There you go. Thank you very much. Good morning again to all. Before we begin with the Q&A session, we'd like to introduce the mentioned panel and ask them to join us here on or beside the stage. First of all, we have, of course, our President and Chief Executive Officer, Mr. Ernest Cu. Then we have Ms. Rizza Maniego-Eala, Chief Finance Officer and Chief Risk Officer. First, we have our General Counsel, Attorney Froilan Castelo. And next, we have our Vice President of Consumer Mobile Business, Mr. Darius Delgado. And fresh from our trip to the U.S., the President and CEO of Mynt, Ms. Martha Sazon. Then we have our Senior Vice President for Network Planning and Engineering, Mr. Joel Agustin. Finally, I got that right. Next we have our Vice President for Globe B2B Business Development, Mr. Raymond Policarpio.
And of course, we have our Senior Advisor for Broadband Business, Mr. Dan Horan. And last but not the least, of course, the Chief Executive Officer of STT GDC, Mr. Carlo Malana. Okay, we'll now begin with the Q&A session with questions sent in advance to our email address, investorrelations@globe.com.ph. The first question is, first set of questions come from Arthur Pineda of Citi. First question, I think, is for Rizza. The question is, "Depreciation and Amortization have declined materially, Q-on-Q . What is driving this, and how should we see this trending for the subsequent quarters?
So in terms of depreciation, [Foreign language] . Thanks. So in terms of depreciation, this dropped Q-on-Q as 4Q 2023 included catch-up amortization related to our capital leases whose contracts were just finalized in the end of 2023. On top of that, the usual 1Q drop in depreciation results from fully depreciated assets the previous years. Now, if you look at the growth rate of depreciation in 2023, that was 4%. So it's better to really look at an annualized basis, using the trends of our quarterly reports the past two years, and depreciation for this year should be slightly higher than the 4% growth last year, given that we have more assets on the books, on top of the fact that we are also closing all the tower sales this year.
Thanks for that, Rizza. The next question is on broadband. Of course, this is for Dan. "Fixed Wireless Broadband contraction has accelerated quarter-over-quarter. Where do you see this as settling for the year?
Thanks, Jose Mari. And Arthur for the question. Recall last year we set the guidance that the fixed wireless revenue will hover to around PHP 600 million or so in the middle of this year. And so far we've been tracking close to that guidance. And earlier in the presentation we also showed that Q-on-Q we've moved from a -15% Q-on-Q to about -8%. So we see that slower decline, improving. And it's also coming from the stabilization of the home prepaid Wi-Fi business as well as the SIM card registration. And we see a higher trend going towards prepaid fiber as more and more customers are looking for more stable connections for the home, still on a pay-as-you-go reloadable concept, and more importantly, unlimited internet.
Thank you, Danny. The next question again is for broadband. Can you please break down the fiber net adds between prepaid and postpaid, and where are the RPUs trending for fiber?
still too early to disclose the breakdown of the different net adds and the plans. However, if you look at the postpaid RPU, we're hovering stable at about PHP 1,500, and it's still early days on the prepaid fiber. But looking at the customers that we're getting, it's still on a concept of quality, and we see that shown in our reload rates, where it's the highest across the prepaid products, and it's pretty stable. And the way that we approach it as well, it's purely digital. So customers are adopting through the GlobeOne app as well as the GCash, and you have the option to reload on both applications. So the convenience is totally there, and there's also a real-time experience for the customers. So the minute you load, you get internet backup almost immediately.
Thank you, Danny. The next set of questions come from German de la Paz of Abacus, and the first question I think is for Darius. What exactly do we mean by market repair efforts?
So when we say market repair, it's all about monetization efforts, some of which will be price-ups of certain SKUs. But the impact of the price-ups that we have institutionalized since a few quarters ago were that most customers who were unloading them actually grew to higher denoms. So that's higher output which we have seen since quarter four continuing to snowball in quarter one. What we also have done to actually support those price-ups or portfolio streamlining efforts is that we kept on improving our network services and the stability of our IT services and IT platforms such that the customers, even though they pay more or pay for higher SKUs, they get the most value in the service that they are surely willing to pay for it.
Thank you, Darius. The next question, I believe again is for mobile. Notice that, mobile data traffic was flat, Q-on-Q . Do we attribute this to greater competition or to the overall macroeconomic environment, or both?
In terms of the overall macroeconomic environment, we've seen it in quarter one. It was gaining rating versus how we've seen it in the last 2-3 quarters last year. So that's a good sign because the capacity of customers has been improving or increasing. The quarter-on-quarter traffic, Q1, is actually based on seasonality because there's a normal December. Nothing got out in the equation. We have actually grown traffic outputs and outputs in Q1 versus Q4.
Okay. Thank you, Darius. The third question, I, I believe is for Rizza. May I clarify equity earnings from Mynt with and without ECPay?
We actually don't give a breakdown of our port costs in terms of contribution to equity earnings outside what we have disclosed in both the slides and also in our filing. So the Mynt net income disclosed already includes the impact of ECPay since its acquisition versus last year wherein ECPay was a consolidated entity in Globe's results.
Okay. Thanks for that, Rizza. The next question, I believe, is for Ernest and Martha. Are there any updates on the Mynt IPO in terms of timeline and preferred exchange?
We really don't have a timeline as of now, given the conditions in the Philippine market. I'm sure you're all aware of it. All I can tell you is that we are preparing the company, as we have previously announced, setting up a proper governance structure within the company, effectively by, you know, I would say, later part of this year. We will be running the company as if it's a public company in terms of governance, no? We have the proper reporting, proper board committees, a very set available set of board members. So it will be ready to go. It will be just a matter of finding the right timing to get it done.
As far as the preferred exchange, obviously the Philippines is the preferred exchange for us, given it is our home base, and, you know, the GCash is the national, I would say, fintech champion in the Philippines. But we are exploring all other markets globally that would be a good match for the needs of the company and the shareholders.
Thank you, Ernest. There are no questions in the queue at the moment, so maybe we can ask our analyst friends here if they have any questions that they would want to ask the panel. You can just please go in front, share your name and then your company, and then can ask your question. Thank you very much.
Hey, good morning. Stephen here from China Bank Securities. A couple of questions for me. First is that, do you see EBITDA margin pressures going forward given that you've reiterated your guidance even if EBITDA margin has outperformed your target in the first quarter? And the next question for me is that what's the driver of non-tower non-telco services even if we strip out the ECPay deconsolidation? Thank you.
So, in terms of EBITDA, we're sticking to 50% as our guidance for the full year. So I think that's, like, our minimum. Our first quarter results show better than 50%. Now, on your second question, so one is on the deconsolidation of ECPay from Globe, and then there are a few more of our port costs who usually generate the larger momentum towards the back half of the year.
Thank you. Thanks for that. That's all from me.
Thank you.
There are no questions in the queue at the moment, so again, maybe we can ask people here with us. Okay.
Hi, good morning. This is Derek from CLSA. So, I have several questions, first on the mobile side. To what extent are you comfortable in raising prices or monetizing, on a per-megabyte basis, in, you know, in light of more competition? Second, are you seeing more 5G adoption recently? And, what are your thoughts about prepaid eSIMs? I think, Globe is not yet doing it right now. Then, on the data center side, regarding the power consumption, have you secured PPAs or RES contracts, with power producers for data centers? Are they green or are they thermal? And, lastly, for GCash, breakdown of revenues, is it more skewed now towards loan-related fees or interest or asset yields s? Thanks.
I'm sorry. So I'll just remember the first question, so I'll get on with it. So we tried carefully in terms of price-ups because there's a blessing in terms of purchasing power of the customers. But for certain segments we do direct to customer price-ups versus indirect price-up, and we just don't do price-ups just like that. We analyze the interplay within the portfolio, if it makes sense, economically. It can never be price-up forever. It's all about delivering the service that customers across all of the segments that we serve today are willing to pay for. And your second question, sorry, can you repeat for me?
Yeah. So, just, regarding 5G, are you seeing any improvements?
Oh, yeah. So 5G, despite the fact that there's no solid use case that differentiates it on smartphone versus 4G, we've seen we've seen consistent traction, such that we have almost 6 million customers in our 5G network. 70% of them are actually using 5G, but it's kind of a coincidence. So what we're trying to do because there's no use case so it just so happened they traveled the routes where 5G is strong, and that's why one of the priorities that we're doing moving forward is that we are deliberately investing in 5G, and it's all about fixed wireless versus build out over there.
I mean, the 5G adoption is going slow, I think, as all of you are noticing. However, in the higher-end, higher-income parts of the country, here, BGC, Makati, we're seeing an increase already in concentration of phones as the natural replacement cycle of mobile phones occurs, right? I mean, the higher-end segment, when they buy new phones, they will not buy a 4G phone but will buy a higher-end 5G phone and consequently start using the 5G network, right? It's just the lower and lower the middle segment, of course, they'll go for the value phones today which are still in the 4G category, no? I mean, you're talking about maybe a PHP 10,000-PHP 8,000 kind of phone, no? So those are all still in the 4G category.
But hopefully, as we see phones coming in and maturing, technology and the chipsets start to lower their pricing, then eventually we'll get to that price range as well, and hopefully it's for adoption.
Regarding eSIMs, if you can comment about.
Sorry, just a clarification. We launched the prepaid eSIM version like weeks ago. So we started with the inbound traveler SIM because we thought, inbound travelers is the best use case, and then a few months after we launched prepaid eSIM. So that's the local eSIM version that we have. Scaling traction not so much because it's also easy to actually purchase a physical SIM. When you look at our stats in terms of acquisitions and that's not so much, not so much momentum already on the acquisition side. It's just rotational chain switches. So it's not massive as of the moment, but we continue to push for it as an innovation story.
Got it. Thanks on the data centers.
Yes, good morning. On the data centers, I think your question is regarding power, right? So in terms of power, all our data centers are currently operating, with the exception of the very small ones that don't qualify for a retail energy supply contract or a RES contract. We do have renewable contracts. So over 95% of our energy consumption is green, and we know we continue to renew that and as well as supporting our commitments to all our parents, of course, including Globe, STT GDC, as well as Ayala Corporation. In terms of our strategy moving forward, most of our RESs are already on the hydro and geo side at this point, you know, but we're continuing to explore, especially for the new sites, alternative energy suppliers as well.
Okay. Thanks. Lastly, on the GCash.
So first of all, we don't disclose revenue. But having said that, what I can say is our revenue source has diversified already. And like before, it was a single-source revenue. But within the payments space alone, we've diversified as we increase the use case diversity within the payments space. More significantly is the financial services as a revenue driver also for GCash, particularly lending, insurance, and others. Also, the new businesses that we've recently developed have started contributing quite significantly to our revenue. So that makes for a sustainable revenue growth for us and expect even lower momentum of growth, both in top line and bottom line.
Okay. Thank you. Just a follow-up on GCash. So will you still be asset-light moving forward?
Definitely, yes.
Okay. Got it. Thank you.
Thank you, Derek. Sorry. We have another question here on cue, regarding Mynt, but I believe it's already been answered earlier by Martha. So unless we have any oh, okay.
I'm Jared Go from AB Capital. Just a quick question on prepaid business, given that this is one of the main drivers for broadband, I believe, moving forward. Can you give me the type of profile that you are targeting for your prepaid business versus, say, fixed wireless?
So for the prepaid business, typically, you're looking at primarily the C to D segment, with the D segment being the largest of the growth because it's 70% of the population. And that's where the broadband penetration is below the national average of 33%. So that's where the growth is. But even in the penetrating the D segment, there are subsegments within the D, and we're approaching this still fully digital. So that's why the approach is to come in via GCash and G1, being the enablement. But the product is pretty simple because it's appealing to the market segment of the D, where it's giving you unlimited internet, pay as you go, reloadable, and you need not worry about even the sign-up process because we're already tying in with the KYCs of GCash. So that makes it a lot more seamless to get it.
More importantly, it's no contract, which is pretty daunting today, especially for the D segment, having to think about paying PHP 1,500 on a recurring basis for the next 24 months. Yeah.
Sorry, just a quick follow-up question. How do you see the competition in the prepaid space moving forward given you're targeting more price-sensitive customers, I would say?
I believe the growth in the Philippines would still be within that segment. So it's low-cost, network solutions entering into that segment, and prepaid fiber being the new category would be most appealing for that. So if you look at the results of the different operators, it's still pretty much us, like, with Converge that are on the forefront of that segment. I think the other, competitor, it's pretty silent about it now, but I strongly believe that that's where, the battleground will take place.
All right. Thank you.
There are currently no questions in the queue, and, I believe there are no more questions here on the floor.
So just to add on prepaid fiber, what we've seen in the first quarter is that it's really gaining traction such that it's growing every year in that category. Even in Q2, it's much higher than that. So we see a lot of potential. We've seen also the disclosures of competition yesterday, what I'm saying. So based on the new ads, it's substantially prepaid from the prepaid segment. So that's also how we see the category growing in the coming quarters. So we're really encouraged to keep further with the growth of fiber in Globe.
Thank you, Darius. There are currently no more questions in queue and here on the floor. So, well, I guess that would conclude the Q&A portion. But before we adjourn, I'll now turn over the floor to Mr. Ernest Cu for his closing remarks.
Thank you once again to everybody for coming over, and again, to the 100 people in Zoom. Thank you again for attending and the interest in Globe. The last quarter, I think, showed the resilience of our telco business, for one thing. 8% in terms of mobile revenue growth is nothing to sneeze at if you look at the global averages. This is one of the highest in the world, I believe, right? So it bodes well for the industry because I saw our competitors' results were also quite good. So we can, I guess, that's further evidence that the competitive environment is quite benign and that the two large telcos are doing very well, you know?
That's really good to know and good to see the industry progressing that way because I also realize over the past 10 years, you guys have been criticizing us for being the most competitive two-player market in the world, right? But hopefully, for investors, we can deliver long-term sanity in the market, as I would say, right? On the broadband side, you're seeing a very good momentum as well for our fiber business, and particularly driven by prepaid fiber. We're seeing an increase in momentum. I think by next quarter, we'll be able to tell you a bit more of that. I myself am quite pleased with what I'm seeing in terms of the buildup. It is on purpose that we decided to build it slowly as opposed to go to really just one thing around acquisitions and end up with large churn.
So this is a very sensitive segment in terms of payments, and we want to make sure we do proper and quality acquisitions because remember, there is a fixed cost to installation, you know? And we want to make sure that these people stay. As Danny mentioned, the churn rates are low, right? The RPUs are high, and I believe that's the right trending that we want to be at, you know, compared to others who are playing mass acquisition in the prepaid fiber space. On the fixed wireless side, you know, pretty much that's a foregone business. That's done, right? So if I were doing models with you, I would completely ignore that and just assume it's going to have a floor at some point, which it is approaching, right? Focus on the fiber side of the business because that's where the market in the business is going.
On the corporate side, you know, we are seeing a resurgence as well in corporate data. You see the rebound in the share. We are restrategizing our approach in this very, very difficult market in the Philippines, you know? The enterprise side of our country is very, very small. It's not large. It doesn't enlarge. The SME is very, very small in terms of the businesses there, almost akin to being like a consumer light. So we're trying to figure out where we play in that particular space, but so far, so good. For the non-telco businesses, you can see that we are now increasing the share of the non-telco revenues and profitability. You know, this is just really with a couple of engines, the primary engine being Mynt.
I guess it's no secret what the profitability and the revenue on the revenue is still a secret, while profitability is not. If you just do your math properly, you'll know what it is. It's trending very nicely for the year. I think Martha has alluded to the fact that the revenue streams within GCash are now diversified. It used to be a single-play payment business. Today, lending is becoming a good contributor. Of course, there's also the long tail of the other businesses. What we are seeing is continued momentum. Loyalty has never wavered. The NPS continues to be at industry-leading levels, and also we're very optimistic about that. The data center business is poised to be a big contributor once we get going, sometime in 2025, right? Maybe by mid-2025, you will see us open the data centers, the big one, particularly in Fairview.
Hopefully, that will become another contributor alongside Mynt, Asticom, ECPay, and the others that have been contributing to the Globe fixed, no? With that, I think, you know, it's a good start to the year. We're very pleased with the performance of all the subsidiaries. You know, we will continue to inch up, you know, as far as the pricing that we can is concerned. But as Darius said, it's got to be done very carefully. There is a ceiling to what our subs can afford. Obviously, also, market reaction has to be measured, right? I guess that's it. Thank you again. If there are any further questions, the team is available after the session. Thank you so much.
Thank you, Ernest. On that note, we conclude the first quarter 2024 annual briefing of Globe Telecom. We wish to thank again all of you who joined us here and in the call. We hope you'll join us again for our second quarter 2024 annual briefing in early August. Again, we wish everyone a pleasant good morning. Stay safe everyone.