the joint motion to amend BTI’s current debt restructuring plan was granted by the
Court. Accordingly, a new Master Restructuring Agreement (MRA) for all BTI creditors will be implemented.
This principally involves a total conversion of up to 56.60% of its capital stock. Globe Telecom and BTI were
directed to provide separate reports on the implementation procedures of the Amended Rehabilitation Plan
and its accompanying MRA within a certain period as mandated by the Court. Likewise, Globe Telecom and
BTI were directed by the Court to ensure that the details of the mechanics for converting debt positions are
clear and properly communicated to the creditors involved.
Pursuant to the resolution of the Court dated August 27, 2013 confirming the Amended Rehabilitation Plan
jointly filed by Globe Telecom and BTI, BTI issued common shares certificate to Globe Telecom on
October 1, 2013 for the conversion of its unsustainable debt (Tranche B) into 38% equity (see Note 10.2).
Globe Telecom intends to further convert portion of Tranche A debt, which together with the converted
Tranche B debt would represent more than 50% of BTI’s outstanding shares upon certain regulatory
approvals.
On October 29, 2013, Globe filed a report with the court covering the mechanics for converting debt
positions as provided for under the MRA.
As of February 10, 2014, the NTC approval for the change in control of BTI is still pending.
As of December 31, 2013 and 2012, loans receivable from BTI amounted to P
=5.04 billion and P
=4.90 billion,
respectively, comprising of principal and interest due until 2023, with quarterly interest payments and semiannual principal payments (see Note 16.6).
126
12. Accounts Payable and Accrued Expenses
Notes
Accrued project costs
Accounts payable
Accrued expenses
Traffic settlements - net
Output VAT - net
Dividends payable
25.3
16
16, 18.2
4
17.3
2012
(As restated,
see Note 2.4)
2013
(In Thousand Pesos)
P
=16,557,492
11,540,568
9,572,302
1,596,233
220,235
–
P
=39,486,830
=11,400,188
P
8,837,714
7,019,084
2,374,154
69,841
33,145
=29,734,126
P
The “Accrued expenses” account includes accruals for services, advertising, manpower and various general,
selling and administrative expenses.
Traffic settlements payable are presented net of traffic settlements receivable from the same carrier
amounting to P
As of December 31, 2013, Globe Telecom and EGG reported net output VAT amounting to P
=220.24 million,
net of input VAT of P
=621.33 million. As of December 31, 2012, Globe Telecom and EGG reported net output
VAT amounting to =
P69.84 million, net of input VAT of P
=558.95 million.
13. Provisions
Notes
At beginning of year
Provisions for claims and assessments
Payments
At end of year
23
2013
2012
(In Thousand Pesos)
P
=203,191
93,309
(1,800)
P
=294,700
=166,773
P
56,327
(19,909)
=203,191
P
Provisions relate to various pending unresolved claims and assessments over the Globe Group’s mobile and
wireline businesses. The information usually required by PAS 37, Provisions, Contingent Liabilities and
Contingent Assets, is not disclosed as it may prejudice the outcome of these on-going claims and
assessments.
As of February 10, 2014, the remaining pending claims and assessments are still being resolved.
14. Notes Payable and Long-term Debt
Notes payable consist of short-term, unsecured US dollar and peso-denominated promissory notes from
local banks for working capital requirements amounting to =
P5,219.90 million; which bears interest ranging
from 1.12% to 3.00%, P
=2,053.90 million, which bears interest ranging from 1.12% to 1.65% as of
December 31, 2013 and 2012, respectively.
127
Long-term debt consists of:
2013
2012
(In Thousand Pesos)
Term Loans:
Peso
Dollar
Corporate notes
Retail bonds
P
=28,018,106
14,321,158
4,877,621
16,864,164
64,081,049
5,980,300
P
=58,100,749
Less current portion
=38,164,986
P
5,829,588
5,819,400
9,911,546
59,725,520
9,294,888
=50,430,632
P
The maturities of long-term debt at nominal values, excluding unamortized debt issuance costs, as of
December 31, 2013 follow (amounts in thousands):
Due in:
2014
2015
2016
2017
2018 and thereafter
P5,990,143
=
6,136,058
7,386,806
4,763,236
40,207,150
=64,483,393
P
Unamortized debt issuance costs included in the above long-term debt as of December 31, 2013 and 2012
amounted to P
=314.07 million, respectively (see Note 28.2.3).
Total interest expense recognized, excluding the capitalized interest, amounted to P
=2,091.92 million,
P
=1,989.45 million in 2013, 2012 and 2011, respectively (see Notes 7 and 22).
The interest rates and maturities of the above debt are as follows:
Maturities
Interest Rates
2014-2022
0.99% to 6.00% in 2013
1.19% to 7.03% in 2012
2015-2022
1.27% to 1.80% in 2013
1.83% to 4.19% in 2012
Corporate notes
2014-2016
1.65% to 8.43% in 2013
1.83% to 8.43% in 2012
Retail bonds
2017-2023
4.89% to 6.00% in 2013
5.75% to 6.00% in 2012
Term Loans:
Peso
Dollar
14.1 Term Loans and Corporate Notes
The Globe Group’s unsecured term loans and corporate notes, which consist of fixed and floating rate notes
and dollar and peso-denominated bank loans, bear interest at stipulated and prevailing market rates.
On March 6, 2013, Globe signed a USD75 million 3-year term loan with floating interest rate with Bank of
Tokyo - Mitsubishi UFJ, Ltd., Singapore Branch as lender. The purpose of the loan is to fund Globe Telecom’s
capital expenditures.
On March 22, 2013, Globe signed a USD120 million 7-year term loan with floating interest rate with
Metrobank as lender to finance Globe Telecom’s capital expenditures.
On July 29, 2013, Globe signed a USD40 million 3-year term loan with floating interest rate with Mizuho Bank
Ltd. as lender to prepay and refinance certain debts.
128
On December 4, 2013, Globe signed a P
=7,000.00 million 7-year term loan with fixed interest rate with Land
Bank as lender. The proceeds of the loan shall be used to partially finance Globe Telecom’s general financing
and corporate requirements for capital expenditures.
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.
As of December 31, 2013, the Globe Group is not in breach of any loan covenants.
14.2 Retail Bonds
On January 17, 2012, Globe Group exercised its option to redeem the =
P3,026.00 million fixed rate bonds thru
an irrevocable notice issued to its trustee bank. The full settlement happened on February 27, 2012, with
redemption cost of P
=60.51 million.
On February 10, 2012, the BOD approved and authorized a corporate bond program to fund the Globe
Group’s capital expenditures with a principal amount of up to P
=15,000.00 million for issuance in one or more
tranches. The Globe Group management has been authorized to determine the final features and other terms
and conditions of the offer and issuance of the corporate bonds, including all agreements related to such
offer and issuance.
On June 1, 2012, Globe Group issued P
=10,000.00 million fixed rate bonds. The amount comprises P
=4,500.00
million and P
=5,500.00 million fixed rate bonds due in 2017 and 2019, with interest rate of 5.75% and 6.00%,
respectively. The net proceeds of the issue shall be used to partially finance Globe Group’s capital
expenditure requirements in 2012.
The five-year and seven-year retail bonds may be redeemed in whole, but not in part, starting two years
before maturity date and on the anniversary thereafter at a price equal to 101.00% and 100.50%, respectively,
of the principal amount of the bonds and all accrued interest to the date of the redemption.
On July 17, 2013, the Globe Group issued P
=7,000.00 million fixed rate bond. The amount comprises
P
=3,000.00 million bonds due in 2020 and 2023, with interest rate of 4.8875% and
5.2792%, respectively. The net proceeds of the issue shall be used to partially finance the Company’s capital
expenditure requirements in 2013.
The seven-year and ten-year retail bonds may be redeemed in whole, but not in part only, starting two years
for the seven-year bonds and three years for the ten-year bonds before the maturity date and on the
anniversary thereafter at a price ranging from 101.0% to 100.5% and 102.0% to 100.5%, respectively, of the
principal amount of the bonds and all accrued interest depending on the year of redemption.
The prepayment feature is assessed as clearly and closely related to the host debt instrument, and hence need
not be separately accounted for at FVPL.
The Globe Group has to meet certain bond covenants including a maximum debt-to-equity ratio of 2 to 1. As
of December 31, 2013, the Globe Group is not in breach of any bond covenants.
15. Other Long-term Liabilities
Notes
ARO
Accrued pension
Accrued lease obligations and others
3.2.4, 7
18.2
25.1.2
2012
(As restated,
2013
see Note 2.4)
(In Thousand Pesos)
P
=1,724,304
1,607,299
1,017,999
P
=4,349,602
=1,594,633
P
843,911
1,342,262
=3,780,806
P
129
The rollforward analysis of the Globe Group’s ARO follows:
Notes
Capitalized to property and equipment
during the year - net of reversal
Accretion expense during the year
Adjustments due to changes in estimates
At end of year
2013
2012
(In Thousand Pesos)
30
22
3.2.4
P
=1,594,633
=1,476,597
P
15,675
130,021
(16,025)
P
=1,724,304
25,022
119,814
(26,800)
=1,594,633
P
16. Related Party Transactions
Parties are considered to be related to Globe Group if it has the ability, directly or indirectly, to control the
Group or exercise significant influence over the Group in making financial and operating decisions, or vice
versa, or where the Group and the party are subject to common control or common significant influence.
Related parties may be individuals (being members of key management personnel, significant shareholders
and/or their close family members) or entities and include entities which are under the significant influence
of related parties of the Group where those parties are individuals, and post-employment benefit plan which
are for the benefit of employees of the Group or of any entity that is a related party of the Group.
The Globe Group, in their regular conduct of business, enter into transactions with their major stockholders,
AC and STI, venturers 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 - AC and STI
·
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:
2013
Traffic settlements receivable - net
Interconnection revenues - net
·
P
=201,216
957,232
2012
(In Thousand Pesos)
P126,277
=
966,037
2011
=36,994
P
1,136,294
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:
2013
Technical assistance fee
Maintenance and restoration costs
and other transactions
Software development, supply,
license and support
130
2012
(In Thousand Pesos)
2011
P
=163,004
=140,083
P
=179,014
P
61,841
64,835
53,996
16,681
12,590
25,999
The 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:
2013
Technical assistance fee
Maintenance and restoration costs
and other transactions
Software development, supply,
license and support
·
2011
P
=35,775
=45,326
P
=54,873
P
20,695
32,372
23,103
4,014
35,268
80,377
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:
2013
Subscriber receivables
Service revenues
·
2012
(In Thousand Pesos)
P
=14,761
14,107
2012
(In Thousand Pesos)
P2,143
=
14,720
2011
P1,718
=
12,640
Globe Telecom reimburses AC for certain operating expenses. The net outstanding liabilities to
(included in “Accounts payable and accrued expenses” account in the consolidated statement of
financial position) and the amount of expenses incurred (included in the “General, selling and
administrative expenses” account in the consolidated statements of comprehensive income) are as
follows:
2013
expenses
Accounts payable and accrued
expenses
2012
(In Thousand Pesos)
2011
P
=7,768
=9,145
P
=7,878
P
–
–
234
16.2 Joint Ventures in which the Globe Group is a Venturer (see Note 10)
· 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
=0.98 million and P
P
=2.21 million as of December 31, 2013 and 2012, respectively. Balances related to
these transactions (included in “General, selling and administrative expenses” account in the
consolidated statements of comprehensive income) amounted to =
P3.76 million, P
=15.49 million and
=12.24 million for the years ended December 31, 2013, 2012 and 2011, respectively.
P
·
In 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 =
P0.54 million, P
=1.58 million and P
=2.86 million in 2013, 2012 and 2011,
respectively. The related receivables amounted P
=1.11 million and P
=3.79 million as of December 31, 2013
and 2012, respectively.
16.3 Transactions with the Globe Group Retirement Plan (GGRP) (see Note 11)
·
In 2008, Globe Telecom, Innove and GXI pooled its plan assets for single administration by the GGRP,
which was created for the management of the retirement fund. The decisions of the GGRP are made
through collective decision of the Board of Trustees.
The plan is funded by contributions as recommended by the independent actuary on the basis of
reasonable actuarial assumptions. These assumptions and the funded status of the pension plan are
disclosed in Note 18.2.
131
The unfunded status for the pension plan of Globe Group as of December 31, 2013 and 2012 amounted
to P
=843.91 million, respectively (see Note 18.2).
The fair value of plan assets by each class held by the retirement fund, on a pooled basis follows:
2013
2012
(In Thousand Pesos)
Investment in fixed income securities
Investment in equity securities
Loans and receivables
Liabilities
Balance at end of year
P
=84,641
1,048,421
1,507,287
1,007,686
(994,441)
P
=2,653,594
=28,333
P
1,032,279
1,515,993
1,010,980
(995,067)
=2,592,518
P
All equity and debt instruments held, except for investment in preferred shares of HALO Group, debt
securities issued by private corporations and long-term negotiable certificates of deposit, have quoted
prices in active market. The remaining plan assets do not have quoted market prices in active market.
Loans and receivables consist of interest and dividend receivables, receivable on securities sold to
brokers and loan granted by the plan to BHI (see Note 25.5).
Liabilities pertain to interest and trust fee payables, accrued professional fees and loan granted to the
plan by Globe Telecom.
The plan assets have diverse investments and do not have any concentration risk.
As of December 31, 2013 and 2012, the pension plan assets of the retirement plan include shares of
stock of Globe Telecom with total fair value of P
=13.02 million, and shares of stock of
other related parties with total fair value of P
=71.96 million, respectively. Gains/losses
arising from these investments amounted to P
=8.34 million and P
=10.97 million in 2013 and 2012,
respectively.
·
In 2008, the Globe Group granted a short-term loan to the GGRP amounting to =
P800.00 million with
interest at 6.20%. Upon maturity in 2009, the loan was rolled over until September 2014 with interest at
7.75%. Further, in 2009, the Globe Group granted an additional loan to the retirement fund amounting
to P
=168.00 million which bears interest at 7.75% and is due also in September 2014.
The retirement plan utilized the loan to fund its investments in BHI, a domestic corporation organized to
invest in media ventures. BHI has controlling interest in Altimax Broadcasting Co., Inc. (Altimax) and
Broadcast Enterprises and Affiliated Media Inc. (BEAM), respectively.
132
·
On August 13 and December 21, 2009, the Globe Group granted five-year loans amounting to
P
=45.00 million, respectively, to BHI at 8.275% interest. The P
=250.00 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 to BEAM from the Globe Group. The
=45.00 million loan is fully secured by a chattel mortgage agreement dated December 21, 2009 between
P
Globe Group and BEAM (see Note 25.5).
·
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 P
=155.00 million, =
=250.00 million in 2013, 2012 and 2011,
respectively.
·
On October 1, 2009, the Globe Group entered into a MOA with Altimax 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
=90.00 million in 2013, 2012 and 2011.
P
16.4 Transactions with Other Related Parties
Globe Telecom has money market placements and bank balances, and subscriber receivables (included in
“Cash and cash equivalents” and “Receivables” accounts in the consolidated statements of financial
position, respectively) 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, Bank of the Philippine Islands, Manila Water Company, Inc.,
Integrated Microelectronics, Inc., Stream Global Services, Inc., HR Mall Inc., Honda Cars, Inc., Isuzu
Automotive Dealership, Inc., Accendo Commercial Corp., Affinity Express Philippines, Inc., Alveo Land Corp.,
Asian I-Office Properties,Inc., Avida Land Corp., Avida Sales Corporation, Ayala Hotels, Inc., Ayala Plans, Inc.,
Ayala Systems Technology, Inc., Cebu Holdings, Inc., Makati Development Corp., myAyala.com, Inc., North
Triangle Depot Commercial Corp., PSI Technologies, Inc., Roxas Land Corp, Serendra, Inc., Station Square
East Commercial Corp., Ten Knots Development, KHI ALI Manila, Inc., Lagoon Development Corp., Subic Bay
Town Center, Inc., Ayala Aviation Corporation, Laguna AAA Water Corp., Liveit Solution, Inc., Liveit
Investments, Ltd., Integreon, Inc., Arvo Commercial Corp., Amaia Land Corp., Michigan Power, Philippine
Intergrated Energy Solutions, Inc., Southcrest Hotel Ventures, Inc., Bonifacio Hotels and Crestview E-Office.
The balances with other related parties are recorded under the following accounts:
Service revenues
expenses
Subscriber receivables (included in
“Receivables” account)
Accounts payable and accrued
expenses
Notes
2013
2012
(In Thousand Pesos)
2011
30
P
=166,074
437,793
P199,392
=
344,206
=1,098,168
P
306,846
21
346,280
345,004
288,351
4
7
212,391
60,437
102,454
71,272
65,694
137,209
12
72,440
50,008
32,750
The balances under “General, selling and administrative expenses” and “Property and equipment” accounts
consist of expenses incurred on rent, utilities, customer contract services, other miscellaneous services and
purchase of vehicles, respectively.
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:
Short-term employee benefits
Share-based payments
Post-employment benefits
Notes
2013
21
18.1
18.2
P
=63,172
50,000
7,466
P
=120,638
2012
(In Thousand Pesos)
=123,700
P
11,502
12,822
=148,024
P
2011
P75,343
=
49,338
1,736
=126,417
P
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 non-interest bearing short-term loans to its key management personnel amounting
to P
=0.05 million in 2012, included in the “Prepayments and other current assets” in the consolidated
statements of financial position.
16.6 Transaction with an associate
The Globe group purchased BTI’s outstanding debts from its creditors and was recognized at transaction
price which was considered its fair value. The total debt of BTI is comprised of sustainable Tranche A and
unsustainable Tranche B. A portion of the debt (Tranche B) was converted into equity and was valued at nil
while the total consideration at point of tender was assigned to the collectible portion of Tranche A.
133
As of December 31, 2013 and 2012, loans receivable from BTI amounted to P
=5.04 billion and P
=4.90 billion
comprising of principal and interest due until 2023, with quarterly interest payments and semi-annual
principal payments (see Notes 6 and 11).
Globe Telecom and BTI executed an agreement to jointly use BTI frequencies for their respective
telecommunications services (see Note 25.8).
134
Total
P
=1,885,495
437,793
–
–
–
BEAM
Altimax
Key management personnel
Others
–
–
475,822
541
Other related parties
GGRP
BHI
Associate
BTI
BPI Globe BanKO
–
957,232
STI
Jointly controlled entities
BMPL
P
=14,107
Revenues
P
=849,336
346,280
155,000
90,000
–
–
–
5,000
–
3,762
241,526
P
=7,768
P
=60,437
60,437
–
–
–
–
–
–
–
–
–
P
=–
Property
and
Cost and Equipment
Expenses
(Note 7)
Amount/Volume
Entities with joint control
over Globe Group
AC
2013
212,391
–
–
–
968,000
158,620
5,037,653
1,107
–
201,216
P
=14,761
P
=166,074 P
=6,593,748
166,074
–
–
–
–
–
–
–
–
–
P
=–
Cash
(Note 30)
P
=–
–
–
–
–
–
–
–
–
–
–
P
=–
Outstanding Balance
Amounts
Owed by
Other
Related
Current
Parties
Assets
P
=143,401
72,440
–
–
–
–
–
9,500
–
977
60,484
P
=–
Amounts
Owed to
Related
Parties
–
–
Interest-free, settlement in
cash
cash
5 years, 7.75%
5 years, 8.28%
Loan receivable - 20 years,
9.60% to 11.55%; lease
capacity provisioning interest-free
cash
cash
cash
cash
Terms
The summary of balances arising from related party transactions for the relevant financial year (in thousands) follows:
Unsecured, no impairment
The P
=250.00 million is covered
by a pledge agreement
while the P
=45.00 million is
fully secured by chattel
mortgage agreement.
–
–
Conditions
135
136
Total
P
=1,326,547
344,206
–
–
–
BEAM
Altimax
Key management personnel
Others
–
–
1,584
Other related parties
GGRP
BHI
BPI Globe BanKO
–
966,037
STI
Jointly controlled entities
BMPL
P
=14,720
Revenues
P
=871,148
345,004
194,000
90,000
–
–
–
–
–
15,491
217,508
P
=9,145
P
=71,272
71,272
–
–
–
–
–
–
–
–
P
=–
Property
and
Cost and Equipment
Expenses
(Note 7)
Amount/Volume
Entities with joint control
over Globe Group
AC
2012
102,454
–
–
53
968,000
295,000
3,792
–
126,277
P
=2,143
P
=199,392 P
=1,497,719
199,392
–
–
–
–
–
–
–
–
P
=–
Cash
(Note 30)
P
=6,281
6,281
–
–
–
–
–
–
–
–
P
=–
Outstanding Balance
Amounts
Owed by
Other
Related
Current
Parties
Assets
P
=165,182
50,008
–
–
–
–
–
–
2,208
112,966
P
=–
Amounts
Owed to
Related
Parties
–
–
cash
cash
5 years, 7.75%
5 years, 8.275%
cash
cash
cash
cash
Terms
The P
= 250.00 million is covered
by a pledge agreement
while the P
=45.00 million is
fully secured by chattel
mortgage agreement.
–
–
Conditions
17. Equity and Other Comprehensive Income
Globe Telecom’s authorized capital stock consists of:
2013
2012
Amount
Shares
(In Thousand Pesos and Number of Shares)
Shares
Preferred stock - P
=5 per share
Common stock - P
=50 per share
250,000
179,934
P
=1,250,000
8,996,719
250,000
179,934
Amount
P
=1,250,000
8,996,719
Globe Telecom’s issued and subscribed capital stock consists of:
2013
Shares
Preferred stock
Common stock
Total capital stock
2012
Amount
Shares
158,515
132,596
P
=792,575
6,629,785
P
=7,422,360
158,515
132,406
Amount
P
=792,575
6,620,291
P
=7,412,866
17.1 Preferred Stock
Preferred stock has the following features:
(a) Issued at P
=5 par;
(b) Dividend rate to be determined by the BOD at the time of issue;
(c) One preferred share is convertible to one common share starting at the end of the 10 th year of the issue
date at a price to be determined by the Globe Telecom’s BOD at the time of issue which shall not be less
than the market price of the common share less the par value of the preferred share;
th
(d) Call option - Exercisable any time by Globe Telecom starting at the end of the 5 year from issue date at
a price to be determined by the BOD at the time of issue;
(e) Eligibility of Investors - Only Filipino citizens or corporations or partnerships wherein 60% of the voting
stock or voting power is owned by Filipino;
(f) With voting rights;
(g) Cumulative and non-participating;
(h) Preference as to dividends and in the event of liquidation; and
(i) No preemptive right to any share issue of Globe Telecom, and subject to yield protection in case of
change in tax laws.
The dividends for preferred shares are declared upon the sole discretion of the Globe Telecom’s BOD.
17.2 Common Stock
The rollforward of outstanding common shares are as follows:
Shares
At end of year
132,406
190
132,596
2013
2012
2011
Amount
Shares
Amount
Shares
Amount
P
=6,620,291
9,494
P
=6,629,785
132,353
53
132,406
P
=6,617,651
2,640
P
=6,620,291
132,348
5
132,353
P
=6,617,424
227
P
=6,617,651
17.3 Cash Dividends
Information on Globe Telecom’s declaration of cash dividends follows:
Per Share
Preferred stock dividends declared on:
February 8, 2011
December 15, 2011
December 11, 2012
November 8, 2013
P
=0.29
0.22
0.21
0.15
Date
Amount
Record
Payable
P
=45,399
35,295
33,145
23,838
February 22, 2011
December 29, 2011
December 27, 2012
November 22, 2013
March 18, 2011
March 18, 2012
January 24, 2013
December 8, 2013
137
Per Share
Common stock dividends declared on:
February 8, 2011
August 8, 2011
February 10, 2012
August 6, 2012
February 5, 2013
August 6, 2013
P
=31.00
31.00
32.50
32.50
33.50
33.50
Date
Amount
Record
Payable
P
=4,102,803
4,102,802
4,302,737
4,302,891
4,435,828
4,440,936
February 22, 2011
August 22, 2011
February 24, 2012
August 28, 2012
February 19, 2013
August 22, 2013
March 18, 2011
September 19, 2011
March 16, 2012
September 18, 2012
March 12, 2013
September 13, 2013
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. On November 8, 2011, the BOD approved
the current dividend policy of Globe Telecom is to distribute cash dividends at the rate of 75% to 90% of prior
year's core net income. On August 6, 2013, the BOD further approved the change in distribution from semiannually dividend payments to quarterly dividend distributions. However, on December 10, 2013, the BOD
approved to defer the implementation of the quarterly dividend payout to the second semester of 2014.
The dividend distribution is reviewed annually and subsequently each quarter of the year, taking into account
Globe Telecom's operating results, cash flows, debt covenants capital expenditure levels and liquidity.
17.4 Retained Earnings Available for Dividend Declaration
The total unrestricted retained earnings available for dividend declaration amounted to P
=6,518.88 million as
of December 31, 2013. This amount excludes the undistributed net earnings of consolidated subsidiaries,
accumulated equity in net earnings of joint ventures accounted for under the equity method, unrealized
gains recognized on asset and liability currency translations, unrealized gains on fair value adjustments and
deferred income tax assets. 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
Cash flow
hedges
Exchange
differences
arising
from
translations Remeasurement
of foreign losses on defined
AFS financial
investments
benefit plan
assets
Total
(In Thousand Pesos)
As of January 1, 2013
Fair value changes
Transferred to profit or loss
Remeasurement losses on defined benefit
plan
Income tax effect
Exchange differences
(P
= 121,200)
406,194
(183,012)
–
(66,955)
–
= 35,027
P
P80,275
=
(22,500)
–
(P
= 3,663)
–
–
(P
= 481,951)
–
–
(P
= 526,539)
383,694
(183,012)
–
–
–
= 57,775
P
–
–
(2,357)
(P
= 6,020)
(492,009)
147,603
–
(P
= 826,357)
(492,009)
80,648
(2,357)
(P
= 739,575)
For the Year Ended December 31, 2012 (As restated, see Note 2.4)
Exchange
differences arising
from translations Remeasurement
AFS financial
Cash flow hedges
assets
investments
benefit plan
Total
(In Thousand Pesos)
Fair value changes
plan
Income tax effect
138
(P
= 153,070)
32,760
12,769
= 36,301
P
43,974
–
(P
= 8,133)
–
–
(P
= 279,453)
–
–
(P
= 404,355)
76,734
12,769
–
(13,659)
–
(P
= 121,200)
–
–
–
= 80,275
P
–
–
4,470
(P
= 3,663)
(289,283)
86,785
–
(P
= 481,951)
(289,283)
73,126
4,470
(P
= 526,539)
For the Year Ended December 31, 2011 (As restated, see Note 2.4)
Exchange
differences arising
from translations Remeasurement
AFS financial
investments
benefit plan
Cash flow hedges
assets
Total
(In Thousand Pesos)
Fair value changes
plan
Income tax effect
(P
= 115,834)
(239,094)
185,900
= 35,032
P
1,269
–
(P
= 7,508)
–
–
–
15,958
–
(P
= 153,070)
–
–
–
= 36,301
P
–
–
(625)
(P
= 8,133)
=–
P
–
–
(399,219)
119,766
–
(P
= 279,453)
(P
= 88,310)
(237,825)
185,900
(399,219)
135,724
(625)
(P
= 404,355)
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 P
=1,000.00 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 2009:
Date of Grant
Number of
Options
Granted
Exercise Price Exercise Dates
Fair Value
of each
Option
Fair Value
Measurement
April 4, 2003
680,200
P
=547.00 per share 50% of options exercisable
from April 4, 2005 to
April 14, 2013; the
remaining 50% exercisable
from April 4, 2006 to
April 14, 2013
P
=283.11
Black-Scholes
option pricing
model
July 1, 2004
803,800
P
=840.75 per share 50% of options exercisable
from July 1, 2006 to June
30, 2014; the remaining
50% from July 1, 2007 to
June 30, 2014
P
=357.94
Black-Scholes
option pricing
model
March 24, 2006
749,500
P
=854.75 per share 50% of the options become
exercisable from March 24,
2008 to March 23, 2016; the
remaining 50% become
exercisable from
March 24, 2009 to
March 23, 2016
P
=292.12
Trinomial option
pricing model
May 17, 2007
604,000 P
=1,270.50 per share 50% of the options become
exercisable from May 17,
2009 to May 16, 2017, the
exercisable from
May 17, 2010 to May 16,
2017
P
=375.89
Trinomial option
pricing model
139
Date of Grant
August 1, 2008
October 1, 2009
Number of
Options
Granted
Exercise Price Exercise Dates
635,750 P
=1,064.00 per share 50% of the options become
exercisable from August 1,
2010 to July 31, 2018, the
exercisable from August 1,
2011 to July 31, 2018
298,950
Fair Value
of each
Option
P
=305.03
P
=993.75 per share 50% of the options become
exercisable from October 1,
2011 to September 30,
2019, the remaining 50%
become exercisable from
October 1, 2012 to
September 30, 2019
P
=346.79
Fair Value
Measurement
Trinomial option
pricing model
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.
A summary of the Globe Group’s ESOP activity and related information follows:
2013
2012
2011
Weighted
Weighted
Weighted
Average
Average
Average
Exercise
Exercise
Number
Number
Exercise
Number
Price
Price
of Shares
Price
of Shares
of Shares
(In Thousand Number of Shares Except Per Share Figures )
Outstanding, at
beginning of year
Exercised
Expired/forfeited
Outstanding, at end of year
1,366
(771)
(21)
574
P
=1,081.01
1,085.79
729.82
P
=1,087.76
1,740
(359)
(15)
1,366
P
=1,055.03
952.28
1,145.88
P
=1,081.01
1,848
(51)
(57)
1,740
P
=1,047.80
856.65
997.06
P
=1,055.03
Exercisable, at end of year
574
P
=1,087.76
1,366
P
=1,081.01
1,661
P
=1,057.94
The average share prices at dates of exercise of stock options as in 2013, 2012 and 2011 amounted to
=1,586.10, P
P
=1,213.00 and P
=1,005.55, respectively.
As of December 31, 2013 and 2012, the weighted average remaining contractual life of options outstanding
is 3.85 years and 4.68 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
=995.00
P
993.75
48.49%
10 years
6.43%
8.08%
August 1,
2008
=1,130.00
P
1,064.00
31.73%
10 years
6.64%
9.62%
May 17,
2007
=1,340.00
P
1,270.50
38.14%
10 years
4.93%
7.04%
March 24,
2006
=930.00
P
854.75
29.51%
10 years
5.38%
10.30%
July 1,
2004
=835.00
P
840.75
39.50%
10 years
4.31%
12.91%
April 4,
2003
=580.00
P
547.00
34.64%
10 years
2.70%
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, 2013, 2012 and 2011 amounted to P
=50.00 million, =
=49.34 million,
respectively (see Note 16.5).
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.
140
The Plan is managed and administered by a Board of Trustees (BOT) whose members are unanimously
appointed by the Globe Group acting through its BOD. The BOT is authorized to appoint one or more fund
managers to hold, invest and reinvest the assets of the Plan and execute an Investment Agreement with the
said fund managers. The Plan is held and invested by the fund managers, in accordance with the guidelines
set by the BOT.
Under the existing regulatory framework, Republic Act 7641 requires a provision for retirement pay to
qualified private sector employees in the absence of any retirement plan in the entity, provided however that
the employee’s retirement benefits under any collective bargaining and other agreements shall not be less
than those provided under the law. The law does not require minimum funding of the plan.
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:
2012
(As restated,
see Note 2.4)
2013
(In Thousand Pesos)
2011
(As restated,
see Note 2.4)
Current service cost
P
=348,399
=282,746
P
=199,555
P
Actual return on plan assets
P
=107,268
=197,785
P
=140,792
P
The accrued pension is as follows:
2012
(As restated,
2013
see Note 2.4)
(In Thousand Pesos)
Present value of benefit obligation
Fair value of plan assets
Liabilities recognized in the consolidated statements
of financial position
P
=4,262,206
(2,654,907)
P3,437,028
=
(2,593,117)
P
=1,607,299
=843,911
P
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
2012
(As restated,
see Note 2.4)
2013
(In Thousand Pesos)
Balance at beginning of year
Current service cost
Interest cost
Benefits paid directly by the Group
Benefits paid from plan assets
Transfers in (out)
Remeasurements in other comprehensive income:
Actuarial changes arising from changes in
assumptions
Actuarial changes arising from experience
adjustment
Past service cost
P
=3,437,028
348,399
184,708
(957)
(165,182)
–
=2,722,289
P
282,746
165,676
–
(116,063)
(20,217)
271,077
313,924
186,916
217
P
=4,262,206
88,673
–
=3,437,028
P
141
Fair value of plan assets
2012
(As restated,
see Note 2.4)
2013
(In Thousand Pesos)
Balance at beginning of year
Benefits paid
Interest income on plan assets
Contributions
Return on plan assets (excluding amount included in net
interest)
Transfers in (out)
P
=2,593,117
(165,182)
141,597
119,392
=2,376,680
P
(116,063)
146,962
92,441
(34,017)
–
P
=2,654,907
113,314
(20,217)
=2,593,117
P
The recommended contribution for the Globe Group retirement fund for the year 2014 amounted to
=378.73 million. This amount is based on the Globe Group’s actuarial valuation report as of
P
December 31, 2013.
The fair value of plan assets by each class as of December 31, 2013 and 2012 follows:
2013
2012
(In Thousand Pesos)
P
=121,330
=44,573
P
Investments in fixed income securities:
Government
Corporate
Loans
Others
Investments in equity securities
696,382
298,750
22,801
9,033
1,506,611
P
=2,654,907
183,993
1,100,846
–
62,052
1,201,653
=2,593,117
P
The assumptions used to determine pension benefits of Globe Group are as follows:
2013
5.27%
5.13%
Discount rate
Salary rate increase
2012
6.25%
4.50%
The assumptions regarding future mortality rates are based on the 1994 Group Annuity Mortality Table
developed by the Society of Actuaries, which provides separate rate for males and females.
In 2013 and 2012, the Globe Group applied a single weighted average discount rate that reflects the
estimated timing and amount of benefit payments.
The sensitivity analysis below has been determined based on reasonably possible changes of each significant
assumption on the defined benefit obligation as of December 31, 2013, assuming if all other assumptions
were held constant:
+0.50%
-0.50%
Impact on defined benefit
obligation Increase (decrease)
(In Thousand Pesos)
(P
=180,415)
400,155
+1%
-1%
837,919
(348,846)
+10%
-10%
(266)
620
Increase (decrease)
Discount rates
Future salary increases
Mortality
142
The objective of the plan’s portfolio is capital preservation by earning higher than regular deposit rates over
a long period given a small degree of risk on principal and interest. Asset purchases and sales are determined
by the plan’s investment managers, who have been given discretionary authority to manage the distribution
of assets to achieve the plan’s investment objectives. The compliance with target asset allocations and
composition of the investment portfolio is monitored by the BOT on a regular basis.
The defined benefit retirement plan is funded by the participating companies, namely Globe, Innove and
G-Xchange. The plan contributions are based on the actuarial present value of accumulated plan benefits
and fair value of plan assets are determined using an independent actuarial valuation
The average duration of the defined benefit obligation as of December 31, 2013 is 22.21 years.
19. Interest Income
Interest income is earned from the following sources:
Notes
Loans receivable
BTI
GGRP
BHI
Others
Short-term placements
Cash in banks
11, 16.3
25.5
30
30
2013
P
=475,822
76,257
13,721
24,431
79,813
18,205
P
=688,249
2012
(In Thousand Pesos)
P
=138,385
76,273
24,818
6,384
316,894
17,097
P
=579,851
2011
P
=–
76,056
24,750
–
188,557
8,025
P
=297,388
20. Other Income
Lease income
Foreign exchange gain - net
Gain on derivative instruments
Others
Notes
2013
25.4, 25.1.1
22, 28.2.1.2
28
P
=172,499
–
–
302,747
P
=475,246
2012
(In Thousand Pesos)
P
=172,499
318,334
–
225,538
P
=716,371
2011
P
=172,499
–
25,495
376,774
P
=574,768
The peso to US dollar exchange rates amounted to P
=44.398, P
=41.078 and P
=43.919 as of December 31, 2013,
2012 and 2011, respectively.
The Globe Group’s net foreign currency-denominated liabilities amounted to USD363.75 million, USD161.22
million and USD188.97 million as of December 31, 2013, 2012 and 2011, respectively (see Note 28.2.1.2).
These combinations of net liability movements and peso rate depreciation/appreciation resulted in foreign
exchange loss in 2013 and 2011 (see Note 22).
The “Others” account includes insurance claims and other items that are individually immaterial.
143
21. General, Selling and Administrative Expenses
Staff costs
Selling, advertising and promotions
Professional and other contracted services
Utilities, supplies and other administrative
expenses
Repairs and maintenance
Rent
Taxes and licenses
Insurance and security services
Courier, delivery and miscellaneous expenses
Others
2012
(As restated,
see Note 2.4)
(In Thousand Pesos)
2011
(As restated,
see Note 2.4)
Notes
2013
16.5, 18
P
=7,473,499
7,014,729
5,966,481
P
=6,426,592
6,440,554
5,193,217
P
=5,918,974
4,756,425
4,214,284
4,399,110
3,656,671
3,534,975
2,055,909
1,383,294
1,320,112
514,059
P
=37,318,839
4,260,773
3,672,038
3,153,505
1,595,842
1,330,648
1,055,375
473,867
P
=33,602,411
3,804,762
3,522,778
2,830,382
1,380,270
1,381,633
1,116,181
487,917
P
=29,413,606
16
5
16
16, 25
The “Others” account includes various other items that are individually immaterial.
22. Financing Costs
Interest expense - net*
Foreign exchange loss - net
Swap and other financing costs - net
Loss on derivative instruments
Notes
2013
7, 14
20, 28.2.1.2
P
=2,091,915
486,308
245,187
88,375
P
=2,911,785
28
2012
(As restated,
see Note 2.4)
(In Thousand Pesos)
2011
(As restated,
see Note 2.4)
P
=2,104,792
–
183,007
74,810
P
=2,362,609
P
=1,989,451
308,650
211,404
–
P
=2,509,505
*This account is net of the amount capitalized borrowing costs (see Note 7).
In 2012 and 2011, net foreign exchange gain amounting to P
=318.33 million and gain on derivative
instruments amounting to P
=25.50 million, respectively, was presented as part of “Other income - net”
account in the consolidated statements of comprehensive income (see Note 20).
Interest expense - net is incurred on the following:
Long-term debt
Accretion expense
Amortization of debt issuance cost
Short term notes payable
Net interest cost (benefit) on defined benefit
obligation
Others
144
2012
(As restated,
see Note 2.4)
(In Thousand Pesos)
2011
(As restated,
see Note 2.4)
Notes
2013
14
15, 25.4
14
14
P
=1,660,094
193,815
131,967
57,954
P
=1,657,862
168,707
103,497
82,047
P
=1,762,501
167,445
116,618
3,823
–
48,085
P
=2,091,915
18,714
73,965
P
=2,104,792
(70,209)
9,273
P
=1,989,451
23. Impairment Losses and Others
Impairment loss on:
Receivables
Property and equipment and
intangible assets
Provisions for (reversal of):
Inventory obsolescence and
market decline
Other claims and assessments
Notes
2013
4, 6, 28.2.2
P
=2,046,523
P
=1,377,317
P
=1,599,967
26,312
259,262
128,614
321,460
88,333
P
=2,482,628
170,678
56,327
P
=1,863,584
5
13
2012
(In Thousand Pesos)
2011
237,918
(47,916)
P
=1,918,583
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:
2012
(As restated,
2013
see Note 2.4)
(In Thousand Pesos)
Deferred income tax assets on:
Allowance for impairment losses on receivables
Unearned revenues already subjected to income tax
Accrued pension
ARO
Accumulated impairment losses on property
and equipment
Inventory obsolescence and market decline
Accrued rent expense under PAS 17
Accrued vacation leave
Unrealized foreign exchange losses
Provisions for claims and assessments
Allowance for doubtful accounts for long-outstanding
net advances
Unrealized loss on derivative transactions
NOLCO (see Note 3.2.8)
MCIT (see Note 3.2.8)
Others
Deferred income tax liabilities on:
Undepreciated capitalized borrowing costs already
claimed as deduction for tax reporting
Excess of accumulated depreciation and amortization of
Globe Telecom equipment for tax reporting(a) over
financial reporting(b)
Unrealized foreign exchange gain
Unamortized discount on noninterest bearing liability
Interest accretion
Customer contracts of acquired company
Others
Net deferred income tax assets (liabilities)
P
=1,267,463
801,636
643,823
476,901
P
=1,081,543
730,079
428,060
440,857
185,941
146,965
136,424
119,087
116,561
109,666
52,696
183,072
103,196
44,236
109,237
103,110
1,108
68,496
40,497
26,414
–
–
29,390
4,153,464
12,654
72,070
15,005
2,176
25,672
3,420,571
1,432,724
1,553,478
815,677
(19,047)
850
6,382
–
–
2,236,586
P
=1,916,878
2,946,566
144,476
7,910
6,382
858
15,390
4,675,060
(P
=1,254,489)
(a) Sum-of-the-years digit method
(b) Straight-line method
145
Net deferred tax assets and liabilities presented in the consolidated statements of financial position on a net
basis by entity are as follows:
2012
(As restated,
2013
see Note 2.4)
(In Thousand Pesos)
Net deferred tax assets*
Net deferred tax liabilities (Globe Telecom)
P
=1,916,878
–
*2013 consist of Globe, Innove, GXI and EGG Group
*2012 consist of Innove, GXI and EGG Group.
P1,016,856
=
2,271,345
GXI’s NOLCO amounting to P
=34.87 million expired in 2011. GTI’s NOLCO amounting to P
=0.05 million expired
in 2012.
The reconciliation of the provision for income tax at statutory tax rate and the actual current and deferred
provision for income tax follows:
2012
(As restated,
see Note 2.4)
2013
(In Thousand Pesos)
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
Income subjected to lower tax rates
Others
Actual provision for income tax
2011
(As restated,
see Note 2.4)
P
=2,059,432
=2,925,464
P
=4,217,441
P
(176,949)
23,988
(16,861)
14,918
P
=1,904,528
(54,524)
25,075
(823,505)
833,783
=2,906,293
P
5,324
8,203
(517,986)
540,602
=4,253,584
P
The current provision for income tax includes the following:
2013
RCIT or MCIT whichever is higher
Final tax
P
=4,949,057
46,359
P
=4,995,416
2012
(In Thousand Pesos)
=4,291,409
P
64,290
=4,355,699
P
2011
=5,011,849
P
37,630
=5,049,479
P
The corporate tax rate is 30% in 2013, 2012 and 2011.
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.
25. Agreements and Commitments
25.1 Lease Commitments
25.1.1 Operating lease commitments
(a) Globe Group as lessee
Globe Group leases 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 one 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 “Prepayment and other current assets” and “Other
noncurrent assets” accounts in the consolidated statements of financial position (see Notes 6 and
146
11). 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 P
=3,534.98 million,
P
=2,830.38 million for the years ended December 31, 2013, 2012 and 2011,
The future minimum lease payments under these operating leases are as follows:
2013
2012
(In Thousand Pesos)
Not later than one year
After one year but not more than five years
After five years
P
=798,706
4,374,751
2,309,172
P
=7,482,629
=786,356
P
4,799,558
3,337,817
=8,923,731
P
(b) Globe Group as lessor
Globe Telecom have certain lease agreements on equipment and office spaces. The operating lease
agreements are for periods ranging from one (1) to fourteen (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 P
=172.50 million for the years ended December 31, 2013, 2012 and
2011, respectively (included in “Other income” account in the consolidated statements of
comprehensive income).
The future minimum lease receivables under these operating leases are as follows:
2013
2012
(In Thousand Pesos)
Within one year
After one year but not more than five years
P
=146,694
183,367
P
=330,061
P146,615
=
329,884
=476,499
P
25.1.2 Finance lease commitments
Globe Group as lessee
The Globe Group engaged the services of various suppliers for the upgrade of its wireless, data and
telephony network. In partnership with equipment and service provider and the appointment of a
project and program manager, Globe Group will undertake a transformation upgrade and overhaul of its
business support systems within the USD790.00 million modernization project.
Part of the managed service engagement with the service provider is a lease for hardware infrastructure
and information equipment valued over the seven-year term of the lease at P
=893.28 million. Total lease
payments as of December 31, 2013 and 2012 amounted to P
=112.00 million,
respectively. The managed service engagement has terms of renewal and purchase options, among
others.
Future minimum lease payments under finance leases with the present value of the net minimum lease
payments are as follows:
2013
Minimum
Present Value
Payments
of Payments
2012
Minimum
Present Value
Payments
of Payments
(In Thousand Pesos)
Within one year
After one year but not more than
five years
More than five years
Total minimum lease payments
Less amounts representing finance charges
Present value of minimum lease payments
P
=183,726
P
=168,707
P
=112,171
P
=99,941
510,561
30,938
725,225
(34,724)
P
=690,501
491,311
30,483
690,501
–
P
=690,501
448,684
224,342
785,197
(47,111)
P
=738,086
417,878
220,267
738,086
–
P
=738,086
147
In addition, total payments to service provider based on the seven-year agreement for the maintenance
of servers, which includes application development and maintenance, service design, managed network
services, office automation or end-user computing, service desk services and business supports systems
amounted to P
=49.00 million as of December 31, 2013 and 2012, respectively.
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.
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 order is accrued.
The consolidated accrued project costs as of December 31, 2013 and 2012 included in the “Accounts
payable and accrued expenses” account in the consolidated statements of financial position amounted to
P
=11,400.19 million, respectively (see Note 12). As of December 31, 2013 and 2012,
the consolidated expected future billings on the outstanding purchase orders issued amounted to
P
The settlement of these liabilities is dependent on the payment terms and project milestones agreed with
the suppliers and contractors. As of December 31, 2013 and 2012, the unapplied advances made to suppliers
and contractors relating to purchase orders issued amounted to P
=8,815.53 million,
25.4 Agreements with C2C/Pacnet
In 2001, Globe Telecom signed a cable equipment supply agreement with C2C as the supplier. In
March 2002, Globe Telecom as lessor 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.
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. Based on the amortization schedule, Globe Telecom recognized
lease income amounting to =
P12.26 million for the years ended December 31, 2013, 2012 and 2011.
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.
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.
148
In the second quarter of 2010, the specific equipment, portion of the property and facilities, and the liabilities
associated with the transfer were identified, classified 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”.
As of December 31, 2012, assets classified as held for sale and the liabilities directly associated with the
assets classified as held for sale amounted to P
In 2013, the Globe Group ceased to classify these assets as held for sale due to the substantial delay in the
completion of the transaction. The Globe Group recognized a catch up depreciation amounting to
=397.00 million for the year ended December 31, 2013.
P
25.5 Agreement with BHI
On August 11, 2009, Globe Telecom signed a credit facility agreement with BHI amounting to
=750.00 million. As of December 31, 2013 and 2012 the total drawdown of BHI amounted to
P
=295.00 million. The loan is payable in one full payment, five years from the date of initial drawdown, with a
P
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. Interest
income amounted to P
=13.72 million, P
=24.75 million in 2013, 2012 and 2011, respectively
(see Note 19). As of December 31, 2013 and 2012, the outstanding balance of loan receivable from BHI
amounted to P
=295.00 million, respectively (see Notes 6 and 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 16.1). In March
2011, the final agreements were executed between Globe Telecom and STI whereby Globe Telecom
conveyed and transferred ownership of certain IRU of certain international cables systems in exchange for
IRUs of certain cables systems of STI. The assets received were booked at its fair value amounting to
=120.19 million.
P
25.7 Construction Maintenance Agreement for South-East Asia Japan Cable System (SJC)
In April 2011, the global consortium of telecommunication companies formed to build and operate the
South-East Asia Japan Cable (SJC) system officially started the construction of the project that will link
Brunei, China Mainland, Hong Kong, Philippines, Japan, and Singapore with options to extend to Thailand.
The SJC consortium is composed of Globe Telecom and nine other international carriers. Globe Telecom’s
estimated investment for this project amounts to USD63.91 million and USD63.60 million and total
expenditures incurred was at 95.43% and 74.00% as of December 31, 2013 and 2012, respectively (see Note
7).
25.8 Agreement with BTI
On July 26, 2012, Globe Telecom and BTI executed an agreement to jointly use BTI frequencies for their
respective telecommunications services. Globe Telecom agreed to pay BTI a capacity provision fee per
annum and grant access to each other’s network, resources and facilities to enable joint and efficient use of
the frequency.
On October 1, 2012, the NTC provisionally approved the joint use by Globe Telecom and BTI the frequencies
assigned to BTI. The joint use agreement will allow Globe Telecom to address the increasing demand for
voice, SMS and mobile data services; and for BTI to be able to offer mobile telecommunications services
nationwide. The NTC imposed conditions to both parties, which includes the continuous payment of annual
spectrum usage fee (SUF) imposed by the NTC to both parties, and where Globe Telecom shall improve and
maintain the required quality service in order to continue the joint use of the assigned frequencies.
25.9 Network Sharing Arrangement with ABS-CBN Convergence Inc.
On May 27, 2013, Globe Telecom, Innove and ABS-CBN Convergence Inc. (ABS-C) entered into a network
sharing arrangement in order to provide capacity and coverage for new mobile telephony, data and valueadded services to be offered by ABS-C nationwide to its subscribers using shared network and interconnect
assets of the parties.
149
This arrangement will enable Globe Telecom, Innove and ABS-C to improve public service by enhancing
utility, capacity, inter-operability and quality of mobile and local exchange telephony and data services to the
public and allow ABS-C to modernize its existing service and expand to a retail base on top of its existing
subscriber base.
On May 31, 2013, NTC approved the network sharing agreement and co-use of the number blocks assigned
to Globe Telecom.
25.10 Shareholders’ and dealership agreement with Taodharma
In March 2013, Globe Telecom entered into a Shareholders Agreement among four other entities to
incorporate Taodharma.
Globe Telecom subscribed for the 25% preferred shares of Taodharma amounting to P
=55.00 million which
has been fully paid up as of August 2013 (see Note 11). Taodharma shall carry on the business of
establishing, operating and maintaining retail stores in strategic locations within the Philippines that will sell
telecommunications or internet-related services, and devices, gadgets, accessories or embellishments in
connection and in accordance with the terms and conditions of the Dealer Agreement executed among all of
the entities.
In March 2013, Globe Telecom also entered into an exclusive dealership arrangement with Taodharma that
included provisions to build and open retail outlet stores scattered across in cities and other major hightraffic locations nationwide.
As of December 31, 2013, Globe Group has recognized P
=67.55 million representing share on costs classified
under “Intangible assets and goodwill - net” in the consolidated statements of financial position (see Note 9).
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 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 setup. 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 Court of Appeals (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 10, 2014.
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 possibility of
outflow of economic resources to settle the contingent liability is remote.
150
27. Earnings Per Share
The Globe Group’s earnings per share amounts were computed as follows:
2012
2011
(As restated,
(As restated,
2013
see Note 2.4)
see Note 2.4)
(In Thousand Pesos and Number of Shares, Except
Per Share Figures)
Net income attributable to common shareholders for
basic earnings per share (a)
Add dividends on preferred shares
Net income attributable to shareholders for diluted
earnings per share (b)
Common shares outstanding, beginning
Add exercise of stock options
Weighted average number of shares for basic
earnings per share (c)
Dilutive shares arising from:
Stock options
Convertible preferred shares
Adjusted weighted average number of common stock
for diluted earnings per share (d)
Basic earnings per share (a/c)
P
=4,936,407
23,838
P
=6,812,109
33,145
P
=9,769,256
35,295
4,960,245
132,406
109
6,845,254
132,353
41
9,804,551
132,348
1
132,515
132,394
132,349
535
233
136
699
40
882
133,283
P
=37.25
133,229
P
=51.45
133,271
P
=73.81
P
=37.22
P
=51.38
P
=73.57
Diluted earnings per share (b/d)
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.
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
Capital includes convertible preference shares and equity attributable to equity holders of the parent.
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.
151
The Globe Group is not subject to regulatory imposed capital requirements. The ratio of debt to total
capitalization for the years ended December 31, 2013 and 2012 was at 62% and 57%, respectively.
The main purpose of the Globe Group’s financial risk management is to fund its operations and capital
expenditures. The main risks arising from the use of financial instruments are market risk, credit risk and
liquidity risk. The Globe Group 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:
28.2.1 Market 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, 2013 and
2012. The analyses exclude the impact of movements in market variables on the carrying value of
pension, provisions and on the non-financial assets and liabilities of foreign operations.
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, 2013 and 2012 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 in 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, 46% and 63%, 31% and
59% of the Globe Group’s USD and PHP borrowings as of December 31, 2013 and 2012,
respectively, 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.
Increase/decrease
in basis points
USD
PHP
152
+35bps
-35bps
+100bps
-100bps
2013
Effect on income
before income tax
Effect on equity
Increase (decrease)
Increase (decrease)
(In Thousand Pesos)
(P
=22,496)
22,496
(209,419)
209,032
(P
=58)
58
1,648
(2,100)
2012
Effect on income
before income tax
Effect on equity
Increase (decrease)
Increase (decrease)
(In Thousand Pesos)
Increase/decrease
in basis points
USD
+35bps
-35bps
+100bps
-100bps
PHP
(P
=4,462)
4,457
(71,844)
66,850
P4,624
=
(3,198)
8,244
(7,761)
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, USD-denominated 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, 24% and 13% of debt as of December 31, 2013
and 2012, 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:
2013
Peso
US
Equivalent
Dollar
(In Thousands)
US
Dollar
Assets
Receivables
Long-term notes receivable
Liabilities
Short-term notes payable
Long-term debt
Unearned revenues
Net foreign currency-denominated liabilities
2012
Peso
Equivalent
$25,572
68,178
97,578
191,328
P
=1,135,339
3,026,975
4,332,248
8,494,562
$41,508
73,127
100,302
214,937
P
=1,705,082
3,003,898
4,120,226
8,829,206
174,181
50,000
325,000
194
549,375
7,733,269
2,219,900
14,429,350
8,611
24,391,130
182,505
50,000
143,648
–
376,153
7,496,940
2,053,900
5,900,752
–
15,451,592
$358,047
P
=15,896,568
$161,216
P
=6,622,386
*This table excludes derivative transactions disclosed in Note 28.3
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).
Increase/decrease
in Peso to
US Dollar exchange rate
+.40
-.40
Increase/decrease
in Peso to
US Dollar exchange rate
+.40
-.40
2013
Effect on income before
income tax
Effect on equity
Increase (decrease)
Increase (decrease)
(In Thousand Pesos)
(P
=143,219)
143,219
2012
Effect on income before
income tax
Increase (decrease)
(In Thousand Pesos)
(P
=64,493)
64,493
P
=52
(52)
Effect on equity
Increase (decrease)
P5
=
(5)
153
The movement on the effect on income before income 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 Globe Group is Philippine
Peso. Although the derivatives have not been designated in a hedge relationship, they act as a
commercial 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 USD666.22 million and USD537.49 million as of
December 31, 2013 and 2012, respectively (see Note 25.3). 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 2013 and 2012
movement in PHP to USD rate on commitments amounted to P
=215.00 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 and Billing Management 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 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 has not executed any credit guarantees in favor of other parties. There is also no
concentration of credit risk within the Group.
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.
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
Special deposit account
Offshore bank deposit
2013
30%
70%
–
–
2012
36%
36%
20%
8%
The Globe Group has not executed any credit guarantees in favor of other parties. There is also minimal
concentration of credit risk within the Globe Group. Credit exposures from subscribers and carrier
partners continue to be managed closely for possible deterioration. When necessary, credit
154
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.
Neither Past
Due Nor
Impaired
Wireless receivables:
Consumer
Key corporate accounts
Other corporations and
Small and Medium
Enterprises (SME)
Wireline receivables:
Consumer
Other corporations
and SME
Other trade receivables
Traffic receivables:
Foreign
Local
Other receivables
Total
Consumer
Other corporations
and SME
Other trade receivables
Traffic receivables:
Foreign
Local
Other receivables
Total
Impaired
Financial
Assets
Total
P
= 421,441
5,865
P
= 830,032
54,851
P
= 540,192
121,562
P
= 297,678
133,771
P
= 3,313,742
1,790,681
P
= 1,501,094
170,412
P
= 6,904,179
2,277,142
8,276
435,582
139,846
1,024,729
139,840
801,594
89,979
521,428
685,456
5,789,879
344,817
2,016,323
1,408,214
10,589,535
269,178
131,074
239,189
179,856
155,270
432,353
65,571
230,771
81,820
1,083,291
1,459,396
314,513
2,270,424
2,371,858
48,501
448,753
22
51,385
470,430
40,156
47,539
635,162
–
19,076
315,418
–
34,055
1,199,166
–
143,508
1,917,417
–
344,064
4,986,346
40,178
1,189,372
122,033
1,311,405
2,256,332
P
= 4,452,094
–
–
–
–
P
= 1,535,315
–
–
–
–
P
= 1,436,756
–
–
–
–
P
= 836,846
–
–
–
–
P
= 6,989,045
Neither Past
Due Nor
Impaired
Consumer
Other corporations and
Small and Medium
Enterprises (SME)
2013
Past Due But Not Impaired
Less than
31 to 60
61 to 90 More than
30 days
days
Days
90 days
(In Thousand Pesos)
2012
Past Due But Not Impaired
Less than
31 to 60
61 to 90 More than
30 days
days
Days
90 days
(In Thousand Pesos)
161,362
1,350,734
31,074
153,107
192,436
1,503,841
14,736
2,271,068
P
= 4,140,912 P
= 19,390,968
Impaired
Financial
Assets
Total
= 1,074,174
P
1,278
= 1,036,145
P
215,499
P485,308
=
216,293
P277,761
=
185,195
P646,642
=
407,679
= 1,102,113
P
138,754
P4,622,143
=
1,164,698
189,558
1,265,010
202,800
1,454,444
107,798
809,399
59,396
522,352
377,067
1,431,388
311,587
1,552,454
1,248,206
7,035,047
248,568
82,666
244,694
179,561
134,382
321,359
66,115
227,458
71,340
797,021
1,492,204
265,827
2,257,303
1,873,892
56,449
387,683
–
42,032
466,287
28,310
31,786
487,527
–
16,209
309,782
–
16,190
884,551
–
151,087
1,909,118
–
313,753
4,444,948
28,310
2,107,169
296,453
2,403,622
1,511,217
= 5,567,532
P
–
–
–
–
= 1,949,041
P
–
–
–
–
= 1,296,926
P
–
–
–
–
= 832,134
P
–
–
–
–
= 2,315,939
P
164,302
2,271,471
43,434
339,887
207,736
2,611,358
12,629
1,523,846
= 3,681,937 P
P
= 15,643,509
Total allowance for impairment losses amounted to P
=3,538.07 million includes
allowance for impairment losses arising from specific and collective assessment amounted to
P
=341.73 million as of December 31, 2013 and 2012, respectively (see Note 4).
155
The tables below provide 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.
2013
Neither past-due nor impaired
High Quality Medium Quality
Low Quality
(In Thousand Pesos)
Consumer
Other corporations and SME
Consumer
Total
Total
P
=169,064
2,976
5,617
177,657
P
=234,119
2,804
698
237,621
P
=18,258
85
1,961
20,304
P
=421,441
5,865
8,276
435,582
228,761
124,166
44,126
397,053
P
=574,710
40,413
6,331
4,179
50,923
P
=288,544
4
577
196
777
P
=21,081
269,178
131,074
48,501
448,753
P
=884,335
2012
Neither past-due nor impaired
High Quality Medium Quality
Low Quality
(In Thousand Pesos)
Consumer
Consumer
Total
Total
P
=725,362
1,092
100,336
826,790
P
=257,307
156
42,378
299,841
P
=91,505
30
46,844
138,379
P
=1,074,174
1,278
189,558
1,265,010
218,599
77,572
52,600
348,771
P
=1,175,561
29,968
5,061
3,646
38,675
P
=338,516
1
33
203
237
P
=138,616
248,568
82,666
56,449
387,683
P
=1,652,693
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 midrange 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.
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):
2013
Subscribers
Charges for the year
Reversals/write offs/
adjustments
At end of year
156
Traffic
Other
Key corporate corporations Settlements
and Others
and SME
Consumer
accounts
P
=2,453,266
P
=320,404
P
=543,344
P
=221,058
1,665,993
225,907
203,343
14,254
(1,377,237)
P
=2,742,022
(5,786)
P
=540,525
(58,813)
P
=687,874
(15,688)
P
=219,624
Non-trade
(Note 6)
P
=124,082
(62,974)
(2,694)
P
=58,414
Total
P
=3,662,154
2,046,523
(1,460,218)
P
=4,248,459
2012
Subscribers
Charges for the year
Reversals/write offs/
adjustments
At end of year
Other
Key corporate corporations
Consumer
accounts
and SME
P
=2,433,222
P
=263,464
P
=434,603
1,121,634
85,006
173,994
(1,101,590)
P
=2,453,266
(28,066)
P
=320,404
(65,253)
P
=543,344
Traffic
Settlements
and Others
P
=249,341
(20,485)
(7,798)
P
=221,058
Non-trade
(Note 6)
P
=88,356
17,168
Total
P
=3,468,986
1,377,317
18,558
P
=124,082
(1,184,149)
P
=3,662,154
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. To cover its financing requirements, the Company intends to use internally
generated funds and available long-term and short-term credit facilities. As of December 31, 2013
and 2012, Globe Group has available uncommitted short-term credit facilities of USD6.90 million and
=7,920.00 million, USD36.40 million and P
P
As of December 31, 2013, the Globe Group has P
=7,000.00 million in available committed long-term
facilities.
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.
157
158
$4,799
P
=1,996,351
P
=4,603,843
PDSTF 6mo. +
1.25% margin;
PDSTF 3mo. +
0.75% margin;
PDSTF 3mo. +
1.25% margin;
PDSTF 3mo. +
1.00% margin
P
=2,117,800
4.85%;8.36%
2016
P
=4,550,000
5.75%;4.85%
2017
P
=19,300,000
4.89%;5.28%;
6.00%;4.85%
2018 and
thereafter
$4,776
P
=1,834,261
$3,799
P
=1,656,312
$3,146
P
=1,492,003
$10,733
P
=3,113,584
$900
$117,100
$2,100
$204,900
Libor 6-mo. +
Libor 6-mo. +
Libor 3mo. +
Libor 6-mo. +
1.50% margin 1.00% margin; 1.00% margin; 1.00% margin;
Libor 3mo. +
Libor 3mo. +
Libor 3mo. +
0.90% margin; 1.50% margin 1.50% margin
Libor 3mo. +
1.00% margin;
Libor 3mo. +
1.50% margin
P
=6,025,000
P
=70,000
P
=120,000
P
=11,810,000
PDSTF 3mo. + PDSTF 3mo. + PDSTF 3mo. + PDSTF 3mo. +
0.75% margin; 0.60% margin 0.50% margin; 0.50% margin;
PDSTF 3mo. + PDSTF 3mo. +
PDSTF 3mo. +
0.60% margin 0.60% margin
0.65% margin
P
=71,100
4.85%;8.36%
P
=1,386,300
4.85%;7.40%;
8.36%
$–
–
2015
2014
*Used month-end USD LIBOR and Philippine Dealing and Exchange Corporation (PDEX) rates.
*Using P
=44.398 - USD exchange rate as of December 31, 2013.
USD debt
Interest payable*
PHP debt
Philippine peso
Interest rate
Floating rate
USD notes
Interest rate
Liabilities
Long-term debt
Fixed rate
Philippine peso
Interest rate
2013
Long-term Liabilities
$27,252
P
=–
P
=10,092,511
P
=50,054,043
$325,000
$–
22,628,843
–
P
=27,425,200
Total
(in PHP)
–
325,000
$–
Total
(in USD)
$–
P
=–
P
=402,344
72,265
108,192
P
=221,887
$–
P
=–
P
=64,081,049
22,556,578
14,321,158
P
=27,203,313
Debt
Issuance Carrying Value
Costs
(in PHP)
$–
P
=–
P
=68,046,189
22,566,560
14,747,965
P
=30,731,664
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) (see Note 14).
$3,661
$3,022
P
=1,754,816
$17,710
Libor 6-mo.
plus 3.40%
margin; Libor
6-mo. plus
2.65% margin
P
=4,603,843
PDSTF 3mo +
0.75% margin;
PDSTF3mo +
1.25% margin;
PDSTF3mo +
1.00% margin;
PDSTF6mo +
1.25% margin
$14,273
Libor 6-mo.
plus 3.40%
margin; Libor
6-mo. plus
2.65% margin
P
=5,747,343
PDSTF 3mo +
0.75% margin;
PDSTF 3mo +
1.25% margin;
PDSTF 3mo +
1.00% margin;
PDSTF 6mo +
1.25% margin;
PDSTF 3mo +
1.50% margin
P
=2,092,544
P
=1,406,300
7.03%, 7.40%,
5.89%, 8.36%
2014
P
=3,397,450
5.97%, 7.03%,
7.40%
2013
$2,392
P
=1,578,270
$11,730
Libor 6-mo.
plus 3.40%
margin; Libor
3-mo. plus
1.50% margin
P
=6,025,000
PDSTF 3mo +
0.75% margin;
PDSTF3mo +
0.65% margin
P
=1,991,100
7.03%, 8.36%,
5.89%
2015
2016
$1,951
P
=1,355,781
$11,735
Libor 6-mo.
plus 3.40%
margin; Libor
3mo + 1.50%
margin
P
=70,000
PDSTF 3mo +
0.60% margin
P
=2,117,800
8.36%, 5.89%
*Used month-end USD LIBOR and Philippine Dealing and Exchange Corporation (PDEX) rates.
*Using P
=41.078 - USD exchange rate as of December 31, 2012.
USD debt
Interest payable*
PHP debt
Philippine peso
Interest rate
Floating rate
USD notes
Interest rate
Liabilities
Long-term debt
Fixed rate
Philippine peso
Interest rate
2012
$8,646
P
=2,933,782
P
=11,930,000
PDSTF 3mo +
0.50% margin;
PDSTF 3mo +
0.60% margin
88,200
Libor 3mo +
1.50% margin
P
=16,850,000
5.89%, 5.75%,
6.00%
2017 and
thereafter
$19,672
P
=–
P
=9,715,194
P
=54,138,836
$143,648
$–
28,376,186
–
P
=25,762,650
Total
(in PHP)
–
143,648
$–
Total
(in USD)
$–
P
=–
P
=314,068
118,490
71,164
P
=124,414
$–
P
=–
P
=59,725,520
28,257,696
5,829,588
P
=25,638,236
Debt
Issuance Carrying Value
Costs
(in PHP)
$–
P
=–
P
=62,469,723
28,266,107
5,876,330
P
=28,327,286
Fair Value
(in PHP)
159
160
P
=173,464
$3,904
$162,025
P
=–
$–
P
=–
$–
Pay
P
=–
$–
P
=32,285
$–
$81,963
P
=–
$–
P
=50,461
$–
$162,025
Pay
1 to 2 years
P
=–
–
–
P
=–
2015
Receive
Less than
1 year
P
=33,971,965
5,219,900
–
P
=39,191,865
P
=28,606
$1,554
$84,749
2014
Receive
On demand
P
=2,737,211
–
–
P
=2,737,211
*Projected USD swap coupons were converted to PHP at the balance sheet date.
Projected Swap Coupons*:
Interest Rate Swaps - Peso
Interest Rate Swaps - USD
Cross Currency Swaps - USD
Projected Principal Exchanges*
Cross Currency Swaps - Peso
Cross Currenc y Swaps - USD
Derivative Instruments
*Excludes taxes payable which is not a financial instrument.
Accounts payable and accrued expenses*
Notes payable
Other Financial Liabilities
2013
P
=–
$75,000
P
=–
$–
$65,966
P
=–
$–
$102,602
Pay
4 to 5 years
P
=–
–
–
P
=–
P
=–
$–
P
=–
$–
$76,720
P
=–
$–
P
=–
$–
$84,794
Total
P
=36,709,176
5,219,900
1,017,680
P
=42,946,756
P
=–
$50,000
P
=–
$–
$264,525
P
=2,063,750
$–
P
=–
$–
$212,450
2018 and beyond
Receive
Pay
Over 5 years
P
=–
–
1,017,680
P
=1,017,680
2017 and beyond
Receive
Pay
3 to 4 years
P
=–
–
–
P
=–
P
=3,062,500
$–
2016
Receive
2 to 3 years
P
=–
–
–
P
=–
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):
P
=–
2013
Receive
P
=203,073
Pay
P
=182
P
=11,639
Pay
Less than
1 year
P
=25,862,630
2,053,900
457,185
–
P
=28,373,715
2014
Receive
On demand
P
=1,834,283
–
–
–
P
=1,834,283
*Projected USD swap coupons were converted to PHP at the balance sheet date.
Projected Swap Coupons*:
Interest Rate Swaps
Derivative Instruments
*Excludes taxes payable which is not a financial instrument.
Accounts payable and accrued expenses*
Notes payable
Liabilities directly associated with the assets classified as held for sale
Other Financial Liabilities
2012
P
=3,847
P
=–
Pay
2 to 3 years
P
=–
–
–
–
P
=–
2015
Receive
1 to 2 years
P
=–
–
–
–
P
=–
P
=–
P
=–
Pay
4 to 5 years
P
=–
–
–
–
P
=–
2016
Receive
3 to 4 years
P
=–
–
–
–
P
=–
Total
P
=27,696,913
2,053,900
457,185
1,347,519
P
=31,555,517
P
=–
P
=–
2017 and beyond
Receive
Pay
Over 5 years
P
=–
–
–
1,347,519
P
=1,347,519
161
28.2.4 Hedging Objectives and Policies
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
(embedded), currency swap contracts, interest rate swap contracts and currency option contracts
(embedded). Certain 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 tables below set out information about the Globe Group’s
derivative financial instruments and the related fair values as of December 31 (in thousands):
Notional
Amount
Derivative instruments designated as hedges
Cash flow hedges
Cross currency swaps
Interest rate swaps
Derivative instruments not designated as hedges
Freestanding
Interest rate swaps
Embedded
Currency forwards*
Net
2013
Notional
Derivative
Amount
Asset
Derivative
Liability
$125,000
26,000
P
=–
187,500
P
=553,562
–
P
=62,174
3,484
–
4,125,000
–
148,009
6,849
–
1,834
P
=555,396
6,027
P
=219,694
2012
Notional
Derivative
Amount
Asset
Derivative
Liability
*The embedded currency forwards are at a net sell position.
Notional
Amount
Derivative instruments designated as hedges
Cash flow hedges
Interest rate swaps
Derivative instruments not designated as hedges
Freestanding
Interest rate swaps
Embedded
Currency forwards*
Net
$26,000
P
=1,437,500
P
=–
P
=31,810
19,168
4,750,000
–
183,432
12,557
–
421
P
=421
25,412
P
=240,654
*The embedded currency forwards are at a net sell position.
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 long-term
debt and US dollar-based revenues (in thousands).
2013
Derivatives:
Interest Rate Swaps
Floating-Fixed
Notional PHP
Notional USD
Pay-fixed rate
Receive-floating rate
Cross Currency Swaps
Floating-Fixed
Notional USD
Pay-fixed rate
162
<1 year
>1-<2
years
>2-<3
>3-<4
years
years
(In Thousands)
>4-<5
years
P
= 2,287,500
$26,000
P
= 2,025,000
$–
P
=–
$–
P
=–
$–
P
=–
$–
P
= 4,312,500
$26,000
3.90%-4.92% for PHP;
0.67% for USD
USD LIBOR 3mo.,
PDSTF 3mo
$–
$–
$75,000
$–
$50,000
$125,000
2.48% - 4.12% for PHP
USD LIBOR + 1.0%
Total
<1 year
Derivatives:
Interest Rate Swaps:
Floating-Fixed
Notional Peso
Notional USD
Pay-fixed rate
P
=1,875,000
$19,168
>1-<2 years
P
=2,287,500
$26,000
2012
>2-<3 years
P
=2,025,000
$–
>3-<4 years
P
=–
$–
>4-<5 years
P
=–
$–
Total
P
=6,187,500
$45,168
3.90%-4.92% for PHP,
0.67%-0.86% for USD
USD LIBOR,
3moPDSTF
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.
·
Cross Currency Swaps
The Globe Group entered into cross currency swap contracts to hedge the foreign exchange and
interest rate risk on dollar loans with maturities until April 2020. These cross currency swaps have a
notional amount of USD125.00 million as of December 31, 2013. The fair value gain amounted to
=491.39 million as of December 31, 2013, of which P
P
=47.35 million (net of tax) is reported in the equity
section of the consolidated statements of financial position.
·
Interest Rate Swaps
As of December 31, 2013 and 2012, the Globe Group has USD26.00 million in notional amount of USD
interest rate swap that have been designated as cash flow hedge of interest rate risk from USD loans.
The interest rate swap effectively fixed the benchmark rate of the hedged USD loan at 0.67% over the
duration of the agreement, which involves quarterly payment intervals up to April 2014.
The Globe Group also has PHP interest rate swap contracts with a total notional amount of
P
=1,437.50 million as of December 31, 2013 and 2012, respectively, which have been
designated as cash flow hedges of interest rate risk from PHP loans. These interest rate swaps
effectively fixed the benchmark rate of the hedged PHP loans at 3.90% over the duration of the swaps,
with quarterly payment intervals up to July 2014.
As of December 31, 2013 and 2012, the fair value of the outstanding swap amounted to P
=3.48 million
and
=31.81 million losses, respectively, of which P
P
=121.20 million (net of tax), respectively,
is reported as “Other reserves” in the equity section of the consolidated statements of financial position
(see Note 17.5).
Accumulated swap cost for the years ended December 31, 2013, 2012 and 2011 amounted to
=67.80 million, =
P
·
Deliverable and Nondeliverable Forwards
The Globe Group has no outstanding deliverable and nondeliverable forwards as of December 31, 2013
and 2012.
Hedging gains/losses on derivatives intended to manage foreign currency fluctuations on dollar based
revenues for the years ended December 31, 2013, 2012 and 2011 amounted to P
=144.70 million loss,
=21.29 million gain and P
P
=28.27 million gain, respectively. These hedging gains/losses are reflected under
“Service revenues” in the consolidated statements of comprehensive income.
163
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 profit or loss 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 and interest rate
swaps entered into by the Globe Group. Fair value changes on these instruments are accounted for directly
in profit or loss in the consolidated statements of comprehensive income.
·
Interest rate swaps
The Globe Group also has an outstanding PHP interest rate swap contract which swaps a floating
PHP loan into fixed rate of 4.92% and involves quarterly payment intervals up to September 2015.
Outstanding notional as of December 31, 2013 and 2012 amounted to P
P
The fair values on the interest rate swaps as of December 31, 2013 and 2012 amounted to a
P
=183.43 million net losses, respectively.
·
Deliverable and Nondeliverable Forwards
As of December 31, 2013 and 2012, the Globe Group has no outstanding deliverable and nondeliverable
currency forwards contracts not designated as hedges.
28.7 Embedded Derivatives
The Globe Group has instituted a process to identify any derivatives embedded in its financial or nonfinancial
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.
·
Embedded Currency Forwards
As of December 31, 2013 and 2012, the total outstanding notional amount of currency forwards
embedded in nonfinancial contracts amounted to USD6.85 million and USD12.56 million, respectively.
The nonfinancial contracts consist mainly of foreign currency-denominated purchase orders with various
expected delivery dates and unbilled leaselines receivables and payables denominated in foreign
currency with domestic counterparties. The net fair value losses of the embedded currency forwards as
of December 31, 2013 and 2012 amounted to P
=4.19 million and P
28.8 Fair Value Changes on Derivatives
The net movements in fair value changes of all derivative instruments are as follows:
December 31
2013
2012
(In Thousand Pesos)
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
(P
=240,233)
(P
=256,851)
307,431
(138,765)
(71,567)
(407,269)
P
=335,702
(555)
(190,444)
(447,850)
(207,617)
(P
=240,233)
28.9 Hedge Effectiveness Results
As of December 31, 2013 and 2012, the effective fair value changes on the Globe Group’s cash flow hedges
that were deferred in equity amounted to P
=12.32 million gain and =
P121.20 million loss, net of tax,
respectively. Total ineffectiveness for the years ended December 31, 2013 and 2012 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.
164
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:
2013
2012
(In Thousand Pesos)
Financial Assets
Financial assets at FVPL:
Derivative assets designated as cash flow hedges
Derivative assets not designated as hedges
AFS investment in equity securities (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**
**
**
P
=553,562
1,834
222,712
29,166,805
P
=29,944,913
=–
P
421
141,446
25,547,243
=25,689,110
P
P
=65,658
154,036
107,027,805
P
=107,247,499
P31,810
=
208,844
91,281,037
=91,521,691
P
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, 2013 and 2012, the Globe Group has no investments in foreign securities.
28.11 Offsetting Financial Assets and Financial Liabilities
The Globe Group has derivative financial instruments that have offsetting arrangements. Upon adoption of
the amendment to PFRS 7, the Globe Group has determined that there is no impact on financial position or
on profit or loss, but resulted on additional disclosures about such offsetting arrangements. Accordingly,
these additional disclosures are set forth below.
December 31, 2013
Amounts
Reported offset under
master
amounts
netting
in the
consolidated arrangements
or other
statement of
similar
financial
contracts
position
(In Thousand Pesos)
P
=493,222
(P
=148,009)
157,521
(148,009)
Amounts
offset by
financial
collateral
received or
pledged
Net
exposure
P
=–
–
P
=345,213
9,512
December 31, 2012
Amounts
Reported offset under
amounts
master
in the
netting
consolidated arrangements
Amounts statement of
or other
offset under
financial
similar
PAS 32
position
contracts
(In Thousand Pesos)
P
=
P
=421
P
=
240,654
Amounts
offset by
financial
collateral
received or
pledged
Net
exposure
Amounts
Gross offset under
amounts
PAS 32
Derivative assets
P
=493,222
157,521
Gross
amounts
Derivative assets
P
=421
240,654
P
=–
–
P
=
P
=421
240,654
165
The Globe Group makes use of master netting agreements with counterparties with whom a significant
volume of transactions are undertaken. Such arrangements provide for single net settlement of all financial
instruments covered by the agreements in the event of default on any one contract. Master netting
arrangements do not normally result in an offset of balance sheet assets and liabilities unless certain
conditions for offsetting under PAS 32 apply.
Although master netting arrangements may significantly reduce credit risk, it should be noted that:
a) Credit risk is eliminated only to the extent that amounts due to the same counterparty will be settled
after the assets are realized; and
b) The extent to which overall credit risk is reduced may change substantially within a short period because
the exposure is affected by each transaction subject to the arrangement and fluctuations in market
factors.
28.12 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
2013
Carrying Value
Financial Assets
Derivative assets
AFS investment in equity securities
(Note 11)
Financial Liabilities
Derivative liabilities (including current
portion)
Long-term debt (including current portion)
2012
Carrying
Fair Value
Value
(In Thousand Pesos)
Fair Value
P
=555,396
P
=555,396
P
=421
P
=421
222,712
P
=778,108
222,712
P
=778,108
141,446
P
=141,867
141,446
P
=141,867
P
=219,694
64,081,049
P
=64,300,743
P
=219,694
68,046,189
P
=68,265,883
P
=240,654
59,725,520
P
=59,966,174
P
=240,654
62,469,723
P
=62,710,377
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.
28.12.1 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 0.24% to 2.25% (for USD floating loans) and
0.50% to 2.96% (for PHP floating loans). 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.
28.12.2. Derivative Instruments
The fair value of freestanding and embedded forward exchange contracts is calculated by using the
interest rate parity concept.
The fair values of interest rate swaps 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
166
cross currency swap transactions are determined based on changes in the term structure of interest
rates of each currency and the spot rate.
The fair values were tested to determine the impact of credit valuation adjustments. However, the
impact is immaterial given that the Globe Group deals its derivatives with large foreign and local banks
with minimal risk of default.
28.12.3 Fair Value Measurement Hierarchy
The following tables provide the fair value measurement hierarchy of the Globe Group’s assets and
liabilities:
Quoted
prices in
active
markets
(Level 1)
Assets measured at fair value:
Derivative assets:
Embedded currency forwards
AFS investment in equity securities - net
Liabilities measured at fair value:
Derivative liabilities:
Interest rate swaps
Liabilities for which fair values are disclosed:
Long-term debt (including current portion)
Liabilities measured at fair value:
Derivative liabilities:
Interest rate swaps
Liabilities for which fair values are disclosed:
Long-term debt (including current
portion)
Significant
Significant
observable
unobservable
inputs
inputs
(Level 3)
(Level 2)
(In Thousand Pesos)
Total
P
=–
–
222,712
P
=553,562
1,834
–
P
=–
–
–
P
=553,562
1,834
222,712
–
–
–
62,174
151,493
6,027
–
–
–
62,174
151,493
6,027
–
68,046,189
–
68,046,189
Quoted
prices in
active
markets
(Level 1)
Assets measured at fair value:
Derivative assets:
AFS investment in equity securities - net
December 31, 2013
Fair value measurement using
December 31, 2012
Fair value measurement using
Significant
Significant
unobservable
observable
inputs
inputs
(Level 3)
(Level 2)
(In Thousand Pesos)
Total
P
=–
141,446
P
=421
–
P
=–
–
P
=421
141,446
–
–
215,242
25,412
–
–
215,242
25,412
–
62,469,723
–
62,469,723
There were no transfers from Level 1 and Level 2 fair value measurements for the years ended
December 31, 2013 and 2012. The Globe Group has no financial instruments measured under Level 3.
167
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 operates and manages 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% or more 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.
The Globe Group’s segment information is as follows:
Mobile
Communications
Services
Revenues
Service revenues:
External customers:
Voice
Data
Broadband
Nonservice revenues:
External customers
Segment revenues
EBITDA
EBIT
Net Income (Loss) Before Income Tax2
Provision for income tax2
Net Income (Loss)
Other Segment Information
Intersegment revenues
Subsidy1
Interest income2
Interest expense
Capital expenditure
Cash Flows
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
1
2
168
2013
Wireline
Communications
Services
(In Thousand Pesos)
Others
Consolidated
P
= 2,605,121
4,691,004
10,440,319
P
=–
151,937
–
P
= 34,903,969
45,155,849
10,440,319
3,512,861
76,124,617
32,860,810
(17,044,186)
15,816,624
807,778
18,544,222
3,969,773
(10,418,889)
(6,449,116)
320,209
472,146
(316,766)
(14,419)
(331,185)
4,640,848
95,140,985
36,513,817
(27,477,494)
9,036,323
13,839,780
(1,670,053)
P
= 12,169,727
(6,652,267)
(148,909)
(P
= 6,801,176)
(322,740)
(85,566)
(P
= 408,306)
6,864,773
(1,904,528)
P
= 4,960,245
(P
= 100,633)
(5,044,591)
629,817
(2,086,823)
(79,959)
(1,628,964)
(31,997,462)
(P
= 556,902)
(297,288)
53,977
(4,344)
–
(835,564)
(3,720,333)
(P
= 507,334)
29,621
1,213
(748)
–
4,947,156
(60,871)
(P
= 1,164,869)
(5,312,258)
685,007
(2,091,915)
(79,959)
2,482,628
(35,778,666)
26,857,607
(23,623,945)
(2,667,872)
7,571,395
(3,628,351)
(3,000,000)
151,624
(115,678)
191,639
34,580,626
(27,367,974)
(5,476,233)
P
= 32,298,848
40,312,908
–
Computed as non-service revenues less cost of sales
Net of final tax
Mobile
Communications
Services
Revenues
Service revenues:
External customers:
Voice
Data
Broadband
External customers
Segment revenues
EBITDA
EBIT
Benefit from (provision for) income tax2
Net Income (Loss)
Subsidy1
Interest income2
Interest expense
Capital expenditure
Cash Flows
1
2
P34,343,471
=
32,743,644
–
P2,665,559
=
4,166,919
8,720,931
=–
P
102,041
–
P37,009,030
=
37,012,604
8,720,931
2,791,596
69,878,711
32,447,257
(13,220,052)
19,227,205
929,592
16,483,001
2,737,792
(10,350,911)
(7,613,119)
(17,604)
84,437
(172,323)
(12,454)
(184,777)
3,703,584
86,446,149
35,012,726
(23,583,417)
11,429,309
17,670,349
(3,549,158)
= 14,121,191
P
(P
= 77,679)
(4,033,824)
448,300
(2,021,189)
(83,582)
(1,186,031)
(23,165,833)
(7,732,316)
693,237
(P
= 7,039,079)
(P
= 206,911)
62,117
67,081
(83,447)
–
(677,553)
(3,615,609)
(186,487)
(50,372)
(P
= 236,859)
(P
= 207,454)
(3,068)
181
(156)
–
–
(28,118)
9,751,547
(2,906,293)
= 6,845,254
P
(P
= 492,044)
(3,974,775)
515,562
(2,104,792)
(83,582)
(1,863,584)
(26,809,560)
17,884,980
(24,226,680)
2,197,903
6,259,215
(344,365)
–
76,262
(45,284)
–
24,220,457
(24,616,329)
2,197,903
Net of final taxes
Revenues
Service revenues:
External customers:
Voice
Data
Broadband
External customers
Segment revenues
EBITDA
EBIT
Benefit from (provision for) income tax2
Net Income (Loss)
Other Segment Information
Subsidy1
Interest income2
Interest expense
Capital expenditure
Cash Flows
2
Consolidated
(In Thousand Pesos)
Mobile
Communications
Services
1
2012 (As restated, see Note 2.4)
Wireline
Communications
Services
Others
2011(As restated, see Note 2.4)
Wireline
Communications
Services
Others
Consolidated
P35,290,101
=
28,139,234
–
P2,938,717
=
3,791,928
7,496,503
=–
P
108,481
–
P38,228,818
=
32,039,643
7,496,503
3,028,245
66,457,580
32,145,366
(11,402,577)
20,742,789
725,038
14,952,186
3,056,714
(7,527,599)
(4,470,885)
–
108,481
(87,007)
(11,051)
(98,058)
3,753,283
81,518,247
35,115,073
(18,941,227)
16,173,846
18,633,438
(4,216,248)
= 14,417,190
P
(4,478,893)
(34,101)
(P
= 4,512,994)
(96,410)
(3,235)
(P
= 99,645)
14,058,135
(4,253,584)
= 9,804,551
P
(P
= 34,747)
(2,091,403)
172,156
(1,924,162)
(27,345)
(1,068,597)
(13,530,030)
(P
= 264,929)
(42,060)
87,532
(65,289)
–
(849,986)
(3,777,427)
(P
= 246,673)
(843)
70
–
–
–
(109,925)
(P
= 476,855)
(2,134,306)
259,758
(1,989,451)
(27,345)
(1,918,583)
(17,417,382)
23,566,299
(13,695,708)
(12,520,892)
6,114,936
(4,345,211)
–
206,006
(109,864)
–
29,887,241
(18,150,783)
(12,520,892)
Net of final taxes
169
A breakdown of gross revenues to net revenues and a reconciliation of segment revenues to the total
revenues presented in the consolidated statements of comprehensive income are shown below:
2013
Gross service revenues
Interconnection charges
Net service revenues
Nonservice revenues
Segment revenues
Interest income
Other income - net
Total revenues
P
=90,500,137
(9,280,229)
81,219,908
4,640,848
85,860,756
688,249
475,246
P
=87,024,251
2012
(In Thousand Pesos)
=82,742,565
P
(8,859,309)
73,883,256
3,703,584
77,586,840
579,851
716,371
=78,883,062
P
2011
=77,764,964
P
(9,953,663)
67,811,301
3,753,283
71,564,584
297,388
574,768
=72,436,740
P
The reconciliation of the EBITDA to income before income tax presented in the consolidated statements of
comprehensive income is shown below:
2012
(As restated,
2013
see Note 2.4)
(In Thousand Pesos)
EBITDA
Gain on disposal of property and
equipment - net
Interest income
Financing costs
Other items
2011
(As restated,
see Note 2.4)
P
=36,513,817
=35,010,810
P
=35,115,073
P
64,333
688,249
(79,959)
(2,911,785)
(27,477,494)
67,612
P
=6,864,773
42,447
579,851
(83,582)
(2,362,609)
(23,583,417)
148,047
=9,751,547
P
319,250
297,388
(27,345)
(2,509,505)
(18,941,227)
(195,499)
=14,058,135
P
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.
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, mobile data or internet services 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)
d)
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;
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 (d) 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, content downloading, mobile data or internet 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.
170
29.1.3 Globe Telecom offers its wireless communications services to consumers, corporate and SME
clients through the following two (2) brands: Globe Handyphone Postpaid and Prepaid and Touch Mobile
Prepaid brands.
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, multicalling, 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)
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; andnc
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 fixed wireless 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 The Globe Group 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.
a)
Consumers - the Globe Group’s postpaid voice service provides basic landline services including tollfree 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 dataonly service. For fixed wireless broadband connection using its WiMax network and 3G with HighSpeed Downlink Packet Access (HSDPA) network, the Globe Group offers broadband packages
bundled with voice, or broadband 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.
171
b)
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. Value-priced, 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:
Note
Increase (decrease) in liabilities related to the
acquisition of property and equipment
Capitalized ARO
Dividends on preferred shares
15
2013
P
=5,838,624
15,675
–
2012
(In Thousand Pesos)
P
=5,699,760
25,022
33,145
2011
(P
=1,353,939)
27,403
35,295
The cash and cash equivalents account consists of:
2013
Cash on hand and in banks
Short-term placements
P
=4,468,305
2,952,430
P
=7,420,735
2012
(In Thousand Pesos)
P
=2,632,954
4,126,801
P
=6,759,755
2011
P
=1,182,895
3,976,151
P
=5,159,046
Cash in banks earn interest at the respective bank deposit rates. Short-term placements represent shortterm money market placements.
The ranges of interest rates of the above placements are as follows:
2013
Placements:
PHP
USD
2012
2011
0.15% to 3.90% 1.35% to 4.69%
0.02% to 1.75% 0.06% to 1.85%
1.50% to 4.88%
0.05% to 1.75%
31. Events after the Reporting Period
On February 10, 2014, the BOD approved the following:
a.
Declaration of the first semi-annual cash dividend of P
=37.50 per common share, payable to
common stockholders of record as of February 26, 2014. Total dividends amounting to
P
=4,972.35 million will be payable on March 20, 2014.
b.
Amendment of Articles of Incorporation to reclassify 31 million of unissued common shares with
par value of P
=50 per share and 90 million of unissued voting preferred shares with par value of
P
=5 per share into a new class of 40 million non-voting preferred shares with par value of P
=50 per
share.
172
GRI Index Sheet
General Standard Disclosure
Section
Page
No.
Remarks
Externally
Assured
G4.1
Statement from the senior most decision maker of the
organization
Message from Chairman
4
Yes
G4.2
Description of key impacts, risks and opportunities
Enterprise Risk Management
39
Yes
G4.3
Name of Organization
Our Business
11
Globe Telecom
Yes
G4.4
Primary Brands, Products and / or services
Empowering You
19
Telecom Service Provider
Yes
G4.5
Location of Organization’s Headquarter
Acknowledgment
183
Manila, Philippines
Yes
G4.6
Number of countries of operation
About the Report
2
Only in Philippines
Yes
G4.7
Nature of ownership and legal form
Ownership Structure
39
G4.8
Markets Served (Geographic Breakdowns)
Our Business
G4.9
Scale of Reporting Organization
Employment Diversity
G4.10
Number of Employees by employment contract
G4.11
Percentage of Employees under collective bargaining
G4.12
Describe Organization’s Supply Chain
G4.13
Report any significant changes in the reporting period
G4.14
Report precautionary approach principle by organization
None
G4.15
Externally developed EES charter & Principles
None
G4.16
List of memberships in associations / industry associations
Our Business
11
G4.17
List of entities included in Organization’s consolidated financial
statement
Subsidiaries & Joint Ventures
11
Yes
G4.18
Explain process for defining report content & aspect boundaries
Materiality Aspects
16
Yes
G4.19
List all identified material aspects in process of defining report
content
Materiality Aspects
16
Yes
G4.20
For each material aspect, report aspect boundary (within)
Materiality Aspects
16
Yes
G4.21
For each material aspect, report aspect boundary (outside)
Materiality Aspects
16
Yes
G4.22
Any statements from previous report has been restated & reason
for restatement
There were no such
statements
Yes
G4.23
Significant changes in Scope & Aspect boundaries from previous
reporting period
There were no significant
changes
Yes
G4.24
List of all stakeholder groups engaged by organization
Stakeholder Management
17
Yes
G4.25
Report basis for identification and selection of stakeholders
17
Yes
G4.26
Organization’s approach to stakeholder engagement
17
Yes
G4.27
Key topics & concerns raised through stakeholder engagement
17
Yes
G4.28
Reporting Period for information provided
About the Report
2
January - December 2013
Yes
G4.29
Date of most previous report
About the Report
2
April 2013
Yes
G4.30
Reporting Cycle
About the Report
2
Annually
Yes
G4.31
Contact point for questions
Acknowledgment
183
Corporate Communications
Yes
G4.32
GRI Content Index Sheet
GRI Index Sheet
173
Yes
Only in Philippines
Yes
51
Customer - 109 Million
Subscribers
Employees - 5,987
Yes
Employment Diversity
51
5,987
Yes
Employee Relations
50
About the Report
2
Yes
There were no significant
changes during the
reporting period.
Yes
173
General Standard Disclosure
174
Section
Page
No.
Remarks
Externally
Assured
G4.33
Policy / practice of seeking External Assurance
External Assurance
Statement
179
Yes
G4.34
Governance Structure of the Organization – committees
Board Committees
35
Yes
G4.35
Process for delegating authority for EES topics from highest
governance body to Senior executives & employees
Globe Telecom will set up
such mechanism
Yes
G4.36
Has organization appointed an executive level position with EES
responsibility
SVP, Corporate
Communications
Yes
G4.37
Report process for consultation between stakeholders and
highest governance body
17
Yes
G4.38
Composition of highest governance body and its committee
Board of Directors
33
Yes
G4.39
Report weather chair of highest governance body is also and
executive officer
Board of Directors
33
Yes
G4.40
Nomination & selection process for highest governance body and
its committees
Board Committees
35
Yes
G4.41
Process in place to avoid conflict of interest at workplace
Strengthening Governance
33
Yes
G4.42
Role of highest governance body in developing and approving
Values, mission, strategies, policies & goals
Human Resources Group
Yes
G4.43
Measures taken to enhance collective knowledge of governance
body on EES topics
Our Senior Management
team actively participates in
various conference, forums
and discussion on EES and
implement certain identified
and relevant best practices
in the organization
Yes
G4.44
Process for evaluation of highest governance body performance
and actions taken in response to evaluation
Board Performance
34
Yes
G4.45
Role of highest governance body in identifying EES risks, impacts
& opportunities
Board Committees
35
Yes
G4.46
Role of highest governance body in reviewing effectiveness of
Risk Management process for EES
Functions of Audit
37
Yes
G4.47
Frequency of review of EES risks, impacts & opportunities
Internal Audit
37
Yes
G4.48
Highest committee or position that formally reviews and
approves SR
G4.49
Process for communicating critical concerns
17
Yes
G4.50
Nature and quantity of critical concerns communicated
17
Yes
G4.51
Remuneration policy of highest governance body
Board Remuneration
34
Yes
G4.52
Process for determining remuneration
Compensation &
Remuneration Committee
35
Yes
G4.53
How stakeholder views & thoughts are accounted on
remuneration
Compensation &
Remuneration Committee
35
Yes
G4.54
Ratio of total annual compensation of highest paid individual to
median annual total compensation
This information is
confidential for Globe
Telecom
G4.55
Ratio of percentage increase of annual total compensation for
highest paid and median paid
This information is
confidential for Globe
Telecom
G4.56
Organization’s values, principles, standards and norms
Our Business
11
G4.57
Internal / external mechanism for seeking advice on ethical and
lawful behavior related to integrity – such as helplines
Self Service Channels
26
Yes
G4.58
Internal / external mechanism for seeking advice on unethical and
unlawful behavior related to integrity – such as helplines
Self Service Channels
26
Yes
Corporate Communication
Corporate and Legal
Services Group
Internal Audit & Finance
Vision, Mission, Corporate
Values
Yes
Yes
Aspect
Specific Disclosure
Section
Page No.
Remarks
Externally
Assured
ECONOMIC
Economic
Performance
Market Presence
G4-EC1
Direct Economic values generated & distributed,
including revenues and other costs
Management Discussion
& Analysis
70
G4-EC2
Financial implications and other risks due to climate
change
Enterprise Risk
Management
39
G4-EC3
Coverage of organization’s defined benefit plan
Benefit Plan
48
G4-EC4
Significant Financial Assistance received from
government
Not Applicable
G4-EC5
Range of ratio of standard entry level wage
compared to minimum wage of operation at
significant locations of operation
50
1.296%
Yes
G4-EC6
Proportion of Senior Management hired from local
community at significant location
G4-EC7
Impact of infrastructure investments & services
65
We measure the social
impact based on the
defined set of parameters
for each of our programs
Yes
65
Our programs - Globe
Bridgecom sim, My fair
share & Sustainable
livelihood support
supports the community
for their livelihood and
also generates indirect
income for Globe telecom
Yes
Indirect
Economic
Impacts
G4-EC8
Indirect economic impacts
Procurement
Practices
G4-EC9
Proportion of spending on local suppliers at
significant location of operations
Yes
We don’t receive
any assistance from
government
ENVIRONMENT
G4-EN1
Material used by weight or volume
G4-EN2
Percentage of materials used that are recycled input
material
G4-EN3
Energy Consumption Within the organization
G4-EN4
Energy Consumption Outside the organization
G4-EN5
Energy Intensity
G4-EN6
Reduction in Energy Consumption
G4-EN7
Reduction in Energy requirements of products &
services
G4-EN8
Total Water Withdrawal by Source
G4-EN9
Significant affect on water sources caused due to
withdrawal
None - we use water for
domestic purposes only
G4-EN10
Percentage of total volume of water recycled and
reused
We don’t recycle water
G4-EN11
Location & Size of Land owned, leased adjacent to
protected areas and areas of high biodiversity
Protecting Biodiversity
61
G4-EN12
Description of significant impacts of activities,
products, and services on biodiversity
61
G4-EN13
Habitats Protected or restored
61
G4-EN14
Number of IUCN Red List species and national
conservation list species with habitats in areas
affected by operation
Materials
Energy
Water
Key Practices for 2013
56
Energy Consumption
57
11,100 GJ
Yes
Results of Energy
Management
57
1,588,068 KWhr
Yes
Water Consumption
58
61,638.52 m3
Yes
Biodiversity
Areas covered under
Reforestation program
for 2013
Yes
None of the species from
the IUCN list are affected
by our operations
175
Aspect
Specific Disclosure
Section
Page No.
Remarks
Externally
Assured
G4-EN15
Direct GHG Emissions by Weight (Scope 1)
Managing Carbon
Footprint
62
30,493.75 tonnes
Yes
G4-EN16
Energy indirect GHG Emissions by weight (Scope 2)
Managing Carbon
Footprint
62
139,352.18 tonnes
Yes
G4-EN17
Other indirect GHG Emissions by weight (Scope 3)
Managing Carbon
Footprint
62
G4-EN18
GHG Emission Intensity
G4-EN19
Reductions in GHG Emissions
Managing Carbon
Footprint
62
G4-EN20
Emissions of Ozone Depleting Substance (ODS)
G4-EN21
NO, SO and other significant air emissions by type
& weight
G4-EN22
Total Water Discharge by Quality & Destination
G4-EN23
Total Weight of waste by type and disposal method
G4-EN24
Total number and volume of significant spills
G4-EN25
Percentage of hazardous waste imported of
exported
G4-EN26
Identify status & value of protected water bodies
G4-EN27
Extent of impact mitigation of environmental
impacts of products / services
G4-EN28
Percentage of products sold and their packaging
material
Compliance
G4-EN29
Monetary value of significance fines due to noncompliance with environmental laws and regulations
Transport
G4-EN30
Significant environmental impacts of transporting
products and other goods and material used for
organizations operation
Overall
G4-EN31
Total environmental protection expenditures and
investment by type
Supplier
Environment
Assessment
G4-EN32
Percentage of new suppliers that were screened
using environmental criteria
G4-EN33
Significant actual & potential negative impacts in the
supply chain & actions taken
G4-EN34
Number of grievances about environmental impacts
filed, addressed & resolved through formal grievance
mechanisms
Emissions
Effluents & Waste
Products &
Services
Environmental
Grievance
Mechanism
Yes
297.44 tonnes
Yes
We don’t emit any Ozone
Depleting Substance
NOT APPLICABLE
Hazardous & Solid Waste
Management
59
Reported on various
wastes produced and
disposed by the company
Yes
NOT APPLICABLE
Hazardous & Solid Waste
Management
59
Reported on various
wastes produced and
disposed by the company
NOT APPLICABLE
Key Practices for 2013
56
Products reclaimed
Yes
There were no such fines
on Globe Telecom during
the reporting period
Expenses on Environment
Programs
62
GHG Emission
63
₱3,068,500.9
Yes
LABOR PRACTICES
Employment
Labor /
Management
Relations
Occupational
Health & Safety
176
G4-LA1
Total number & rate of employee turnover by age
group, gender & region
Employees Hire Rate
51
Reported on turnover by
gender
Yes
G4-LA2
Benefits provided to full time employees that are not
provided to temporary or part time employees
Employee Benefits
48
Employee Benefits
Yes
G4-LA3
Return to work and retention rates after parental
leave by gender
Employee Benefits
48
G4-LA4
Minimum notice periods for operational changes
Our People Our Globe
45
G4-LA5
Percentage of total workforce represented in health
and safety committee
Health & Safety
49
10.69%
Yes
G4-LA6
Rates & type of injury, occupational diseases,
fatalities by region
Health & Safety
49
G4-LA7
Workers with high incidence or high risk of diseases
related to their occupation
G4-LA 8
Health & Safety topics covered in formal agreement
with trade unions
Health & Safety
49
Yes
Our employees does not
have any risk of diseases
related to the occupation
Yes
List of safety programs
Yes
Aspect
Training &
Education
Specific Disclosure
Page No.
G4-LA9
Average hours of training per year per employee by
employee category
G4-LA10
Programs for skill management and lifelong learning
G4-LA11
Percentage of employees receiving regular
performance and career development reviews
G4-LA12
Composition of governance bodies and employees
according to gender, age group, minority group and
other diversity indicators
45
G4-LA13
Ratio of basic salary of men to women by employee
category
50
G4-LA14
Percentage of new supplier that were screened using
labor practices criteria
G4-LA15
Significant actual & potential negative impacts for
labor practices in supply chain
G4-LA16
Number of grievances about labor practices filed,
addressed & resolved
Diversity & Equal
Opportunities
Supplier
Assessment
Grievance
Mechanisms
Section
45
Remarks
Training Programs
Externally
Assured
Yes
All the employees undergo
annual performance
review procedure
Yes
HUMAN RIGHTS
G4-HR1
Percentage of total number of significant
investment agreements which includes human rights
clauses
G4-HR2
Total hours of training on policies & procedures
concerning human rights aspects relevant to
operations
G4-HR3
Total number of incidents of discrimination and
actions taken
Freedom of
Association
& Collective
Bargaining
G4-HR4
Operations Identified in which Right to exercise
freedom of association and collective bargaining
may be at significant risk and actions taken to
support these rights
Child Labor
G4-HR5
Forced labor
Investment
50
All our employees values
and respects every
individual and there were
no cases of any kind of
discrimination
Yes
Employee Relations
50
We provide freedom to
join collective bargaining
and none of the
operations has any kind of
risk for its abolishment
Yes
Operations & suppliers identified as having
significant risk for incidents of child labor and
measure taken to abolish it
Employee Relations
50
We practice strong antichild labor and none of our
operations have any risk to
child labor
Yes
G4-HR6
Operations & suppliers identified as having
significant risk for incidents of forced labor and
measure taken to abolish it
Employee Relations
50
None
Yes
Security
Practices
G4-HR7
Percentage of security personal trained in the
organization’s policies or procedures concerning
aspects of human rights that are relevant to
operations
Indigenous
Rights
G4-HR8
Total number of incidents of violations involving
rights of indigenous people and actions taken
Employee Relations
50
We do not violate any
rights of the indigenous
people
Yes
Assessment
G4-HR9
Percentage & total number of operations that have
been subject to human rights reviews and/or impact
assessments
G4-HR10
Percentage of new suppliers screened using human
rights criteria
G4-HR11
Significant actual & potential negative human rights
impacts on supply chain and actions taken
G4-HR12
Number of grievances about human rights impacts
filed, addressed & resolved through formal grievance
mechanisms
Non Discrimination
Supplier
Human Rights
Assessment
Human Rights
Grievance
Mechanism
Employee Relations
177
Aspect
Specific Disclosure
Section
Page No.
Remarks
Externally
Assured
SOCIETY
G4-SO1
Percentage of operations with implemented local
community engagement, impact, assessments and
developing programs
65
Yes
G4-SO2
Operations with significant actual & negative impact
on local community
65
Yes
G4-SO3
Percentage & total number of operations analyzed
for risk related to corruption and risk identified
Employee Relations
50
Yes
G4-SO4
Communication & training on anti-corruption
policies & procedures
Employee Relations
50
G4-SO5
Confirmed incidents of corruption & actions taken
We strongly practice
anti-corruption policy and
there were no incidents of
corruption.
Public Policy
G4-SO6
Total value of political contributions by country
We don’t contribute to any
political parties.
Anti-competitive
Behavior
G4-SO7
Total number of legal actions for anti- competitive
behavior, anti-trust and monopoly practices & their
outcomes
None
G4-SO8
Monetary Value of significant fines for noncompliance with laws & regulations
We are compliant to all
the laws and regulations
of the local government
as well as the telecom
industry
G4-SO9
Percentage of new suppliers screened using criteria
for impacts
G4-SO10
Significant actual & potential negative impacts on
society by Supply chain
G4-SO11
No. of grievances filed, addressed & resolved about
the impact on society
G4-PR1
Percentage of significant product & services
categories for which health & safety impacts are
assessed for improvement
Our products does not
have any impact on health
& safety
G4-PR2
Total no. of incidents concerning with noncompliance with regulations & voluntary codes on
health & safety by products
None
G4-PR3
Product & Service information labeling
G4-PR4
No. of Non-Compliance issues with voluntary codes
governing product / service information
G4-PR5
Results of surveys measuring customer satisfaction
G4-PR6
Sale of banned or disputed products
We don’t sell any banned /
disputed products
G4-PR7
Incidents of non-compliances to marketing laws &
codes
No such incidents
Customer Privacy
G4-PR8
Total number of complaints regarding breaches of
customer privacy and losses of customer data
No such incidents
Compliance
G4-PR9
Significant fines for non-compliance with laws
& regulations concerning the use of products &
services
No such incidents
Community
Anti-Corruption
Compliance
Supplier
Assessment
Yes
PRODUCT RESPONSIBILITY
Customer Health
& Safety
Product &
Service Labeling
Marketing
Communication
178
Empowering you
19
Various products &
services specs
Yes
There were no such issues
Yes
Independent Assurance Statement
Introduction
ECC International (ECCI) has been engaged by the management of Globe Telecom (Company) to provide an
independent assurance of its 2013 Annual Sustainability Report. The intended users of this assurance statement
are the management and all other key stakeholders of the company.
Scope of Work
The assurance was planned and conducted in line with the requirements of the international standard AA 1000
AS. We performed a Type II, Moderate Level of Assurance and evaluated the Company’s Sustainability
Performance based on its 2013 Annual Sustainability Report and other information/data made available by the
st
st
company for the reporting period from January 01 , 2013 to December 31 2013 with respect to:
• AA 1000 APS Standard– Principles of Materiality, Inclusivity and Responsiveness
• Global Reporting Initiative (GRI) G4 Guidelines
Assurance Procedure
We performed assurance based on our methodology which is built on our professional experience and
international standards for assurance. We planned and performed our work to obtain the evidence we considered
necessary to provide a basis for our assurance conclusions.
We used the GRI Quality of Information Principles to evaluate the performance data together with the company’s
data protocols for how the sustainability performance data is measured, recorded and reported. This formed the
basis of the Reporting Criteria for undertaking our assurance work. In doing so, we have:
• Reviewed the company’s approach to stakeholder engagement and materiality analysis
• Review of the company’s Environment, Economic & Social (EES) policies, plans and practices
• Reviewed the consistency of data/information within the report as well between the report and the original
source
• Conducted interviews/discussions with senior management and decision makers from different
functions/locations of the company
• Performed sample audits on certain data streams to validate the accuracy, completeness and reliability of
the data collection, compilation and reporting system
Financial data reported in the 2013 Annual Sustainability Report is taken directly from the independently audited
financial statements and the same has not been checked against its source as part of this assurance process
Adherence to AA1000 Principles
Inclusivity:
Globe Telecom was found to have a variety of well-managed mechanisms to regularly engage with all
stakeholders frequently. The company considers stakeholder concerns and addresses them through proper
channels. This report clearly indicates the various stakeholders the company is involved with and their method of
engagement with them.
Materiality:
We reviewed and analyzed the process of defining the material aspects for Globe Telecom addressed in this
report. The company conducts regular group discussions to identify the focus areas of the company. There is an
improvement in the materiality aspect this year as compared to last year. The company has identified key
concerns under each category and prepared their report accordingly. The material aspects were found to be in
close link with the business goals and directions.
179
Responsiveness:
The company has adequate set of policies and guidelines in place to respond to the stakeholder concerns. Some
of the key process has been defined in the stakeholder management section of the report. It was also evident that
company responds to their stakeholders on a timely basis.
Key Observations & Recommendations
•
Globe Telecom has systems and controls in place to collect and consolidate sustainability performance
data from different sources. We recommend further development of the data gathering and reporting
process towards a more integrated approach which would make the process more efficient
•
Globe Telecom has carried out extensive stakeholder engagement with key internal and external
stakeholders on a regular basis. In future reports we recommend further disclosure on how stakeholder
engagement impacts the company’s response to material sustainability issues
•
Globe Telecom has reported well on its EES performance in the report and we recommend that more
focus is also provided, especially to the social performance of the company’s supply chain
Conclusion
In our opinion, the company has represented its Sustainability Performance in the report for the year 2013 in a fair
and balanced manner and meets the requirement of Type-2, Moderate level of assurance. All material issues of
the company’s business are adequately reported and the report gives reliable, accurate and complete information
about its sustainability performance for the year 2013. The report adheres to the AA1000 principles of Materiality,
Inclusivity and Responsiveness.
The reporting principles for defining the report content and quality are followed in line with the GRI G4 Guidelines.
The company has disclosed materiality issues in line with GRI G4 “in accordance – CORE” criteria.
All the General Standard disclosure and Specific Standard disclosure related to the identified material issues have
been externally assured as indicated in the GRI Content Index Sheet.
Responsibilities
The Preparation, Presentation and Content of the Globe Telecom’s 2013 Annual Sustainability Report is the sole
responsibility of the company. The company is responsible for determining the Sustainability goals & objectives,
performance and for establishing and maintaining appropriate data management systems and internal control
systems from which the reported information is derived.
Our responsibility is to express an independent conclusion on the company’s 2013 Annual Sustainability Report
defined within the scope of work as mentioned above. Our statements represent our independent opinion and
intended to all stakeholders of the company including its management.
Sathappan Sathappan
Lead Assurer
Date – March 11, 2014
180
Karthik Subburaman
Associate Assurer
METRO MANILA
STORES
UP TECHNO STORE
SM NORTH EDSA
TRINOMA
SM NOVALICHES
SM MARIKINA
SM FAIRVIEW
SM TAYTAY
SM MASINAG
SM VALENZUELA
GATEWAY
ALI MALL CUBAO
QUEZON AVENUE
EASTWOOD MALL
SHANGRI-LA
PODIUM
ROBINSONS GALLERIA
SM MEGAMALL
GREENHILLS
SM MAKATI
TOWER ONE
GREENBELT 4
MARKET MARKET
GLORIETTA
THE GLOBE TOWER
ROCKWELL
SM AURA
ALPHA LAND
SM BICUTAN
SM MALL OF ASIA
SM SAN LAZARO
SM MANILA
SM SOUTHMALL
SM SUCAT
ROBINSONS PLACE MANILA
BINONDO
SM STA. MESA
SM BF HOMES
List of Stores
ADDRESS
UP Ayalaland TechnoHub Diliman, Commonwealth, Quezon City
4th Floor, Cyberzone Building, New SM Annex, SM City North Edsa , Quezon City
M1 Unit 1034, Trinoma Mall, EDSA, Quezon City
2nd Floor, SM City Novaliches, Quirino Highway, San Bartolome 2, Novaliches, Quezon City
Ground Floor, Cyberzone, SM City Marikina, Marcos Highway, Calumpang, Marikina City
3rd Floor, Cyberzone, SM City Fairview, Quirino Highway cor. Regalado Avenue, Brgy. Greater Lagro, Novaliches, Quezon City
2nd Floor, Building B, SM City Taytay, Manila East Road, Taytay, Rizal
2nd Floor, Cyberzone, SM City Masinag, Marcos Highway, Antipolo City
3rd Floor, SM Super Center Valenzuela, McArthur Highway, Valenzuela City
3rd Floor, Gateway Mall Araneta Center, Cubao, Quezon City
Upper Ground Floor, Ali Mall II, Araneta Center, Cubao, Quezon City
Unit 103 -A, Ground Floor, National Bookstore Inc., Quezon Avenue, Quezon City
2nd Floor, Eastwood Mall, Eastwood City, Cyberpark, E. Rodriguez Avenue, Bagumbayan, Quezon City
Floor 1, Shangri-la Plaza, EDSA cor. Shaw Blvd., Mandaluyong City
5th Floor, The Podium Building, ADB Avenue, Ortigas Center, Mandaluyong City
Floor 1 East Wing, Robinsons Galleria Mall, EDSA cor. Ortigas Avenue, Quezon City
4th Floor Cyberzone, SM Megamall Building B, Ortigas Center, Pasig City
Ground Floor, V Mall Greenhills Shopping Center, Ortigas Avenue, San Juan
4th Floor, Concourse Area, SM Makati Department Store, Ayala Center, Makati City
Unit C, Mezzanine, Makati Stock Exchange, Ayala Tower One, Ayala Avenue cor. Paseo de Roxas, Makati City
2nd Floor, Greenbelt 4, Ayala Center, Makati City
4th Floor, Market Market, Bonifacio Global City, Taguig
Ground Floor, Glorietta 3, Ayala Center, Makati City
2nd Floor, The Globe Tower, 32nd St. cor. 7th Avenue Bonifacio Global City, Taguig
Floor R2 Power Plant Mall Rockwell Makati City
4th Floor, Unit 434, SM Aura Premiere, 26th St. cor. McKinley Parkway, Brgy. Fort Bonifacio, Global City, 1630, Taguig City
Ground Floor, Alphaland Southgate Mall, EDSA cor. Pasong Tamo Extension, Makati City
2nd Floor, SM City Bicutan Building B, Dona Soledad Avenue, Brgy. Don Bosco, Bicutan, Paranaque City
2nd Floor, North Parking Building, SM Mall of Asia, Pasay City
3rd Floor, SM City San Lazaro, Felix Huertas cor. A.H. Lacson Sts., Sta. Cruz, Manila
Lower Ground Floor, Cyberzone, SM City Manila, Arroceros cor. Marcelino Sts., Manila
3rd Floor, Cyberzone, SM Southmall Alabang-Zapote Road, Las Pinas City
3rd Floor, SM Supercenter Sucat, Sucat Road, Paranaque City
4th Floor, Pedro Gil Wing, Robinsons Place Manila, Pedro Gil cor. Adriatico Sts., Ermita, Manila
3rd Floor, Lucky China Town Mall, Calle Felipe cor. La Chombre Sts., Brgy. 293, Zone 28, Binondo, Manila
3rd Floor, SM City Sta. Mesa, Ramon Magsaysay Blvd. cor. Araneta, Sta. Mesa, Manila
3rd Floor, Cyberzone Area, SM City, BF Paranaque
LUZON
STORES
ADDRESS
SM TARLAC
SM MARILAO
SM CLARK
SM OLONGAPO
CABANATUAN
SM SAN FERNANDO
SM BALIUAG
SM PAMPANGA
HARBOR POINT
CONCEPCION
WALTERMART SAN FERNANDO
GAPAN
TUGUEGARAO
SAN NICOLAS, ILOCOS NORTE
SAN FERNANDO, LA UNION
DAGUPAN
VIGAN
SM ROSALES
SM BAGUIO
HYPERMART LAOAG
CANDON
SM BACOOR
SM MOLINO
SM ROSARIO
SM DASMARINAS
PUERTO PRINCESA
SM MUNTINLUPA
Unit 345, 3rd Floor, Cyberzone, SM City, McArthur Highway, Tarlac City
Unit 219, 2nd Floor, SM City Marilao, Km. 21 Brgy. Ibayo, McArthur Highway, Bulacan
Unit 203-204, 2nd Floor, SM City Clark, Clarkfield, Pampanga
Unit 306, 3rd Floor, SM City Olongapo, Brgy. Pagasa Magsaysay Drive, Olongapo City
GL-4B, Ground Floor, NE Pacific Mall, Km. 111, Maharlika Highway, Cabanatuan City, Nueva Ecija
Unit 314, 3rd Floor, SM City San Fernando, V. Tiomico St., Brgy. Poblacion, City of San Fernando Pampanga
Unit 141, Ground Floor, SM City Baliwag, Doña Remedios Trinidad Highway, Brgy. Pagala Baliuag, Bulacan
Unit 129, Cyberzone area, SM City, City of San Fernando, Pampanga
Unit 1012, Ground Floor, Harbor Point Mall, Rizal Avenue, Subic Bay Freeport Zone, Olongapo City
Unit 2, Ground Floor, Suarez Bldg.; Timbol St. San Nicolas, Concepcion, Tarlac
Ground Floor, Waltermart, Mac Arthur Highway, Brgy. San Agustin, City of San Fernando Pampanga 2000
2nd Floor, Waltermart Center, Maharlika Highway, Bayanihan, Nueva Ecija
Unit 79, Chowking Bldg., Balzain Road, Tuguegarao City, Cagayan Valley
Unit LG-9, 365 Plaza, National Highway, Brgy. 1, San Francisco, San Nicolas, Ilocos Norte
Ground Floor, La Union Provincial Administrative Commercial Bldg., Quezon Avenue, San Fernando, La Union
Ground Floor, 127 Nepo Mall Dagupan, Arellano St., Dagupan, Pangasinan
Collegio Business Center, Mart 1 Nueva Segovia St., Vigan City
Unit IT112, Ground Floor, SM City Rosales, MacArthur Highway, Brgy. Carmen East , Rosales Pangasinan
Unit 349 & 350, 3rd Floor, SM City Baguio, Luneta Hill, Upper Session Road, Baguio City
Ground Floor, SM Hypermart, F.R Castro cor. Paco Roman St., Laoag City, Ilocos Norte 2900
KanPing Commercial Bldg. Maharlika Highway, Brgy. San Antonio Candon City, Ilocos Sur
3rd Floor CB 324-325 Cyberzone Area SM City Bacoor Tirona Highway cor. Aguinaldo Highway, Bacoor, Cavite
Unit 213, 2nd Floor, SM Supercenter Molino, Molino IV, Bacoor, Cavite
Unit 237, 2nd Floor, SM City Rosario, Gen. Trias Drive, Rosario Cavite.
Unit E204, 2nd Floor, SM Dasmariñas Governor Drive 1, Brgy. Sampaloc Dasmariñas, Cavite
Unit 1, Ground Floor, GETAN Square, 273 Rizal Avenue Puerto Princesa, Palawan
Unit 240, 2nd Floor, SM Supercenter Muntinlupa National Road, Tunasan, Muntinlupa City
181
STORES
ADDRESS
FESTIVAL SUPERMALL
THE DISTRICT AYALA MALL IMUS
CAVITE CENTRAL MALL
AYALA ARVO
CALAPAN
SM BATANGAS
SM LIPA
SM SAN PABLO
SM CALAMBA
SM STA. ROSA
LEMERY
PINAMALAYAN
CITIMART-BAUAN
ROBINSONS LIPA
ULTIMART SAN PABLO
TARGET MALL
SM NAGA
SM LUCENA
LEGASPI
LCC IRIGA
08 & XS-09, 3rd Floor, Filinvest Festival Supermall,Filinvest Corporate City, Alabang Muntinlupa
Unit 112B, Ground Floor, The District Ayala Mall, Imus, Cavite
Unit 28, Ground Floor, Central Mall, Salitran II, Dasmarinas, Cavite
Unit G-14B, The District, Molino-Paliparan Road, Brgy. Salawag, Dasmarinas, Cavite
Ground Floor, Homemark Bldg., JP Rizal St. Camilmil, Calapan City, Or. Mindoro
Units 229 & 230, 2nd Floor, SM City Batangas, Pastor Village, Pallocan West, Batangas City
2nd Floor, SM City Lipa, Ayala Highway, Brgy. Marawoy, Lipa City, Batangas
2nd Floor, SM San Pablo, Maharlika Highway, San Pablo City
2nd Floor, Cyberzone, SM City Calamba, National Highway, Brgy. Real, Calamba City
2nd Floor, Cyberzone, SM City Sta. Rosa, Brgy. Tagapo, Sta. Rosa City, Laguna
Ground Floor, RVC Bldg., Ilustre Avenue cor. A. Bonifacio St., Lemery, Batangas
FCA Bldg 2, Mabini St., Zone 3, Pinamalayan, Or. Mindoro
Ground Floor, Citimart Bauan, Kap. Ponso St., Bauan, Batangas
Ground Floor, Robinsons Place, J. P. Laurel, Lipa City
Ultimart Shopping Plaza, M. Paulino St., San Pablo City, Laguna
2nd Floor, Target Mall, Balibago Complex, Sta. Rosa City
Unit 212, 2nd Floor, SM City Naga, Central Business II, Brgy. Triangulo, Naga City
Unit CZ 014, 3rd Floor, Cyberzone SM Lucena, Dalahican cor. Pagbilao Road, Lucena City
2nd Floor, Pacific Mall, Landco Business Park, Bitano, Legaspi City
2nd Floor, LCC Mall Iriga, Brgy. San Francisco, Highway 1, Iriga City
VISAYAS
STORES
ADDRESS
AYALA CEBU
SM CEBU
GAISANO GRAND MALL MACTAN
SM CONSOLACION
ELIZABETH MALL
GAISANO TABUNOK
GAISANO ISLAND MALL
J. CENTER MALL
COLONADE MALL
TOLEDO
PACIFIC MALL
SM ILOILO
GAISANO ROXAS
SM BACOLOD
AYALA BACOLOD
SM DELGADO
ROBINSONS BACOLOD
DUMAGUETE
GAISANO ILOILO
BORACAY
GAISANO OTON
ISLAND CITY MALL
ROBINSONS TACLOBAN
CALBAYOG
MAASIN
GAISANO CENTRAL TACLOBAN
GALLERIA LUISA
CATBALOGAN
BAYBAY LEYTE
Active Zone, Ayala Center Cebu, Cebu Business Park, Cebu City
2nd Floor, Cyberzone, SM City Cebu, Northwing, North Reclamation Area, Cebu City
Ground Floor, Gaisano Grand Mall of Mactan Agus Road corner Basak, Lapu Lapu City, Cebu
Unit 201-Q, 2nd Floor, Cyberzone, SM City Consolacion, Lamac, Consolacion, Cebu
Unit T-020, 3rd Floor, Elizabeth Mall, N Bacalso cor. Keon Kilat Sts., Cebu City
Unit F-17, 2nd Floor, Gaisano Grand Fiesta Mall, Highway Tabunok, Talisay City, Cebu
Ground Floor, Annex-5, Gaisano Island Mall, Pajo, Lapu Lapu City, Cebu
Unit GK16, Upper Ground Floor, J. Center Mall, A.S. Fortuna, Mandaue City
Ground Floor, Colonade Mall, Colon St., Cebu City
Unit 17, Ground Floor, Gaisano Grand Mall, Riverside, Sangi, Toledo City
Unit SLC 5-A, 2nd Floor, Pacific Mall, Ibabao st., Estancia, Mandaue city
2nd Floor, SM City Iloilo, B. Aquino Avenue, Mandurriao, Iloilo City
Area #9, Gaisano Arcade, Arnaldo Blvd., Roxas City
Unit 115, Southwing SM City, Poblacion Reclamation Area, Bacolod City
Stall F123, 1st Floor, The District North Point , Talisay Highway, Brgy. Zone 15, Talisay City, Negros Occidental
Ground Floor, SM Delgado cor. Valeria & Delgado Sts., Iloilo City
3rd Floor, Robinsons Place, Mandalagan, Bacolod City
Space 276-279, 2nd Floor, Robinsons Dumaguete, Calingdanga, Dumaguete City, Negros Oriental
2nd Floor, Gaisano City, La Paz, Iloilo City
Unit 1-2A, Block C, Phase 2 D'Mall De Boracay Balabag, Malay, Aklan
Gaisano Oton, Poblacion Oton, Iloilo
Lower Ground Floor, Island City Mall, Dao District, Tagbilaran City
Ground Floor, Annex Bldg. Robinson's Place Tacloban, National Highway, Tabuan, Marasbaras Tacloban City, Leyte
Unit #2, Crown Bldg., Magsaysay Blvd., Calbayog City, Western Samar
Ground Floor, Pering Chai Bio Building, Tomas Oppos St., Tunga-Tunga, Maasin City
Unit KG-05, Ground Floor, Gaisano Central Tacloban, Justice Romualdez St., Tacloban City
Units 16 & 17, Upper Ground Floor, Galleria Luisa, Governor Celestino Gallares St., Tagbilaran City, Bohol
Unit 2, Samar College Bldg., Mabini Avenue, Catbalogan, Samar
Ground Floor, Grace Space Rental Enterprise, A. Bonifacio St., Baybay City, Leyte
MINDANAO
182
STORES
ADDRESS
SM CAGAYAN DE ORO
CDO LIMKETKAI
AYALA CENTRIO
BUTUAN
ILIGAN
VALENCIA
OZAMIS
PAGADIAN
DAVAO ABREEZA
COTABATO CITY
TAGUM
SM LANANG
SM GENSAN
SM DAVAO
ZAMBOANGA
KORONADAL
Unit 313, 3rd Floor, SM City CDO, Gran via St. cor. Mastersons Avenue,Cagayan De Oro City
North Concourse, Limketkai Mall, Lapasan, Cagayan de Oro City
2nd Floor, Ayala Centrio Mall, Lapasan, Cagayan de Oro City
3rd Floor, Gaisano Mall, J.C. Aquino Avenue, Butuan City
3rd Floor, Gaisano Mall, Roxas Avenue, Villa Verde, Iligan City
2nd Floor, NVM Building, Sayre Highway, Valencia City, Bukidnon
Unit B-5, Ground Floor, Gaisano Ozamis City Mall,Rizal Avenue cor. Zamora Extension, Ozamiz City, Misamis Occidental
Lower Ground, Gaisano Capital, Pagadian City
3rd Floor, Abreeza Mall, JP Laurel Avenue, Davao City
BPI Bldg. Makakua St., Cotabato City
Unit 4 & 5, Upper Ground Floor, Gaisano Grand Mall Tagum, Apokon Road, Visayan Village, Tagum City
Unit C3-150, 3rd Floor, Cyberzone, SM Lanang Premier, JP Laurel Avenue, Bajada, Davao City
Unit CY01-03, 3rd Floor, SM Gensan, Santiago Blvd. cor. San Miguil St., General Santos City
3rd Floor, SM City Davao Annex Bldg., Ecoland Subd., Quimpo Blvd., Davao City.
Door 2&3, ARV Bldg., San Jose Road, Zamboanga City
2nd Floor, KCC Mall of Koronadal, GenSan Drive, Koronadal City
Acknowledgement
Project Lead:
Ma. Yolanda Crisanto, APR
Project Manager:
Roland Ferrer
Tek Olaño
Project Assistant:
Jomari Fajardo
Kristel Or
Consultant:
Arpit Shrivastava
ECC International (www.eccigroup.com)
Artist:
Kelvin Tee
Photography:
Wig Tysmans
Stephen Militante
Hair and make-up:
Arlene Adto
SUBSIDIARIES:
Innove Communications, Inc.
18th Floor, Innove IT Plaza
Samar Loop corner Panay Road
Cebu Business Park
6000 Cebu City
Trunkline: (032) 415-8822 / (032) 730-2000
G-Xchange, Inc.
24th Floor, The Globe Tower
32nd St. cor. 7th Ave.
Bonifacio Global City, Taguig
Website: www.globe.com.ph/gcash
Entertainment Gateway Group
3rd Floor, Bloomingdale Building
Salcedo Street, Legaspi Village
1229 Makati City
Trunkline: (02) 892-8101 / (02) 840-1576 /
(02) 892-8103
Website: www.egg.ph
Kickstart Ventures, Inc.
55 Paseo de Roxas Avenue
Makati City
Trunkline: (02) 625-8723
Website: www.kickstart.ph
CORPORATE INFORMATION:
Head Office:
Globe Telecom, Inc.
The Globe Tower
Trunkline: (02) 797-4043
Website: www.globe.com.ph
Investor Relations:
Trunkline: (02) 797-4307
Email: ir@globe.com.ph
Corporate Communications:
Email: gtcorpcomm@globe.com.ph
Stock Trading Information:
Globe Telecom is listed on the Philippine Stock Exchange
Ticket symbol: GLO
SHAREHOLDER SERVICES:
For inquiries regarding dividend payments, change
of address, account status, and lost/damaged stock
certificates, please contact our stock transfer agent:
Bank of the Philippine Islands (BPI) Stock Transfer Office
16th Floor, BPI Building
Ayala Avenue corner Paseo de Roxas
Makati City
Tel. (02) 816-9067 / (02) 816-9321
Fax. (02) 845-5515
For further information regarding the annual report,
please contact:
Ma. Yolanda C. Crisanto
Senior Vice President, Corporate Communications
Email: gtcorpcomm@globe.com.ph
The Globe Telecom 2013 Annual and Sustainability Report cover is printed on FSC®-certified Mohawk Options, which is made with 100% postconsumer waste. The main pages of this report are printed on 9Lives Offset, a premium-grade recycled paper that is carbon-neutral, FSC®certified and made of 100% post-consumer waste. The Financial Statement is printed on Econobond, which is 100% recycled uncoated paper
made from post-consumer collected waste.
183
Globe Telecom, Inc.
The Globe Tower
32nd Street corner 7th Avenue,
Bonifacio Global City,
Taguig, Philippines
www.globe.com.ph

Full version

Transcription

Similar documents

Traumatic partial optic nerve avulsion with luxated globe

PLANETPALS Print Earth Globe

Singer AND lover were executed then made to look

Read More

drustvo fizicara srbije

Inflatable Labeling Globe (418k PDF file)