Inflation hits Globe prepaid clients

THE rising inflation has pushed subscribers of Ayala-led Globe Telecom to optimize their spending.

Ernest Cu, president and chief executive of Globe Telecom, said the increase in consumer prices has forced consumers, particularly in the more affordable segment TM, to maximize mobile services.

“The lower income classes are the ones who are truly optimizing their spending and maximizing the inclusions of promo packages, and probably spending less. There was a slowdown of two percent quarter-on-quarter. I think that this is just a reflection of the macroeconomic conditions in the country today, something that not only Globe faces, but other consumer goods companies also face,” he said in a virtual media briefing.

Majority or 97 percent of Globe’s subscribers are in the prepaid segment.

October inflation hit 7.7 percent, higher than September’s 6.8 percent.

Darius Delgado, head of Globe Consumer Mobile Business, said while they saw growth in mobile data with the opening of the economy, they did see softening in spending in the last quarter given the rising inflation.

“This is driven by the fact that we have a significant portion of financially constrained customers in our prepaid base, especially in our mass-market brand where we observed the biggest impact of inflation as compared to the more affluent brand that we have. These customers economize their household spending in general, leading to the optimization of telco’s sending in return,” said Delgado.

“But given this, we are one with our customers in helping them survive this difficult environment in keeping them engaged with our campaigns that will help them stretch their household budget,” he added.

Globe chief finance officer Rosemarie Maniego-Eala said the company will continue monitoring the situation given the expected boom in spending for the holiday season.

“Inflation, we’re already seeing that it is hitting the wallets or the spending capability of our low-end customers. Now what we are interested to witness is if the Christmas spending will be buoyed by remittances for example,” she said, adding that they will also need to see if consumers by then will have additional savings and if this will flow into connectivity spending.

“It’s not gonna be an easy term from 2022 to 2023. There are some headwinds and I think those will be quite challenging to overcome, but there are some positive sides or levers that the company can use both on the top line and the spend side,” she added.

Earnings

Globe ended the first nine months with a core net income of P16 billion. Third-quarter net income stood at P4.993 billion, 16 percent lower than P5.911 billion in the second quarter.

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