Globe 2011 Annual Report
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Table of Contents
ABOUT THE REPORT
This is the fourth Sustainability Report issued by Globe Telecom covering the operations
of Globe Telecom Inc. and its subsidiaries in the Philippines. The report is intended to
communicate ongoing commitments to transparency and accountability as a responsibility
towards its stakeholders. The Company seriously commits to its mission to transform
and enrich lives through communications which gives way to the theme of the 2011
sustainability report, “Revolutionize total customer satisfaction through Globe Telecom’s
transformation brought by network modernization and cultural reformation.”
This Sustainability Report contains and discusses available data and metrics as tracked by
different business units and enabling groups. It is important for the Company to research and
study the impact of its business processes and programs to the environment, society and
economy—considering all possible effects its actions may have to the country and therefore
determine possible ways of disclosing measures for the overall growth and development.
Reporting Period
This report covers the significant impacts of Environmental, Economic and Social initiatives
executed and implemented from January 2011 to December 2011. For quantitative
measures of performance, the report includes data for two years 2010 and 2011 to help
readers identify trends and year-on-year comparison. Based on the scope, boundary and
measurement methods, there are no significant changes from previous reporting periods.
Reporting Scope / Boundaries
This report covers solely Globe Telecom’s operations in the Philippines focusing on the
telecommunications business segment.
Reporting Cycle
The report is released annually based on the Company’s fiscal year.
Globe Telecom’s fiscal year is concurrent with the calendar year.
Reporting Framework
We aim to align the Company’s approach towards sustainability reporting by following the
Global Reporting Initiative (GRI) G 3.1.
External Assurance
02
Message from the President and CEO
06
The Heart of Globe
12
Our Business
16
The Transformation Plan
22
2011 Key Highlights
26
Your Globe, Your Way
28
Corporate Governance
54
Our People, Our Globe
72
Greening the Globe
94
Bridging Communities
110
Our Commitments
122
Management Discussion and Analysis
123
Report of the Audit Committee to the Board of Directors
130
Statement of Management’s Responsibility for Financial Statements
131
Independent Auditors’ Report
132
Global Reporting Initiative (GRI) Index
230
Independent Assurance Statement
240
Our Store Directory
242
Acknowledgements
249
about globe
Globe Telecom, Inc. Philippines (hereinafter referred as Globe Telecom), one of the pioneers
in the telecommunications industry and now a major provider of telecommunications services
in the Philippines is supported by 5,757 employees and over 782,000 retailers, distributors,
suppliers, and business partners nationwide. The Company operates one of the largest and
most technologically-advanced mobile, fixed line and broadband networks in the country,
providing reliable, superior communications services to individual consumers, small and
medium-sized businesses, and corporate and enterprise clients. The Globe Telecom network
currently has over 30 million mobile subscribers, over 1.4 million broadband customers, and
over 671,000 landline subscribers.
Globe Telecom is consistently recognized both locally and internationally for its corporate
governance practices and is one of the most profitable companies in the country as proven by
its financial performance. It is listed on the Philippine Stock Exchange (PSE) under the ticker
symbol GLO and had a market capitalization of ₱149.96 billion by the end of 2011.
Ayala Corporation from the Philippines and Singapore Telecom (SingTel) from Singapore, both
industry leaders in their respective countries are the principal shareholders of Globe Telecom.
Aside from providing financial support, this partnership has created various synergies and has
enabled the sharing of best practices in the areas of purchasing, technical operations, innovation
and marketing, among others.
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Globe 2011 Annual Report
With 2011 as the year of transformation for us, this is the first time Globe Telecom has
been externally assured for its 2011 sustainability report. The assurance engagement was
conducted by TÜV Rheinland, a global independent third party. Globe Telecom is pleased
to announce that it has achieved B+ level of assurance for its 2011 sustainability report
compared to self declared B level report in 2010.
Message from the Chairman
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message from the chairman
“We take great pride in Globe Telecom’s direct and indirect
contributions to national development – whether it be through
the capital investments that the Company makes to build a
world-class telecom infrastructure for the country; the taxes and
regulatory fees it pays to the government; or the businesses, jobs,
and livelihood generated through its relationship with over 782,000
retailers, dealers, distributors, merchandisers, and suppliers.”
2011 proved to be a significant year for Globe Telecom. The Company posted significant
improvements across all the key metrics of revenues, market share, profitability, and
shareholder returns. This was achieved despite the weakness and uncertainty of our global
markets, slower domestic economic growth, and a step-up in the competitive dynamics in
the telecom industry.
The Company’s core net income, which excludes all foreign exchange,
mark-to-market charges and non-recurring items, rose by 11% to ₱10.0
billion. This was a sharp reversal from the decline in 2010. Reported
net income was at ₱9.8 billion, up 1% from last year as 2010
results included a one-time upward revenue adjustment.
Shifting Industry and Competitive Dynamics
The recent changes in our telecommunication industry structure has redefined the
competitive dynamics; with our competition now owning a substantial share of the mobile
market, spectrum, and distribution network. In the spirit of creating a truly liberalized
telecom sector, we acknowledge the commitment of the regulator to create an even playing
field through the re-allocation of resources, using an auction of 3G spectrum expected to
commence in 2012.
The Company’s financial position remained robust with
conservative debt levels backed by strong operating
cash flows. This was recognized by international ratings
agency Fitch Ratings, which upgraded our credit rating
to investment grade, a notch higher than Philippine
sovereign debt. Local ratings agency PhilRatings
also affirmed the Company’s triple A rating, which
signifies it has the smallest degree of investment
risk.
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Strong Operating Results amidst a Challenging and Competitive Landscape
Against this backdrop, Globe Telecom’s consolidated operating revenues rose by 9% to
an all-time high of ₱71.6 billion. This was underpinned by the market’s positive response
to the Company’s product and technology innovations and service enhancements. This
growth compares favorably where matched against an industry which grew by a modest
1% in 2011. Revenue growth was broad-based, spanning all key product groups, brands,
and market segments. The Company made significant headway against competition during
this period, gained subscriber and revenue market share in both mobile and broadband.
In the mobile telephony space, we strengthened our market leadership in the postpaid
sector as we grew our presence in a segment long considered to be mature. At the same
time, we also strengthened our competitive position in the prepaid segment. In broadband,
we maintained the past years’ double-digit growth as revenues rose by 30%. The business’
significantly enhanced scale has not only diversified our revenue mix but also improved
our margins. Globe wireline data business also continued to grow steadily as we offered
value, flexibility, and choice to both small and large businesses and created solutions and
services that boost their productivity and cut costs.
Dramatic Improvement in Shareholder Value
The sustained revenue and earnings
momentum, as well as improvements in
its market position, translated to dramatic
improvements in shareholder value. Globe
Telecom’s market capitalization jumped 42%
in 2011, outperforming the Philippine composite
index – the region’s best-performing market –
which grew by 4% in the same period. This was also
in part fuelled by positive market sentiment for the
entire sector on expectations of greater pricing discipline
moving forward.
Globe continued to provide one of the highest dividend
yields in the local market and among telecom companies
in the region. The Company paid out a total of ₱8.2 billion
in dividends in 2011 equivalent to 84% of prior year’s net
income and translating to a dividend yield of 8%. Coupled
with the increase in share price, total shareholder return in
2011 was at 51% from -4% in the prior year.
Globe 2011 Annual Report
MESSAGES | From the President and CEO
With these developments, competition in the industry remained intense but the sector
managed to stage a recovery in 2011. Mobile penetration rates inched towards the 100%
mark as players competed fiercely for share of wallet. Usage and network traffic continued
to grow even as price pressures persisted – be it for traditional services such as voice
and SMS or for nascent services such as mobile browsing, whose usage became more
pervasive through smartphones and internet devices.
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message from the chairman
Future-proofing the Network for Improved Customer Experience and Sustained Growth
As product and service innovations in the industry have made telecommunications
more pervasive, we recognized our need to modernize and redefine the Company’s
underlying infrastructure. The changes need to support the sector’s continued growth and
developments and significantly improve our cost structure. Last November, we unveiled
a massive network modernization and IT transformation program designed to respond
precisely to the challenges of globalization, the explosion of data traffic and the demands
brought about by the smartphone era. This will entail capital investments of up to US$790
million over the next five years, which is our largest infrastructure commitment to date.
This program is an ambitious but necessary undertaking that will allow us to build a
rock steady infrastructure base to support our growth momentum. It is envisioned to
significantly improve network quality, increase voice and data capacity, drive down
operating costs, and prepare the network to meet the future needs of customers. The scale
and scope of this undertaking is extensive as it cuts across all network elements, across all
layers, and across all regions of the country. When completed, our customers can expect
to see dramatic improvements in call quality, SMS delivery times, speed, coverage, and
network availability and reliability.
The new network will also have an all-IP architecture and have a significantly increased use
of fiber optic cables to handle our voice and data traffic. This will give us the capability to
upgrade to more advanced technologies moving forward and personalize our service to
customers. Finally, this modernization program will reduce the costs of operating, maintaining,
and upgrading our networks as we shift towards more power-efficient equipment, achieve cost
efficiencies with increased fiberization, and as we adopt more green solutions that will also
reduce the Company’s carbon footprint and energy consumption.
Simultaneously, Globe is launching a transformation of its IT and business support systems
to create a streamlined and integrated information environment that is more responsive
to current business demands and to customer needs. This entails a comprehensive reengineering of our IT systems over the next two years, spanning billing and charging
processes, product and service deployment, customer care, and other front-end systems.
Upon its completion, the Company will be able to roll-out products to the market faster and
more quickly respond to customer queries and requests. Ultimately, this should translate
to improved revenue growth prospects for Globe as well as lower operating cost for the IT
system as we refresh, simplify, and integrate these.
In the coming year, our priority is to execute our transformation agenda efficiently and
effectively and ensure a seamless transition so we can sustain our momentum and remain a
strong challenger to an even larger competitor.
Commitment to Creating Shared Value for all Stakeholders
Our desire to excel in a rapidly changing telecommunications industry is driven by our
commitment not only to create excellent value for our customers, shareholders and
employees but also to mark positive change in a broader constituency in our society.
We take great pride in Globe Telecom’s direct and indirect contributions to national
development—whether it be through the capital investments that the Company makes to
build a world-class telecom infrastructure for the country; the taxes and regulatory fees
it pays to the government; or the businesses, jobs, and livelihood generated through its
relationship with over 782,000 retailers, dealers, distributors, merchandisers, and suppliers.
We continue to pursue business models that promote greater social inclusion, cognizant of
this industry’s unique power to transform society, and anchored on our long-held value that
our well-being as a corporation is inextricably linked with that of the larger community.
Our pioneering initiative in mobile microfinance under BPI Globe BanKO Inc. (BanKO) is
one such business model that advocates financial inclusion. This utilizes Globe Telecom’s
mobile money platform and BPI’s banking infrastructure to deliver affordable financial
services to those who are currently not served by the formal banking system. In 2011,
BanKO launched its retail community banking services, offering savings, insurance, and
loan products to previously unbanked daily wage earners and micro-entrepreneurs. It
also expanded its network of partner outlets to include grocery stores, money changers,
pawnshops, and internet cafes to bring banking closer to its target customers. BanKO
has also quickly evolved to become the country’s largest privately-owned provider of
wholesale microfinance funding. With a wholesale loan portfolio of over ₱2 billion as of
the end of 2011, it has lent to over 50 microfinance institutions, including non-government
organizations, rural banks, cooperatives, and financing companies.
Meanwhile, GCASH through its GCASH REMIT mobile money transfer service continues
to assist the government to disburse funds to qualified, low-income families in far-flung
areas as part of the government’s Conditional Cash Transfer Program (CCT). In 2011 alone,
GCASH REMIT distributed around ₱4.5 billion worth of CCTs in over 9,000 barangays
nationwide, enabling beneficiaries in remote areas to collect their cash assistance without
having to spend and travel long distances to go to the provincial centers.
GCASH was also recently cited by the United Nations World Food Programme (WFP) and
has become a benchmark to other WFP operations around the world. WFP, in cooperation
with the DSWD (Department of Social Welfare and Development), undertook a cash-forwork program designed to assist the rehabilitation of typhoon-ravaged communities in
metropolitan Manila and Northern Luzon. Using the GCASH platform, WFP and the DSWD
found a fast, secure, low-cost, and transparent means of sending financial assistance
directly to the disaster-affected households.
Our commitment to sustainability and corporate responsibility extends to many other
facets of our operations. This is manifested in our programs focused on education,
entrepreneurship, and the environment under Globe BridgeCom (Bridging Communities), in
our relief efforts during times of disaster such as when Typhoon Sendong hit Dumaguete,
Cagayan de Oro, and Iligan City, and in the discipline we are instilling to systematically
measure and track our performance against the triple bottom line—covering human resource
development, environment, and financials which are embodied in our Sustainability Reports.
In closing, we extend our gratitude to our Board members, the management team, and the
employees for their hard work, dedication, and perseverance and to all our shareholders,
customers, and business partners for their continued support. We hope to continue to
count on your support as we face the many challenges and opportunities created by this
dynamic industry, and chart a renewed path of growth for Globe Telecom.
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Globe 2011 Annual Report
JAIME AUGUSTO ZOBEL DE AYALA
Chairman, Board of Directors
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message from the president and ceo
“Believing in transformation to serve customers better, your
Company has made steadfast progress against the promise of
delivering superior customer experience.”
One of our greater achievements this year was to sustain our growth momentum with
a record high in revenues and increased number of subscribers despite a stronger joint
competitive force. This, we achieved as we continue to transform your Company focusing
on the customer and delivering our brand of superior customer experience.
Key to winning our future and making a difference is our transformation towards serving
customers better. We made steadfast progress in this journey that would soon create a
new benchmark for public service in the Philippine telecommunications landscape.
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Revenue lift enveloped all key products. Mobile service
revenues were up 7% to fully reverse last year’s decline.
Mobile telephony revenues from domestic voice, regular,
unlimited and bucket SMS, mobile browsing, and other
value-added services were up 14% year-on-year. Mobile
browsing revenues nearly reached ₱2 billion, up 52%
from 2010, by forging ahead with new and affordable
services for social networking, surfing, email, and search.
Broadband revenues, meanwhile, grew by 30% from last
year propelled by a rapidly swelling subscriber base
patronizing the country’s most preferred broadband
service provider. Our fixed line data business also
continued steady ascent on revenues of ₱3.8 billion,
9% higher than last year, addressing growing demand
for reliable internet and data solutions.
A couple of years ago, Globe was thought to be in a downward spiral of business decline,
operating in a matured market with limited growth. Today, we successfully orchestrated a
dramatic shift in business by seeing vast potential in creating new markets. Once again,
Globe is on the rise.
All of our Company’s mobile brands finished strong
in terms of revenue growth. Our prepaid business
delivered 9% revenue growth, led by our mass
market brand TM whose revenues improved 15%
year-on-year. Globe Postpaid revenues rose 6%
compared to last year—a remarkable feat in an
industry segment long considered fully mature.
Globe closed 2011 with record revenues, amidst fierce competition and a general
slowdown in the broader macro-economic environment. Full-year service revenues reached
In terms of subscriber growth, we closed 2011
with a solid total mobile subscriber base just
Globe 2011 Annual Report
MESSAGES | From the President and CEO
On the commercial side, transforming the way we do business has dramatically changed
how Globe addressed customer needs and wants in all market segments. From marketing,
product development, to pricing – we demonstrate a new aggressiveness, hunger, and
customer understanding in the marketplace. Much of public perception about your
Company has been transformed alongside the new face to Globe services that is more
personal and appealing. Look at our advertising across all product segments, and I am sure
its aspirational lifestyle approach speaks closer to a customer as an individual with diverse
needs. Consider the pervasiveness and vast improvement of our customer-facing touch
points. With better equipped and trained contact center personnel, 24/7 text-facilities
coupled with internet and social media help channels, Globe has gone to great lengths to
meaningfully talk to customers. Think about enhanced engagement in the way we deal with
our retailers and distributors. We treat them like our own, giving them the means necessary
to proudly push our products past cutthroat competitors. Finally, the ground-breaking
success of our new concept stores and premium dealerships across the country has reeled
in significantly more foot traffic, and robust sales activity.
an all-time high, closing the year at ₱67.8 billion, up 8% from last
year. A new quarterly record of ₱17.8 billion was also set in the
4th quarter, and marked a phenomenal fifth consecutive period of
growth. EBITDA and core net income were also up 5% and 11%,
respectively – tremendous growth in a maturing market.
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message from the president and ceo
over 30 million, delighting 13% more customers than we did in 2010. Gross additions for
the year was a stellar 23.2 million, 7% above last year, and capped by yet another new
record of 6.1 million adds in the final quarter of 2011.
Globe Prepaid and TM strengthened their brand propositions, reduced churn through
loyalty and rewards programs, and lured more customers through highly compelling on-net
and all-network offers. On the other end of the market, Globe Postpaid further cemented
leadership in its segment space, adding an all-time high 389,000 new subscribers in
2011. Better-quality acquisitions, improved churn rates, higher revenues, and consistent
market share gains have steadily flowed from (1) a refreshed product program anchored on
personalized plans and great devices, (2) a targeted rewards and loyalty program, and (3)
an expansion of our sales channels, including online channels and our own concept stores.
Proud testament to the renewed strength of our postpaid proposition was the December
launch of the iPhone 4S. Even as AppleTM opened up distribution rights to the competition,
Globe was clearly ahead with superior end-to-end customer experience – from offering
personalized offers and competitive data packages all the way to having customers’ iPhones
delivered or picked up at convenient store locations. Last December 16, consumer appeal
of the world’s most coveted mobile device was formidably complemented by the superior
customization and experience from Globe Postpaid. Globe made an unprecedented move
to offer the first ever mobile browsing bill cap at ₱999 per month that would finally address
bill shock and give customers uninterrupted data experience using their smartphones.
Moving on to broadband, the business generated total revenues of ₱7.5 billion in 2011,
30% higher than last year. The lift resulted from subscriber growth, stimulated by the
strength of the Tattoo brand and programs. This significantly improved scale has resulted
in better profitability for this business, with fixed line and broadband delivering almost 65%
of this year’s growth in consolidated EBITDA. Subscriber base by year-end was over 1.4
million, 31% higher than last year.
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At the other spectrum, Globe Business stepped up its thrust to become the most preferred
business solution provider for our enterprise, corporate, and SME customers. Through
the industry’s first cloud computing services for enterprise customers, Globe Business
customers realize cost savings, improve their IT agility, ensure business continuity, and
strengthen information security. This service comes with no less than Vmware vCloud
Powered status. Globe also recently achieved BS 25999 status, an international Business
Continuity Management standard that validates the capability of your Company to continue
operations and serve clients without interruption. Moreover, in the SME segment, several
of our new concept stores now contain NegoStore areas which serve as additional sales
channels for current and prospective Globe Business customers. Lastly, in order to provide
subscribers with more efficient and affordable telecom services, we interconnected with
PLDT in several provinces in Luzon and Mindanao, allowing subscribers of both networks
to call each other more affordably.
As a final note to our commercial transformation, we continue to launch new Globe concept
stores. Our new concept store offers an integrated retail environment that gives customers
the total shopping experience. Our new stores brandish live handsets in our central display
area, digital and interactive merchandising through touch screen displays and retail TV, and
award-winning in-store magazines and product catalogs. In 2011, 4 to 5 new stores opened
every month nationwide – an accelerated pace that capitalized on the fantastic customerdrawing lure of the new store blueprint. Most recently, we opened in Bacolod and Davao,
bringing to 64 the total number of stores under the new format.
Altogether across our business lines, we underscore the fact that environmental and social
consciousness is integral to sustaining the commerce in which we engage.
Ultimately, we take full responsibility for the influence we exact on our environment.
Everywhere we operate, we proactively leverage energy management, greenhouse gas
emission reduction, and waste recycling practices. Abiding by internationally acknowledged
environmental regulations – our Valero Telepark office, for example, is ISO 14001 certified –
we contribute solutions that mitigate climate change on our own initiative. For one, our fleet
operations continue the usage of E10 and LPG, both cleaner fuel alternatives on company
vehicles. We also started the deliberate promotion of a greener office by implementing a
paperless program in all corporate offices, and eventually, in all our stores. We moreover
reflect our dedication to preserving the environment through continued partnerships with
environmental agencies. We are bound by official agreements at the very least until 2014,
while biodiversity commitments are currently underway through 2012. By mid-2013, we
expect to move to a new “green” and LEED-certified corporate office at Bonifacio Global
City in Taguig, replete with environment-friendly and energy-saving features. Conclusively,
Globe 2011 Annual Report
Overall across the Consumer Business, we introduced new products and services built for
the individual preferences of customers. For our Tattoo broadband services, we introduced
new prepaid sticks such as Superstick MyFi and Tonino Lamborghini that cater to the
different browsing habits of our customers. To provide greater value for @Home users,
Tattoo DSL and Tattoo WiMAX now offer plans bundled with free landline, free speed boost,
free Globe-to-Globe NDD calls, and a free WiFi router. We also launched Powersurf, a
postpaid mobile browsing offer available in several denominations based on bulk megabytes
and consumable in kilobytes. For our IDD services, we sustained our “worldwidest”
campaign by increasing our roaming partners to over 380 – the most among Philippine telco
providers. We also launched new services in key overseas markets such as the US and the
Middle East. Meanwhile, our customizable postpaid plan My Super Plan now comes with
the guarantee of worry-free service. Among others, we offer a monthly bill cap on browsing
charges, a phone warranty for newly-acquired plans, and exclusive 24/7 access to our
expanded customer service channels.
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message from the president and ceo
Globe aims to complete execution of our “Globe Goes Green” program before moving into
our new headquarters.
From a societal perspective, we are accountable for the impact our business makes on
the communities we serve. Our social responsibility comes alive through Globe Bridging
Communities. Through this program, we are able to engage stakeholders in underserved
Filipino to design their own sustainable future, creating opportunities that allow them
to contribute to society. We continue to extend support to several organizations and
NGOs such as Gawad Kalinga Community Development Foundation, Inc., and Virlanie
Foundation. Together, we push forward, among others, a fulfilling CSR agenda of
empowerment through ICT education and utilization. Furthermore, our mobile commerce
service, GCASH, remains a key disbursement channel of the DSWD’s Conditional Cash
Transfer program, and other disaster relief operations, when needed. At a glance, Globe
Bridging Communities stands tall on socio-developmental pillars manifested through
distinct implementation programs. Namely, these are iGive (volunteerism/calamityresponse), iProsper (entrepreneurship), iLead (community relations), iAccess (ICT for
development), and iConserve (environmentalism).
Forward-looking then, the pursuit of sustainability, from the complementary perspectives of
environment and society, will always be maintained as a staple thrust in our strategic agenda
for the future, undoubtedly as we forge ahead with your Company’s transformation program.
Beyond commercial facets, Globe is transforming holistically, modernizing its core units
including network and IT systems, enabling new technologies to power the business.
Equally important, our people and culture transformation will ultimately make the difference
in our ability to execute our winning programs well.
In November, we announced our ambitious plan to build a modernized, scalable, and
future-proof network that fully supports our superior customer experience proposition.
This involves the change-out of existing mobile network equipment, network optimization,
coverage expansion, and capacity build-out with at least twice the level of fiber-optic
technology. Ultimately, we are providing customers pervasive 3G coverage, instantaneous
messaging, reliable call connections, 4G/LTE technology readiness, and palpable boost
to overall quality and resiliency. Our network modernization program will take two years
to complete and has never been done in the scale that we envisioned. Once completed,
Globe would have built one of the best mobile networks in Asia and the Filipino nation
would be proud to enjoy world class standards in mobile telephony. We also expect to
realize savings from improved power efficiencies, and the use of green solutions. As we
proceed with our nationwide rollout, we will certainly use all the learning and experience
gained from our global innovation partners Huawei and Alcatel Lucent as well as our own
local insights to make the changes as seamless as possible for our customers.
Meanwhile, for our IT transformation program which covers a good portion of our customer
care, billing, campaign management, and other front-end systems, we are already
defining design and capability specifications. We are investing in responsive IT systems
that address changing business demands and support marketing objectives. In essence,
we are providing faster response to customer requests, convergent billing, better credit
control, quicker time-to-market for new products, and better analytic models to support our
product campaigns.
These network and IT transformation initiatives represent huge investment outlay – about
US$790 million in total capex spending over 5 years. But, we expect a most fulfilling return in
the continuous turning of a people and culture-building initiative called Our Circle of Happiness.
Our people eagerly look forward to the new network and IT systems as a source of pride
and swell of ambassadorship. With a future-proof network and trail-blazing IT infrastructure
behind the most innovative communication solutions, it’s easy for our employees – heads
high and hearts proudly committed to the Company – to serve customers better. Endeared
by the superior service heralded by highly motivated employees, more customers come to
love Globe. We are thus able to satisfy the business growth appetite of shareholders, who
in turn, are encouraged to plow back incentives for our people. This cedes employees who
are even more engaged to serve customers better, turning Our Circle of Happiness once
again, in perpetuity moving forward.
In closing, we are proud of this year’s accomplishments, and your Company’s outstanding
business results reveal profound proof that customer-centricity is our winning strategy for
the future. This is the spirit enshrined in The Globe Way of putting our customers first that
drives your Company to make even greater things possible in 2012.
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Globe 2011 Annual Report
ERNEST L. CU
President and Chief Executive Officer
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The heart of globe
Focused Customer
Needs
Exceptional
Customer Service
Globe Telecom strives to continuously improve its business practices to achieve total
customer satisfaction of its stakeholders in fulfillment of its vision and mission. Its drive
to provide superior service quality brings Globe to its forefront position as the Philippines’
leading telecommunications service provider.
Loyalty
MISSION
Transform the lives of people, businesses and communities through innovative solutions.
VISION
Happiest customers and employees.
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.
I love Globe. Together, we make great things possible.
The Circle of Happiness exemplifies Globe Telecom’s UNIQUE CUSTOMER
EXPERIENCE that creates a delightful cycle that brings joy to everyone:
our employees, our customers, and our shareholders.
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Overall Business
Growth
Mutual Respect
Leading Telco Industry
Honesty and Integrity
Customer-centricity
Community
Development
There is an undeniable direct link between employee satisfaction and customer satisfaction, and between customer
satisfaction and improved financial performance. Globe recognizes that employee satisfaction is an antecedent
to higher employee engagement. Organizations with engaged employees have customers who use their products
more. Customers who use more products and services are more likely to continue to do so in the future and even
refer new customers. Improvements in customer usage result in improved financial performance and profitability.
This in turn translates to satisfied shareholders and more opportunities for employees and ultimately increased
employee satisfaction and engagement.
Customer-centricity and the delivery of a differentiated customer experience is at the forefront of Globe Telecom’s
priorities and in the fulfillment of this aspiration, it becomes a win-win situation for all.
Globe 2011 Annual Report
A Globe Store ‘Tech
Coach’ guiding a
customer on how
to use his newly
purchased smartphone.
Collaboration
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environmental and sustainability policy
Globe is committed to promote environmental sustainability by reducing the impact of our
business operations to the environment and together with the help of our employees, business
partners and clients, we shall achieve this. We have robust systems in place to manage our
environmental impact and integrate them into our Corporate Social Responsibility management.
We commit to:
•
Consciously move towards the continuous reduction of our ecological footprint from our
operations. Where possible, we will move beyond regulatory compliance and apply best
practices and global voluntary standards on environmental and social responsibility.
•
Manage emissions from our energy use, particularly in 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 environmental impact by communicating our policies and programs.
•
Partner with organizations that share the same environmental values
and find ways to cooperate to protect the environment.
•
Conduct a review of our environmental management system to ensure that the
commitments of this policy are delivered, and that we strive for continuous improvement.
•
Report our environmental performance to our stakeholders.
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Globe 2011 Annual Report
Part of the Globe Telecom campaign supporting
Earth Hour, first launched in 2010 and ran in major
newspapers and non-traditional applications.
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our business
Our business
Globe 2011 Annual Report
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our business
Portfolio in a Snapshot
Services
Provides customers nationwide with a fully digital mobile
communication network using GSM technology allowing
subscribers to access SMS, voice, data and value-added
services. Postpaid customers are empowered by giving
them the authority to contract service-on-demand. Customer
statements of account are done on a monthly basis
dependent on their contract sign-off or service cut-off period.
Organizational Profile
Globe Telecom is one of the leading
companies in the highly competitive
telecommunications industry in the
Philippines today. The Company constantly
renews its commitment to enrich lives
by simplifying and removing obstacles in
communication technology and improve
everyday communications. Our mission is
to bring forth communication advancement
to businesses and users through innovative
solutions with a vision of having the
happiest customers and employees. The
extensive span of services not only meets
the daily requirements of individuals and
small to medium sized business but also of
corporations and enterprises as well.
Aside from being an industry leader, Globe
Telecom is consistently one of the most
profitable companies in the market. It is
consistently recognized in both local and
international markets for its outstanding
corporate governance practices.
The Company’s origin can be traced back
to the Robert Dollar Company in 1928 after
the US Congress Act No. 3495 allowed
it to franchise and operate a wireless
long distance message service Company
in the Philippines. However, it was in
1993 when the monumental partnership
to the signing of a Memorandum of
Understanding between Ayala Corporation
and Singapore Telecom, Inc. (STI),
wholly-owned subsidiary of Singapore
Telecommunications Limited (SingTel),
was formalized with then President Fidel
V. Ramos as witness. This important
collaboration between these two trade
giants gave way to the formidable
Description
communication leader which was officially
renamed at the Securities Exchange
Commission (SEC) as Globe Telecom, Inc.
in 1998.
Since then, Globe Telecom has changed
the face of communications in the
Philippines. The Company reaffirmed its
dedication to its subscribers with the
launch of the Globe Handyphone, the
first fully digital CMTS (Cellular Mobile
Telephone System) using the GSM (Global
Systems for Mobile) communications
network. With constant upgrading of Globe
Telecom’s systems and technology, the
Company even increased its lead from
market competitors by becoming the
first Philippine internet service provider.
The fixed line telecommunications and
broadband services are now managed by
Innove Communications Inc. (Innove), a
wholly-owned subsidiary.
Globe Telecom expanded its service
coverage by launching its mobile
commerce services in 2004. This service
is more popularly known as GCASH
which operates under its wholly-owned
subsidiary, G-Xchange, Inc. GTI Business
Holdings, Inc., one of its subsidiary
companies, is an investment company that
has the authority to provide VoIP services.
The Company also reinforced its network
connectivity with the TGN-Intra Asia
Cable System. It is through this program
that Globe Telecom was first to locally
introduce Worldwide interoperability for
Microwave Access or WiMAX, a wireless
channel with the capability of delivering
high-speed internet service to a large
geographical area.
A fully digital mobile communication network service using
GSM technology but without binding the subscriber with a
monthly bill. The prepaid service allows customers to load
credits when they need or require to avail of SMS, voice, data
and value-added services.
TM is the Company’s value brand, targeted to serve the
value-conscious segment. It is a prepaid service that is widely
recognized for affordable and basic voice and text packages.
TM now also offers mobile internet not only at rates similar to
Globe-branded services, but also at low-denomination price
points that are relevant to its target segment
Service covers wired, fixed wireless and fully mobile interneton-the-go at various connectivity speeds and technologies
that can surely meet all the needs of customers - whether
individuals or businesses.
Globe GCASH mobile-based payment system has been
proven to lessen the hassles of transferring money. A quick
and reliable service that allows customers to pay their bills or
send money to their loved ones without the need of going to
the bank or a remittance center.
Despite all modernization efforts
successfully executed in the past,
Globe Telecom remains committed in its
journey to change the face of Philippine
telecommunications and has commenced
in the last quarter of 2011, a companywide transformation process. This
involves network, IT, business, talent, and
cultural transformation.
As in previous years, Globe Telecom
continues to reach out to the country
through different community and
environmental initiatives. The Company
inexorably believes in the preservation of
the environment and continues to support
causes of organization that safeguards our
wildlife and forestry. Programs like the
reforestation of the Cordillera Mountains
and clean-up of the Taal Lake are some of
the causes supported by Globe Telecom.
The Company also believes in uplifting
the Filipino way of life. Partnerships with
government and non-government agencies
continued for several years. Globe Telecom
has initiated programs that boost the
educational system of the country through
the use of Information and Communication
Technology (ICT) -empowered systems.
Through the Company’s technological
power, the Philippines now has ICTcompetent schools in remote areas
through Globe-supported programs like
Internet-In-Schools, Text2Teach and Global
Filipino Teachers. Aside from education,
Globe Telecom also reinforced order and
security at the barangay level with “Sagot
Ka ni Kap” program that equipped local
community officials with modern gadgets
enabling them to quickly respond to
emergencies and complaints.
Globe 2011 Annual Report
18
19
our business
Subsidiaries and Joint Ventures
Globe Telecom
provides mobile telecommunications
services
The customers are always first and they
are the Company’s inspiration in making
great things possible. Globe introduced
over the years, innovative products
and services that changed the game in
local telecommunications. This includes
Globe DUO, My Super Plan, GCASH,
SUPERALLTEXT 20 and ASTIGTXTALL.
Globe Telecom is registered with the
Securities and Exchange Commission
(SEC) with Identification Number 1177.
The Company’s legal address is Globe
Telecom Plaza (Pioneer Highlands), Pioneer
corner Madison Streets, Mandaluyong City.
Additional information is available and may
be accessed by the public through the
Company website, http://www.globe.com.
ph; Facebook page, http://facebook.com/
globeph; and Twitter, @talk2GLOBE.
Subsidiaries
Innove Communications,
Inc. (Innove) - provides fixed
line telecommunications and
broadband services, highspeed internet and private data
networks for enterprise clients,
services for internal applications,
internet protocol-based solutions
and multimedia content delivery
G-Xchange, Inc. (GXI) - a whollyowned subsidiary, provides
mobile commerce services under
the GCASH brand
Globe Telecom took honors from the 10th Philippine
Quill Awards for its outstanding communication
programs and tools. Shown in photo during the
awarding ceremonies at the Crowne Plaza Galleria
Manila are representatives from Globe Telecom
led by Head of Corporate Communications Yoly
Crisanto (center)
Bridge Mobile Pte. Ltd. provides international roaming
and other mobile services for
subscribers of Globe Telecom
and other regional mobile
operators belonging to the
Bridge Alliance
BPI Globe BanKO Inc. - provides
mobile-based banking services in
the Philippines to micro-finance
institutions and retail clients
Entertainment Gateway
Group Corporation (EGG)
and EGGstreme (Hong Kong)
Limited (EHL) (collectively
referred here as EGG Group)provide digital media content and
applications
Globe 2011 Annual Report
GTI Business Holdings,
Inc. (GTI) - a wholly-owned
subsidiary, is an investment
company with authority to
provide VoIP services
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Joint Ventures
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our business
The Transformation Plan
Globe Telecom demonstrates its dedication
to its customers and to the industry with
the undertaking of a momentous company
transformation plan. While punctuated by the
network modernization and IT transformation
project, the objective is to transform as an
enterprise covering all bases highlighted in
the Globe Circle of Happiness.
modernization project to Huawei, a global
leading ICT solutions provider.
The transformation plan is designed
to improve Globe Telecom in totality
through modernization of the network’s
technological capacities, replacement of
current hardware and systems with more
advanced technology and the restructuring
of business processes and procedures. The
enhancement of the Globe Way through
the Circle of Happiness will revolutionize
customer-care by prioritizing its customers’
needs while focusing on Globe Telecom’s
mission in achieving superior customer
experience. Cost transformation will look
into lowering operating costs to make the
business more efficient. Once completed,
it will reaffirm Globe Telecom’s status
as a top service provider in this highly
competitive market.
Hardware upgrades will also prepare
Globe Telecom for the expected growth
in voice and data traffic resulting from
increased subscriber base and shifting
user preferences. The transformation will
lower overall costs of the Company’s
wireless services through the usage of
newer and more power-efficient equipment.
With the increased efficiencies and lower
maintenance requirements, Globe Telecom
estimates a substantial US$170 million
savings in operating expenses over 5 years.
The network modernization will also give
the Company the ability to easily shift and
upgrade its current infrastructure to more
advanced technologies such as LTE.
During the second quarter of 2011, Globe
Telecom became the first carrier in the
Philippines to laiunch the commercial
rollout of the improved 4G mobile
technology, using global standard HSPA+
or Evolved High-Speed Packet Access.
Current subscribers then from 19 pilot
areas were the first to experience the
benefits of the improved service which
increased average data browsing speed of
up to 4 to 6 Mbps.
At the latter part of 2011, the Company
contracted external technology leaders
who will assist in the project’s completion.
After intense evaluation and deliberation,
Globe Telecom awarded the network
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The Globe Telecom and Huawei partnership
will jointly establish a Joint Innovation
Center (JIC) where network best practices
will be developed and customized to suit
the requirements of the Company using
the latest developments accessed through
Huawei’s vast research and development
centers across the world.
To reform its business processes, Globe
Telecom will simultaneously initiate an IT
transformation project, streamlining its
business procedures to prepare the Company
to changing market and business demands.
Amdocs, a top software and services
provider, will spearhead the business process
reformation which expected to achieve full
functionality over the next two years. The
reformation will involve the re-engineering of
business and operating systems procedures
which will increase efficiencies in current
billings systems and improve response time
to customer queries and service requests
bringing Globe Telecom’s customer service to
world-class standards.
The network modernization and IT
transformation program require an
investment amounting to approximately
US$790 million over the next five years,
a significant investment for the Company
since its commencement. These
projects are momentous endeavors for
the Company, showing Globe Telecom’s
serious commitment and dedication to
enhancing the industry and providing its
customers with the best services possible.
Talent and Culture transformation is also a
key priority focus of Globe. This priority has
three main tracks: Leadership and Talent
Development, Performance Management
and Rewards, Employee Engagement and
VMV (Vision, Mission, Values). Initiatives
have been established to ensure a holistic
approach in communicating the Company’s
VMV, strengthening the leadership bench,
retaining talents through development and
recognition, and creating an environment of
highly engaged employees.
The anchor program of Globe Telecom’s
culture transformation was a 2-day Globe
Leadership Boot Camp (GLBC) that was
participated in by the top 159 leaders of
the company in October 2011. Held in
Cebu, the conference aimed to align all
Globe leaders towards a common and
clear vision for change to enable leader-led
transformation across the organization. The
conference also defined what behaviors
leaders must exhibit to drive the culture
change throughout the organization. The
development of the Circle of Happiness
and its new Vision and Mission statements
were among the more significant outputs of
the program together with the identification
of priority areas that the Company should
address in 2012. Other areas that emerged
as critical focus areas for Globe Telecom’s
culture transformation were leadership,
succession management, performance
management, and career development.
Related systems and processes were
identified as pivotal priority programs.
Plans for these areas were initiated in 2011
and are set to be launched and completed
in 2012.
Top 159 Globe leaders
attended the Globe
Leaders’ Boot Camp
last October 2011.
Prior to the GLBC, the leaders also
participated in a one-day Customer
Immersion Program intended to gain
deep insight into existing customers and
their experiences. Leaders were assigned
to different tracks to get to know and
experience things from a customer’s point
of view in various areas such as consumer
retail, business, broadband, network, sales
and distribution, customer service, and
back-end processes. As a result, the leaders
were able to identify business and culture
priorities to develop and improve on to
create a differentiated customer experience.
To reinforce the messages of the new
Vision and Mission, the CEO and key
senior executives held town halls in GMA
(Greater Manila Area) and in the Visayas
and Mindanao regions to keep employees
updated on the company performance,
introduce the Circle of Happiness and
communicate why customer centricity is
vital to Globe Telecom’s transformation.
A Spot Recognition Program was
introduced and implemented by all
Globe 2011 Annual Report
The Company expects to increase its 4G
footprint with the continued expansion of
HSPA+ in 2012.
While Alcatel-Lucent, a leading global
telecommunication systems integrator, will
lead the project management responsibility
to ensure the completion and success of
the program.
23
our business
departments as a way to recognize and
reinforce a culture of customer-centricity.
The Globe Senior Leadership Team
recognizes the pivotal role of leadership in
the organization transformation. Thus, the
company pursued a corporate Succession
Management fueled by more robust
feeders of internal talents targeted for
focused development to be future Globe
Leaders. With this, Globe is poised to
launch integrated leadership development
programs for emerging Young Leaders,
outstanding Fast Trackers, high performing
Executives and, Top Business Leaders
by early 2012. In addition, the Employer
Value Proposition and leadership pipeline
have been revitalized to tap potential
local and international business leaders
from both graduate and post graduate
levels. The technical pipeline was likewise
strengthened and relaunched to boost both
Network and IT Transformation.
Globe Telecom President and CEO Ernest Cu
announced the Company’s biggest network
modernization rollout which will utilize modern and
future-proof technologies, giving Globe subscribers
state of the art network quality experience.
Various corporate-wide employee
engagement activities were also held
throughout the year to rally the employees
towards a common experience of
excitement and commitment towards
the future of the Company. Some of
these initiatives included enhancements
to various multi-media communication
channels, employee recreation activities,
enhancements to employee benefits, and
milestone celebrations. In addition, a
network of department representatives,
in partnership with the Human Resources
Group, initiated department-driven
activities aimed at increasing employee
engagement through teambuilding
activities, fun events, skip-level meetings,
and learning sessions.
Globe University, the Company’s inhouse training facility that provides
regular courses, specialized training and
leadership programs to employees, also
has a vital contribution in the reformation
of its personnel management by offering
self-improvement and career advancement
training courses on a regular basis.
This is expected to augment business
process renovation with personnel skills
improvement which when combined will
produce a new ethos in customer service.
Globe Telecom also values the preservation
of the ecosystem in the transformation
program by promoting a paperless
environment. Further developments and
customization will be made to existing
payment applications through stronger
partnerships with financial institutions.
GCASH, the electronic wallet, will be reintroduced and promoted to its customers,
easing the completion of payments and
financial transactions through the use of
Globe Telecom’s network.
Globe 2011 Annual Report
24
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our business
2011 Key Highlights
• Awarded as one of the top Philippine
corporations under the Best Senior
Management Investor Relations (IR)
Support and Most Consistent Dividend
Policy categories based on the results
of the annual poll conducted by Alpha
Southeast Asia.
• Received ISO 14001 (Environmental
Management System) and OHSAS
18001 (Occupational Health and Safety)
certifications for Valero Telepark.
• Added MEF 14 status in its list of Metro
Ethernet Forum (MEF) certification.
• Platinum Award from the Institute of
Corporate Directors (ICD) for corporate
governance practices.
• Recognized by the ATR KimEng
Securities, Inc. as fully compliant among
the telco and utilities sector companies
in terms of corporate governance.
• Bronze award from the University of Asia
and the Pacific’s (UA&P) Tambuli Awards
for Globe Kababayan Circle Christmas
Campaign.
• Best managed companies in the
Philippines by FinanceAsia:
oo 4th place, Best Managed Company
oo 5th place, Best Corporate
Governance
oo 4th place, Best Investor Relations
oo 4th place, Corporate Social
Responsibility
Strong Dividend
• Broadband Service Provider of the Year
by Frost and Sullivan for outstanding
performance in the broadband business.
• Recognized as the only
telecommunications company in
the country with MEF-certified
professionals.
• Received 10th Philippine Quill Awards:
oo Award of Excellence:
• Conditional Cash Transfer (CCT)
via GCASH REMIT
• Globe Prepaid
SUPERUNLITXTALL25
oo Award of Merit
• Globe Run for Home
• Globe Kasama Ko Program
• Globe Cordillera Challenge 2:
Bigger and Better
• 5 in 55: Ka-Globe Jam Special
Run
• Employer of Choice by the Gawad
Maestro Outstanding Workplace and
Learning Performance Program of the
Year from the Philippine Society of
Training and Development (PSTD).
• Guinness World Record for the largest
secret Santa game across multiple
locations in the Philippines and South
East Asia on December 18, 2011.
Globe executives, led
by Rizza ManiegoEala, Head of Globe
International Business
(2nd from left) and Gil
Genio, Head of Globe
International and
Business Markets (3rd
from left) expressed
their joy as Guinness
Book of World Records
Adjudicator Jack
Brockbank (center)
confirmed that Globe
made a new world
record for the biggest
simultaneous kris
kringle. Others in
photo are OWWA
Administrator Carmelita
Dimzon (4rd from
right) OWWA-NCR
OIC Matet Capa (3rd
from right) and hosts
Giselle Sanchez, Gabe
Mercado and Chiqui
Reyes.
Globe 2011 Annual Report
26
oo 2nd place, Most Committed to a
A family that runs
together stays healthy
together, including the
young runner who’s
probably awe-struck
by all that’s happening
around him during
the Globe Run4Home
event in 2011.
27
your globe, your way
Your Globe, Your way
Globe 2011 Annual Report
28
29
your globe, your way
Photo on far right:
Elbert Cuenca ,
Chairman of the
Philippine Mac Users
Group, (left) receives
his iPhone 4S from
Globe President and
CEO Ernest Cu.
Our Products And Services
Philippines to offer the Samsung Galaxy
SII, the first 4G smartphone to be offered
by a Philippine mobile service provider, to
its postpaid subscribers in June 2011.
Customers are at the heart of the Company’s
product R&D (research and development)
when developing as well as delivering its
service. To continually provide superior
customer service experience is the
Company’s aspiration and challenge to itself.
Globe Telecom revolutionized postpaid
subscriptions with the introduction of
personalized postpaid plans, the first ever
flexible plan that allowed subscribers to
design their own plans according to their
needs and requirements.
Globe Postpaid Services
Globe Telecom created a mark in 2011
on a high note with the launch of the
new AppleTM iPhone 4S, complementing
its remarkable features with the anti-bill
shock guarantee and exclusive perks to
Globe subscribers. Offers exclusively
for iPhone 4S included unlimited data
plans with customizable bonus services
such as free calls and SMS. Subscribers
could also personalize their phone usage
and experience as they chose their own
iPhone apps for free, and accessories at
discounted rates.
The My Super Plan Unli Surf Combo is
the first ever fully flexible unlimited data
plan that allowed customers to create
plans that would best meet their needs be it uninterrupted mobile surfing, bonus
call and text service. The Company also
started the My Super Plan Family Combo
for those with multiple accounts for their
families, the first unlimited and fullycustomizable family plan.
With the increasing popularity of Android
phones, Globe was also first in the
Plan
Details
My Super Plan
Design your own plan by combining your consumable plan with unlimited
services and preferred handsets while deciding your regular / monthly freebies.
Family Combo
The first and only customizable family unlimited plan that gives you 3 postpaid
lines, 3 phones and 3 unlimited services that can be changed monthly.
Unli Surf Combo
The plan that allows unlimited mobile surfing so you can enjoy the full features of
the latest smartphones or tablets in the market.
Load Tipid Plan
The budget-friendly plan that allows you to avail of budget-controlled plans and
even allows the usage of consumables for prepaid promos.
Platinum
The premium postpaid plan that offers the ultimate in personalized service and
rewards.
Globe Prepaid Services
The prepaid market was transformed with
the “Go Lang Nang Go” campaign which
reinforced Globe Prepaid’s image as a youth
brand. In line with the thrust to win in the
youth market, the prepaid national offers
were fortified with combo offers to cater to
various call and text needs. SuperUnliAllTxt25
gave prepaid users an all-in-one combo
with unlimited text service to all networks,
10 minutes of call to Globe/TM and 1 hour
mobile internet service for only ₱25 per
day. SuperAllTxt20 was enhanced to give
subscribers 250 texts to all networks and 10
minutes of calls to Globe/TM while SuperUnli
users got an additional 20 texts to all
networks on top of unlimited call and text to
Globe/TM.
30
Since high-value prepaid subscribers
are also key to Globe Prepaid’s growth,
SuperFree Weekends was launched to
reward subscribers who load at least ₱199
from Monday to Friday. Qualified customers
receive a free service with 250 texts to all
networks plus 1 hour mobile internet valid
from Saturday and Sunday.
Globe 2011 Annual Report
The Company also launched an array of
prepaid offerings to better cater to the needs
of regional markets. SuperTrio includes
unlimited text to Globe/TM, texts to other
networks and free call minutes valid for 1 or 3
days. Superlahatxt20 included unlimited text
messages plus 100 minutes call to Globe/TM,
5 international SMS, 1 hour mobile internet
and 100 texts to other networks all for the low
price of ₱20. For users who required only text
service, Globe Prepaid also offered Unlitxt10
with unlimited texting to Globe/TM for 1 day.
31
your globe, your way
Promo
Details
SuperUnliAllTxt25
Unlimited texts to all networks + 10 minutes of calls to Globe/TM +1 hour
browsing valid for 1 day.
SuperAllTxt20
250 texts to all networks + 10 minutes of calls to Globe/TM valid for 1 day.
SuperUnli
Unlimited call and text to Globe/TM + 20 texts to all networks valid for 1 day.
SuperTrio15
Unlimited text and 5 minutes of calls to Globe/TM + 5 texts to other
networks valid for 1 day.
SuperTrio40
Unlimited text and 15 minutes of calls to Globe/TM + 15 texts to other
networks valid for 3 days.
Superlahatxt20
Unlimited text and 100 minutes of calls to Globe/TM + 100 texts to all
networks + 5 international SMS + 1 hour browsing.
Unlitxt10
Unlimited text to Globe/TM for 1 day.
Superfree Weekends
Special perks for high-value prepaid subscribers through SuperFree
Weekends – FREE 250 texts to all networks + 1 hour browsing valid from
Saturday - Sunday when you load at least ₱199 from Monday – Friday.
SuperUSdirect
Get your own (virtual) US number for ₱699/mo. so anyone in the US can call
you at their local rates including US unlimited plans.
SuperIDD
The first Unlimited IDD to over 50 destinations worldwide. Available in daily
(₱149) and monthly (₱1999) variants.
TipIDD Card
Lowest call card rate to Saudi at ₱8/minute. (all competitors are at 10/min).
Tingi IDD
₱40 for 20 minutes to the US, Canada, Hongkong and Singapore.
TM Services
TM reached a new milestone in 2011
with the launch of mobile browsing for
subscribers with internet-capable handsets.
The AstigRewards loyalty program—at
the end of its first full year—allowed TM
subscribers to establish themselves as a
very highly engaged base, generating a
strong response.
Promo
AstigTawag20
Consumable 15 minutes of calls to all network.
TODOTAWAG 15/15
₱15 for 15 minutes of calls to Globe/TM.
SuliTawag
₱5 for 3 minutes of calls to Globe/TM.
DagdagCall
Add-on of 3 minutes of calls to those subscribed to Sulitxt5, Astigtxt10 and
Astigtxtall.
AstigTxt 10
Unlimited text to Globe/TM.
SULITXT 5
25 text messages to Globe/TM.
AstigTxtAll
150 messages to all network.
UnliCombo
Unlimited TM-TM/Globe calls from 10pm-5pm + unlimited text.
AstigCombo
Bulk offers for SMS to all networks and calls to Globe/TM.
SuperSurf
Unlimited mobile internet.
PowerSurf
Consumable mobile internet.
The continued improvements in mobile
data services backed up by a stronger and
more reliable Globe network gave way to
the introduction of m.globe, an all-in-one
mobile portal that enabled users to surf and
browse through their favorite internet sites
using their mobile handsets. The Company
also partnered with content providers
to give subscribers exclusive access to
a variety of applications, ranging from
entertainment, social networking, games,
leisure and lifestyle, sports and many more.
The continued improvements in its mobile
data services not only strengthened the
Company’s vision of providing a full-range
of innovative data plans and making mobile
browsing more accessible to more Filipino
mobile phone users, but also protected
its subscribers with the ₱999 data bill cap
program—an effective move to provide
superior customer experience by preventing
bill shock.
At the start of 2011, the Company launched
the “Marked for Greatness” campaign
that transformed the image of Tattoo,
Globe Telecom’s broadband product. The
campaign initially featured running coach
Rio dela Cruz, cosplay goddess Alodia
Gosiengfiao, tattoo artist Sarah Gaugler
and then followed by race car driver Marlon
Stockinger, bloggers Rico Mossesgeld and
Saab Magalona, and the all-girl rock band
General Luna as new brand ambassadors
of Tattoo, under the new brand tagline
“Live Without Limits.” It was also in the first
quarter of 2011 that the Globe Broadband
DSL and WiMAX were officially marketed
under the Tattoo@Home brand.
In the same quarter, the Company
introduced Tattoo Torque, the fastest
broadband plan designed for heavy and
ultra-heavy internet users with its speed
of up to 100 Mbps, powered by fiberoptic Gigabit Passive Optical Network
(GPON) technology and initially available
in selected areas in Metro Manila. This
product completed the Tattoo@Home
portfolio with services allowing different
users to select the most appropriate
service for them depending on their speed
requirement—be it light, moderate, heavy,
or ultra-heavy.
Several improvements were put in place
throughout 2011. Tattoo@Home was first
to offer customizable home broadband
plans on both DSL and WiMAX services
that empowered customers to increase
their broadband speed at selected hours,
consisting of Day, Night, and Insomniac
speed boost add-ons. This feature allowed
customers to boost up their speed for an
extra 1 Mbps, for as low as ₱150 per month.
Service upgrades were also made
available to Tattoo@Home customers
including the WiFi upgrade option which
allowed shared connection. This upgrade
was offered free for an extended contract
period of 24 months or ₱350/month
for 3 months for those who retain their
12-month contract.
At the last quarter of 2011, Tattoo@Home
Online Planbuilder was introduced wherein
subscribers create their own, unique plan
according to their needs by simply going to
www.tattoo.globe.com.ph.
The prepaid broadband service also
welcomed new products in 2011. The
Tattoo prepaid stick maintained its market
popularity as seen in the increased demand
Globe 2011 Annual Report
32
Details
Data and Broadband Services
Globe mobile internet service was
expanded with the “You’re On” campaign,
a thematic campaign which officially
launched its suite of customizable and
consumable mobile data plans, exclusive
content and portfolio of affordable
smartphone devices for an enriching and
enjoyable mobile browsing experience.
The campaign has dramatically increased
mobile browsing revenues by 52% from
previous year’s levels, and at the same
time, has earned Globe the recognition of
being the most popular service provider for
mobile internet services in the Yahoo! Net
Index 2011.
33
your globe, your way
and McAfee applications with their plans.
The postpaid portfolio was also re-launched
with increased speeds up to 12 Mbps with
all devices running in 4G HSPA+.
In May, Tattoo also had a successful
partnership with Swatch whereby all new
Tattoo Postpaid Unlimited Plan subscribers
automatically received a gift certificate
that could be used to purchase a Swatch
watch. In June, the company introduced
the first 4G broadband stick in the country
for Tattoo Stick together with its new
ambassador Marlon Stockinger. At the last
quarter of 2011, the Company launched
Tattoo Consumable Plans, the first and
only prepaid and postpaid hybrid plan
that combined the prepaid flexibility and
postpaid connectivity.
and sales of the product. Towards the end
of the year, new usage-based plans were
introduced that gave customers access
to On-line Basic Bundle, Social Network
Bundle, and Email and Chat Bundle along
with the 120 and 200 hour bulk offers.
Tattoo Superstick MyFi, a USB modem with
WiFi capability, was also offered in both
prepaid and postpaid subscriptions. The
product was very well received by postpaid
subscribers as they received free addedvalue service which includes free 200 SMS
Furthermore, Globe teamed up with Bank
of the Philippine Islands (BPI) for its 160th
anniversary offering bank customers with
commemorative Tattoo broadband sticks
with special free access to BPI websites.
Partnerships with Banco de Oro (BDO)
and SM Prime Holdings, the largest mall
operator in the Philippines, offered BDO
account and card holders to free meals at
SM Food Court when using BDO’s 1,430
ATMs nationwide. A new online banking
collaboration was signed with Philippine
Savings Bank (PSBank) allowing registered
Globe subscribers to access electronic
banking and online prepaid loading service
through their accounts.
Tattoo Services
Enterprise Innovation Forum which was
attended by CEOs and key officers from
the Philippines’ top corporations. The
forum provided insights on how companies
can future-proof their businesses
through innovation, and how changes in
management practices, business models,
technologies and solutions can aid in
transforming the future of their enterprises.
It also gathered renowned members of
the ICT industry to share their knowledge
and expertise on mobility and M2M;
network and connectivity trends; as well
as collaboration and technology evolution,
with experts from Avaya, Cisco, ECI
Telecom, F5 Networks, HP, Huawei, IBM,
RIM, Sandz, SingTel and Tellabs discussing
the various topics.
Globe Business focuses on providing
relevant ICT solutions with unparalleled
service. It delivers a full suite of product
and services to meet demands for mobility,
voice, collaboration, M2M, hosting services
and reliable connectivity.
Globe also recognizes the importance
of networking. Globe hosted the second
Product
Details
Details
Business Plus
Allows companies to customize their postpaid
subscription according to their mobile
communication requirements.
Business Capped
Allows companies to manage their budget by
providing a set amount for communication needs.
Employee Prepaid Plus
Allows customers to enjoy all the benefits of Globe
prepaid plus the VAS and Business Loop rate of
their corporate account.
Tattoo Mobile Broadband
Allows customers to connect to the internet from
anywhere.
The wireless broadband service uses plug and play
device that connects to Globe Telecom’s stable 4G
connection providing an ultra-fast wireless service.
AMAX CE
Tattoo DSL
The traditional wired broadband connection which
gives its subscribers an unlimited surfing service.
Offers full featured service that empowers
the Company to pass prepaid credits to their
employees.
TxtConnect
Tattoo Torque
Fastest internet connection available in the country
using the breakthrough technology Gigabit-capable
Passive Optical Network (GPON).
Provides full featured web-based service that
empowers a Company to broadcast messages to a
predetermined subscriber or recipient base.
Globelines
Cost-efficient voice solutions addressing business
requirements
Tattoo Superstick
A USB-based modem allowing unlimited internet
surfing and SMS service anytime, anywhere using
4G technology for its postpaid and prepaid plans.
It gives up to 3 Mbps surfing speed and enables
subscribers to create their own WiFi hotspot
Tattoo MyFi
A USB-based modem that enables subscribers to
connect WiFi-enabled devices to Globe Telecom’s
broadband service. This service is available in
prepaid and postpaid subscriptions.
Business Voice
Provides quality voice service from basic direct line
to multi-channel line services (Analog trunk lines and
Centrex).
Globe 2011 Annual Report
Tattoo WiMAX
Tattoo Nomadic
34
Moreover, Globe added Metro Ethernet
Forum (MEF) 14 to its growing list of
certifications, a solid foundation for Carrier
Ethernet ubiquity and interoperability. With
this certification, Globe assures enterprise
customers that its Carrier Ethernet services
measures up to international specifications
accepted globally.
Mobility
Product
Tattoo@Home
Globe Business Services
In the second quarter of 2011, Globe was
the first Philippine carrier to enable IPv6
with AT&T, Cable and Wireless Worldwide,
KDDI, Level 3 Communications, SingTel,
Sprint, StarHub, Limelight Networks and
Yahoo! by participating in the World IPv6
Day. This enabled enterprise customers to
have more public IP addresses to allocate
within their organization as the IPv4 nears
exhaustion. The core IP network of Globe
is now IPv6 ready, allowing its users to
access both IPv4 and IPv6 websites. It has
also initiated IPv6 peering with top global
carriers and content distribution networks.
35
your globe, your way
Telepresence
Most advanced close-to-live teleconferencing
solution that can replicate an “in-person” meeting
experience.
Collaboration
Utilizes advanced collaboration technologies, which
transmit life-size, high definition images and spatial
discrete audio.
ISDN – PRI
An all-digital voice line, used mainly as voice trunks
for PBX’s.
Allows clients to save on communication costs by
empowering them using Globe Telecom’s mobile
network when making calls.
Business Voice
With Globe Telecom’s Business Infrastructure-as-aService, there’s no need to buy and maintain your
own cluster of servers.
Gain access in Cloud to a readily available utility
service that provides the best-of-breed IT resources
when in need.
Data Center
Data Center is a technologically advanced, highly
secured infrastructure where clients can store vital
data, hardware and run mission critical business
systems and applications.
Ethernet Services
Point to point or multi-point connectivity services
designed to connect the business head office to its
remote sites.
An advanced-feature SIM cellular device that is
connected to a Company’s private telephony system
(PABX).
The service allows clients to save on communication
costs when making mobile calls.
Toll–Free Services
Infrastructure-as-aService
Hosting Services
Also allows clients to be contactable even if there’s
no available wired facility in their location.
GSM PBX
M2M enables machines, equipment, assets or things
to remotely exchange real-time data with other
machines, people or information systems through a
communication network. M2M solutions are created
to provide new ways of doing things.
M2M (Machine
to Machine)
It has DID and DOD channels that adjust
automatically and therefore do not require
programming by the customer, aside from
eliminating the need for an operator or IVRS.
Mobile Deskphone
M2M
Domestic or international toll-free services that
feature vanity numbers (domestic) or universal
international freephone number (UIFN).
E-LAN: Multi-point high-quality L2 Ethernet service
with 3 levels of QoS namely standard, business and
premium
DTFS is accessible nationwide using Globe Telecom
landline and mobile only.
E-LINE: Point-to-point ultra-high bandwidth
connectivity service that is delivered to the customer
via fiber optic cable and familiar Ethernet port.
ITFS available in various countries and territories options for UIFN as well.
Hosted Contact Center
(HCC)
E-LINK: Point-to-point high bandwidth and clear
channel service that connects the customer to the
Globe network or Globe data centers.
HCC is an end-to-end hosted solution that offers
a highly scalable, multi-channel contact center
solution that enables organizations to communicate
more effectively with their customers.
Freeway
Delivers full-featured contact center applications.
Corporate IDD (CIDD)
Managed IP-PBX
CIDD is a fully-managed and cost-efficient voice
solution for companies with high volume of
outbound and inbound voice traffic to and from
almost any international destination.
Freeway IPL: Point to point private leased line
service that provides reliable connectivity, network
security and high service reliability.
Connectivity
Freeway Cebu to the World (C2W): Point to point
private leased line service designated for Cebubased clients. It provides the shortest path from
Cebu to other countries without passing the central
technical operating centers in Manila and Makati.
Freeway ELAN: Multi-point, Ethernet service that
delivers scalable data connectivity. It provides
three levels of Quality of Service (QOS) -- standard,
business and premium and uses Virtual Private LAN
Service (VPLS) technology.
MIP is a fully-managed voice service enabling
companies to enjoy the benefits of IP telephony
without the complexity and high upfront capital
expense.
It follows a modular mix-and-match approach and
supports a wide range of configurations to meet a
broad spectrum of business communication needs.
Audiocon
Reservation-less conferencing that allows group of
up to 200 people to have on-demand conference
calls controlled by the Organizer.
Collaboration
Web Conferencing
An application that enables communication of two or
more people over the web in real time.
Combines desktop sharing through a web browser
with phone conferencing and video.
36
Freeway E-LINE: Point to point high bandwidth
connectivity and security of traditional leased line
and the simplicity and bandwidth scalability of
Ethernet connectivity.
International Private
Leased Line (IPLC)
Provides point-to-point bilateral international private
leased line service that is delivered in partnership
with a global carrier. This service is available in a
variety of speeds with end-to-end service level
guaranteed and with extensive cable network
coverage.
Globe 2011 Annual Report
Enables meeting organizers to conduct audio
conferencing from disparate locations using landline
and mobile phones.
Freeway-managed international data services using
Multi-Protocol Label Switching (MPLS) and Virtual
Private LAN Service (VPLS) technology.
37
your globe, your way
Managed International
Data Services
Designed to address the customer’s need for
optimizing Wide Area Network (WAN) resources and
accelerating business applications to deliver better
results.
International E-Line: Point-to-point over Ethernet
service providing a dedicated international
connection deployed via SingTel’s extensive cable
infrastructure.
International IP VPN: Private IP service solution
using MPLS technology that offers all the
functionality of the previous technologies but at
a more affordable cost structure and with more
flexibility via any-to-any capability.
International ATM: Virtual, one-to-many access
connection with Class of Service (CoS) and offers
reliable and secure data transmission rates.
International Frame Relay: Virtual, one-to-many
connection providing reliable date transmission
rates and many of the performance and reliability
characteristic of a dedicated, point-to-point
connection.
Connectivity
Business IP / Internet
Globe Telecom’s network enables borderless
communication and access to information through
connectivity to multiple IP Peers and Content
Providers on strategically diverse International PoPs
in US and Asia.
Direct Internet: A Premium Internet Service utilizing
leased-line technology to deliver high speed internet
access for fixed bandwidth requirements that is
dynamically routed to multiple Global and local IP
Peers through a diverse submarine cable network.It
is provisioned as a Primary link and gateway to the
Global Internet for businesses that have determined
bandwidth requirements.
Burstable GIX: Burstable variant of Direct Internet,
which offers twice the subscribed bandwidth for
traffic bursts. It employs 90th percentile billing which
is the most cost effective usage billing scheme in
the market.
The Globe Corporate and Small Medium
Enterprises (CSME) group launched “What
Kind of Leader Are You?”—a digital
campaign that surveyed leadership styles
of participants. The application matched
their techniques to Globe Business
solutions which would help manage and
effectively balance life and work.
38
“What Kind of Leader Are You?” campaign
took participants to an urgent search for
quick and reliable solutions as offered
by Globe CSME, resulting in increased
customer awareness and brand preference
for Globe Business. Furthermore, this
campaign generated significant traction in
the digital space, specifically in Facebook,
for CSME.
International Services
The launch of Globe SuperUSdirect in 2011
allowed local subscribers to have their own
virtual US number that can be contacted by
anyone from the US, at local US rates. The
Company continued offering SuperIDD, the
first unlimited International Direct Dialing
(IDD) to over 50 destinations all over the
world with daily and monthly options that
customers can choose from.
With the increased call traffic to Saudi
Arabia, the Globe TipIDD lowest call
card rate to the kingdom was offered
with calls costing only at ₱8 per minute.
International rates were also lowered for
calls to the US, Canada, Hongkong and
Singapore with Tingi IDD which gave 20
minutes of calls for only ₱40.
Another initiative introduced to prepaid
customers is the partnership with
MoneyGram, a leading global payment
service and US-based Iris Wireless LLC,
a global leader in mobile messaging
solutions and value-added service for
mobile operators. The cooperation allowed
Filipinos in the US to send Globe or TM
load to their families and friends in the
Philippines using MoneyGram Express
Payment service.
Globe Telecom introduced the Automated
Prepaid Roaming registration which
eliminates the hassles of activating roaming
service for prepaid subscribers. One would
simply reply “yes” to the welcome roaming
SMS message each time one roams with
Globe prepaid.
The Company ventured to improve its
international services with the introduction
of roaming data packages made possible
in partnership with Bridge Alliance giving
the introduction of the new Bridge Data
Roam—Unlimited Data Roaming Plan.
Also, Globe Telecom signed an agreement
with Americatel Corporation which
launched ZeroUnlimited Philippines, the
first US wireless plan that gave unlimited
domestic and international calling
facilities to its customers.
Globe Telecom continues to expand its
international services, offering a wide
array of roaming services, IDD call cards,
discounted IDD rates and co-branded
call services with telecommunications
companies abroad. A new partnership with
Lebara Mobile gave Globe subscribers
in the United Kingdom, Spain, Germany,
France, Switzerland, Denmark, Netherlands
and Australia better value in IDD calls to
their relatives and friends using Globe
Telecom network and TM in the Philippines.
Currently, the Company has over 600
international roaming partners, giving the
widest global coverage among Philippine
telecommunications companies.
Globe 2011 Annual Report
The attractive and user-friendly, webbased application used for the campaign
increased and renewed interests in the
services of Globe CSME. Participants,
whether entrepreneurs, managers or
directors of companies, became more
cognizant of their hampered life and
acknowledged that there is an urgent need
for change.
Globe CSME also hosted a series of
Negostar events for SMEs. Armed with
insights on the different challenges faced
by SMEs, Globe Business offered its
customers solutions to make running
their businesses easier. Moreover, Globe
CSME continued to provide new programs
that aim to help SMEs in growing their
business. One of these programs was
the Negostore, an enhanced Business
Life zone found in several Globe concept
stores. Frontliners were more prepared to
address queries; products and services
were more visible. Secondly, Globe CSME
introduced the NegoStarter Kit CD, a
virtual salesperson that profiles the needs
of entrepreneurs and matches them with
an appropriate suite of Globe Business
solutions.
39
your globe, your way
Product
Bridge Data Roam - Unlimited Data
Roaming Plan
Details
GCASH
G-Xchange, Inc. (GXI), a fully-owned mobile
commerce subsidiary of Globe Telecom,
operates GCASH, Globe Telecom’s mobile
financial service that allows subscribers to
store money virtually and securely in their
mobile phones. The impressive performance
of GCASH in 2011 showed tremendous
growth and potential in the product. This
inspired the Company to revolutionize its
strategies and plans for GCASH.
significant returns that contributed to the
outstanding 2011 revenue growth.
Adding to the astounding 2011
performance is the international remittance
business that further expanded in the
Middle East market. GCASH’s partnership
with Al Fardan Exchange (AFX) located
in (UAE), one of the largest remittance
companies in the Gulf Cooperative
Countries (GCC), eased up remittance
processes and lowered remittance charges
for Overseas Filipino Workers (OFW). By
the end of 2011, GCASH has 33 partners
located in various parts of United Arab
Emirates (UAE), Kingdom of Saudi Arabia
(KSA), Kuwait, Bahrain, Oman and Qatar
among others. Other notable development
in GXI’s remittance business is the
breakthrough partnership in the highly
lucrative but highly regulated Japan market
through an exclusive partnership with Soft
Bank.
Starting 2012, GXI is set to re-invest on
core mobile commerce services such
as remote payments, person-to-person
transfers, mobile remittance, and face
to face payments. The Company will
soon introduce GCASH PowerPay+, a
salary disbursement service that provides
insurance coverage as an added benefit
on top of all existing GCASH services.
PowerPay+ is a result of GXI’s cooperation
with ACE Insurance, a member of the
leading global insurance and reinsurance
company, ACE Group of Companies®.
The robust technology that supports GCASH
gave its exceptional lead in the e-currency
and mobile financial service industry.
Globe Telecom intends to further enhance
GCASH services to promote its use among
its existing subscribers and serve as a plus
factor in attracting new customers.
BPI Globe BanKO
Globe Telecom partnered with industry
giants BPI and major shareholder Ayala
Corporation to create BPI Globe BanKO
Inc. (BanKO), the first-ever mobile-based
savings bank in the Philippines in 2009. The
collaboration utilized the banking expertise
of BPI and the mobile money platform of
Globe Telecom to deliver financial services
to those who are unserved and underserved
by traditional banks.
In September 2011, BanKO launched its
innovative community banking model,
wherein existing businesses in the
community were accredited as partner
outlets. In these outlets, customers can
apply to open a bank account for only
₱100, and cash-in and cash-out as low as
₱50 at a time. BanKO partnered with major
chains such as Tambunting Pawnshop and
Generika Drugstore as well as individual
community establishments including grocery
stores, internet cafés and cooperatives
among others. At the end of 2011, there
were over 1,000 fully operational, accredited
partner outlets nationwide.
With their BanKO accounts, customers gain
access to various financial products such
as savings, loans, insurance, load purchase
and bill payments using only their mobile
phones. Accounts do not have minimum
maintaining balance; but those reaching
₱2,000 average daily balance (ADB) will
earn interest of 1% per annum with free life
insurance coverage of five times the ADB.
Alongside the launch of its community
banking model, BanKO cemented its
microfinance reputation by being the
largest privately-owned provider of
wholesale microfinance funds. As of
December 2011, its institutional banking
group had an outstanding wholesale loan
portfolio of over ₱2 billion lent to over 50
microfinance institutions (MFIs). Aside from
this, BanKO also introduced its mobile
banking system to partner MFIs, thus
allowing them to disburse and collect loans
more safely and more efficiently.
To create a solid deposit base for its
customers, BanKO offers a product that
Globe 2011 Annual Report
The remarkable achievement of GXI was a
result of several breakthrough engagements
and partnerships. The most notable is the
ongoing cooperation with DSWD and stateowned Land Bank of the Philippines, that
utilized GCASH services for its Conditional
Cash Transfer (CCT) to disburse funds via
domestic cash pick-up service in over 9,000
barangays nationwide including logistically
challenged areas. In 2011, GXI was able
to disburse to 700,000 CCT beneficiaries
worth ₱4.5 billion in cash assistance.
This project is in conjunction with the
government’s Pantawid Pamilyang Pilipino
Program (4Ps), cash assistance program
aimed to improve the lives of poor families
who comply with government requirements
such as schooling, undergoing regular
medical check-ups and vaccinations.
This collaboration allowed the Company
to realize its mission to “transform lives
through communications” while gaining
40
Balabac Island,
Palawan – DSWD
and state-owned
Land Bank of the
Philippines expand the
use of GCASH REMIT,
domestic cash pick
up service of Globe
Telecom subsidiary
G-Xchange, Inc., to
distribute Conditional
Cash Transfers (CCT) in
the remotest places in
the Philippines.
Globe Telecom’s partnership with Bridge Alliance, the
leading mobile alliance in Asia Pacific, launched Bridge
DataRoamUnlimited, an unlimited data roaming plan that offers
one-flat rate across 11 territories in the Asia Pacific region.
The countries included in this coverage are Airtel (India), AIS
(Thailand), CSL (Hong Kong), CTM (Macau), Globe Telecom
(Philippines), Maxis (Malaysia), SingTel Mobile (Singapore), SingTel
Optus (Australia), SK Telecom (Korea), Taiwan Mobile (Taiwan)
and Telkomsel (Indonesia). Globe Telecom customers are offered
flexible plans depending on their needs: US$10 for 1 day; US$27
for 3 days and US$40 for 5 days.
41
your globe, your way
guarantees optimum financial returns.
BanKO Social Investment is a private
deposit account which offers an interest of
4.5% per annum— higher than standard
market rates.
With its foray into community banking
combined with leadership in wholesale
microfinance, BanKO is breaking barriers in
pursuit of its goal of financial inclusion for
every Filipino.
Putting our Customer First
Customer Loyalty and Rewards System
In line with revolutionizing customer
satisfaction, Globe continues to recognize
its loyal customers. The Company runs My
Rewards My Globe and TM Astig Rewards
reward programs for its postpaid, prepaid
and TM subscribers. The programs allow
subscribers to earn points for service
consumption—be it voice, data or text.
Accumulated points are credited to
customers’ accounts within 7 days from
loading for prepaid and on monthly basis
for postpaid subscribers.
Redemption of points is as easy as earning.
Subscribers simply need to send a text
message with the item codes to ‘4438’.
Rewards offered vary from Globe products,
gadgets, shopping, dining, leisure, travel,
perks and privileges. Delivery of rewards is
instantaneous for Globe products and free
door-to-door delivery within 20 days for the
other rewards.
My Rewards My Globe and TM Astig
Rewards programs are Globe Telecom’s
way of showing loyal subscribers
appreciation for continued patronage by
giving added value for their money. This is
the Globe Way of keeping loyal customers
happy, completing the circle of happiness.
42
Customer Experience
The Philippine telecommunications industry
has matured in great leaps these past few
years and the growing competition among
major players has led them to step up their
service offerings and product differentiation
strategies. New trends on the internet and
the emergence of social media as a valuable
means for communication also challenge
traditional telecommunication providers to
continuously find ways to make services
relevant and within reach of today’s savvy
consumers. In this changing and very
competitive landscape, Globe Telecom, in
keeping with its core values, has chosen
to impact the market and delight today’s
customer by differentiating through its gamechanging level of customer experience.
At Globe, “Customer Experience” is at
the core of everything we do. It defines
our brand of service, how we differentiate
ourselves from competition and how
we continuously innovate to delight our
subscribers. Globe believes in providing
standardized, specialized and personalized
services. Ultimately, this means delighting
customers with the power of choice—
a choice over how they choose to
customize their plan and today a choice
over their channel for customer service.
2011 marked many advances in our
commitment to deliver this customer
experience promise. In a market
place that is becoming very complex,
the recent creation of a Customer
Experience Division has allowed Globe to
institutionalize an internal framework and
process that fosters a customer-centric
strategy in every facet of its operations.
This has resulted in a clearly designed
customer experience strategy that
governs every product and service as it
is rolled-out to consumers. The creation
of the Customer Experience Division, and
customer strategy, is an example of our
serious commitment to strengthen our
relationship with customers, enabling
us to focus more intuitively on our
customer’s needs and improve the way we
serve, sell, talk and listen.
Partnership with best-in-class
multinational contact centers
Within the span of a year, Globe has
successfully partnered with best-in class
contact center providers, such as Stream
Global Services, Aegis PeopleSupport,
TechMahindra and PTI, Inc. This mix of
multinational expertise allows for best
practice sharing as we benefit from
our partners’ global experience from
providing BPO services to many global
telecommunication giants. In line with this
strategy is the redesign of our contact
center and telephony infrastructure,
enabling calls to be routed to subject
matter experts; increased hotline and
PABX/IVR capacities enabling calls to get
through and; enhancements of call transfer
technology. Having subject matter experts
assures customers that their calls are
routed to a specialized agent, rather than
to a pool of knowledge generalists which
was the strategy in the past. This means
customer call queries are addressed faster
and more efficiently, resulting to higher
levels of customer satisfaction.
Last June 2011, Globe completed a
milestone hotline service transformation.
Upgrades in the Call Center Telephony
systems were introduced as part of the
change. The system also implemented a
call transfer facility so misrouted callers
were no longer advised to call back. Call
traffic congestion was greatly reduced
from for TM and for Globe Hotline through
the increase in E1 lines, PABX and IVR
capabilities. With the redesigned IVR,
customers can easily follow instructions
provided, significantly lowering misrouted
calls. The introduction of the In-store Help
Phone greatly decreased simple after-sales
concerns handled by Globe Stores to this
new service channel. In addition, the selfhelp guides made available in the online
pages of Globe Telecom’s website offloaded
simple queries from Globe Store personnel,
improving overall in-store services. This
transformation program reduced repeat
and escalated transactions previously
handled by Level 2 Resolution and Recover
Management (RRM) agents. Today, complex
resolutions are completed in less than 48
hours and with reduced operating costs
because of the introducing of efficient
processes and handling systems.
As a result of these many programs,
Globe today boasts a much-improved
First Call Resolution Rate, a big leap from
2010’s results, exceeding the standard for
customer service in this industry category.
Self-service
Today’s consumers are savvy. They are
comfortable with technology, automation
and online services. They demand distinct
features from their service providers, such
as online access to account information,
and the ability to conduct service
modifications on-demand without need for
agent assistance.
Empowering customers has been the
theme for Globe Customer Experience
in 2011. Self-service is among the many
initiatives launched to empower customers
with the ability to transact the way they
want. The re-launch of the Talk2GLOBE
Hotline brings with it many self-service
features available on the Interactive Voice
Response (IVR) system. This means, our
subscribers can enjoy the convenience
of transacting directly with our telephony
system to inquire about their balances,
promos and keywords, report a payment,
and many other transactions without
having to speak to a customer service
representative. Aside from self-service on
the hotline, Globe also launched a quickaccess self-service menu giving customers
instant access to a menu-based service
to inquire about their account, register to
services, transfer GCASH money, check
movie schedules, and many new exciting
features everyday by simply calling *143#.
The service is accessible from any phone,
virtually anywhere in the world and is free
of charge.
Game-changing sales hotline
and retail experience
The company opened 56 new concept
stores across the country bringing up
the total number of full-service concept
Globe 2011 Annual Report
Today, there are 10.2 million unique
prepaid and postpaid subscribers
redeeming and enjoying their lifestyle and
telco rewards from My Rewards My Globe
and TM Astig Rewards. This translates
to 34% of active base, surpassing
engagement rates among mature loyalty
programs. The program created stickiness
to the brand resulting in a significant
reduction in churn rates.
43
your globe, your way
stores to 64 in 2011. These new outlets
represent Globe Telecom’s vision to provide
superior service by transforming its retail
stores across the country from being mere
payment centers to a retail experience
hub that showcases the best devices,
accessories and a much wider array of
customer support services. Last year, Globe
has added new features to further reinforce
the customer experience of subscribers
and visitors alike. Select stores now have
‘Tech Coaches’ or device experts that can
help customers with their smartphones
and a dedicated hotline was also set up for
on-the-go customers who do not have the
time to queue at the stores for their aftersales concerns. In 2012, Globe will continue
to open more concept stores in strategic
locations all over the country.
Alternatively, customers can also seek
consultative sales assistance through
Globe Telecom’s new sales hotline – (02)
730-1010. This inbound sales channel is a
first in the Philippines, and has proven to
be a successful medium for customers to
purchase subscriptions over the phone. Also
launched in 2011, this new hotline number
is for customers who wish to order postpaid
subscriptions, seek consultative assistance,
and request for new handset delivery.
Talk2GLOBE your way 24/7
Social media is quickly becoming the
communication media of choice. Social
networking sites such as Twitter and
Facebook have taken the internet by
storm and have redefined the way we
communicate with each other.
44
360 Degree Quality Feedback Programs
What gets measured gets done in Globe!
In 2011, we didn’t only launch programs to
improve our customer experience systems
and processes but we also launched the
Philippines’ most comprehensive bestin-class customer feedback program. At
Globe, we believe in listening to the voice
of our customers so we can understand
and respond quickly to their needs. Today,
this comprehensive world-class Customer
Satisfaction Survey (CSAT) provides the
business with 16,000 surveys a month
as basis for service improvements and
development for future products and services.
As part of this feedback program, Globe
also started the largest telecom Mystery
Shopper in the Philippines, conducting
almost 300 visits per month. Insights
collated from the program provide
continuous input for the calibration of our
sales and customer service strategy at
our Stores. As a result, the overall sales
experience was calibrated and made more
consultative. We gained better knowledge
that helps us anticipate the needs of our
customers, allowing us to train our staff
on customer needs assessment, problem
solutioning, consultative cross-selling,
up-selling, and handling objections. This
guided and consultative sales process
makes transactions simpler and faster, thus
improving customer satisfaction and overall
turn-around time per customer.
Soon: Globe worry-free service guarantee
With the many improvements in customer
experience, we are confident that more
customers will feel the difference about our
brand of quality service. We look forward to
launching our worry-free service guarantee
in the first quarter of 2012. This worryfree guarantee is another first in Philippine
telecommunications and a milestone
achievement as we work on nothing but
the best customer service experience when
using our products and services. We are so
confident about our level of quality service,
that we’re branding our service guarantee.
As part of our service promise, is a
commitment that if our service falls under
our customer’s expectation for any reason,
we will be more than happy to make up
for this. Our brand of quality service:
Guaranteed Globe, Guaranteed Happy!
Retail Channel Expansion
Our Customer First policy does not only
apply to our customers in mass markets,
it also applies to our partners who care
for our business. Globe Telecom has over
782,000 retailers distributors, suppliers,
and business partners nationwide. Trade
distribution is a key area of the business
that helps make Globe products and
services as accessible as possible.
By giving value to our distributors and
strengthening our partnerships, we
make Globe Telecom accessible to more
customers—wherever they are.
Globe Telecom achieved several consumer
sales milestones in 2011 by dominating its
National Account channels. The company
reached number 1 in retail through its
partnership with SM focusing on major sale
events, number 1 in Price Club/Wholesale
channel by exclusively partnering with
Puregold, number 1 in high-end channel
cooperating with Shopwise and Rustan’s,
and number 1 in top convenient stores via
collaboration with 7Eleven.
Globe Telecom also takes care of its partner
communities, the special interest groups or
organizations with their own membership
base which can easily be enabled with
communications. Each partner community
enjoys a customized SIM enabling unique
functions that are relevant to them. In
2011, Globe supported University of Santo
Tomas’ (UST) 400 year foundation by
launching its very own UST SIM in time
for the Quadricentennial week celebration.
Moreover, University of the East (UE) and
the Makati local government has their own
SIM which allows our member base to enjoy
special mobile rates and exclusive offers on
their mobile phones.
Photo shows a
7-Eleven cashier
demonstrating how
easy it is to purchase
load at the check-out
counter of 7-Eleven
to Phil Seven Corp
President and CEO
Victor Paterno (2nd
from left) and Globe
Consumer Sales Head
Mon Matriano (far
right).
Globe 2011 Annual Report
In 2011, Globe capitalized on this new
media trend and took customer service
beyond the hotline with the addition
of multiple online channels that gave
customers 24/7 access to customer
assistance through a variety of options.
When online, subscribers can simply
chat with Globe using their web browser
from the Globe website, or by adding
Talk2GLOBEChat as their Yahoo! Messenger
contact. Customers can also reach Globe
through Twitter or Facebook by simply
engaging with @talk2GLOBE or facebook.
com/globeph. These channels have
dedicated customer service representatives
who are available to make sure that every
Globe subscriber gets a quick response and
solution. Alternatively, customers can also
chat with live agents through text by simply
texting HELP to 1234. This service is open
to all Globe Telecom postpaid, prepaid and
Tattoo subscribers.
45
A DAY IN THE LIFE OF A POSTPAID SUBSCRIBER
Yesterday, Today, and Tomorrow
to Hong Kong for a year.” After breakfast
where he reads through the broadsheets,
it’s a quick routine to get ready.
9:30 AM He’s poring over plans for a
grower house for the company’s latest pig
farm at his desk, punctuated with emails,
calls and texts from suppliers or interested
clients. “My regular phone has always been
a Globe line. I’ve only really changed my
number once in my life.”
If there’s one thing that Globe inspires, it’s
loyalty. Take Ramon Abola, 66 years old. An
electrical engineer, he has been a postpaid
user for almost 20 years now. Three out
of his four children are also on Globe
Postpaid, two of them having had the same
phone numbers for just beyond a decade.
Part of the baby boomer generation that
discovered that “you were no longer
tethered to your desk,” he adapted quickly
to the growing phenomenon of information
communications technology. Perhaps a
natural tendency of his profession, or even
just an innate curiosity about innovation,
he likes to boast that he has never needed
help in using his phone.
“I used to be in charge of setting up phone
lines in San Miguel. My first job was literally
setting up people’s phones at their desks.”
Though he will admit that it was so easy
to set up his latest smartphone because,
“Globe just sent me the settings through a
text message, and everything was fixed.”
12:30 PM Working so close to home,
he’s back for lunch. It’s usually a quiet
meal, and dessert is the New York Times
crossword puzzle on his iPad, done twice
so he can beat his own time. But the iPad
is not really for games, he’s been trying to
free himself from his laptop and is close to
perfecting the shift.
“I don’t like bringing my laptop when I
travel for work. For my trips abroad or even
to the farms out of town, I find it easier to
just have my iPad and my mobile phone.
I’ve also found that we never get lost when
I can connect to the 3G network and use
the GPS.”
The afternoon includes a meeting with
clients, and he finds that the iPad always
“makes it easier to present. People can’t
help paying attention when you’re showing
them something on it.” The long drives he
takes frequently are alleviated by articles
on the New York Times app on his phone.
Calls if any are few and far between, except
if there’s something brewing at work.
“My mobile phone is usually for business,
I only really talk to my daughter on
the phone when she needs the car, or
my sisters when they’re inviting me to
something. We’re a family who talks to
each other more when we’re face to face.
My kids always complain that I don’t say
goodbye when we’re speaking on the
phone. I think it’s an Abola thing.”
7:30 PM His kids would probably say
that it’s a matter of age. They join him
for dinner, slowly trickling in from various
places of work. The meal can go long since
they wait around for each other to come
home, and the dinner table also doubles as
a shared work area. Once the plates have
been cleared, conversation continues with
each family member at their own screen
whether it be a smartphone, a laptop, a
tablet, or the television.
11:30 PM to 1:00 AM Late night talk
show hosts David Letterman and Jay Leno
accompany him on his nightly washing up.
And when the television’s off, it’s either a
book or a magazine on the iPad until he
finally drifts off.
When pressed about why he stays with
Globe, he points to his obvious penchant
for habits. Except he has tried other telco
services, always to come back. It’s never
been about the newest things though,
only what was proved to be most useful
and efficient.
“I think it has something to do with Globe
and their association with the Ayalas. It
means you know it’s something that’s
well done. That’s why you get upset when
service is shoddy because you expect a
certain modicum of standards.”
8:00 AM Technology has always been
a tool for Ramon and something that
accompanies him for much of the day. His
mobile phone is the first thing he checks in
the morning as soon as he wakes up.
Another sure sign that he’s awake is that
his television is set to CNN. “A habit,” he
says, “I picked up when I was assigned
46
Globe 2011 Annual Report
“Most of my work is done through emails
and texts. The people I deal with are either
in the provinces or other countries.”
47
a day in the lives of prepaid subscribers arya and kookie
The Prepaid line with its various Unli offers
is a way for a student to stay connected.
Especially when which network you’re on
determines whether or not you’re getting
a reply.
A Few of our Favorite Things
The Prepaid line with its various Unli offers is
a way for a teenager to be more mindful of
phone usage while still remaining connected.
Especially when you’re fresh out of college
and exploring the new and large world of
paying for your own.
“I’ve been on my Prepaid for a few months
now, after I had to have my Postpaid line
cut. I don’t want to spend much because I’m
paying off my laptop. The musical is helping
me be financially independent.”
Arya Herrera, 20, is an actress and singer.
She’s part of the musical, “The Sound of
Music,” currently on an extended run at
Resorts World. The musical is her biggest
show to date.
“I used to find musical theater so cheesy.
I really sing, but I also used to hate acting.
And now, even with the musical, I still hate
dancing. Musical theater is an acquired taste.
My best friend changed my mind about it.
He knew that I sang and encouraged me to
join Blue Rep—he forced me to try out for the
musical production for the newbies and I got
the lead role.”
Then there was no stopping her. “My org
became my major, I obviously enjoyed it.”
Now that she’s just about to graduate from
Ateneo de Manila University with a major in
Information Design, her weeks are focused
on the three days that she’s performing Sister
Sophia or as part of the ensemble.
48
She’s a big texter, and though she’s definitely
more conscious of how she spends her
money, she’s found that she prefers her
current phone situation. “I like the Prepaid
service, too. I like that if you load a certain
amount in a specific period of time, you get
unlimited calls and texts with freebies pa. I
think I’m spending less pa, I’m forced to be
more practical. “
12:00 NN to 10:00 PM With two shows on
Saturdays and Sundays, Arya spends most of
her waking time either out on stage or in the
dressing room with her cast. “I do the show
and even in the dressing room, I’m on my
laptop. I’m just chatting with my friends, but
my laptop’s there, I don’t close my laptop.”
The breaks between scenes can be pretty
long, and when they’re not eating or chatting,
Arya and the rest of the ensemble are on their
mobile devices. “My friend has Globe Tattoo,
that can connect up to five people, so we
connect through her in the dressing room. But
most of the time, I’m playing Skyrim.”
Arya’s focused on her growing
career as an actress, that even
if her day ends relatively early on
playdates, she goes home directly to
rest her voice. The rest of her week
consists of being with her friends,
and doing various preparations for
her transition to the small screen.
“I’m trying to get on TV, so I’ve
been working out, and taking more
classes. This is what I want to do, so
I’ll do everything that helps me get
better.”
“I’ve been on Globe since I’ve had a phone.
Unli’s a lifesaver. So when I went to high
school—I noticed that no one would text if you
weren’t on Globe. Even in college, everyone
seems to be on Globe, too.”
Kookie Santos, 19, an Information Design
student at Ateneo de Manila University admits
that her Nokia C3 is used mostly for texting
because as she says, “When you’re a student
and on prepaid, all you’re interested in is load
and Unli. With my phone, I just really text—I
don’t call that much.” Though it does wake her
up right before her classes begin.
7:00 AM “I think it’s a dorm sickness, waking
up just 30 minutes before class. But I’ve never
been late.”
12:00 NN Her course load gives her a pretty
light week. Most days, she’s done by lunch.
And like all the the
students in the
Information
Design
program, she
spends time
1:30 PM to 6:00 PM “When we’re done with
lunch, we’re back at the lounge. Lately, we’ve
been having Corelympics, we do planks—I’m
trying to beat 1 minute 30 seconds.”
There’s free WiFi from the university so she’s
surfing the web with her friends and talking to
each other over laptops.There are also Tetris
Battle marathons on Facebook, which the
whole room participates in until the lounge has
to be closed by 6 PM.
Throughout much of the day though, her
phone and laptop are with her.
“I would definitely recommend Globe to
my friends because I wouldn’t text them
otherwise. I’m guilty of not texting the
Smart or Sun people.”
8:00 PM Living away from home, Kookie
keeps in touch with her parents through
the dormitory landline. “ They’re on another
network. I don’t know what it is about Smart
and adults, it looks like it’s a parent thing.”
And it’s at night that she reads her news feed
or has conversations with friends over Twitter.
“I’m on Facebook and Twitter. Nakaka-pressure
[on Facebook] that people have to like your
status updates. So I’m on Twitter more.”
Because she’s on the internet daily, she’s
particular about her online persona, too. “If
there’s one thing I don’t like about the internet,
there’s just so much hate on it especially on
YouTube. Why not make people laugh? I mean
but if things get stressful, I usually just keep
myself busy in my head.”
Kookie’s bizarre mind experiments
are all part of a growing style that
“reflects my own optimism. My
whole style is making fun things.
Like Pixar? That’s definitely my
dream job.”
Globe 2011 Annual Report
11:00 AM On the weekend, Arya’s day
begins an hour before her call time. Even
on a regular day, she’s a late riser because
she’s usually on her laptop playing Skyrim
until early morning. Then she’s off to Resorts
World on a play day. If not, she’s off to a
friend’s house for a day spent on her laptop.
“I’m always on my laptop. But my phone’s
always there beside me, I never leave it.
Whether am upstairs or downstairs, it’s
always with me.”
in the ID room beside the Fine Arts Program
Office, close to the college cafeteria.
49
a day in the life of a mobile wallet USER
GCASH is King
a day in the life of an ofw
making a home
away from home
When given a microfinancing bent, GCASH
can be a banking platform for services
such as money remittance, loan settlement,
and the payment of bills—products and
services for people who possibly would not
transact with a bank.
Mr. Larry Bat-ao, 38, a sari-sari store
owner living in Surigao, is part of a pilot
program facilitated by Cantilan Bank in
the Caraga Region.
“Nakatulong talaga sa akin ang GCASH sa
oras; hindi ko na kailangan umalis kung
meron akong payment. At nakakadagdag
sa puhunan ang kinikita ko dahil sa akin
nagpapadala ang mga tao. Tapos hindi
ko pa kailangan pumunta sa bayan para
mag-withdraw.”
4:00 AM Larry lives in an area where most
people are either fishermen or farmers. He
therefore has to wake up when they do, as
he provides them their morning coffee and
their cigarettes for the day.
5:00 AM to 10:00 PM His store is his sole
source of livelihood to feed his family of
four children. He estimates that one out of
every five customers daily use GCASH as
payment, and a few more use his services
to do their own mobile banking.
“Ninerekomenda ko talaga ang GCASH
kasi mabilisan ang transaction, hindi na
kayo magsasayang ng panahon pumunta
sa bayan. Pwede naman sila magpadala sa
akin. Basta magparegister sila.”
His long hours may seem surprising, but he
is trying to earn enough capital to expand
his business. “Gusto ko sana magkaroon
ng GCASH station sa bayan ng Cantilan.
Kailangan natin ng pera, ng puhunan.”
Larry has been a GCASH user for roughly
four years, and plans to continue doing so.
Without a doubt, Globe has been there
on the front lines of the Philippine migrant
phenomenon, connecting families across
vast distances to help keep them whole.
Samie Parallag-Tallosig, 40, is a domestic
worker in Hong Kong for 21 years. She’s
married to Joel Tallosig and is mother of
11-year old Samantha Joy.
6:00 AM Her day begins early, preparing
breakfast for the small family of three
for whom she’s an amah. She greets her
daughter good morning through SMS.
8:30 AM When the family has left for the
day, she does her chores. The whole time,
she’s on the phone with her family, all on
prepaid lines from TM. “ Tawag daw ako ng
tawag parang nandun lang daw ako.”
There is much to talk about. She financed a
corn-buying business and sari-sari store that
her father and the family run. She keeps an
eye on her daughter who has a boyfriend.
3:00 PM By mid-afternoon, Samie has
completed her daily calls to her family.
She’s texted her daughter to remind her
to be good, and to study well. She’ll be
preparing dinner in a few hours to leave
right after for a Globe road show.
7:30 PM After dinner has been served,
she asks to leave. The family she works
with allows her to go out during the week if
Globe has an event.
“Malaking pasalamat ko talaga sa Globe.
Tinuturing nila akong kaibigan, at sobra
akong alaga. Sinusundo nga nila ako kapag
umuuwi ako sa Pilipinas eh.”
Samie can’t contain how amazed she is with
what Globe has continually done for her.
“Ganito pala yon. Lumalaki mundo mo, naeexpose ka. Dumadami ang mga kaibigan
mo. Proud na proud talaga ako dun.”
Globe 2011 Annual Report
50
51
A Day in the Life of a Business
A Culture of Quality
When communication and customer
engagement across continents is a
company’s sole commodity, a dependable
connection is a literal lifeline. Globe wireline
solutions have provided ePerfomax a critical
cog in their business model.
“ePerformax is actually one of the
pioneers here in the Philippines,” shares
Teresa Hartsaw, President and CEO, “We
specialize in training and developing
employees. We want to be the best contact
center, not necessarily the largest. And
so when we started we were determined
to manage our growth. We knew that in
on order to be truly competitive for our
Fortune 500 clients, we had to provide the
absolute best customer experience.”
As they handle customer service
interactions via phone, email, and chat, a
working line is just as vital as their unique
approaching of tailoring various processes
for the client’s needs. ePerformax thrives
on collaborating with its clients, something
that can only occur when communication is
possible at all hours.
“Telco is extremely important to our
business. We use wirelines to connect
with customers in the U.S., Canada and
Australia and we use the Globe Business
Plus and Globe Mobility Solutions to
connect with our employees. People ask us
how we can afford to give our employees
a cellphone and a mobile plan and we tell
them we really cannot afford not to.”
This same focus on strong relationships
made their search for a telecommunications
company to aid them in their endeavor a
crucial one.
“We looked for a company that was
reliable, dependable, creative, and
innovative. Things that matched what we
were trying to accomplish as a business.
Globe has that culture and the commitment
to quality we needed because they’re one
hundred percent with us. Just imagine, we
can’t have our wirelines go down because
that disconnects us with our customers and
that’s our product. We’ve been with Globe
since we started in 2002.”
With their steady growing client list and
in turn, service requirements, ePerformax
continues to engage Globe’s services.
“When you’re talking about a partnership
that providing our lifeline to our business,
you’ve got to really have a true partnership.“
And without fail, Globe and its unyielding
commitment to quality has continued to
convince ePerformax that they were right to
come to the Philippines.
“When people ask if we’re going to expand
outside the Philippines, we tell them we’re
not. We love the Philippines. We believe it’s
the best country in the world for customer
service,” shares Teresa. “The people are
more than friendly. They’re smart, creative
and with a service-oriented culture, they’re
determined to be the best. ”
Globe 2011 Annual Report
52
53
corporate governance
corporate governance
Globe 2011 Annual Report
54
55
corporate governance
Governance Mechanism
Globe Telecom ethos believes that
integrity, accountability and transparency
in all aspects of the business are crucial
ingredients to the Company’s success.
These are the principles that make up
the Company’s foundation to achieving
its mission, vision and goals. With the
continuous tests brought by global and
national state of affairs, these values help
the Company endure these challenges.
The Company’s Articles of Incorporation
and By-Laws maintain the basic structure
of corporate governance while the Manual
for Corporate Governance acts as its
supplement. These legal documents are
the core of the Company’s operational
framework to its smallest detail including
the principal duties of the members of the
Board with emphasis on the composition
and balance of the Board, for a diverse
pool of skills and background which
ensures that duties and responsibilities are
performed in a proper manner despite an
increasingly competitive environment.
Globe Telecom established their Manual of
Corporate Governance that is in line and
compliant to the regulations implemented
by the Securities and Exchange
Commission (SEC). This manual was last
updated in 2010 as per SEC Memorandum
Circular No. 6, Series of 2009 —Revised
Code of Corporate Governance and will
be reviewed regularly to preserve its
compliance to government regulations.
In addition, Globe Telecom has
implemented a Code of Conduct, Conflict
of Interests and Whistleblower 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.
Board Composition
The Board is composed of eleven (11)
members. These board members are
elected during the Annual Stockholders
Meeting (ASM) and hold office for the
ensuing year until the next ASM. Of the 11
members of the board, only the President
and CEO is an executive director while
the rest are non-executive directors
who are not involved in the day-to-day
management of the business.
Name of Board Member
Title
Nature of
Appointment
Key Responsibilities
Gender
Jaime Augusto Zobel de Ayala
Chairman
Non-Executive
Chairman of the Board and
Executive Committee
M
Gerardo C. Ablaza Jr.
Co-Vice Chairman
Non - Executive
Co-Vice Chairman of Board and
Executive Committee; Member of
Compensation and Remuneration
Committee; Member of
Nominations Committee
M
Hui Weng Cheong
Co-Vice Chairman
Non - Executive
Co-Vice Chairman of Board and
Executive Committee; Member
of Nominations Committee and
Compensation and Remuneration
Committee
M
Delfin L. Lazaro
Director
Non - Executive
Chairman of Finance Committee
M
Tay Soo Meng
Director
Non - Executive
Member of Executive Committee,
Audit Committee and Finance
Committee
M
Ernest L. Cu
Director, President and
CEO
Executive
President and Chief Executive
Officer and Member of Executive
Committee
M
Fernando Zobel de Ayala
Director
Non - Executive
-
M
Romeo L. Bernardo
Director
Non - Executive
Member of Audit Committee
M
Manuel A. Pacis
Independent Director
Non - Executive
Chairman of Audit Committee
M
Xavier P. Loinaz
Independent Director
Non - Executive
Chairman of Nominations
Committee
M
Guillermo D. Luchangco
Independent Director
Non - Executive
Chairman of Compensation
and Remuneration Committee;
Member of Nominations
Committee and Finance
Committee
M
Globe 2011 Annual Report
56
57
corporate governance
Board Performance
Board Committees
Ocampo served as Director until April 12,
2011 and has attended all the meetings
during his term. Mr. Manuel A. Pacis was
elected as an Independent director on April
12, 2011 and has attended all the meetings
from hence on.
The Company holds the ASM where the
shareholders are given the opportunity to
raise questions and clarify issues relevant
to the Company. The Board members,
President and CEO along with the external
auditors are present to address any queries
raised during the meeting. Inquiries by
shareholders whether by telephone, mail or
electronic mail are swiftly handled.
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.
The attendance of each board member is
enumerated below:
Name of the
Committee
In 2011, a total of 8 meetings were
held including the ASM. Mr. Roberto de
2010
Number of
meetings
attended
Number of
meetings
held
Number of
meetings
attended
Number of
meetings
held
Jaime Augusto
Zobel de Ayala
8
11
73%
6
8
75%
Gerardo C. Ablaza Jr.
9
11
82%
6
8
75%
Hui Weng Cheong
2
3
67%
8
8
100%
10
11
91%
7
8
88%
-
-
-
8
8
100%
Ernest L. Cu
11
11
100%
7
8
88%
Fernando Zobel de Ayala
10
11
91%
7
8
88%
Romeo L. Bernardo
11
11
100%
8
8
100%
Roberto F. de Ocampo
10
11
91%
3
3
100%
Manuel A. Pacis
-
-
-
6
6
100%
Xavier P. Loinaz
11
11
100%
8
8
100%
Guillermo D. Luchangco
10
11
91%
8
8
100%
Tay Soo Meng
Objectives
Percent
present
Percent
present
Jaime Augusto Zobel de Ayala
Hui Weng Cheong
Gerardo C. Ablaza Jr.
Ernest L. Cu
Tay Soo Meng
Chairman
Co-Vice Chairman
Co-Vice Chairman
Member
Member
Audit Committee
•
It supports corporate governance
of the Company by fulfilling its
oversight responsibility relating to:
oo the integrity of the financial
statements and the financial
reporting process and principles;
oo internal controls;
oo the qualifications, independence,
remuneration and performance
of the independent auditors;
oo staffing, focus, scope,
performance, and effectiveness
of the internal audit function;
oo risk management; and compliance
with legal, regulatory, and corporate
governance requirements
Manuel A. Pacis
Romeo L. Bernardo
Tay Soo Meng
(Alternate: Chor Khee Yang)
Chairman
Member
Member
Compensation
and
Remuneration
Committee
•
Establishes transparent remuneration
policy and procedure for directors
Verifies disclosures of facts and
statements on Company’s annual report
Reviews and Strengthens the Human
Resources Development policies
Guillermo D. Luchangco1
Gerardo C. Ablaza Jr.
Hui Weng Cheong
(Alternate: Aileen Tan)
Chairman
Member
Member
Nomination
Committee
•
Ensures unbiased nomination
of directors and officers
Xavier P. Loinaz
Guillermo D. Luchangco
Hui Weng Cheong
Gerardo C. Ablaza Jr.
Chairman
Member
Member
Member
Finance
Committee
•
Looks after Company’s financial
operations and treasury
Reviews and evaluates financial
affairs on a regular basis
Conducts annual financial review and
operations review prior to ASM
Delfin L. Lazaro
(Alternate: Delfin C. Gonzales Jr.)
Guillermo D. Luchangco
Tay Soo Meng (Alternate: Allan
Wong)
Chairman
•
•
•
Member
Member
Globe 2011 Annual Report
As delegated by the Board subject to
certain limitations, provides management
sound guidance and advice, policies
and strategic guidelines and periodically
evaluate and monitor implementation of the
strategies that the Board has approved
Assumed position on May 10, 2011
58
Position in Committee
•
•
1
Members
Executive
Committee
2011
Board Member
Delfin L. Lazaro
All the committees have their own
charters that are aligned with the
objectives of each committee.
59
corporate governance
Committee Meetings
The Executive Committee met twelve (12)
times, the Audit Committee met six (6)
times, the Nomination Committee met
four (4) times, the Compensation and
Remuneration Committee met two (2) times
Name
and the Finance Committee met six (6)
times in the year 2011. The Attendance of
the members of these Committees is duly
recorded, as follows:
Executive
Committee
Audit
Committee
Nomination
Committee
Compensation
and Remuneration Committee
Finance
Committee
Present
Present
Present
Absent
Present
Absent
Absent
Absent
Present
Jaime Augusto Zobel de Ayala
10
2
Hui Weng Cheong
12
0
3
1
2
0
Gerardo C. Ablaza, Jr.
10
2
3
1
2
0
Ernest L. Cu
12
0
12
0
5
0
Xavier P. Loinaz
1
0
Manuel A. Pacis3
5
0
Romeo L. Bernardo
6
0
Koh Kah Sek
1
0
Tay Soo Meng
1
2
1
Guillermo D. Luchangco
4
0
4
0
2
0
Delfin L. Lazaro
Absent
6
0
6
0
6
0
Mr. Tay Soo Meng was appointed Director on 08 February 2011 to serve the remainder of the term of Ms. Koh Kah Sek. Mr. Tay was also elected as member of
the Executive Committee, Audit Committee and Finance Committee.
2
Mr. Xavier P. Loinaz served as Chairman and Member of the Audit Committee until 12 April 2011. He was, thereafter, appointed Chairman of the Nomination Committee.
3
Mr. Manuel A. Pacis was elected Chairman and Member of the Audit Committee on 12 April 2011.
1
Management Commitments
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 stock options and
remuneration in the form of a specific sum
for the attendance at each regular or special
meeting. As approved by the shareholders
during the ASM held last April 1, 2003, the
Board members are entitled to 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.
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.
Any market sensitive information such
as dividend declaration is also disclosed
to the SEC and PSE and then released
through various modes of communication.
Functions of Audit
Audit Committee
The Audit Committee’s roles and
responsibilities are clearly defined in the
Audit Committee Charter approved by the
Board. The Committee supports 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 Internal Audit Group,
as well as the overall scope and work
plan of the independent auditors. The
Audit Committee meets at least once
every quarter and invites non-members,
including the President and CEO, Chief
Financial Officer, independent and internal
auditors, and other key persons involved in
Company governance, to attend meetings
when necessary. During these meetings:
• The Committee reviews the financial
statements and all related disclosures
and reports certified by the Chief
Financial Officer, and released to the
public and/or submitted to the 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
Globe 2011 Annual Report
60
Board Remuneration
As for the investor community, the
Company practices regular disclosure of
financial results to the top 20 shareholders
and other beneficiaries who hold more
than 5% of the Company’s common
and preferred shares. Quarterly financial
results are immediately disclosed after the
approval by the Board to PSE (Philippines
Stock Exchange) and Securities Exchange
Commission (SEC). Quarterly and yearend 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.
61
corporate governance
•
•
the full Board. On an annual basis,
the Committee also assesses the
independent auditor’s qualifications,
skills, resources, effectiveness and
independence. The Committee also
reviews and approves the proportion
of audit and non-audit work both in
relation to their significance to the
auditor and in relation to the Company’s
total expenditure on consultancy, to
ensure that non-audit work will not be
in conflict with the audit functions of the
independent auditor.
The Committee reviews the plans,
activities, staffing, and organizational
structure and assesses the effectiveness
of the internal audit function, including
conformance with the International
Standards for the Professional Practice
of Internal Auditing (ISPPIA).
The Committee provides oversight of
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 130 of
this Annual Report).
The Committee conducts an annual
assessment of its performance to
benchmark its practices against the
expectations set out in the approved
62
Audit and Internal Controls
Internal Audit
It is the policy of Globe Telecom to
establish and support an internal audit
function as a fundamental part of
its corporate governance practices.
Internal Audit is a service, providing an
independent, objective assurance and
consulting function within Globe Telecom,
and sharing the organization’s common
goal of creating and enhancing value for
its stakeholders, through a systematic
approach in evaluating the effectiveness of
the Company’s risk management, internal
control and governance processes. The
Internal Audit function at Globe Telecom
is performed by the Internal Controls
Division (ICD), previously called Internal
Audit Group. In addition to their internal
audit function, ICD assists and supports
Management in developing, instilling, and
nurturing Control Self-Assessment (CSA)
environment at Globe Telecom. The Audit
Committee regards its relationship with
ICD as having a vital role in supporting the
Committee in the effective discharge of its
oversight role and responsibilities.
The ICD 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
and CEO. The ICD maintains, reviews,
and assesses the adequacy of its
Charter annually to ensure compliance
with regulatory requirements and
appropriateness for enabling good
corporate governance. Any amendments
to the Charter are submitted to the Audit
Committee and the Board for approval.
The ICD 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.
The ICD governs its internal audit activities
in conformance with the International
Standards for the Professional Practice
of Internal Auditing (the “Standards”),
the Institute of Internal Auditor’s Code
of Ethics, and the Company’s Code of
Conduct. In 2007, the group subjected
its activities to an external Quality
Assurance Review (QAR) which resulted in
a “Generally Conforms” rating, the highest
rating that can be achieved in the QAR
process, confirming that internal audit
activities are conducted in conformance
with the Standards.
In December 2011, the ICD also played
host to the 13th Ayala Group Internal Audit
Network (AGIAN) Conference for Ayala
Corporation and its group of companies
held at the Baguio Country Club in Baguio
City. The conference was attended by
delegates from Ayala Corporation, Ayala
Land, Inc., Ayala Foundation, Bank of the
Philippine Islands, Cebu Holdings, Inc.,
Makati Development Corporation, Stream
Global Services, Honda/Isuzu Makati,
Ayala Properties Management Corporation,
Integrated Microelectronics, Inc., BPI Globe
BanKO and Globe Telecom, Inc., with the
theme “Internal Audit Rising To Tomorrow’s
Demands and Emerging Technologies.”
The annual AGIAN conference aims to
benchmark and share leading internal audit
practices (i.e., internal or external) including
information on process development,
methodology, and knowledge to develop a
network of world class, multi-skilled, internal
audit professionals who are business
partners of stakeholders of the various Ayala
Companies providing reasonable assurance
on its internal controls, risk management,
and governance processes.
Geared towards excellence, the Internal
Controls Division provides for continuing
personal and professional development
for all auditors through its Learning Ladder
Framework to equip them in the conduct of
reviews, with focus on acquiring familiarity
and expertise with Globe Telecom’s internal
processes and telecom technology, new
accounting and auditing standards, fraud
investigation skills, and regulatory updates.
External Audit
The Company engages the services of
independent auditors to conduct an
audit and obtain reasonable assurance
Globe 2011 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.
Charter, and to ensure that it continues to
fulfill its responsibilities in accordance with
global best practices and in compliance
with the Manual of Corporate Governance
and other relevant regulatory requirements.
The results of the self-assessment and any
ensuing action plans formulated to improve
the Committee’s performance are reported
to the Board.
63
corporate governance
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 a bid for the
external audit services of independent
auditors and on an annual basis conducts
the independent auditor’s performance
appraisal. From the results, the Audit
Committee evaluates and proposes to the
Board for endorsement and approval of
the shareholder, the appointment of the
independent auditors. The endorsement
is submitted to the shareholders for
approval at the ASM. The representatives
of the independent auditors are expected
to be present at the ASM and have the
opportunity to make a statement on the
Company’s financial statements and results
of operations if they desire to do so. The
auditors are also expected to be available
to respond to appropriate questions during
the meeting.
SyCip, Gorres, Velayo and Company (SGV
and Co.) is the appointed independent
auditors for Globe Telecom, Inc., and
its subsidiaries. In accordance with
regulations issued by the SEC, the audit
partner principally handling the Company’s
account is rotated every five (5) years or
sooner. The most recent rotation occurred
in 2011.
64
The fees presented above include outof-pocket expenses incidental to the
independent auditor’s services.
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 nonaudit 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.
Dealings in Securities
The Audit Committee has reviewed the
nature of non-audit services rendered
by SGV and Co. and the corresponding
fees and concluded that these are not
significant to impair the independence of
the auditors.
from trading Globe shares starting
from the time when quarterly results
are internally reviewed until after Globe
publicly discloses its results. Notices of
trading blackouts are regularly issued to
the officers concerned and compliance
is monitored by the Corporate and Legal
Services Group. Also, all key officers are
required to submit a report on their trades
to a designated compliance officer, for
submission to the SEC in accordance with
the Securities Regulation Code.
Globe has adopted strict policies and
guidelines for trades involving the
Company’s shares made by key officers
and those with access to material nonpublic information. Key officers and those
with access to the quarterly results in
the course of its review are prohibited
Stockholders
Common
Shares
Ayala Corp.
40,319,263
30.5
-
-
40,319,263
13.9
SingTel
62,646,487
47.3
-
-
62,646,487
21.5
-
-
158,515,021
100.0
158,515,021
54.5
29,387,266
22.2
-
-
29,387,266
10.1
132,353,016
100.0
158,515,021
100.0
290,868,037
100.0
Asiacom
Public*
Total
% of
Common
Preferred
Shares
% of
Preferred
Shares
Total
% of Total
* Including shares held by Globe directors, officers and employees through ESOP (Executive Stock Option Plan)
The aggregate fees billed by SGV and Co.
are shown below (with comparative figures
for 2010):
2011
(Million ₱)
2010
(Million ₱)
Audit Fees
15.95
15.95
Non-Audit
Fees
5.41
3.25
21.36
19.20
Total
Audit Fees. This includes the 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 2011 and 2010.
Non-Audit Fees. This includes special
projects, trainings and seminars rendered
by the SGV and Co. and its affiliates.
Ownership Structure
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.
Globe 2011 Annual Report
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 services rendered by SGV and Co.,
pursuant to the regulatory and statutory
requirements amounted to ₱15.95
million annually for the years ended 31
December 2011 and 2010. In addition
to performing the audit of Globe Group’s
financial statements, SGV and Co. was also
selected, in accordance with established
procurement policies, to provide other
services in 2011 and 2010.
65
enterprise risk management
Globe Telecom Inc. is committed to
shaping an organization that ensures
risk management is an integral part of
all business units and activities and a
core capability. Effective enterprise risk
management practices are a key enabler
to the continuing growth and success of
the Company.
Globe Telecom’s objectives in managing
risk include:
• Aligning and embedding risk
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;
• To promote 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
As part of its annual planning cycles, senior
management and key leaders perform
an enterprise wide assessment of risks
focused on identifying the key risks that
could threaten the achievement of the
Company’s business objectives, both at the
corporate and business unit level, as well
as specific plans to mitigate or manage
such risks.
66
Globe Telecom employs a two-dimensional
view of risk monitoring. Business unit or
functional group level leaders regularly
monitor the status of operational, legal,
financial, project risks that may threaten the
achievement of defined business outcomes
and are accountable for the completion
of the approved mitigation plans meant to
address the risks to the business. Senior
management’s oversight of enterprise
level risks includes strategic risks, major
programme risks, regulatory risks and the
status of risk mitigation plans as they relate
to the attainment of key business objectives.
Roles and Responsibilities
The Board of Directors, supported by the
Executive Committee (ExCom) and Audit
Committee, has an oversight role over the
Company’s risk management activities
and approves Globe Telecom’s risk
management policies and framework.
The ExCom covers specific non-financial
(e.g., strategic, operational, human
capital, regulatory) risks, while the Audit
Committee provides oversight of financial
reporting risks.
The Chief Financial Officer and
concurrent Chief Risk Officer (CRO)
supports the President, as the overall
risk executive, in overseeing the risk
management activities of the Company,
ensuring that the process is embedded
in the normal business cycles and
operational decisions, the responsibilities
for managing specific risks are clear, the
level of risk accepted by the Company is
appropriate, and that an effective control
environment and risk discipline exists for
the Company as a whole.
The CRO reports annually to the Board
and /or the Audit Committee Globe
Telecom’s risk profile and the mitigation
strategies.
Risk owners at the senior executive level
have been identified and made accountable
for managing specific risks, supported
by business process owners who have
been designated, and made responsible
for the particular process or activity from
which the risk arises. This is consistent
with management’s belief that risks are
best understood and managed by the
employees who are closest to the process.
The Enterprise Risk Management
Services Division (ERMS) supports
the CRO in developing, establishing,
maintaining and continually improving
the ERM processes. It assists all levels
of the organization in achieving its key
objectives by bringing a systematic
approach to evaluating and improving
the effectiveness of risk management.
Targets
Globe Telecom’s risk management policies
will continue to evolve. The immediate
goals for the ERM program in 2012 is to
develop a more mature process focus and
build a robust ERM infrastructure to fully
realize Globe Telecom’s objectives for
managing risks.
Business Continuity Management
Globe Telecom has established an
enterprise-wide Business Continuity
Management (BCM) program that is
aligned with leading telecommunications
BCM practices and is internationally
certified to BS (British Standards) 25999,
the leading international standard on
business continuity. BCM is an integral
component of Globe Telecom’s ERM
program and is a high priority for the
Company. It is a program that has top
management support and oversight, and
an organizational structure, framework
and budget to maintain and implement
it. The Company implements a BCM
Policy that shall ensure safety of people
and continuity of operations of critical
resources that support the delivery of key
products and services, while abiding to
legal and regulatory.
The journey towards having a reliable,
working and independently certified
business continuity management program
started a decade ago in Globe Telecom
when different groups in the organization
began developing their respective business
continuity and disaster recovery plans
to address network outages and the
threat of pandemic flu. In 2008, to ensure
enterprise-wide, uniform, comprehensive
and focused implementation, Globe
Telecom’s top management created the
EBCM Office with the mandate to drive,
strengthen and integrate the different
plans and programs. Leveraging on the
accomplishments of the past years,
the EBCM Office and the company’s
business continuity planners put in place
a BCM framework and methodology that
requires measures for risk reduction,
emergency response, service recovery
and restoration. Established also was
the BCM organizational structure across
the company, and framework for the
development, maintenance and activation
of the functional business continuity
plans, information technology and
network recovery plans as well as incident
management plans for top site threats.
In 2011, just as the company continued to
build a more resilient and geographically
redundant network and IT infrastructure,
Globe Telecom implemented a BS
Globe 2011 Annual Report
Risks are prioritized, depending on their
impact to the overall business and the
effectiveness by which these are managed.
Risk mitigation strategies are developed,
updated and continuously reviewed for
effectiveness, and are also monitored
through various control mechanisms.
67
enterprise risk management
25999—compliant business continuity
management system (BCMS). Putting
in place a BCMS is a testament to the
Company’s commitment to continuously
improve its BCM capabilities that will
help it reduce the probability, shorten
the period and limit the impact of any
disruption. Globe Telecom believes that
being BCMS-certified, on the other
hand, gives an independent assurance
that the organization indeed meets the
requirements of an international standard,
and the confidence that the Company has
plans in place to continue operations in
the event of a significant disruption, as
well as it assures the company and its
stakeholders of continual improvement
as such is an inherent benefit of the
certification. By year’s end, the team’s
dedicated efforts were rewarded with
the BS 25999 certification from the
British Standards Institute (BSI) which
marked Globe Telecom as the first
telecommunications company and second
among local companies to receive a
BCM certification in the Philippines. The
certified BCMS of Globe applies to the
delivery of Voice, SMS, Data, Internet
and Data center-related services, through
its mobile and fixed line networks, to its
domestic and international customers,
and supported by all organizational units
from its facilities located at Metro Manila,
North Luzon, South Luzon, Visayas and
Mindanao in the Philippines.
68
Globe now has an improved governance
and incident management structure
composed of dedicated team of
professionals who are responsible for
maintaining the program, creating and
implementing risk reduction measures as
well as incident management and recovery
plans, and for managing and monitoring
Globe Telecom’s disaster-preparedness.
Globe Telecom’s certified BCMS follows the
PDCA (Plan-Do-Check-Act) cycle across all
domains of the BCM lifecycle. This iterative
process ensures that business continuity
is effectively managed and improved. Such
process helped improve Globe Telecom’s
existing methodologies and processes
for risk assessment, recovery strategy
setting, plan documentation, training and
awareness, exercising, internal audit and
management review.
The improved risk assessment processes
facilitated the proper identification
and classification of key products and
services as well as all supporting critical
resources including people, premises,
technology, information, supplies and
stakeholders. It helped identify threats
to critical resources as well as prepare
corresponding treatments plans for risks
arising from such threats. This improved
the company’s readiness to mitigate,
respond to and recover from a crisis.
The company implemented suitable risk
reduction and response measures against
the common and high impacting threats
notwithstanding the nature of the threat
whether it be natural or man-made like
typhoons, flooding, fire, earthquake,
pandemic flu, acts of terrorism, crashing of
hardware and software systems, and other
like threats. Globe Telecom acknowledges
that the country, due to its location and
situation, is prone to natural calamities.
Hence, the Company has established
an Incident Management Plan (IMP) for
such threats and created Emergency
Response Team (ERT) in all critical sites.
ERT members are fully trained with skills
and capabilities to respond to emergencies
with the goal to save lives and prevent
any further damage to assets. The IMP is
regularly monitored, tested and improved to
keep it relevant and easy to implement.
Globe Telecom recognizes that a properly
maintained and implemented IMP may
help prevent the escalation of an incident
into a crisis that may necessitate the
activation of recovery plans. Nevertheless,
to ensure readiness for such scenario, the
Company also improved its recovery plans
for critical functions (i.e., the functions
needed to recover business within acceptable
timeframe) and technology, as well as
the overall Crisis Management Plan. The
plans are now more detailed and contain
the necessary information to help recover
operations and services. The existing network
and IT recovery plans aim for quick recovery
of its mission-critical services and operations
within management approved recovery time
objects (RTO).
The certified BCMS also ensured that
Globe has a risk-aware organization.
In 2011, several training sessions were
conducted to heighten people’s awareness
of business continuity concepts. Forty
(40) key members of the BCP Teams
attended the 2-day BS 25999 training
and awareness session while more than
1,500 employees attended the BCMS All
Employees Training Session which was
made mandatory by Globe Telecom. More
than fifty (50) employees completed the
training sessions for Divisional Planners
and Functional Champions and more
than ten (10) site managers from the most
critical sites received the training sessions
for Facilities Managers. More than two
hundred (200) employees completed the
Introduction to Crisis Management training
module but more importantly, members
of the top management attended the
Crisis Management training and tabletop
simulation exercise last November 2011.
Globe Telecom adheres to its commitment
to keep the BCM relevant and updated by
conducting regular tests and review of the
program. Numerous exercises and drills,
including site emergency and response drills
as well as drills for community-wide disasters
like typhoons and floods, were conducted in
2011 to test the effectiveness of the plans.
Several tests and drills for mission-critical
telecom equipment and mission-critical sites
were done by the teams to test the recovery
plans and business continuity plans. On the
other hand, actual incidents that occurred
were documented and used by the company
as basis for addressing the gaps and
improving its BCM capabilities.
Audits were conducted in 2011 and are also
planned in the coming years to identify the
risks that could lead to business disruptions.
Owners of the plans conducted self-audit
and were required to address the gaps in the
processes. On top of this, senior executives
closely monitor the state of BCMS through
the regular Management Review.
Globe 2011 Annual Report
The Company is fully aware that no
certification and recovery plans can
provide absolute assurance that a severely
disruptive event will no longer occur
given that Globe Telecom‘s critical sites
are continuously exposed to natural
hazards and other potential causes of
disruptions. However, the Company is
strongly committed to maintaining its
BCM to provide reasonable assurance
to its stakeholders that it is ready to
respond to and recover from any incident,
including those not anticipated. Such
commitment is demonstrated by appointing
competent people and functional experts
to champion and support Globe Telecom’s
BCM organizational structure and funding
initiatives to continuously improve the
BCM processes. In 2011, the EBCM Office
was integrated under the Enterprise Risk
Management Services Division to ensure
process focus and a shared discipline for
the mitigation of enterprise level risks.
69
CORPORATE RESPONSIBILITY—
Stakeholder engagement
Local
Communities
Globe Telecom shows that it cares and supports local
communities by executing life-improving programs and social
activities
Service Providers
/ Suppliers
Employees
Procurement Management
Apply ethical supplier management system to all service providers
to ensure that relationships adhere to prescribed policy and
guidelines
Shareholders
NonGovernmental
Organizations
Community Engagement through various social activities
(CSR)
Partners
Conferences and Industry Workshops
•
•
•
Care and support for community
Life Improving programs
Support for good governance through
ICT
•
•
•
•
Transparency
Long term partnership
Ethical behavior
Clear procurement policies
•
Continuing support and long term
membership
•
•
•
•
•
Regulatory disclosures
Transparency
Accountability
Building partnership
Policy alignment with areas of national
interest i.e. green initiative, biodiversity
protection
•
•
•
•
Building Partnership
Community Development
Governance
Environment protection and preservation
Globe Telecom is a member of telecommunications industry
specific associations and has remained to be a respected member
of the local business community
Local
Government
Authorities
Globe
Telecom
Customers
Local
Partners
Service
Communities
Providers
Local
Government
Authorities
Compliance to Government legislative framework
Non
Governmental
Organizations
Partnership for community development projects
Communicate commercial, policy, regulatory and other
relevant matters with government authorities and regulators
and continue compliance with all government requirements as
prescribed by law
Lobby and dialogue on regulatory affairs and policy formation
Globe Telecom supports developmental causes and maintains
partnerships with various NGOs, local and international, for
various community development projects
Materiality Analysis
Globe Telecom communicates with
its eight major stakeholder groups
using diverse channels. While the
Company understands the priorities and
Stakeholders
expectations of its stakeholders, they
also believe in the method of regular
communication to its stakeholders.
Method of Engagement
How we engage with our stakeholders
Shareholders
/ Investors /
Management
Board
Annual Stockholders Meeting (ASM)
Extraordinary General Meetings (EGM)
These meetings result in quarterly reports submission and
annually, which review and address individual and institutional
investor’s expectations
•
•
•
Dividends
Financial Performance
ROI
Employees
Employee Satisfaction Survey (ESAT)
Meetings / Kapihan Sessions
Ka-Globe Jam / Townhalls
Trainings / Learning Expo / Globe University
Various Committee Formation
Globe Employees Portal (ICON)
Globe Way Awards
Spot Recognition Programs
Club Memberships / Special Events
Volunteering
•
•
•
•
•
•
Career Development Programs
Safe Work Environment
Open Communication
Regular Trainings / Learning Management
Employee Benefits
Employee Relationship
Customers
Customer Satisfaction Survey (CSAT)
Customer Feedback Management
Customer engagements include constant monitoring, research
and study on the affordability and accessibility of our products
and services as we strive to minimize customer complaints and
increase customer satisfaction
70
•
•
•
•
•
Customized Plans
Faster resolution of complaints
Loyalty / Rewards Program
Better network quality
Easy access to support
and form the basis for key considerations
and reporting in 2011 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.
High: Issues that are most relevant
to our business and have high
current/potential impact on our
business and stakeholders.
Medium: Issues reported but
not necessarily with quantitative
indicators. Some issues have only
partial impacts on our business
and stakeholders.
Low: These issues are of low
materiality with minimum impact on
our business and are not reported
in detail.
The concerns and issues identified during
stakeholder engagement were discussed,
prioritized based on the materiality matrix
High
medium
low
Level of concern for
stakeholders
low
medium
High
Current potential impact on company
Globe 2011 Annual Report
Allowed open communication and feedback and rewards
mechanism. Provided equal opportunities to share their thoughts,
views and opinions between the Company and its employees
For the 2011 Annual Report, Globe Telecom
focused on the issues that are most
material to its business and stakeholders.
We identified the relevant areas of
stakeholder engagement in the table above
like method and means of engagement,
major outcome of the engagement.
Materiality matrix is used to map material
issues based on the following criteria:
71
board of directors
Our place, our globe
our people, our globe
Globe 2011 Annual Report
72
73
board of directors
Jaime Augusto Zobel de Ayala.
Mr. Zobel, 52, Filipino, has served as
Chairman of the Board since 1997 and
a Director since 1989. He also holds the
following positions: Chairman and CEO
of Ayala Corporation; Chairman of Bank
of the Philippine Islands and Integrated
Micro-Electronics Inc.; Vice Chairman of
Ayala Land, Inc.; Co-Vice Chairman of
Mermac, Inc., and the Ayala Foundation;
Alabang Commercial Corporation, Ayala
International Pte, Ltd., and Ayala Hotels,
Inc.; Member of the Mitsubishi Corporation
International Advisory Committee, JP
Morgan International Council, and Toshiba
International Advisory Group; Philippine
Representative to the Asia Pacific
Economic Council Business Advisory
Council; Chairman of Harvard Business
School Asia-Pacific Advisory Board; Vice
Chairman of the Asia Business Council;
Hui Weng Cheong.
Mr Hui, 57, Singaporean, has served as
Director since October 2010. Mr. Hui is
currently Singapore Telecom Group’s CEO
International, and is responsible for growing
its overseas investments and strengthening
its relationships with overseas partners.
Prior to this position, he was Chief
Operating Officer with the Group’s Thai
associate, Advanced Info Service (AIS), and
was responsible for sales and marketing,
network operations, IT solutions, and
customer and services management. He
was also appointed Deputy President of
AIS in November 2006. Mr. Hui started his
SingTel career as an engineer and worked
various management roles within the
Group. In 1995, he was posted to Thailand
as the Managing Director of Shinawatra
Paging, before returning to Singapore in
1999 to take on the role of Vice President
(Consumer Products) to manage the
product development of all new mobile,
paging, internet, broadband and telephone
business. He also sits on the Boards of
Bharti Airtel Limited and Bharti Telecom
Limited. Mr. Hui graduated with First Class
Honors in Electrical Engineering from the
National University of Singapore in 1980,
and obtained his Master in Business
Administration from the International
Business Education and Research Program
at the University of Southern California,
USA in 1992.
Gerardo C. Ablaza, Jr.
Mr. Ablaza, 58, Filipino, has served
as Director since 1998. 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.
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. He is
a Board Director of Bank of the Philippine
Islands, BPI Family Savings Bank, BPI Card
Finance Corporation, Azalea International
Ventures Partners Limited, Inc., Asiacom
Philippines, Inc., Manila Water Company,
and LiveIT Investment Ltd. Mr. Ablaza was
also former President and CEO of Globe
Telecom, Inc. from 1998 to April 2009. Prior
to joining the Ayala Group, he was VicePresident and Country Business Manager
for the Philippines and Guam of Citibank,
N.A. for its Global Consumer Banking
Business. Prior to this position, he headed
the Credit Payments Products Division
of Citibank, N.A. Singapore. Mr. Ablaza
graduated summa cum laude from De La
Salle University in 1974 with a degree in
Liberal Arts, Major in Mathematics (Honors
Program). In 2004, he 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
also awarded by Telecom Asia as the Best
Asian Telecom CEO.
Globe 2011 Annual Report
74
Member of Harvard University Asia Center
Advisory Committee; Member of the Board
of Trustees of the Eisenhower Fellowships
and the Singapore Management University;
Member of the International Business
Council of the World Economic Forum;
Chairman of the World Wildlife Fund
Philippine Advisory Council; Vice Chairman
of The Asia Society Philippines Foundation,
Inc., Co-Vice Chair of the Makati Business
Club; and Member of the Board of Trustees
of the Children’s Hour Philippines, Inc. He
graduated with B.A. in Economics (Cum
Laude) degree from Harvard College in 1981
and obtained an MBA from the Harvard
Graduate School of Business in 1987.
75
board of directors
Ernest L. Cu.
Mr. Cu, 51, Filipino, is currently the
President and Chief Executive Officer of
Globe Telecom, Inc. Mr. Cu has served
as Director since 2009. He joined the
Company on 1 October 2008 as Deputy
CEO. He brings with him over two decades
of general management and business
development experience spanning multicountry operations. Prior to joining Globe,
he was the President and Chief Executive
Officer of SPI Technologies, Inc. Mr. Cu
was the recipient of the Ernst and Young
ICT Entrepreneur of the Year award in 2003,
and was adjudged Best CEO by Finance
Asia in 2010. He was also conferred the
International Association of Business
Communicators’ (IABC) CEO EXCEL
award for communication excellence in
telecoms and IT, and was voted as one
of the Most Trusted Filipinos in a poll
conducted by Reader’s Digest. Mr. Cu
earned his Bachelor of Science in Industrial
Management Engineering from De La
Salle University in Manila, and his Master
of Business Administration from the J.L.
Kellogg Graduate School of Management,
Northwestern University.
76
Delfin L. Lazaro.
Mr. Lazaro, 65, 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 and
Chemicals Inc., Chairman and President of
Michigan Power, Inc., and A.C.S.T. Business
Holdings, Inc.; Chairman of Azalea Intl.
Venture Partners, Ltd.; Director of Ayala
Land, Inc., Integrated Micro-Electronics,
Inc., Manila Water Co., Inc., Ayala DBS
Holdings, Inc., AYC Holdings, Ltd., Ayala
International Holdings, Ltd., Bestfull
Holdings Limited, AG Holdings, AI North
America, Inc., Probe Productions, Inc. and
Empire Insurance Company; and Trustee
of Insular Life Assurance Co., Ltd. He
was named Management Man of the Year
1999 by the Management Association of
the Philippines for his contribution to the
conceptualization and implementation of
the Philippine Energy Development Plan
and to the passage of the law creating the
Department of Energy. He was also cited for
stabilizing the power situation that helped
the country achieve successively high
growth levels up to the Asian crisis in 1997.
Tay Soo Meng.
Mr. Tay, 62, Singaporean, was elected
as Director on 8 February 2011. Mr. Tay
has been the Executive Vice President for
Networks of Singapore Telecommunications
Limited (SingTel) since 1 September 2010.
Prior to this, he was with Optus Networks
as Managing Director since July 2008 and
was responsible for driving the technology,
engineering and operation of Optus’
fixed, satellite, IP and mobile networks
to meet strategic and operational needs.
Mr. Tay was also the Vice President of
Network Operations for SingTel, overseeing
SingTel’s Network Operation for two
years – including Local, International and
Mobile Switch Management Operations,
Satellite Operations, Submarine Cables
Management and Restoration, Field
Operations, Outside Plant Operations,
SingTel Group Operations, Business
Operations and Network Operation
centre. Before this assignment, Mr. Tay
was Vice President of Mobile Networks
for SingTel. Mr. Tay has over 40 years of
global telecommunication experience
and was responsible for setting up
paging and cellular networks for SingTel’s
overseas joint ventures. 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, 51, Filipino, has served as
Director since 1995. He is currently the Vice
Chairman, President and Chief Operating
Officer of Ayala Corporation. His other
significant positions include: Chairman of
Ayala Land, Inc., Manila Water Company,
Inc., Ayala DBS Holdings, Inc., Alabang
Commercial Corporation, AC International
Finance Limited and Ayala International
Pte, Ltd.; Co-Vice Chairman of Ayala
Foundation, Inc. and Mermac, Inc.;
Director of Bank of the Philippine Islands,
Integrated Micro-Electronics, Inc., Asiacom
Philippines, Inc.; and Member of The Asia
Society, World Economic Forum, INSEAD
East Asia Council, and World Presidents’
Organization. He is also the Vice Chairman
of Habitat for Humanity International and
the chairman of the steering committee
of Habitat for Humanity’s Asia Pacific
Capital Campaign; a member of the Board
of Directors of Caritas Manila, Kapit
Bisig para sa Ilog Pasig Advisory Board,
Globe 2011 Annual Report
Romeo L. Bernardo.
Mr. Bernardo, 57, Filipino, has served
as Director since 2001. He is Managing
Director of Lazaro Bernardo Tiu and
Associates (LBT), a boutique financial
advisory firm based in Manila. He is
also a GlobalSource economist in the
Philippines. He does World Bank and Asian
Development Bank-funded policy advisory
work, Chairman of ALFM Family of Funds
and Philippine Stock Index Fund. He is
likewise a director of several companies
and organizations including Aboitiz
Power, BPI, RFM Corporation, Philippine
Investment Management, Inc. (PHINMA),
Philippine Institute for Development
Studies (PIDS), BPI-Philam Life Assurance
Corporation (formerly known as Ayala Life
Assurance, Inc.), National Reinsurance
Corporation of the Philippines and Institute
for Development and Econometric Analysis.
He previously served as Undersecretary of
Finance and as Alternate Executive Director
of the Asian Development Bank. He was
an Advisor of the World Bank and the IMF
(Washington D.C.), and served as Deputy
Chief of the Philippine Delegation to the
GATT (WTO), Geneva. He was formerly
President of the Philippine Economics
Society; Chairman of the Federation of
ASEAN Economic Societies and a Faculty
Member (Finance) of the University of the
Philippines. Mr. Bernardo holds a degree in
Bachelor of Science in Business Economics
from the University of the Philippines
(magna cum laude) and a Masters degree
in Development Economics at Williams
College (top of the class) from Williams
College in Williamstown, Massachusetts.
77
board of directors
Pilipinas Shell Corporation and Pilipinas
Shell Foundation. Mr. Fernando Zobel de
Ayala graduated with a B.A. in Liberal Arts
degree from Harvard College in 1982. He
also holds a Certificate in International
Management at INSEAD, France.
Xavier P. Loinaz.
Mr. Loinaz, 68, Filipino, has served as
Independent Director since 2009. He was
formerly the President of the Bank of
the Philippine Islands (BPI). He currently
holds the following positions: Independent
Director of BPI, BPI Capital Corporation,
BPI Direct Savings Bank, Inc., BPI/MS
Insurance Corporation, BPI Family Savings
Bank, Inc. and Ayala Corporation; Member
of the Board of Trustees of BPI Foundation,
Inc. and E. Zobel Foundation; and
Chairman of the Board of Directors of Alay
Kapwa Kilusan Pangkalusugan.
Guillermo D. Luchangco.
Mr. Luchangco, 72, Filipino, has served
as Independent Director since 2001. He
is also Chairman and Chief Executive
Officer of various companies of the ICCP
Group, including Investment and Capital
Corporation of the Philippines, Science
Park of the Philippines, Inc., Cebu Light
our people, our globe
Industrial Park, Inc., Pueblo de Oro
Development Corp., Regatta Properties,
Inc, and RFM-Science Park of the
Philippines, Inc.; Chairman and President of
Beacon Property Ventures, Inc.; Chairman
of ICCP Venture Partners, Inc. and Manila
Exposition Complex, Inc., and Director
of Phinma Corporation, Phinma Property
Holdings Corp., Roxas and Co., Inc.,
Ionics, Inc. and Ionics EMS, Inc.
Key Officers and Consultants
Manuel A. Pacis.
Mr. Pacis, 67, American, has served as
Independent Director since 2011. He was
formerly the Vice President for Finance of
the Procter and 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, 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 and accounting.
Name
Position
Albert de Larrazabal
Chief Financial Officer and Treasurer
Cathy Hufana-Ang
Head, Internal Audit
Chee Loo Fun
Senior Adviser for Consumer Marketing
Gil Genio
Head, Business Customer Facing Unit and
President, Innove Communications, Inc.
Marisalve Ciocson-Co
Compliance Officer and Assistant Corporate
Secretary
Peter Bithos
Advisor for the Consumer Customer Facing Unit
Ramon Ralph Matriano
Head, Consumer Sales
Rebecca Eclipse
Head, Office of Strategy Management
Renato Jiao
Head, Human Resources
Robert Tan
Chief Technical Adviser
Rodell Garcia
Head, Information Systems Group/ Head, Network
and IT Transformation
Rodolfo Salalima
Chief Legal Counsel and Senior Advisor
Solomon Hermosura
Corporate Secretary
Vicente Froilan Castelo
Head, Corporate and Legal Services Group
Globe Telecom Inc. believes that a
great part of its integrity and reliability
is presented through its frontliners
comprised by different levels of Globe
Telecom’s personnel. The Company strives
to enhance excellence in its personnel
management by providing continuous
leadership and training programs to
qualified employees.
Employment Diversity
78
General Employee Indicators
Composition of governance bodies and
breakdown of employees per category
according to gender, age group, minority group
membership, and other indicators of diversity.
Globe 2011 Annual Report
An organization’s success and
competitiveness depend upon its ability
to embrace diversity and the benefits it
entails. In keeping with this belief, Globe
Telecom employs a diverse workforce that
helps the Company to adapt to fluctuating
markets and customer demands by utilizing
diverse collection of employee skills and
experiences. The diversity of its workplace
is an indication of the equal opportunities
provided by Globe Telecom to individuals
from different background and social strata.
Discrimination of any kind is not acceptable.
Company policies and procedures such as
the code of business ethics and recruitment
practices are in force to ensure that Globe
Telecom adopts an unbiased philosophy
irrespective of gender, cast, creed, ethnicity
or any other difference.
79
our people, our globe
Total workforce by employment type, employment contract and region
Age Range
Female
Sr Mngt
Total
%
611
217
2
830
30.5
30-39
711
749
43
1,503
55.2
40-49
62
196
71
329
12.1
50-59
4
35
20
59
2.2
60-69
1
2
3
0.1
1,389
1,199
2,724
100.0
Age Range
Staff
Middle Mgt
20-29
630
196
30-39
606
831
40-49
160
50-59
60-69
136
Sr Mgt
Total
%
826
27.2
60
1,497
49.4
366
80
606
20.0
23
40
33
96
3.2
4
2
2
8
0.3
Male Total
1,423
1,435
175
3,033
100.0
Grand Total
2,812
2,634
311
5,757
48.8
45.8
5.4
100.0
%
Total Workforce by Employment Type and Region
Region
Regular
GMA
Probationary
Total
%
3,786
159
3,945
68.5
North Luzon
367
8
375
6.5
South Luzon
427
13
440
7.6
Visayas
648
22
670
11.6
Mindanao
320
7
327
5.7
5,548
209
5,757
100.0
96.4
3.6
100.0
Total
%
0.3
3
0.1
Product and Service Delivery
45
0.8
Transformation Management Office
43
0.7
5,757
100.0
Total
PERCENTAGE OF
EMPLOYEES BY
GENDER
2010
48%
female
Employee Remuneration
As per Company records, the lowest
actual salary of employees covered by the
Collective Bargaining Agreement is 15%
above the minimum wage as compared to
the Department of Labor and Employment’s
(DOLE) mandated wage. This is a range
of ratios of standard entry level wages
as compared to local minimum wage at
significant locations of operations.
EMPLOYEE MINIMUM WAGE
52%
male
2011
47%
460
451.22
450
440
Philippine Pesos
Male
Middle
Mngt
20-29
Female Total
Gender
Staff
15
Office of the Head
Employees by Gender, Age Range and Category
Gender
Office of Strategy Management
430
426
426.22
Globe Minimum
Wage
female
DOLE Minimum
Wage
53%
420
male
410
404
400
390
380
2010
2011
Year
Note: The daily wage shown above is in Philippines Pesos (₱) and for NCR region.
Total Workforce by Group
Business CFU
Consumer Business
Corporate and Legal Services Group
Finance and Administration
Human Resources
Information Systems
New Business
Office of the President
Corporate Communications
789
13.7
2,528
43.9
57
1.0
545
9.5
55
1.0
242
4.2
1,326
23.0
5
0.1
70
1.2
18
0.3
Corporate Strategy and Business Development
2
0.0
Enteprise Architecture
3
0.1
29
0.5
Internal Audit
80
%
Ratio of Basic Salary of Men to Women
by Employee Category
Male employees have a slightly higher basic
salary compared to female employees.
However there is no discrimination for a
given job profile based on the gender. The
variation in comparative salary is due to
varying job profile undertaken by male and
female employees.
Ratio per Employee Level (Male to female)
2010
1.14
1.10
1.03
staff level
employees
middle
management
senior
management
1.14
1.09
1.06
staff level
employees
middle
management
senior
management
2011
Globe 2011 Annual Report
Network Technical Group
Total
81
our people, our globe
Total number and rate of employeeturnover by age group, gender, and regioN
662 (11.6%)
572 (10.9%)
total number of employee turnover
total number of employee turnover
for 2011
for 2010
7,000
EMPLOYEE turnover by gender
6,000
5,757
5,667
331
5,000
Female
Total No. of
Employees
4,000
2010
275
Gender
Number of Employees
2011
Employee Turnover
3,000
2,000
331
Male
297
1,000
662 (11.5%)
572 (10.09%)
0
2010
0
2011
100
200
EMPLOYEE turnover by region
EMPLOYEE turnover by age group
600
350
309
511
450
Number of Employees
300
200
2011
273
2010
400
309
300
2011
500
Number of Employees
400
Number of Employees
Year
2010
250
200
196
150
100
34
0
33
34
38
32
23
12
19
0
GMA
N. Luzon
S. Luzon
Region
56
50
60
Visayas
Mindanao
20-29
30-39
40-49
Age
9
50-59
0
2
60-69
Globe 2011 Annual Report
68
100
82
300
83
our people, our globe
How We Develop and Nurture our Staff
Globe Telecom believes in encouraging
its employees to constantly pursue selfdevelopment and create a passion for
learning. To support this belief, each
employee is given a chance to collaborate
with his managers and plan out his career
development program. Furthermore, to
check Globe Telecom employees progress
in their career path, an annual performance
review is conducted that would help
evaluate and plan future movements to help
employees achieve their goals.
Employee Benefits
Globe Telecom is committed in providing
its employees with facilities and payments
above the government-imposed minimum
wage requirement. We offer benefits as
required by law as well as internal benefits
program to enhance the quality of life of
our employees.
The following benefits are provided to globe telecom employees
91.4%
or 5,263 of 5,757 are Non-Collective Bargaining Unit Employees
(NCBU) and are thus covered by regular performance planning and appraisal,
and career development reviews.
8.6%
Healthcare Benefits
For CBU Members
Health Insurance–Group Hospitalization (In-Patient) Plan
Leave Due to Illness in the Family (Non-Confinement)
Outpatient Healthcare
Bereavement Leave
• Outpatient Consultations/Diagnostics
Calamity Leave
• Outpatient Medicine Reimbursement
Additional Day-Off
• Dental Services
or 494 of 5,757 are members of the Collective Bargaining Unit and
are exempt from performance and career development reviews.
• Optical Services/Subsidy
Financial Assistance
• Other Outpatient Benefits:
Educational (CBU Members)
Free medical consultations at
company designated clinics
Other Healthcare Benefits
• Maternity Pay
Percentage of employees covered by collective bargaining agreements:
• Work-related Accident or Injury
Rice Subsidy (CBU Members)
Calamity
Bereavement
Death
7,000
Number of Employees
6,000
5,757
5,667
5,000
Employees
Under Collective
Bargaining
4,000
Total No. of
Employees
Security and Protection Benefits
Company Loans
Group Term Life Insurance
Emergency and Non-Emergency Loans
Hazard Insurance (based on role)
Retirement
Other Benefits
Time-Off/Leave benefits
Vacation Leave
3,000
2,000
Longevity Awards
Handyphone Postpaid Plan Availment
Short Term Sick Leave
Carplan/Company Car Program (For
managers and executive levels)
Long Term Sick Leave
Other Cash Allowances
Paternity Leave (10 days)
1,000
494 (8.6%)
Maternity Leave (60-78 days depending upon type of
delivery)
Special Leave for Women (60 days)
0
2010
2011
Year
Leave Due to Illness in the Family
Paid Time-Off (For Non-CBU only)
Solo Parent Leave (7 days)
Court Subpoena Leave
84
Globe 2011 Annual Report
513 (9%)
85
our people, our globe
Photo on far right:
Globe Training
Program wins big in
first ever PSTD Gawad
Maestro Awards
Performance Evaluation
All level of employees undergo the annual
performance evaluation where Key
Performance Indicators (KPI) is aligned
with business and individual performance.
Performance result helps shape and
drive the development of the employee’s
performance and career with Globe Telecom.
Those who do not achieve the required
level are coached and nurtured through a
structured performance improvement plans
designed to ensure all employees are given
the opportunity to improve.
Learning Management
Globe Telecom also started to offer its
employees numerous training programs
that will also improve their skills in
preparation for the network transformation
program. In 2011 alone, the Company
delivered a total of 19,820 training seats
benefiting 5,757 unique employees which
accurately represent 100% of Globe
Telecom’s population. The similar figure
for 2010 was 84%. These trainings are
compliance courses on the Globe Way—
Honesty and Integrity and Business
Continuity Management series.
PERCENTAGE OF EMPLOYEES trained
against total work force
The coverage of employees trained in 2010
and 2011 are shown below:
84%
100%
in 2010
in 2011
training hours
The table below exhibits the number of hours dedicated by each employee for his training:
Globe University
In addition to specialized trainings,
several regular courses are offered under
Globe University, the corporate learning
center. The courses offered through the
university include leadership programs
that highlight The Globe Way values and
other specialized trainings for key talent
segments in Network, Product, Retail,
Sales, Marketing and Corporate Social
Responsibility. Technical programs that
focus on Internet Protocol (IP), Project
Management, IT Infrastructure Library
(ITIL), Business Model Innovation, Retail
Consultative Selling and Customer
Service were made available to further
enhance the skill sets and capabilities of
the Globe technical personnel. The Globe
Trainer Management Program (GTMP)
has produced an additional 75 internal
trainers nationwide whose goal is to spread
the culture of mentoring, coaching and
teaching across the various functions of
the organization. These trainings and
courses are vital to the transformation
project since these would help form the
Company’s manpower resource to worldclass standards.
Part of Globe Telecom’s learning program
is the official launch of the Company’s
e-Learning portal in partnership with
Skillsoft and powered by Moodle. Through
this virtual delivery, the courses are now
available to all Globe Telecom’s personnel
all over the country. Additionally, the
Globe University learning modules were
included in the e-portal providing a mix of
classroom and online learning experience
to its participants and a monthly learning
newsletter released to all employees
highlighting various learning opportunities
that the Company offers.
These programs and the training delivery
of internal facilitators have helped the
Learning Management Team of Globe
Telecom save the Company almost ₱7
million in 2011 through the CEO’s Customer
First Circle Program.
In 2011, the Company’s Learning Expo
2010-2011 received the Program of the
Year accolade for “Outstanding Workplace
Learning and Performance Program of the
Year“ for 2010-2011 from the Philippine
Society for Training and Development
(PSTD), proof of the Company’s constant
pursuit for excellence. More than 2,200
employees availed of the program over the
span of 11 nationwide campaigns for 2011.
core curriculum
Anchor
Competencies
Customer
First
LEGEND
Core Behavioral Programs
Result
Orientation
Best Customer Experience
Series
-- Service Excellence
-- Internal Service Excellence
(for support)
Excellent Communicator
Series
-- Effective Business
Communication
-- Presentation and Facilitation
Skills
-- Training the Trainers
-- Managing Effective Meetings
Instructor-led Course
Learning Expo
25
21.5
20
Blended Learning
Inspiring Self
21.5
Training Hours
18.5
Leading Self Series 2
-- Putting 1st Things 1st
-- Entrepreneurial Mindset
Leading Self Series 1
-- Personal Excellence thru
Self-Leadership
-- Bouncing back from
Adversity
10
Acting with Integrity Series
-- Code of Conduct and
Information Security
-- Honesty and Integrity at
Work
Collaborative
Teamwork
Leading Self Series 3
-- Getting the Best Deal from
Work and Life
-- Communication, Synergy
and Personal Dev’t
8.5
7
Anchor
Competencies
5
Market Driven
Innovation
0
86
Associate
(CBU)
Specialists
Senior
Specialists
Manager
Level of Employees
Head
Senior
Executives
Core Technical Programs
Decision
Making and
Accountability
-- Business Continuity Management
-- Problem Solving and Decision Making
-- Safety 101
-- Telco for Business
-- Project Management 101
Globe 2011 Annual Report
Number of Hours
15.5
15
-- 6 Sigma White Belt
Basic Finance/Capital Investment/Managing
Costs and Profits
87
our people, our globe
Technical curriculum
Safety Programs
Business curriculum
Globe Sales Account Management
Information Technology
Programs
Project Management
Programs
Quality Programs
legend
Store and Service Programs
Individual
Contributors’ Track
Leader’s Pack
Individual
Contributors’ Track
Products and
Services
Sales Team
Management
Best Customer
Experience
Leader’s Pack
Marketing
Leadership Academy
Electrical Safety
Database
Management
Business
Analysis
6 Sigma Black
Belt
Instructor-Led Course
Blended Learning Approach
Value Selling @
Globe
Stores
Management
101
Consumer
Understanding
Business
Casting
Products and
Services
Systems and
Processes
Prospecting
Skills
Construction
Safety
Industrial
Climbing,
Hauling and
Rope Access
Brand
Advertising
Stores 101
Industrial First
Aid and Basic
Life Support
Effective
Negotiation
Skills
Information
Technology
Security
Project
Management
Series
Operating
System
Project
Management
Professional
Certification
Cluster Sales
Program
Defensive
Driving
Virtualized
Infrastructure
Cluster Sales
Program
Certification
6 Sigma Black
Belt
Programming
Application
Storage
Technology
Strategic
Account Sales
Skills
6 Sigma Black
Belt
Certification of
Competency
in Business
Analysis
Certified
Business
Analysis
Professional
LEGEND
Instructor-led Course
E-Learning
Blended Learning
Approach
Ensuring Employee Health and
Technical curriculum
Internet Protocol
Programs
Network Programs
Service Management
Programs
Facilities Programs
legend
internet
Protocol 101
Fundamentals of
Mobile Telephony
internet Protocol
Series
Basic Network
Architechture
ITIL v3 Foundation
Courses
Network Support
Facilities
Life Cycle Modules
Certificate in Facilities
Management
Instructor-Led Course
Blended Learning Approach
Certification
internet Protocol
Certification
3G WCDMA
Radio Network
Design, Planning and
Optimization
Equipment-specific
training
1st level and 2nd
level Operations and
Maintenance
New Generation
Network/ Long Term
Evolution
88
HEALTH and SAFETY incidents
Employee safety and work environment
are important to Globe Telecom. Because
of this strong conviction for providing
a safe and pleasant work environment,
Globe Telecom obtained OHSAS 18001
certification for Occupational Health and
Safety Management System for Valero
Telepark. Steps are being undertaken
for other Globe Telecom locations with
the objective of achieving the OHSAS
certification. As for 2011, the employee
accident rate of 2.64% was commonly
due to vehicle driving. To lower this rate
and minimize accidents, the Company
conducted various training programs and
awareness programs for our employees
like safe driving, fuel economy, and
partnered with the Honda Driving Institute.
These accidents are classified as minor
injuries and there were no fatalities
causing death or permanent disability for
our employees.
117 or 2.06% total number
of incidents in 2010
152 or 2.64% total number
of incidents in 2011
At the moment, the Company has a
dedicated health and safety committee
that ensures the health and safety of Globe
Telecom employees. A total of 19.4% of
the workforce are engaged and part of
the health and safety committee covering
different locations of Globe Telecom
offices, stores and worksites nationwide.
Globe 2011 Annual Report
Broadband and
Narrowband
Capability Modules
SafetY
89
our people, our globe
2011 accidents by region and gender
60
56
Male
Number of Employees
50
48
Female
40
EMPLOYEE PROGRAMS
The Company takes pride that to date there
are no incidents of discrimination within
the Company facility and during official
work hours. Globe Telecom also complies
with RA 7160 or the Special Protection of
Children Against Child Abuse, Exploitation
and Discrimination Act. To guarantee
that no human rights violation occurs, a
strict preliminary screening of applicants
is being utilized and the Company does
not condone the violation of the rights of
indigenous people.
Globe Telecom promotes healthy living
and maintaining balanced lifestyles
for its employees. The Company fully
encourages employee activities that
promote well-being—physically, socially
and spiritually. Being a predominantly
Catholic country, Globe Telecom
sponsors regular religious events for its
Catholic employees such as monthly first
Friday masses. In April 2011, the first
ever Lenten Service program prior to Holy
Week was held that included confessions
rites, spiritual talks and Way of the Cross.
On September 8, a special mass was
celebrated in honor of Blessed Mother
Mary’s birthday.
30
The current Company policy requires a
minimum of 30 days notice period for
operational changes.
24
20
3
0
The existing Code of Conduct specifies
actions against corruption, extortion and
bribery. Globe Telecom will not take these
offenses lightly that any employee proven to
have committed these is subject to dismissal.
10
10
Luzon
4
6
1
Visayas
Mindanao
NCR
Region
No. Total Workforce Represented in Health and
Safety Committee (Y2011)
Mandaluyong Host Exchange
23
Mandaue
10
Marikina MSC
38
MK2
22
Nasugbu CLS
23
New Solid Bldg
42
Ormoc LEC
14
Ozamis
15
Plaridel
10
Quezon, Bukidnon
10
Roxas FOBN
24
San Jose FOBN
20
San Juan MSC
22
San Remegio FOBN
10
Tacloban LEC
20
Tagbilaran LEC
23
Talisay MGW
10
Tarlac MSC
36
UN Host
34
Valero Telepark
41
Vernida
10
Vito Cruz MSC
23
Zamboanga Canelar
10
GTP 1 and 2
68
Abacus
10
Aurora MSC
22
Bacolod Host Exchange
22
Bacoor Host Exchange
24
Ballesteros CLS2
25
Batangas Host
27
BPI Buendia
17
Cabanatuan MGW
15
Cadiz FOBN
19
Canero MSC
22
Carmona MSC
29
Cauayan
15
CDO Corp
30
CDO MSC
25
Dauin FOBN
17
Davao MSC
37
Davao Pryce
20
GenSan
10
GLOBE TELECOM-IT Cebu
50
Iligan Host Exchange
28
Iloilo Host Exchange
21
Legazpi 1
15
Total No. of Health and Safety
Committee Members
1,117
Malolos
15
Total No. of Employees
5,757
Mamburao FOBN
22
Percentage
Mandalagan Host
22
The same document also clearly expresses
its views on conflict of interest, wherein
employees are obligated to declare or
divulge in writing, any involvement that
would raise conflict of interest with the
Company. It also defines that conflict of
interest may be a personal or financial
interest divergent or in conflict with his
professional obligations as this may
result in compromising judgments in the
administration, management, decision
making and discharge of the employee’s
official function. This article in the Code
of Conduct also explains that personal
interest is not confined to the personal
involvement of the employee himself—it
may also arise from the employee’s family
or even a close personal relationship with
a contractor, sub-contractor, customer,
competitor, creditor or any other entity
that does business with the Company. The
penalty for this violation is dismissal from
the Company.
Free From Child Labor
Globe Telecom aside from adhering to
the principles of Human Rights Act, also
recognizes Child Labor Law. The Company
ensures and observes measures protecting
children against child labor. There are no
operational activities by the Company that
pose significant and hazardous risks to
children and young workers in the workplace.
The Company continued to hold annual
events like the “I Love Globe Caravan”
at the Globe Telecom Plaza and Valero
offices. The event showcased several
Globe products and services as well
as products from other Ayala Group
companies. Employees were given
preferential rates and discounts during
the event.
Cause-oriented employee events
increased employees’ awareness and
increased employee volunteerism. The
Globe Run for Home in March, one of
the Company’s main sports events for
the year, had the Company partnering
with four organizations as the event’s
beneficiaries. These organizations were
Gawad Kalinga, Habitat for Humanity,
Haribon Foundation and Virlanie
Foundation—all focused in home building.
Several members of Globe Champions
Team joined to support this cause.
The other Company-sponsored sports
events were: Subic International Triathlon
in April, GStrike Bowling and Vikings
Volleyball Tournaments in May, Globe
Bowling Doubles that started in June,
Yamaha Run at Bonifacio Global City
in July, Ironman 70.3 in August, GSlam
Basketball that was held from August
to October 2011, GSmash Greenhills in
November 2011 and Globe-Philippine
Rugby Football Union partnership for the
whole of 2011.
Globe Telecom also supported its
employees who joined Ironman 70.3
in Camarines Sur. The Company was
Globe 2011 Annual Report
90
EMPLOYEE RELATIONS
19%
91
our people, our globe
The Company also received the JZA
Overall Champion for 2011 over other
companies of the Ayala Group during the
HR Summit in November 2011.
Globe employee programs will continue to
improve employee’s work-life balance, to
promote a ‘family’ culture, and to reward
and recognize employee’s hard work
through the different fun and happy activities
that create a stress-free workplace.
Employee Engagement
Right: Globe Rugby
Team is 2011 GlobePRFU 7s Plate
Division champ held
at the Nomads Sports
Center in Parañaque.
represented by the Globe Champions
Triathlon Team composed of 12 individual
athletes and 2 corporate relay teams.
The Immortals—Globe Champions Rubgy
Team received their championship award
during the Rugby PRFU 7 Tournament in
October while the Globe Bowling Club
won top awards in different inter-company
bowling tournaments.
During the JZA (Jaime Zobel de Ayala)
Volleyball Tournament, Globe teams
received silver championship medals in
both Men’s and Women’s Divisions. In July
92
Globe Telecom CEO, Ernest L. Cu
received the Best CEO Golfer accolade
during the 1st and 2nd leg of the JZA Golf
Competition in September and November
2011 while the Globe Golf Team won the
Team Championship award.
100
Employees contributed in cause-oriented
Ayala activities in 2011. During the Ayala
Blood Drive in May 2011, the total of 200
bags of blood was contributed. Globe
Telecom employees also launched in ICON,
the Globe intranet, the call for donations for
flood victims as part of the Ayala Foundation
Call for Help Cotabato and gathered 250
books as its contribution to the Ayala Book
Drive. During the 1st Ayala Street Dance
Competition at the Hotel Intercontinental,
G-Moves, a group of 14 Globe employees,
placed 5th in the competition.
60
Work Relationships, Job Enrichment, and
Vision, Clarity, and Alignment consistently
emerged as the top three drivers of
employee satisfaction in all four surveys
conducted in 2010 and 2011.
95.00%
87.29%
90
86.00%
Employee Satisfaction Index (ESI) Score
78.11%
80
70
The Employee Satisfaction scores in 2011
also improved when compared with the
previous year’s results. The first survey
for 2010 was conducted in April with an
ESI score of 69.27 and had a participant
response rate of 78.11%. The second
survey ran on August 2010 had an ESI score
of 68.82 with a response rate of 87.29%
69.27%
70.14%
68.82%
72.80%
Participants Response
50
40
30
20
10
0
April 2010
August 2010
March 2011
Time of Survey
November 2011
Globe 2011 Annual Report
As part of the Ayala Group of Companies,
Globe Telecom employees officially have
become part of the monthly Ayala ER/LR
meetings every 2nd Tuesday of the month.
Employees also participated in several Ayala
sports activities. 200 Globe runners joined
the Ayala Fun Run in February 2011. The
Men’s 10k 3rd placer, Elmer Santiago and
Women’s 10k 1st placer 10k, Anne Fernando
are both Globe Telecom employees.
2011, Globe Champions Bowling Team
received bronze medal at the JZA Bowling.
The Company also placed 4th at the JZA
Badminton event in September 2011.
Percentage
Left: Ayala
Corporation President
and Chief Operating
Officer Fernando
Zobel de Ayala (right)
is all smiles as he
crossed the finish
line of the Globe
Run4Home 2011.
As in previous years, Globe hired a third
party service provider to administer the
Employee Satisfaction Survey (ESAT). The
survey was administered twice in 2011. The
first survey was conducted in March 2011,
with a response rate of 86%. Results of the
Employee Satisfaction Index (ESI) was at
70.14. The second survey was conducted
in November 2011 with an all-time high
response rate of 95%. The ESI increased
to 72.80. This was the highest ESI since
the survey was first administered in 2009.
Across all employee engagement drivers
measured by both surveys done in 2011,
highest satisfaction ratings were recorded
in the areas of Work Relationships, Job
Enrichment, and Vision, Clarity and
Alignment. Compared to the first survey
in March, satisfaction ratings on Senior
Leadership and Total Rewards/ Recognition
reflected significant improvements in the
November survey results.
93
Greening the globe
Greening the Globe
Globe 2011 Annual Report
94
95
Greening the globe
Globe Telecom Environmental Strategy
Manage our operations’ carbon footprint
and identify areas of reduction through
alternative energy sources
Globe Telecom Green
Initiative
Energy
Environment
Energy
Consumption
Develop products and services with
minimum environmental impact
Water
Reforestation
Water
Consumption
Manage industrial waste
Protect environment in our area
of operation
GHG Emission
Waste
Management
As part of its green initiative, we
have implemented the Environment
Management System that takes
environmental protection as a priority
consideration. As a commitment to
96
ensure that environmental aspects and
impacts in the workplace are being
managed proactively, we embarked on
an initiative to have one of its corporate
offices, Valero Telepark, certified to
ISO 14001 (Environmental Management
System). This certification was granted
in May 2011. Similar initiatives will be
implemented at GT-IT Plaza Cebu in
2012. With the system in place, we are
bound by environmental regulations,
incorporating sustainability in our
business strategies and contributing to
solutions that mitigate climate change.
Globe Telecom has implemented various
energy management systems for its corporate
offices as well as network offices of the
Company. These initiatives include managing
air conditioning control and retrofit, lighting
efficiency and energy management.
Corporate Office Operation
1. Switching off lights in office areas from
12 noon – 1 pm and 6:30 pm onwards
(isolated lighting for areas with overtime).
2. Turning off / dim lightings in unmanned
Mobile Switch Centers (MSC), Data
Center, Network Operation Centers (NOC),
IN, Switch Room areas based in corporate
buildings.
3. Switching off air conditioning units in
offices 15 minutes earlier than office
closing time.
4. Initiative to replace all desktops
workstations with laptops which
consumes less power and does not
require UPS system
5. Adopt the LED lighting technology for
office lighting as this uses less power and
has a longer usage life.
6. Release new energy conservation
(enercon) guidelines for employees such
as switching off of unnecessary lights,
unplugging of office equipment, recycling,
etc.
Cell site Operation
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.
2. Adopt solar power / wind power for most
of the 99 prime-powered sites.
Globe 2011 Annual Report
Globe Telecom continuously creates
initiatives as part of its commitment
and responsibility to care for our planet.
Over the years, we have dedicated a
wide range of activities that address
the challenges towards sustainability
of environment such as energy
management, reduction of greenhouse
gas emissions and recycling waste.
Energy management
97
Greening the globe
Globe Telecom IT Plaza Initiative
Fleet Operation
1. Integrate subject on the Efficient Driving
Practices with the Safe Defensive Driving
Training for employees.
2. Consider the adoption of cleaner fuel
alternatives such as E10 and LPG.
3. Review and rationalize vehicle distribution
based on territorial usage e.g. 4x4
assigned in Metro Manila can be redeployed in the provinces.
Business Travel
1. Recommend the use of teleconference to
lower frequency of business air travels.
Equipment/System
kwhr Savings
Shutting-off of AHU at 3rd floor during
weekends (Saturday and Sunday)
40TR AHU
65,040 kwhr total
Replacement of 16-36 watts fluorescent
lamps with 18 Watts CFL
Lighting system at
stairwells @ 12 hours
1,242 kwhr total
Conversion of 36 watts fluorescent tubes into
7.5 Watt LEDs
Lighting system at average
of 12 hours
56,127 kwhr total
Start/Stop of AHUs at 4th and 6th floors
Start: 7:45am Stop: 4:45pm
Offices
10,499 kwhr total
Shutting off of Globe signage at 10pm
instead of 12pm
Bldg. logo/signage
5,702 kwhr total
Running 3 compressors only during
weekdays from 6am to 5pm, 2 compressors
during weekdays and weekends from 5pm
to 6am
380TR Chiller Unit
342,000 kwhr total
Results of Energy Management in corporate officeS
Savings in Electricity Consumption due to Energy Management Initiatives
Globe Telecom Plaza (MANILA)
kwhr Savings
Decommissioning of 4 units 40KVA UPS at
GTP2
UPS serving offices at 3rd,
4th and 5th floor GTP2
62,572 kwhr total
Decommissioning of 2 units 30KVA and
40KVA UPS at GTP1
UPS serving 5th and 4th
floor offices and IDF
20,230 kwhr total
Decommissioning of 1 unit 40KVA power
transformer at GTP1
40KVA power transformer
at 4th floor EE room
2,493 kwhr total
Shutdown of 6 units VRV FCU at GTP2 EE
rooms
Aircon system
51,840 kwhr total
Shutdown of 1 unit VRV FCU at GTP1 UPS
Room
Aircon system
5,400 kwhr total
Increase thermostat of VRV FCU setting at
EE rooms and UPS rooms from 20 deg 0C to
23 deg 0C
Aircon system
UG to 5th GTP1
63,660 kwhr total
Unloading of chiller system during low
ambient temperature and once chilled water
return temperature reached setpoint
Aircon system/Chiller
101,196 kwhr total
Reduction of office lighting after office hours
Lighting system
194,508 kwhr total
502,079
GT Plaza
500,000
Valero
495,000
GT ITP
490,000
485,000
480,610
479,623
480,000
475,000
470,000
465,000
Globe Telecom Corporate Offices
Electricity Consumption
Valero Telepark (MANILA)
Initiative
505,000
Savings in Consumptions (kwhr)
Equipment/System
Equipment/System
kwhr Savings
Changing fluorescent lights (56W) to LED
lamps (22W) (replaced 2,982 lamps)
Lighting system 15F to
basement 4 (3,624 original
lamps)
413,979 kwhr total
Reducing LED parking lamps from dual to
single lamp to reduce remaining installed
fluorescent lamps from 642 to 297
Lighting system at
mechanical rooms and
stairwell
60,514 kwhr total
Shutting window-type aircon at roof deck
electrical room due to cooler ambient
temperature
Electrical room aircon
5,130 kwhr total
350,000,000
300,000,000
292,321,607
Note: Inclusive of Corporate
offices, Network sites and
Globe Telecom Stores
302,003,711
254,455,869
250,000,000
226,943,854
200,000,000
204,254,329
Globe 2011 Annual Report
Electricity (kw)
Initiative
150,000,000
100,000,000
50,000,000
0
2007
98
2008
2009
Year
2010
2011
99
Greening the globe
% increase in Electricity Consumption from
previous year for Globe telecom facilities:
14.88% in 2010
Facilities
3.31% in 2011
2010
Number
of
Facilities
Total
Kilowatt/
Hour
Water Consumption
2011
CO2
Emission,
MT
Energy,
joules
Number
of
Facilities
Total
Kilowatt/
Hour
CO2
Emission,
MT
Energy,
joules
Networks
8,368
245,997,507
109,157
8.86E+14
8,568
255,798,945
114,337
9.21E+14
Corporate
Offices*
10
42,385,057
20,801
1.53E+14
10
42,289,374
20,504
1.52E+14
Business
Center
160
3,939,043
1,695
1.42E+13
161
3,915,392
1,661
1.41E+13
8,538
292,321,607
131,654
1.05E+15
8,739
302,003,711
136,502
1.09E+15
Total
%
Difference
Globe Telecom Corporate Offices' *
Water Consumption (cu. liters)
Month
Direct Energy Consumption by Primary Source
Primary and
standby
generators used
in the facilities
water supplier. Globe Telecom strives to
keep water consumption at the corporate
offices and for operational purposes at
minimal levels only. None of the water
sources are affected by withdrawal of
water by Globe Telecom. At the current
requirement, Globe Telecom does not
recycle water for further use.
3.31
Note: Calculation Tool was derived from Indirect CO2 Emissions from Purchased Electricity. Version 3.0. December 2007. Developed by World Resources Institute (WRI) and
copyrighted. Available at www.ghgprotocol.org.
Type of
Resource
Globe Telecom believes in efficient and
effective usage of water. The Company
measures and reports water resource–
related data, manages risks and draws
up and executes water management
plans. The water supply for most of Globe
Telecom operations, offices and cell sites is
channeled through by the country’s major
Consumption in
2010 (in joules)
Consumption in
2011 (in joules)
Reason for change in
consumption rate
Initiatives
Impacts of Initiatives
5.03E+13
5.69E+13
The difference in
energy consumption
is due to an increase
of number of gensets
utilized from 2,892 in
2010 to 3,588 in 2011
Maintain NPC
Time-of-Use
arrangement with
Meralco particularly
Valero Telepark
and MK2 as this
generates monthly
savings of around
7.6% in electricity
costs respectively.
Lesser electricity
consumption resulting
to lesser CO2 emission.
Implement
programmed
energy reduction
schemes in
corporate offices.
2010
2011
January
2,840.45
3,167.57
February
3,476.22
3,694.11
March
3,530.43
3,436.34
April
3,457.49
3,651.65
May
3,940.21
3,127.66
June
3,638.44
3,645.95
July
3,431.17
3,406.92
August
3,433.09
3,458.56
September
3,356.20
3,267.78
October
3,424.09
3,280.03
November
3,271.10
3,189.41
December
3,157.55
2,958.48
40,956.44
40,284.47
TOTAL
Note: Calculation Tool was derived from GHG Emission from Fuel Used. Version 3.0. December 2007. Developed by World Resources Institute (WRI) and copyrighted.
Available at www.ghgprotocol.org.
* GLOBE TELECOM Plaza 1and2, TPT Building, Valero Telepark, GLOBE TELECOM-IT Plaza, Innove Plaza, CDO Corp Office
Indirect Energy Consumption by Primary Source
Type of Resource
Consumption in
2010 (joules)
Consumption in
2011 ( joules)
Total Electricity
consumption
(owned + leased
facilities)
1.05E+15
1.09E+15
Reason for change in
consumption rate
Replacing
conventional
fluorescent lamps
with light emitting
diode (LED ) lighting
technology in 2
corporate offices
(Valero Telepark and
Globe Telecom IT
Plaza, Cebu)
Impacts
•
•
•
Power savings of
₱6.3 million annually
Savings of ₱138,320
from the recycling of
mercury-containing
fluorescent lamps.
Reduction in carbon
footprint by 158.08
Metric Tons of
carbon dioxide per
year, which is equal
to planting 790 trees.
water consumption
40,956.44 cu. liters
in 2010
40,284.47 cu. liters
in 2011
Globe 2011 Annual Report
The 3.31% difference
in consumption rate,
due to increase in
number of facilities
from 8,538 in 2010 to
8,739 in 2011
Initiatives to
minimize energy
consumption
Note: Calculation Tool is derived from Indirect CO2 Emissions from Purchased Electricity. Version 3.0. December 2007.
Developed by World Resources Institute (WRI) and copyrighted. Available at www.ghgprotocol.org.
100
101
Greening the globe
Environmental Development
Key Measures / Initiatives in 2011
Measures
Objectives
Hazardous Waste
Management Program
Disposal of used lead acid
batteries
Goals / Targets
Particulars / Success Parameters
• 100% disposal of used lead
• Recycle lead acid batteries
acid batteries
Solid Waste
Management
Waste reduction, material reuse
and recycling
Protecting Biodiversity
Green environment as an offset
to carbon emissions
Cellphone Take Back
Program
• Reduce residual wastes
• Decreased residual wastes
• Plant 250,000 trees or
• Planted a total of 88,000 trees as an
generated at Globe Telecom
Plaza and Valero Telepark
by 13%
• Recycle at least 10% of the
total solid wastes generated
at Globe Telecom Plaza and
Valero Telepark
mangroves from 2010 to
2014
• Collect at least 10,000 units
in a period of one year
(October 2011 to October
2012)
Reduce carbon emission thru
ride sharing
• Utilize “Globe Ikot” as
alternative transportation for
employee commuting via
Globe Telecom Plaza-New
Solid Building-BPI-Valero
routes
bulbs were treated
• 218,200 mg of liquid mercury
properly disposed
• Recycled 60% (843 liters) of oil from
1,405 liters of used oil generated
in 2011
generated at Globe Telecom Plaza
and Valero Telepark by 21%
• Recycled 16% of the total wastes
generated
• A total of 16,369.40 kg of recyclable
items were collected in 2011 with a
resource recovery value of ₱73,004
offset to Company’s carbon dioxide
emissions
• Partnered with Department of
Environment and Natural Resources
(DENR) and local communities for
the preservation and conservation
of upland forests in Cordillera,
Rizal Watershed, Sierra Madre
Range in Bulacan, and in Los
Baños, Laguna as well as the
Mangrove reforestation in Batangas,
Guimaras, Iloilo City, Bohol, Davao
and Cebu
• Launched the program “i-rEcover”
last October 24, 2011 at Greenbelt
3, Makati City, in partnership with
Nokia and Ayala Foundation, Inc.
• A total of 857 units of old and
defective cell phones have been
collected until December 2011 by
the accredited recycler, TES-AMM
Singapore
• 292 kgs of cell phone units and
accessories collected
• 29 cubic meters of landfill space
were saved
• Environment-friendly scheme as
sharing journeys reduces carbon
emissions
• 83.77% savings or 70.4 metric tons
reduction of CO2 emissions
Measures
Objectives
SHEMS Certification at
Valero Telepark
Reduce operational impacts on
environment
Goals/Targets
Particulars/Success Parameters
• Valero Telepark certified
• Certified ISO 14001 (Environmental
aims to reduce cost of printing
and delivery to Globe Telecom and
Innove postpaid subscribers
• At the end of 2011, 163,000
subscribers were enrolled in
e-billing which equates to 751 trees
conserved
to ISO 14001 and OHSAS
180001 in 2011
Management System) on August
10, 2011 by AJA Registrars
• Certified OHSAS 18001:2007
(Occupational Health and Safety
Management Systems) on June 2,
2011
References:
1. CO2 Emissions Calculation Tool s. Version 3.0. December 2007. Developed by World Resources Institute (WRI) and copyrighted. Available at www.ghgprotocol.org
2. http://conservatree.org/learn/EnviroIssues/TreeStats.shtm
3. http://bgm.stanford.edu/pssi_faq_benefits
4. http://www.epa.gov/osw/conserve/materials/paper/basics/
5. http://stats.paperrecycles.org/
6. http://www.epa.gov/osw/conserve/materials/paper/basics/
7. Philippine Recyclers Institute (Inc)
8. Envirocycle, an HMRGroup Affiliate
9. Dolomatrix Philippines, Inc.
10.Genetron International Marketing
Investment / Expenditure on EnvironmentaL Program for 2011
ACTIVITY
EXPENSES (₱)
2011
2010
Reforestation Program
1,072,992.14
1,077,546.62
Donation to Bantay Kalikasan through Balik-Baterya Project
4,904,784.05
10,706,808.18
336,165.00
244,270.25
440,000.00
Earth Hour, Earth Day, Environment Month
69,600.00
78,000.00
Green Office - Paper Reduction Program
29,000.00
122,200.00
819,658.71
215,040.00
79,410.00
16,830.00
17,926,523.33
2,285,781.62
Replacement of the Conventional Fluorescent Lights to LED Tube Lights at
Valero Telepark and Globe Telecom-IT Plaza
Valero SHEMS Certification (ISO 14001 and OHSAS 18001)
Cellphone Take Back Program
Fluorescent Bulb Treatment
TOTAL
investment on environmental program
₱2,285,781.62
in 2010
Hazardous Waste Management
The Company’s Hazardous Waste
Management program covers recycling of
waste management generated by its
102
• Introduced paperless billing which
₱17,926,523.33
in 2011
operations. This program promotes the
recycling of lead acid batteries, used oil
and busted fluorescent lamps.
Globe 2011 Annual Report
Globe Ikot
Recycle defective / old mobiles
• 5,455 pieces of busted fluorescent
• Implement paperless billing
program for Globe Telecom
and Innove postpaid
subscribers
generated from telecom operations
• Complete disposal of used
oil and busted fluorescent
lamps
Reducing paper consumption
• Implemented recycling program
in cooperation with Environment
Management Bureau since 2003
• Recycled 400,015 kg of batteries
in 2011
Treatment of busted fluorescent
lamps and treatment of used
oils
Paperless Billing
103
Greening the globe
Summary of Environmental Gains from Used-Lead Acid Battery Disposal Program
Year
Weight of
Batteries (kg)
Monetary
Value (₱)
Sulfuric Acid
Recovered
(liters)
Lead
Recovered
(kg)
Solid Wastes Collected from Valero Telepark
Landfill Area
Saved
(cu. meters)
2010
280,578.00
6,110,510.52
56,115.54
196,404.38
7,081.87
2011
400,015.00
10,238,045.15
80,905.82
283,170.36
10,113.23
TOTAL
680,593.00
16,348,555.67
137,021.36
479,574.74
17,195.10
Note: Conversion factors derived from Philippine Recyclers, Inc.: 0.7 kg of Lead recovered per kg of battery; 0.05 kg of plastic
recovered per kg of battery; 0.2 liters of sulfuric acid neutralized per kg of battery; 0.025 cm3 of landfill space saved per kg of battery
Quantities Disposed (Pcs)
22,411.00
896,440.00
2011
5,455.00
218,200.00
Total
27,866.00
1,114,640.00
Note: 15 – 40 mg of liquid mercury is properly disposed per piece, Conversion factor derived from Dolomatrix Philippines, Inc., a DENRaccredited Hazardous Waste Treater.
Volume of Recovered (Liters)
2010
1,870.00
1,122.00
2011
1,405.00
843.00
Total
3,275.00
1,965.00
Note: Used oil is 60% recyclable: Conversion factor derived from Genetron International Marketing, a DENR-Accredited Used Oil
Recycler and Treater
Solid Waste Management
As a result of our Company’s Solid Waste
Management Program, 16,369 kg of
recyclable items were collected in 2011.
This volume of recyclables collected
Monetary Value
(₱)
Total Waste
Collected (kg)
Residual Wastes
(kg)
represents the volume of wastes that were
diverted from the landfill with a resource
recovery value of ₱73,004.00 for 2011.
%
Recyclables (kg)
%
101,683.10
149,304.30
123,914.00
83%
25,390.30
17%
2011
73,004.00
114,251.40
97,882.00
86%
16,369.40
14%
Total
174,687.10
263,555.70
221,796.00
84%
41,759.70
16%
104
Total Waste
Collected (kg)
Residual Wastes
(kg)
%
Recyclables (kg)
%
13,952.10
50,160.80
45,776.00
91%
4,384.80
9%
15,223.00
58,050.40
54,456.00
94%
3,594.40
6%
Total
29,175.10
108,211.20
100,232.00
93%
7,979.20
7%
Environmental Benefits from Recyclables Collected in 2010-2011
582 Trees saved
140,450 kwh of energy saved
907,711 liters of water saved
79 cu. meters of landfill space saved
Aluminum Cans
15
cu. meters landfill space saved
PET and other plastics
kilos of plastics recycled
Conversion:
Paper
1 Ton = 17 trees
1 Ton = 4,100 kwh of energy
1 Ton = 26,497.87 liters of water
1 Ton = 2.2937 cu. meters of landfill
1 pc = 7.9 kilos of lead
1 pc = 5.678115 liters of sulfuric acid
Aluminum cans
1 kilo = 0.02 cubic meters landfill space saved
PET and other plastics
1 kilo = .99 kilos of plastics recycled
%
2010
87,731.00
99,143.50
78,138.00
79%
21,005.50
21%
2011
57,781.00
56,201.00
43,426.00
77%
12,775.00
23%
Total
145,512.00
155,344.50
121,564.00
78%
33,780.50
22%
Protecting Biodiversity
Globe Telecom continuously takes
measures to promote green environment
in the areas where it operates. In 2011,
we had the opportunity to plant a total
of 88,000 trees all over the country. This
project is aimed to support neutralizing the
greenhouse gas (GHG) emissions. The tree
planting activity is part of the Company’s
commitment to sustain a green environment
by planting and growing a total of 250,000
trees across the nation from 2010 to 2014.
Globe Telecom guarantees that regions of
biodiversity are unharmed by its operations.
Globe 2011 Annual Report
Solid Wastes Collected from Globe Telecom Plaza
Monetary Value
(₱)
Recyclables (kg)
References:
1. http://conservatree.org/learn/EnviroIssues/TreeStats.shtm
2. http://bgm.stanford.edu/pssi_faq_benefits
3. http://www.epa.gov/osw/conserve/materials/paper/basics/
4. http://stats.paperrecycles.org/
5. http://www.epa.gov/osw/conserve/materials/paper/basics/
2010
Year
%
Used car batteries
Summary of Solid Wastes Collected from Globe Telecom Plaza and Valero Telepark
Year
Residual Wastes
(kg)
2011
5,596
Summary of Environmental Gains from Used Oils Disposal Programs
Volume Disposed (Liters)
Total Waste
Collected (kg)
2010
Amount of Mercury Properly
Disposed (milligrams)
2010
Year
Monetary Value
(₱)
Paper and Cartons
Summary of Environmental Gains from Busted Fluorescent Bulbs Disposal Programs
Year
Year
105
Greening the globe
Reforestation Area
Partners
No. of Trees Planted
Brgy Sasa and Brgy. Bool,
Tagbilaran City, Bohol
DENR-PENRO Bohol
10,000
Barile, Cebu
DENR-PENRO
10,000
Brgy. Hinactacan, La Paz,
Iloilo City
LEAPP
10,000
Taklong Island Marine Reserve,
Guimaras, Iloilo (Mangrove)
DENR-PENRO Guimaras
10,000
Los Baños, Laguna
Beta Sigma Fraternity - UP Los
Banos
Labey, Ambuklao, Bokod,
Benguet
Cordillera Conservation Trust
Makaluwesa Reforestation Area,
Opol, Misamis Oriental
Nature Crusaders of the
Philippines Foundation
5,000
Sipalay City, Negros Occidental
DENR-PENRO Bacolod
10,000
San Miguel, Bulacan
Green Earth Heritage
SM Lucena
9
SM Naga
3
SM Rosales
1,000
30,000
2,000
TOTAL
Cellphone Take Back Program
Part of the Company’s green environment
initiative is the Cellphone Take Back
program. Being a leader in mobile network
industry, we believe that the proper disposal
of unused or defective electronic gadgets
such as old cellphones, batteries and the
like can greatly impact in preserving the
environment. In 2011, a total of 857 units
of old and defective cell phones were
11
Sub-total
VisMin
Units
3,504
Tagum
27
grams of base metals
Borongan
12
recovered
Daet Microstore
19
Davao Gaisano
48
Davao NCCC
24
Kalibo, Aklan
50
Robinsons Cagayan de Oro
23
SM Cagayan de Oro
8
Tacloban
9
88,000
collected by the accredited recycler, TESAMM Singapore. The recycling process
recovered 3,504 grams of base metals and
438 grams of precious metals. This activity
alone already saved approximately 29 cubic
meters of landfill space.
114
Environmental Benefits from Recycling
of Broken Electronic Items:
Sub-total
220
Globe Corporate Offices
214
Donations from McDonald’s
242
Others
401
Total
857
438
grams of precious metals
recovered
29
cu. meter of landfill space
saved
as of December 15, 2011
Hauling Date
Weight (kg)
22-Nov-11
218
15-Dec-11
74
Total
292
Cellphone Units Collected from “i-rEcover, i-rEcycle” Program
Stores
Units
NCR
Computation for Globe Ikot Environmental Benefits (2011)
Gateway
6
Glorietta
3
Market! Market!
22
Park Square 1
15
SM North Edsa
8
Trinoma
8
UP Techno Store
2
Sub-total
67
Luzon
Dagupan
24
SM Calamba
No. of
trips
per day
No. of
passengers
per vehicle
*
No.of
passengers
/ month
% savings
with
respect to
number of
passenger
per trip
Quantity
of Fuel
Used
(liters)
CO2
Emissions
(metric
Tons)
CO2
Emissions
Without
Globe Ikot
(metric
tons)
CO2
Emissions
Saved
(metric
tons)
4
42
3
NIY-144
Toyota
Innova
2010
Gasoline
2.34
6
6
720
83.33%
2,562.17
6.00
35.27
29.27
NOU962 Mits
Adventure
2010
Gasoline
2.34
6
6
720
83.33%
2,184.54
5.11
30.07
24.96
ZSE-750
Toyota
Innova
2008
Diesel
2.68
8
7
1,120
87.50%
825.24
2.21
18.43
16.22
13.32
83.77
70.45
Annual
* Globe Ikot vehicles operate from Monday-Friday only = 20 days per month
**CO2 Emissions from Business Travel Version 2.0 June 2006. Developed by Word Resources Institute (WRI) and copyrighted. Available at www.ghgprotocol.org
Globe 2011 Annual Report
15
Puerto Princesa
106
3
Calapan
Nuvali
CO2
Emission
Factor **
3
Robinsons Place Manila
Cabanatuan
Type
of Fuel
Used
107
Greening the globe
Managing Carbon Footprint
Managing greenhouse gases is an
important issue globally. The Company
continues to monitor its greenhouse gas
(GHG) emissions through a voluntary
initiative on GHG Accounting which started
in 2008. Having established the baseline
for its operations’ carbon footprint,
Globe Telecom used the International
GHG Protocol Corporate Accounting and
Reporting Standard and specifically used
the following calculation tools:
• GHG Emissions from Fuel Use in the
Facilities; Version 3.0, December 2007.
• Mobile Combustion CO2 Emissions
Calculation Tool; Version 1 .3, January
2005.
• Indirect CO2 Emissions from Purchased
Electricity; Version 3.0, December 2007.
Source of GHG emissions
•
CO2 Emissions from Business Travel;
Version 2.0, June 2006.
All the calculation tools used for this
accounting activity were developed by
the World Resources Institute (WRI) and
copyrighted.
Working with a team representing groups
that maintain data of carbon dioxide
emission sources, Globe Telecom used the
Operational Control Approach covering only
all emissions coming from operations where
the Company has 100% operational control.
They also identified greenhouse gases
defined in the Kyoto Protocol, namely CO2,
CH4 and N2O, emitted from the Company’s
operations as part of the accounting.
Emissions in 2010
(metric tons CO2)
Primary and standby generators
used in the facilities
Fleet Vehicle
Electricity consumption
(owned + leased facilities)
Business Travel
Emission in 2011
(metric tons CO2)
17, 096.53
17,729.37
8,345.95
8,283.23
131,653.51
136,501.72
903.23
1,109.06
Note: Calculation tools developed by World Resources Institute (WRI) and copyrighted. Available at www.ghgprotocol.org.
paperless billing program
163,000
652,000
no. of postpaid
subscribers enrolled
to e-billing
total pieces of paper
4
108
total no. of reams
(500 pieces/ream)
2,608
total weight
(given: 2 kg/ream)
total no. of trees saved*
Notes:
* For every ton of printing paper
recycled, 24 trees (40 feet tall and
6-8 inches in diameter).
Reference: www.conservatree.org
The modern Globe Telecom network will
use alternative sources of power and
renewable energy by using solar and
wind energy powered cellsites, as well as
delaying genset mode features, increasing
the Company’s “green” cellsites by over
200%. This will boost energy savings
through reduction in carbon footprint and
lower power consumption, generating fuel
savings of up to 60%.
Network equipment will also be refreshed
with upscale battery autonomy and
delaying genset mode feature, as well
as operate on natural cooling methods,
resulting to more efficient use of
commercial power and 30% worth of fuel
savings. Once the network modernization
program is completed, Globe Telecom
will have one of the “greenest” network
infrastructures in the ASEAN Region.
Clean Fleet Program
A Clean Fleet Program contributes to the
efforts for cleaner air by eliminating the air
pollutants present in it. To identify options
for reducing these pollutants, Globe
Telecom participated in United Nation’s
Environmental Protection (UNEP) Program
on Clean Fleet. By using the Clean Fleet
Tool, we were able to examine closely the
impact from our fleet including the pollution
indices like Particulate Matter, SOx, NOx,
VOC, Carbon Monoxide, and Pb. Options
for reduction were suggested by the tool
and is being implemented to minimize our
fleet’s emissions.
Memberships in Associations
Strategic memberships in associations
(such as industry associations) and/
or national/international advocacy
organizations, in which Globe Telecom is a
part of, are:
1.Philippine Business for the Environment
2.Pollution Control Association of the
Philippines, Inc.
3.Green Philippine Island of Sustainability
4.Business Continuity Managers
Association of the Philippines
5.Corporate Network for Disaster
Response
The network modernization will use highly
efficient and reliable hardware technologies
and solutions that will effectively reduce
operational expenses and lower carbon
dioxide emissions—a conscious effort of the
Company that has always been mindful of
how its operations impact the environment.
List of Stakeholder Groups for Globe Telecom’s Environment Programs
Globe Telecom has long been at the
forefront of environmental sustainability
and development guided by its
environmental strategy to identify areas of
operation where it could utilize renewable
energies, develop products and services
that enable consumers and businesses
reduce their environment impact, manage
industrial wastes, and help protect the
environment through various volunteer
programs and related projects. Through
its corporate social responsibility (CSR)
program, Globe Bridging Communities,
Globe Telecom institutionalized an
integrated program called Globe Goes
Green and spearheaded programs such as
the Globe Cordillera Challenge and Globe
Adventure Taal for Clean Water to express
its support for environmental conservation.
Forest Building Program:
1
Barangay Council of Bohol, Tagbilaran City
2
Guibuangan Coastal Environmental Savers Association (GUCESA) Barile, Cebu City
3
Local Environmental Awareness and Protection Philippines, Inc. (LEAPP)
- Iloilo City
4
San Roque Coastal Environment Program Association – Guimaras
5
La Paz Fisherfolks Aquatic Resources and Mangrove Management
Association, Inc. – Guimaras
6
Beta Sigma Fraternity - UP Los Banos
7
Bro. Alfred Shields Marine Station - Lian, Batangas
8
Cordillera Conservation Trust
9
Nature Crusaders of the Philippines Foundation - Cagayan de Oro City
10
Southern Negros Coastal Development Management Council Sipalay City
11
GreenEarth Heritage Foundation, Inc. – Bulacan
Balik Baterya Program
12
ABS-CBN Foundation, Inc.
Cell Phone Take Back Program
13
Philippine Tarsiers Foundation, Inc.
14
Ayala Foundation, Inc.
Other Industry Associations
15
Philippine Business for the Environment
16
Pollution Control Association of the Philippines, Inc.
Globe 2011 Annual Report
average pieces of
paper used per
billing/subscriber
(including envelope)
1,304
63 (monthly)
751 (annually)
Globe Telecom Builds
Planet-Friendly Network
As part of its commitment to environmental
sustainability, Globe Telecom’s stateof-the-art mobile network will utilize
technologies that are environment-friendly,
harnessing and integrating “green”
solutions in its operations.
109
bridging communities
Bridging communities
Globe 2011 Annual Report
110
111
bridging communities
Identification and Selection Basis of Stakeholders
Identification
Methods
Globe Telecom
employees undertake
relief operations in
Brgy. Daang Hari,
Navotas City, one of
the hardest hit areas by
Typhoon Pedring.
Responsibility and sustainability are
integral parts of business operations at
Globe Telecom which the Company use to
leverage on as a communication service
provider. Social responsibility, being
an intrinsic part of business activities,
helps build a meaningful connection with
stakeholders. The Company is aware that
its actions have far-reaching consequences
and that they always strive to identify
community impacts in order to deliver value
to those directly or indirectly affected by
Globe Telecom’s business.
112
Globe Telecom carefully assesses the
CSR initiatives and beneficiaries, wherein
both should meet all criteria set forth by
the Company. The Legal and Security
departments provide the Corporate Social
Responsibility (CSR) department a list
of high security risk A1 sites at the start
of the year. This list is assessed and
reviewed for priority CSR engagement
based on intelligence reports while the
CSR department nominates sites based
on mutual undertakings with government
agencies and NGOs or consortia. Sales
and marketing departments take on
community partnerships to help promote
fresh opportunities in existing markets and
various sales initiatives.
Focus towards
Sustainability
Partnership
Shared Value
Creation
Create an
ICT-enabled
Philippine society
by providing
services to
government
agencies,
communities and
environmentfocus groups
Develop and
cultivate
partnerships
to address and
seek solutions
to existing
problems without
compromising
the needs
of future
generations
Start mutuallybeneficial
partnerships with
development
players,
executing and
implementing
programs using
Globe Telecom’s
competencies in
ICT
Ensure program
compliancy with
branding and
external value
to stakeholders,
communities
and direct
beneficiaries,
with adequate
impact to the
value chain
Basis for Selection of External Partners for Community Development
Evaluate potential partners to ascertain who has the
greatest impact to beneficiaries
Explore potential partnership capacities to determine
shared organizational values and vision
Better understanding of the capabilities and priorities
of potential partners
Globe 2011 Annual Report
Through its commitment to contribute
in addressing issues in marginalized
sectors, it continues to implement Globe
Bridging Communities, the Company’s
flagship Corporate Social Responsibility
(CSR) program. This program engages
stakeholders in underserved Filipino
communities to design their own
sustainable future, creating opportunities
that allow them to contribute to society.
Innovative
use of ICT
113
Through Globe
BridgeCom
Sagot Ka Ni Kap!,
communication
and relevant law
enforcement
equipment including
mobile phones and
SIMs, handheld radios,
uniform shirts, tear
gas, boots, flashlights,
raincoats, and
handcuffs are provided
to the local community
police auxiliary units or
barangay tanod.
bridging communities
114
41.Nokia Philippines
42.Hands On Manila (HOM)
43.Museo Pambata
44.Gifts and Graces
45.UN Volunteers
46.Philippine Tarsier Foundation, Inc. (PTFI)
47.Haribon Foundation
48.Virlanie Foundation
49.Children’s Hour
KEY INITIATIVES for community
development
Initiatives
Community
Development
• Sagot Ka ni Kap
• Disaster Relief
Operations
• ICT for Social
Services Delivery
• Cordillera Challenge
2
Environmental
Development
• Run4Home - Haribon
Foundation
• Globe Adventure
Taal for Clean Water
• I-rEcover, I-rEcycle
• Active Citizenship
through Volunteerism
• Internet in Schools
Program
People Development
• Text2Teach
• Global Filipino
Teachers
• Global Filipino
Schools
• Employee
Volunteerism
Programs
Note: Please visit Globe Telecom Bridging communities page on
http://www.facebook.com/GlobeBridgeCom and find out more
about our community development programs.
Community Development
“Sagot Ka ni Kap” (SKK), loosely
translates to the village captain cares
for you, is a community-based relations
program that trains barangay officials in
conflict resolution. Every member of the
barangay contributes in keeping peace and
maintaining order in their area. The mission
of this program is to help prevent crime in
communities by enabling local community
police auxiliary units or barangay captains
with the provision of communication and
relevant law enforcement equipment
including mobile phones, handheld radios,
uniform shirts, boots, flashlights, raincoats
and personal accident insurance program.
With the help of these equipment and
awareness, the barangay captain will have
the capability to quickly respond to any
emergency or complaints.
By the end of 2011, SKK had an increase of
21% in the number of cell-site communities
(barangays) that adopted the program.
This training resulted in the passing of
76 Barangay Resolutions that led to the
adaptation of the grassroots Communication
Hotline System as a means to curb crime
and enable citizen feedback to their local
leaders. Globe Telecom’s SKK program was
one of the finalists of the 2011 Quill Awards
for Excellence in Business Communication—
Community Relations category.
Disaster Relief Operations (Bangon
Pinoy) focuses on communities that were
severely affected by natural disasters.
Bangon Pinoy provides relief operations,
financial assistance, network restoration
and a series of community-rebuilding
activities through partnerships with local
governments, NGOs and volunteer Globe
employees. The program was built on the
values of hope and preservation, and on the
belief that even in the toughest of times,
we can rely on one another and collectively
rise above the challenges. The Company
quickly mobilized resources and manpower
for this purpose to help people quickly
connect with those that matter in their
lives. Globe Telecom invested in the timely
repair of mobile and broadband networks
and provided rebates, payment reprieves
and flexible connection options for disaster
affected subscribers. To date, the program
responded to typhoon and flood related
disasters in the 3 major island groups of
the Philippines, mobilizing volunteers and
resources to support state and non-state
organizations provide emergency response
to victims. A total of 2,220 volunteering
hours were rendered by Globe employees
and over 17,200 families were helped
through relief operations, free internet and
Libreng Tawag (free call) centers.
Information and Communication
Technology (ICT) for social services
delivery is supported by Globe Telecom’s
membership to the ICT4Health Consortium
composed of Telcos, Department of
Health (DOH), World Health Organization
(WHO), and all other mHealth and
eHealth stakeholders from academe,
pharmaceuticals, HMOs, hospitals, etc.
Under this community development
scope, the Company embarked on several
humanitarian activities. The UN World
Food Program (WFP) and United Nations
Children’s Fund (UNICEF) are also set to be
major partners of Globe Telecom.
In 2011, Globe Telecom entered several
partnerships under this program. Globe
Telecom provided the NMRice Mobile
Hotline (2378) for the International Rice
Research Institute (IRRI) and partnered
with Solar Energy Foundation for their
solar energy fundraising campaign and
distribution to remote villages through the
Ride for Light Project.
Globe Telecom’s Cash for Work (CFW)
program ran from October 2009 to
December 2010 where a number of food
assistance, disaster relief programs
and innovations were implemented. An
evaluation of this program was conducted
in 2011 to assess its benefits to society
and rate of achievement of its objective.
The CFW program used Globe Telecom
prepaid SIMS for GCASH transactions. The
program statistics showed that GCASH
Globe 2011 Annual Report
Our External Partners for
Community Development are:
1. Department of Interior and Local
Government
2. PAGASA
3. Technical Skills Development Authority
(TESDA)
4. Mindanao Emergency Response
Network (MERN)
5. Simbahang Lingkod ng Bayan (SLB)
6. Bote Central Inc.
7. Globe Telecom-BPI BanKO
8. World Wide Fund (WWF)
9. Voluntary Service Overseas (VSO)
Bahaginan
10.Asian Forum on CSR (Asian Institute of
Management-AIM)
11.Cordillera Conservation Trust (CCT)
12.Habitat for Humanity Philippines (HFHP)
13.Philippine Business Center, Inc.
14.Department for Social Welfare
Department (DSWD)
15.SEAMEO-INNOTECH
16.US PEACE CORPS
17.United Nations Children’s Fund (UNICEF)
18.ChildFund International, Philippines
19.ABS-CBN Foundation Inc. 20.KMBI, Inc.
21.British Council
22.Coalition for Better Education (CBE)
23.Center for Teacher Excellence (CefTEx)
24.International Rice Research Institute
(IRRI)
25.Natasha Goulbourn Foundation (NGF)
26.Department of Education (DepEd)
27.Pusod, Inc.
28.Stiftung Solarenergie - Solar Energy
Foundation Philippines 29.Golden ABC (Penshoppe)
30.Gawad Kalinga Community Development
Foundation, Inc. 31.Philippine Health Insurance Corporation
32.Conservation International (CI)
33.UN World Food Programme Philippines
34.Rustan Coffee Corporation
35.RAMCAR
36.Hybrid Social Solutions
37.Corporate Network for Disaster
Response (CNDR)
38.Ayala Corporation
39.Netbooster Agency Asia
40.GMA Network
115
bridging communities
Top left: A Globe
representative
patiently explains how
beneficiaries of the
Cash-for-Work Program
can claim their funds via
Globe GCASH.
Top right: Bikers of
the Globe Cordillera
Challenge 2 helped
raise funds for the
conservation and
preservation of the
Cordillera region.
actual rollout was used by 1,790 beneficiaries
or 4% of total CFW beneficiaries disbursing
a total of PhP 1.8 million out of the total
CFW fund. The program was introduced
in the NCR and R4-A regions, 4 cities
(Mandaluyong, Marikina, Malabon, Quezon
City), and 3 municipalities (Jala-Jala,
Binangonan, San Mateo).
Due to the success of the CFW program,
Globe Telecom has confirmed to initiate
the program again in 2012 with the aim
to introduce the GCASH REMIT services.
The program plans to disburse to 3,230
households and 2 cities (Cagayan de
Oro City and Iligan City). Total valued
amount for GCASH disbursement is set at
₱6,920,050.
116
EnvironmentAL Conservation
The Globe Cordillera Challenge 2 is
the second attempt of Globe Bridging
Communities aimed to elevate public
awareness about the importance of the
reforestation of the Cordillera region. The
program increased compliance to state
regulation on the Company’s reforestation
targets and staged two major events—a
Profile/Fundraising event and a Forest
building Volunteer Mobilization.
A total of 168 bikers participated in the event,
90 participants were Globe employees. The
second challenge raised a total of ₱180,000
through volunteer fundraising.
The Company partnered with the Cordillera
Conservation Trust (CCT), a non-profit
organization that centers its activities in
the development of environmental solution
and sustainable strategies to preserve
and conserve the region. The Cordillera
Mountain is a vital catch basin for rain water
and an important water channel for most of
Luzon’s major rivers that provides the water
needs of people in low-lying areas.
engagement partnership co-branded
with Globe Telecom being a champion
for Protective Area Landscape protection
and conservation using ICT. The program
raised a total of PhP 141,525 from 565
employees to help community partners in
improving water quality.
The Run4Home Project selected the
Haribon Foundation, a membership
organization committed to nature
conservation through community
empowerment and scientific excellence as
one its beneficiaries. The annual charity fun
run of Globe drew almost 8,000 runners.
Haribon aims to plant and nurture 800
seedlings in the span of 3 years. This will be
Globe Telecom’s contribution to Haribon’s
Rainforestation Organizations and Advocates
(ROAD) to 2020 campaign to restore one
million hectares of Philippine forests in
Baras, Rizal.
The i-rEcover, i-rEcycle Program is a
community engagement partnership to
mobilize the Ayala Malls and Globe Stores to
participate in collecting used mobile phones
as a means to recycle parts and reduce
material requirements for new mobile phones.
The program created a shared value among
participating companies, NGOs and business
establishments that promoted conservation
and recycling to Globe Telecom subscribers
and customers of Ayala Malls. The program
raised 613 old Nokia mobile phones
collected from October 2011 to December
2011. This activity raised ₱6,130 donated
to the Philippine Tarsier Foundation Inc for
the conservation efforts of Tarsier natural
habitats in Bohol province. The i-rEcover,
i-rEcycle Program is further discussed in the
Environment section of this report.
Globe Adventure Taal for
Clean Water is a major profile and
fundraising event aimed at improving the
water quality of the Taal Volcano Lake
that will benefit 13 municipalities and 3
cities. The program launched a community
Top left:Globe
Telecom and PUSOD,
Inc. launch Globe
Adventure Taal, a threeevent adventure race
consisting of kayaking,
running and biking in
the eastern shore of the
Taal Volcano Protected
Landscape to inform
and educate the public
on the importance of
protecting vital ecosystems such as Taal
Lake as well as provide
opportunities for the
people to demonstrate
their passion to support
a worthy cause.
Top right: McDonald’s
Philippines donated
613 items composed
of old cellular
phones, batteries and
accessories to the
i-rEcover,i-rEcycle
program launched
recently by Nokia
Philippines, Globe
Telecom, Ayala
Foundation and
Philippine Tarsier
Foundation, Inc. (PTFI).
Globe 2011 Annual Report
Through WFP-CFW partnership, GCASH
was established as an innovative mobile
cash transfer medium and became an
intervention benchmark for other WFP
agencies, and a case study by Cash
Learning Partnership (CaLP). CaLP is
composed of Oxfam GB, the British
Red Cross, Save the Children, the
Norwegian Refugee Council and Action
Against Hunger / ACF International to
support capacity building, research and
information-sharing on cash transfer
programming as an effective tool to
support populations affected by disasters
in a way that maintains dignity and choice
for beneficiaries while stimulating local
economies and markets.
117
bridging communities
People Development
Active Citizenship through Volunteerism
promotes employee participation as
volunteers, bringing relief to communities
and places where it is mostly needed. The
program had several milestones in various
ACTIVITY / PROGRAM
Hours
Days
Volunteerism
Hours
12
12
7
1,008
Davao Flashflood Relief Operations
30
6
1
180
Typhoons Juaning and Kabayan
20
6
1
120
Typhoons Pedring and Quiel
80
6
1
480
Typhoon Sendong
15
8
12
1,440
Globe Adventure Taal for Clean Water
50
16
1
800
Hands on Manila's Servathon 2011
20
9
1
180
Pasig Run 2011
82
4
1
328
Cordillera Challenge 2
41
8
3
984
5
10
1
50
Reforestation Program
295
64
8
2,360
Environment Month: Employee-initiated
environmental programs
120
64
12
1,344
Blood Drive
183
1
1
183
Emergency Drill
580
344
96
20,280
45
6
1
270
1,578
564
147
30,007
Haribon Tree-Planting
Total
Globe Telecom also launched the Internetin-Schools pilot program in two Special
Education (SPED) schools, P. Gomez
Elementary School in Manila and P. Villanueva
Elementary in Pasay City. Both schools serve
special education pupils. SPED Centers
in public elementary schools became the
main focus of the program after it shifted
from connecting regular public high school
computer labs. This need was actually
recognized by the Department of Education
(DepEd) in Gearing Up Internet Literacy and
Access for Students (GILAS) meeting with all
telecommunications companies in April 2011
at the DepEd Central Office.
The program utilized the use of a VizZle,
a visual learning software provided by the
Autism Society Philippines as agreed with
DepEd and also donated the refurbished
hardware equipment to be used for this
program.
Globe Bridging Communities, in
partnership with its Network Technical
Group and Globe Quarter Century Club
(association of Globe retirees), donated
in 2011 an ICT package composed of five
desktop PCs and one-year free internet
connectivity to Malasa Elementary School.
This school with a population of 112
pupils is near Mt. Pinatubo and serves
an indigeneous tribe (Aetas). In the past,
Malasa ES has been benefiting from a
distance learning program of the University
of Sto. Tomas Office for Community
Development Affairs conducted via twoway radio with an external radio mast.
Beginning 2011, Globe BridgeCom
connected Malasa ES to the internet using
a special off-grid solution customized by
the Network Technical Group so that the
school has internet connectivity even if
it is out of range from the nearest Globe
WiMAX site.
Because of the positive results of this
program, Globe Telecom committed to
continue the Internet-in-Schools program
in 2012.
Globe Telecom’s Text2Teach was initially
introduced in 2003 with a vision to provide
educational materials in the form of
audio and video to the elementary school
students. Through the use of the Nokia
Education Delivery (NED) application,
teachers are able to download materials
and lesson guides in Science, Math, and
English for grade 5 and 6 by simply texting
using high speed 3G mobile technology
service provided by Globe Telecom.
The program is running in 157 public
elementary schools from 5 cities and 8
municipalities in four key provinces namely
Albay, Camarines Sur, Ilocos Norte and
Nueva Ecija. There are now 755 teachers
trained to use Text2Teach and 26,312
students benefitting from the program
that cover subjects such as English,
Science and Math. In July 2011, Globe
Telecom signed a four-year partnership
with Text2Teach Alliance members for the
program implementation from 2012 to
2014. In addition to the schools, the scope
of the project was expanded to include the
training of barangay leaders and Parents
Teachers Association (PTA) officers.
Shortly, local government units (LGU) will
be included when additional funding is
raised. This grant amounts to ₱9,356,500.
Due to the positive results and feedback
of this program Globe Telecom pledged to
continue Text2Teach in 2012.
The Global Filipino Teachers (GFT)
program aims to improve the quality
of public education by building an
ICT-empowered public school system
implemented by Globe BridgeCom in
cooperation with Cebu-based Coalition for
Better Education (CBE) and DepEd. The
program encourages public mentors to
adapt ICT learning environment, promote
creativity and produce efficient learners
and problem solvers. GFT gives more than
just free internet. Globe Telecom takes
the responsibility of equipping schools
with necessary and relevant skills that
would allow both students and teachers to
harness the power of ICT.
Using the Company’s core competency
and technology, the GFT program focuses
in training public school teachers. At the
moment, a total of 125 teachers from 110
schools attended Problem-Based Learning
(PBL) teacher training from Luzon (Ilocos
Region, Central Luzon) and Mindanao (Davao
Region and Zamboanga Peninsula). In 2010,
GFT Teacher from Cagayan de Oro City,
Ms. Charlotte Maestrado, became a finalist
to the 2011 Microsoft Innovative Teachers
Leadership Awards (ITLA) in February 2011.
Globe 2011 Annual Report
118
Participants
Gawad Kalinga Bayani Challenge
Quarter Century Club Outreach to Malasa
Elementary School
Photo on the far right:
Special children in P.
Gomez Elementary
School try the desktop
computers with newlyinstalled VizZle visual
learning software
donated by Autism
Society Philippines.
Globe Telecom
provides internet
connectivity.
campaigns in 2011. The summary of
employee participation in such activities is
enumerated below.
119
bridging communities
Membership of Globe Telecom with External Agencies
Corporate Network for
Disaster Response
League of Corporate
Foundation
World Wide Fund for Nature
So far, Globe has
connected more
than 2,000 public
elementary and
high schools to the
internet through the
Internet in Schools
(ISP) program as well
as conducted ICT
trainings for teachers
under the Global
Filipino Teachers
(GFT) program. Globe
is also developing
and nurturing
partnerships with
local and international
development
organizations for food
security, health care,
and conditional cash
transfers.
The Global Filipino Schools (GFS)
is Globe Telecom’s collaboration with
Microsoft and was publicly launched during
the 6th Microsoft ITLA Summit. After
the success of the Text2Teach program,
Globe Telecom has taken the initiative to
further raise the ICT maturity of various
public schools and allow them to become
an expert in ICT in their own community.
The GFS community kicked off in Bilar,
Bohol where it was first introduced to the
community leaders where it received solid
buy-in community support. GFS is an ICT
competency-building initiative that utilizes
communications technology to help the
public school sector. The aim is to enhance
learning, teaching and management
competencies of students, teachers
and school heads mainly by harnessing
the educational power of ICT. GFS shall
foster an ICT-enabled environment in
public schools through ICT-equipped
multimedia laboratories, ICT skills building
for the entire academe, and ICT-enabled
community programs led by public schools
for their own communities.
GFS is implemented in three phases:
• Provide schools with relevant ICT
infrastructure like an enhanced ICT
laboratory.
• Train teachers and school heads
on online collaboration, authentic
assessment and project-based learning
through GFT.
• Implement programs in communities
enriching self-development and
encourage self-sufficiency.
This program is set to be completed in 2012.
Globe Telecom
membership
with external
agencies
Coalition for Better Education
Philippine Business for
Envvironment
i-Genius Global
Text2Teach
Teacher’s Month Campaign
Consortium
Globe 2011 Annual Report
120
GFT continues to strive for improvements in
their program implementation. The program
institutionalized the bringing of schools
principals to last day of GFT training whereby
GFT trainees present their PBL thesis
projects for more solid buy-in to the program
and secure support to post-GFT activities of
the GFT teachers. In 2012, GFT will conduct
Peer Coaching Seminars to 296 proficient
teachers, mentor 562 new teachers and
graduate an additional 100 GFT.
121
MANAGEMENT’S DISCUSSION AND ANALYSIS
Operational Performance
our commitments
Area
Environment
Workplace
Our Commitments
Promote efficient and effective
environmental protection initiatives
Continuously enable our people
through technology, systems and
processes to make the difference in
the lives of the customers we serve.
Build a customer-centric highperforming organization composed
of the happiest employees that are
able to delight our customers.
Community
Marketplace
Initiate and support programs that
promote social and economic
well-being in communities by
providing access to mobile and
web technologies that can enable,
empower and enrich their lives.
To expand network coverage and
infrastructure to provide access to
as many people as possible
Approach
• Initiate measures to reduce energy consumption across the
organization
• Manage carbon footprint through its operations
• Implement waste management programs (Solid wastes, Hazardous
wastes and Electronic wastes)
• Improve employee engagement through The Globe Way starting with
leaders as champions
• Strengthen the recognition and rewards system that is anchored on
operational performance
Results of Operations (₱ Mn)
Net Operating Revenues
Service Revenues
Mobile 1
Broadband 2
Fixed Line Data 3
Fixed Line Voice 4
Non-Service Revenues
31 Dec 2010
65,548
62,555
50,503
5,748
3,488
2,816
2,993
YoY Change
9%
8%
7%
30%
9%
-9%
25%
performance
• Develop and groom strong leaders and high performing talents by
investing in and enabling employees’ growth and career development
• Create a fun work environment promoting family, personal interests,
and total wellness
• Foster a culture of innovation
• Attain OHSAS certification for all its corporate offices in the near
future
• Synergize corporate social responsibility initiatives to demonstrate
model Communities of Practice (CoP) in 5 target provinces – Benguet,
Batangas, Bicol, Bohol and Lanao
• Develop and nurture partnerships with local and international
development organizations with specific benefits to at least 10,000
families in target provinces
• Leverage various modalities of employee volunteers for community
development
• 1,000 volunteers
• 10,000 volunteer hours
• Lead a value-chain analysis study, collaborating with Safety, Health
and Environment (SHE) and Logistics Administrative Services (LAS),
to assess GHG reduction opportunities and increased Recyclability
• Lead in the development of nurseries (seedlings) in 20 public schools
northern part of the Philippines for reforestation projects
• Continue support to the Taal Volcano Protected Landscape area to
improve water quality in Lake Taal which will benefit 13 municipalities
and 3 cities in the vicinity of the lake
• Develop diverse set of products and services to meet the ever
changing needs of subscribers
• Develop effective risk management strategies
• Strive to ensure minimal operational cost but maintain high
business efficiency
• Focus on customer loyalty programs and provide better offers for
our customers
1.
2.
3.
4.
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.
Includes revenues from landline and DUO services.
Mobile Business
Globe provides digital mobile
communication services nationwide using
a fully digital network. 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, consumable
G-Flex Plans, Load Allowance Plans,
Load Tipid, Apple™ iPhone plans and
high-end Platinum Plans. In 2010, the
Company expanded its postpaid offerings
to include 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
to these personalized plans, Globe also
introduced various add-on roaming and
mobile browsing plans to cater to the
needs of its subscribers.
their usage by selecting the freebies and
add-on services that would come with
their subscriptions, and to change their
choices monthly. Globe also introduced a
fully-customizable unlimited data plan to
its subscribers in mid-2011, driven by the
popularity of social networking sites as
well as increased smartphone penetration.
The Unli Surf Combo Plan provides
uninterrupted mobile surfing for on-the-go
subscribers without the need for a WiFi
connection. Data plan subscriptions also
come with consumable amounts which
subscribers may use to make local and
international calls and texts. On top of this,
subscribers also get bonus calls and SMS
which they may change monthly depending
on their needs.
Globe Prepaid and TM are the prepaid
brands of Globe. Globe Prepaid is targeted
towards the mainstream market. TM, on the
other hand, caters to the value-conscious
segment. Both brands offer a wide range
of domestic and international voice, SMS,
mobile browsing and other value-added
services, in either pay-per-use, unlimited,
or bucket pricing schemes. In 2011, the
Company refreshed Globe Prepaid through
its Today I Will campaign which aims to
support the aspirations of the Filipino youth
aided by the brand’s suite of products
Globe 2011 Annual Report
In 2011, Globe consolidated its
personalized and customizable plan service
with the launch of 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
All-Consumable Plan. Subscribers also get
the chance to design their plans based on
122
31 Dec 2011
71,564
67,811
53,953
7,496
3,792
2,570
3,753
123
MANAGEMENT’S DISCUSSION AND ANALYSIS
Operational Performance
and services. Its unique brand proposition
revolves around its innovative product and
service offerings, superior customer service,
and Globe’s “worldwidest” services and
global network reach.
In addition to digital wireless
communications, Globe also offers
mobile payments and remittance services
under the GCASH brand. GCASH is an
internationally acclaimed micro payment
service that transforms a mobile phone
into a virtual wallet, enabling secure,
fast, and convenient money transfers at
the speed and cost of a text message.
Since the launch of GCASH, whollyowned subsidiary GXI (G-Xchange, Inc.)
has established a wide network of local
and international partners that includes
government agencies, utility companies,
cooperatives, insurance companies,
remittance companies, universities, and
commercial establishments which all
accept GCASH as a means of payment for
products and services.
124
Globe closed the year with a cumulative
mobile subscriber base of 30.0 million in
2011, 13% higher than previous year’s
26.5 million SIMs. Gross additions were
up 7% year-on-year from 21.8 million in
2010 to 23.2 million. With significantly
lower churn rates, full year net subscriber
additions rose to 3.6 million against 2010
level of 3.2 million.
Globe Postpaid, which comprised 5% of
the total mobile subscriber base, delivered
record-breaking performances in 2011
driven by the customizable plans and the
launch of Apple™ iPhone 4S towards
yearend. Full year gross additions surged
42% against last year to close at a record
of 585,724, while net additions in 2011
reached an all-time high of 388,569 aided by
lower churn rates. As a result, cumulative
postpaid subscribers stood at 1,454,706
at yearend, 36% higher than 2010 level of
1,066,137. Postpaid gross and net ARPUs
of ₱1,261 and ₱962 were lower than last
year’s ₱1,609 and ₱1,192, respectively,
driven by lower MSF (monthly service fees)
from the new affordable and customizable
plans. Growth in mobile browsing, regular
and unlimited SMS, as well as unlimited
voice services were partly offset by lower
revenues from international services,
which were affected by the strong peso
and declining voice rates for inbound and
outbound services. Meanwhile, subscriber
acquisition costs (SAC) increased by 28%
from ₱3,489 last year to ₱4,471 in 2011 on
higher subsidies for the various handset
promo offerings and the iPhone 4S launch.
Costs, however, remained recoverable within
the 24-month contract period for postpaid
subscribers.
Globe Prepaid accounted for 51% of
cumulative mobile subscriber base in
2011. During the year, the brand got a
boost from a refreshed campaign that
focused on the aspirations of the Filipino
youth. The introduction of various valuefor-money, all-network offers also provided
additional lift to the brand. Full year gross
acquisitions reached 11.4 million, 5%
better than previous year’s level of 10.8
million. With churn rate declining year-onyear, net subscriber additions more than
doubled from 785,855 in the previous year
to 1,627,716 in 2011. As a result, total Globe
Prepaid subscribers rose 12% from 13.8
million last year to about 15.5 million SIMs in
2011. Globe Prepaid gross and net ARPUs
declined by 8% and 5% year-on-year,
respectively, with the increase in unlimited
voice, bucket SMS and mobile browsing
services partly offset by lower international
service revenues. Subscriber acquisition
costs, on the other hand, increased by
14% from ₱37 a year earlier to ₱42 in 2011
mainly on higher ads and promo spending
to support the refreshed campaign. SAC,
however, remained recoverable within a
month’s net ARPU.
TM accounted for 44% of the total mobile
subscriber base in 2011. The brand
delivered full year gross additions of 11.2
million, up 7% from previous year’s 10.5
million. TM continued to spur demand
through innovative services such as the
value-driven all-network offers and the
launch of its mobile browsing service
in 2011. While quarterly net additions
remained strong, full year net incremental
subscribers of about 1.6 million were lower
against the 2.2 million generated in 2010.
TM subscribers stood at 13.1 million at
yearend, up 13% from previous year’s
level of about 11.6 million SIMs. TM gross
and net ARPUs were lower than 2010
levels by 7% and 2%, respectively, with
continued shift in usage from regular, payper-use service to value-based bucket and
unlimited offerings. Subscriber acquisition
costs, on the other hand, were steady at
₱27 and remained recoverable within a
month’s net ARPU.
Mobile Subscribers (In ‘000 SIMs)
26,471
30,040
1,455
1,066
Globe Prepaid
and TM
25,405
28,585
2010
Globe Postpaid
2011
Fixed Line and Broadband Business
Globe offers a full range of fixed line
communications services, wired and
wireless broadband access, and end-toend connectivity solutions customized
for consumers, SMEs (Small and Medium
Enterprises), large corporations and
businesses.
Globe’s fixed line voice services include
local, national and international long
distance calling services in postpaid and
prepaid packages through its Globelines
brand. Subscribers get to enjoy tollfree rates for national long distance
calls with other Globelines subscribers
nationwide. Additionally, postpaid fixed
line voice consumers enjoy free unlimited
Globe 2011 Annual Report
The mobile business ended the year
on a high note, with revenues beating
market expectations to close at almost
₱54.0 billion, 7% above previous year’s
₱50.5 billion. This was despite peaking
penetration rates, persistent price
pressures and declining yields resulting
from subscribers’ continued preference for
unlimited and bucket service offers, as well
as the negative impact of the strong peso
on US$-linked revenues. Record subscriber
acquisitions in the postpaid segment, rapid
growth in mobile browsing activities, and
strong demand for the Company’s on-net
and all-network offers fuelled the year-onyear growth in mobile revenues. Demand
for mobile subscriptions also picked up
with the introduction of the latest gadgets
to the market such as the much anticipated
Apple™ iPhone 4S and iPad2, together
with the newest BlackBerry® phones, and
various popular Android devices.
125
MANAGEMENT’S DISCUSSION AND ANALYSIS
Operational Performance
broadband Subscribers (In ‘000)
1,074
1,411
1,122
819
dial-up internet through their Globelines
subscriptions. Low-MSF (monthly service
fee) fixed line voice services bundled
with internet plans are also available
nationwide and can be customized with
value-added services including multicalling, 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.
126
Broadband subscribers rose 31% from
previous year’s level to close the year with
more than 1,411,000 subscribers, with
growth across both wired and wireless
services. Wireless broadband customers
accounted for almost 90% of cumulative
net additions for the year and now make
up around 79% of total broadband
subscribers. This sustained subscriber
pick-up translated to a 30% growth in
service revenues, increasing to ₱7.5 billion
from ₱5.7 billion a year ago. The segment
now comprises 11% of consolidated
service revenues compared to 9% in 2010.
The fixed line data segment continued to
post strong growth as it ended 2011 with
service revenues of ₱3.8 billion, an increase
of 9% over the ₱3.5 billion posted in 2010.
This was primarily driven by the continued
demand for domestic leased lines and highspeed internet services for large enterprises.
Growth has been fueled by the Company’s
continued expansion of its network of highspeed data nodes, transmission links, and
international bandwidth capacity to serve
the requirements of business and enterprise
clients, including those in the financial
services, retail, offshoring and outsourcing
industries.
For Globe’s fixed line voice business, total
service revenues decreased by 9% to ₱2.6
billion, despite the increase in cumulative
fixed line voice subscribers. Total voice
subscribers grew 9% year-on-year to over
671,000, driven by higher subscriptions
to the postpaid DUO and SUPERDUO
services, as well as to the bundled voice
and broadband plans. The decline in
the topline figure was mainly due to the
continued shift in traffic from fixed line voice
to mobile services and the resulting weaker
demand for voice-only, fixed line products.
Wired
289
255
2010
2011
Financial Performance
Full year 2011 consolidated service
revenues reached an all-time high of PhP
67.8 billion, 8% higher than previous year’s
level of ₱62.6 billion. The mobile business
delivered strong results across all postpaid
and prepaid brands, while the broadband
business continued to register double-digit
revenue growth, riding on the strength of
the Tattoo brand and the rising demand
for fast and reliable internet connectivity.
Consolidated non-service revenues likewise
exceeded previous year’s level of about
PhP 3.0 billion to close the year at PhP
3.8 billion, underpinned by the record
acquisitions in the mobile postpaid segment
and the higher sales of Tattoo Broadband
sticks.
Operating expenses and subsidy increased
by 13% year-on-year from ₱29.0 billion
in 2010 to ₱32.7 billion driven by higher
marketing and subsidy, staff, services,
trade-related provisions and network costs.
Marketing and subsidy expenses were
25% higher than previous year as a result
of higher subscriber acquisitions, brandbuilding initiatives, higher handset subsidies,
as well as product and service launches for
the mobile business. As a percentage of
service revenues, marketing and subsidy
was up at 10% from 9% in 2010. Staff
costs also grew on higher headcount
and corporate incentives, while services
increased largely on professional and
consultancy fees, and outsourced services
related to broadband, IT and store services.
Network-related charges such as lease,
electricity, fuel, repairs and maintenance
were also up as a result of an expanded 2G,
3G, and broadband networks.
With the overall rise in service revenues, full
year 2011 consolidated EBITDA increased
by 5% from previous year’s ₱33.5 billion to
₱35.1 billion. Consolidated EBITDA margin
declined from previous year’s level of 54%
to 52% in 2011 driven by lower mobile
margins, and the increased contribution of
the lower-margin broadband business to
total results. Mobile EBITDA margin was
lower year-on-year but remained healthy
at 60% of mobile revenues in 2011. On the
other hand, the improved scale in the fixed
line and broadband business translated to
a better EBITDA margin of 22% of revenues
compared to only 14% in 2010.
Depreciation charges were also up by 5%
year-on-year with continued investments
in the mobile and broadband networks. In
2011, depreciation expense also included
an accelerated depreciation charge of about
₱350 million for a pilot implementation
of the network change-out in Davao. As
the Davao equipment change-out was
a pilot run that was conducted prior to
awarding the nationwide contract to Huawei
Technologies, Globe’s selected technology
partner, these depreciation charges were
treated as part of the normal depreciation
for the year arising from changes in the
remaining useful life of assets. Globe
reviews the estimated useful life of its
assets on an annual basis. However,
future accelerated depreciation charges
related to its network modernization and IT
transformation programs will be treated as
a non-recurring charge in determining core
net income.
Globe closed the year with core net income
of ₱10.0 billion, up 11% from about
₱9.1 billion a year ago. Core net income
excludes foreign exchange and mark-tomarket gains and losses as well as nonrecurring items. Reported net income after
tax, meanwhile, was slightly up by 1% from
previous year’s ₱9.7 billion to ₱9.8 billion
Globe 2011 Annual Report
For the broadband business, Globe offers
wired, fixed wireless, and fully mobile
internet-on-the-go services across various
technologies and connectivity speeds for
its residential and business customers.
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
256 Kbps up to 3 Mbps. In selected areas
where DSL is not 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 On-the-Go allows
subscribers to access the internet using
HSPA+, 3G with HSDPA, EDGE, GPRS
or WiFi at various hotspots nationwide
using a plug-and-play USB modem. This
service is available in both postpaid and
prepaid packages. In addition, consumers
in selected urban areas who require faster
connections have the option to subscribe
to Tattoo Torque broadband plans using
leading edge GPON (Gigabit Passive
Optical Network) technology with speeds of
up to 100 Mbps.
In 2011, the fixed line and broadband
business of Globe continued its robust
growth, posting a year-on-year revenue
increase of 15%. This was driven by the
strong performances of the broadband and
fixed line data businesses whose revenues
grew 30% and 9%, respectively.
Wireless
127
MANAGEMENT’S DISCUSSION AND ANALYSIS
Operational Performance
in 2011 as the 2010 results included the
one-time upward adjustment of ₱526 million
arising from prepaid load credits that have
either expired or have been used up.
Last November 2011, the Company
announced a landmark mobile network
modernization program aimed at
significantly improving network quality
and customer experience, increase voice
and data capacity, drive down costs, and
to prepare the network to meet the needs
of customers today and in the future. For
customers, this modernization program
will bring significant improvements in
network capacity leading to improved
reliability, ease of access, and pervasive
coverage. For Globe, this transformation
effort will enable improved revenue growth
prospects, savings in capital spend and
operating expenses, as well as efficiencies
resulting from synergies with a dedicated
vendor partner.
The network and IT transformation
initiatives are expected to generate
128
Globe’s balance sheet and cash flows
remain strong with ample liquidity
and gearing within optimum levels.
Consolidated assets amounted to
₱130,839 million in 2011 compared to
₱30,628 million in 2010. Consolidated
cash, cash equivalents and shortterm investment balances were at
₱5,159 million at the end of the period
compared to ₱5,869 million in 2010.
Consolidated net cash provided by
operating activities increased by
10% from ₱27,148 million in 2010 to
₱29,926 million in 2011 on higher cash
flows generated from operations.
Meanwhile, consolidated net cash used in
investing activities amounted to ₱18,190
million, 7% above 2010 level of ₱16,929
Service Revenue Profile
4%
With improved bottom line, consolidated
basic earnings per share increased to
₱74.02 in 2011 from previous year’s ₱73.29,
while consolidated diluted earnings per
share was slightly up to ₱73.77 from ₱73.12
a year ago. Consolidated return on average
equity, meanwhile, remained steady at 21%
using reported net income and average
equity balances for the year ended.
million. Full year consolidated capital
expenditures declined by 11% from last
year’s ₱19,467 million to ₱17,417 million in
2011. Capital expenditures in 2011 included
amounts to expand and upgrade the
Company’s broadband and mobile networks
and to deploy 4G mobile technology
via HSPA+ in key areas nationwide.
Consolidated net cash used in financing
increased by 23% to ₱12,521 million in
2011 with lower borrowings compared
to previous year. Consolidated debt
decreased by 3% from ₱50,371 million to
₱48,679 million in 2011. Loan repayments
of Globe for the period amounted to
₱11,553 million, 4% lower compared
to the ₱11,987 million paid in 2010.
The Company’s gearing levels have
been increasingly optimized over the
past few years with the raised dividend
payouts and higher proportion of debt
to total capitalization. Globe closed the
year with gross debt to equity ratio of
1.01:1 on a consolidated basis which
is well within the 2:1 debt to equity
limit dictated by its debt covenants.
Meanwhile, net debt to equity ratio was
at 0.90:1 compared to 0.95:1 in 2010.
5%
return on equity
net income (₱ Bn)
core net income (₱ Bn)
11%
10
21%
21%
9.7
9.8
2010
2011
2010
2011
9.1
2010
80%
Mobile
Fixed Line Data
Fixed Line Voice
Broadband
2011
Globe 2011 Annual Report
The Company is at the same time
initiating an IT transformation project
to create a streamlined and integrated
information environment, in response to
changing market and business demands.
The system transformation effort is a
comprehensive re-engineering of Globe’s
IT systems over the next two years. This
will result in convergent, single billings,
faster time-to-market for new products,
and quicker response time to customer
queries and service requests through
the Company’s stores and call centers.
Total capital expenditures for both the
network and IT transformation program is
about US$790 million over the next five
years, with US$700 million for the network
modernization program and US$90 million
for the IT transformation initiative. About
US$530 million will be spent in 2012 and
US$110 million in 2013.
savings in operating expenses and capital
expenditures over the next 5 years totaling
to US$180 million and US$210 million
respectively, in addition to the revenue uplift
driven by the network quality improvements
and increased capacity. Since it will involve
replacing network equipment and IT
systems, and while all efforts will be taken to
maximize the re-use of existing equipment,
the Company expects that assets with net
book values estimated at US$388 million
will need to be decommissioned after
modernization. This estimate is before any
possible proceeds from resale and is still
subject to actual site validation. The net
book values of these non-useable assets
will impact Globe’s profitability through
an acceleration of the depreciation over
its remaining useful life until such time
when the new, replacement capex is ready
for service. Owing to its exceptional and
non-recurring nature, this accelerated
depreciation will not be considered in
the determination of core net income. As
these are also non-cash charges, it will not
compromise cash flows nor the Company’s
ability to declare dividends.
129
Globe 2011 Annual Report
131
130
INDEPENDENT AUDITORS’ REPORT
GLOBE TELECOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
The Stockholders and the Board of Directors
Globe Telecom, Inc.
We have audited the accompanying consolidated financial statements of Globe Telecom, Inc. and
Subsidiaries, which comprise the consolidated statement of financial position as at December 31, 2011, 2010
and 2009, and the consolidated statements of comprehensive income, consolidated statements of changes in
equity and consolidated statements of cash flows for the years then ended, and a summary of significant
accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with Philippine Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation and fair presentation of 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 auditor’s 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 auditor considers 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, 2011, 2010 and 2009, and its financial
performance and its cash flows for the years then ended in accordance with Philippine Financial Reporting
Standards.
SYCIP GORRES VELAYO & CO.
February 10, 2012
132
2011
28, 30
28
4, 28
5
28
6, 28
P 5,159,046
=
–
10,119,505
1,911,190
9,766
5,586,419
22,785,926
778,321
23,564,247
=
P 5,868,986
–
8,374,123
1,839,333
19,888
4,704,198
20,806,528
778,321
21,584,849
=
P 5,939,927
2,784
6,583,228
1,653,750
36,305
4,199,320
18,415,314
–
18,415,314
7
8
9
10
24
11,18
99,267,780
191,645
3,591,514
249,000
765,670
3,209,477
107,275,086
=
P 130,839,333
101,837,254
214,192
3,248,376
197,016
670,594
2,875,686
109,043,118
=
P 130,627,967
101,693,868
236,739
2,982,856
233,800
742,538
3,338,410
109,228,211
=
P 127,643,525
12, 18, 28
14, 28
4
28
24
13
=
P 23,042,514
1,756,760
2,474,142
208,247
1,157,927
166,773
=
P 22,115,203
–
2,402,749
93,336
1,098,492
224,388
=
P 20,838,681
2,000,829
2,981,880
85,867
1,107,721
89,404
14, 28
15, 28
9,597,367
–
38,403,730
8,677,209
–
34,611,377
5,667,965
803,617
33,575,964
25.4
583,365
38,987,095
697,729
35,309,106
–
33,575,964
24
14, 28
28
3,929,414
37,324,579
58,370
4,620,490
41,694,261
152,529
4,627,294
39,808,057
6,589
15, 28
2,111,719
43,424,082
82,411,177
1,982,453
48,449,733
83,758,839
1,916,707
46,358,647
79,934,611
17
16, 18
17, 28
17
33,967,476
573,436
(124,902)
14,012,146
48,428,156
=
P 130,839,333
33,946,004
544,794
(88,310)
12,466,640
46,869,128
=
P 130,627,967
33,912,158
468,367
18,518
13,309,871
47,708,914
=
P 127,643,525
Assets classified as held for sale
Noncurrent Assets
Property and equipment - net
Investment property - net
Intangible assets and goodwill - net
Investments in joint ventures
Deferred income tax - net
Other noncurrent assets - net
25.4
Total Assets
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued expenses
Notes payable
Unearned revenues
Derivative liabilities
Income tax payable
Provisions
Current portion of:
Long-term debt
Other long-term liabilities
Liabilities directly associated with the assets
classified as held for sale
Noncurrent Liabilities
Deferred income tax - net
Long-term debt - net of current portion
Derivative liabilities
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
See accompanying Notes to Consolidated Financial Statements.
2009
Globe 2011 Annual Report
Gemilo J. San Pedro
Partner
CPA Certificate No. 32614
SEC Accreditation No. 0094-AR-2 (Grpup A),
February 11, 2010, valid until February 10, 2013
Tax Identification No. 102-096-610
BIR Accreditation No. 08-001998-34-2009,
June 1, 2009, Valid until May 31, 2012
PTR No. 3174825, January 2, 2012, Makati City
ASSETS
Current Assets
Cash and cash equivalents
Short-term investments
Receivables - net
Inventories and supplies
Derivative assets
Prepayments and other current assets - net
December 31
2010
(In Thousand Pesos)
Notes
133
GLOBE TELECOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Notes
REVENUES
Service revenues
Nonservice revenues
Interest income
Other income - net
3, 16, 29
19, 29
20, 29
Gain on disposal of property
and equipment - net
COSTS AND EXPENSES
General, selling and administrative
Depreciation and amortization
Cost of sales
Financing costs
Impairment losses and others
Equity in net losses of joint ventures
7, 29
21
7, 8, 9, 29
5
14, 22, 29
23
10, 29
INCOME BEFORE INCOME TAX
PROVISION FOR (BENEFIT FROM)
INCOME TAX
Current
Deferred
24
NET INCOME
OTHER COMPREHENSIVE INCOME
(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
Tax effect relating to components of other
comprehensive income
17
TOTAL COMPREHENSIVE INCOME
Earnings Per Share
Basic
Diluted
Cash dividends declared per common
share
134
17
Years Ended December 31
2010
2009
2011
(In Thousand Pesos, Except Per Share Figures)
=
P 67,811,301
3,753,283
297,388
574,768
72,436,740
=
P 62,554,689
2,993,301
218,532
856,941
66,623,463
=
P 62,443,518
1,418,614
271,806
1,064,476
65,198,414
319,250
72,755,990
32,535
66,655,998
597,786
65,796,200
29,304,463
18,941,227
5,887,589
2,579,714
1,918,583
27,345
58,658,921
26,692,104
18,085,839
4,238,960
2,068,401
1,529,534
2,968
52,617,806
24,496,882
17,388,430
2,947,950
2,182,881
800,346
7,009
47,823,498
14,097,069
14,038,192
17,972,702
5,049,479
(784,215)
4,265,264
4,187,625
105,933
4,293,558
5,583,809
(179,980)
5,403,829
9,831,805
9,744,634
12,568,873
(53,194)
(133,257)
25,040
1,269
20,150
14,553
(625)
(33,698)
24,682
15,958
(36,592)
39,977
(106,828)
(10,375)
53,900
=
P 9,795,213
=
P 9,637,806
=
P 12,622,773
=
P 74.02
=
P 73.77
=
P 73.29
=
P 73.12
=
P 94.59
=
P 94.31
=
P 62.00
=
P 80.00
=
P 114.00
Cost of
Notes
Capital
Additional
Share-Based
Other
Stock
Paid-in
Payments
Reserves
Retained
(Note 17)
Earnings
(Note 17)
Capital
(Note 16.5)
Total
For the Year Ended December 31, 2011 (In Thousand Pesos)
As of January 1, 2011
Total comprehensive income
(loss) for the year
Dividends on:
Common stock
Preferred stock
Cost of share-based payments
Collection of subscription
receivables
Exercise of stock options
As of December 31, 2011
17.3
18.1
17.2
=
P 7,409,223
=
P 26,536,781
=
P 544,794
(P
=88,310)
=
P 12,466,640
=
P 46,869,128
–
–
–
(36,592)
9,831,805
9,795,213
–
–
–
–
–
–
–
–
49,338
–
–
–
(8,205,605)
(80,694)
(8,205,605)
(80,694)
49,338
776
227
P 7,410,226
=
–
20,469
=
P 26,557,250
–
(20,696)
=
P 573,436
–
–
(P
=124,902)
–
–
=
P 14,012,146
776
–
=
P 48,428,156
For the Year Ended December 31, 2010 (In Thousand Pesos)
As of January 1, 2010
Total comprehensive income
(loss) for the year
Dividends on common stock
Cost of share-based payments
Exercise of stock options
As of December 31, 2010
17.3
18.1
17.2
=
P 7,409,079
=
P 26,503,079
=
P 468,367
=
P 18,518
=
P 13,309,871
=
P 47,708,914
–
–
–
144
=
P 7,409,223
–
–
–
33,702
=
P 26,536,781
–
–
104,788
(28,361)
=
P 544,794
(106,828)
–
–
–
(P
=88,310)
9,744,634
(10,587,865)
–
–
=
P 12,466,640
9,637,806
(10,587,865)
104,788
5,485
=
P 46,869,128
For the Year Ended December 31, 2009 (In Thousand Pesos)
As of January 1, 2009
Total comprehensive income
for the year
Dividends on:
Common stock
Preferred stock
Cost of share-based payments
Collection of subscription
receivables
Exercise of stock options
As of December 31, 2009
17.3
18.1
17.2
=
P 7,408,075
=
P 26,453,323
=
P 386,905
(P
=35,382)
=
P 15,878,634
=
P 50,091,555
–
–
–
53,900
12,568,873
12,622,773
–
–
–
732
–
–
–
–
–
–
126,437
–
–
–
(15,087,144)
(50,492)
–
(15,087,144)
(50,492)
126,437
272
=
P 7,409,079
49,756
=
P 26,503,079
–
(44,975)
=
P 468,367
–
–
=
P 18,518
–
–
=
P 13,309,871
732
5,053
=
P 47,708,914
See accompanying Notes to Consolidated Financial Statements.
Globe 2011 Annual Report
See accompanying Notes to Consolidated Financial Statements.
27
GLOBE TELECOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
135
GLOBE TELECOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Notes
CASH FLOWS FROM OPERATING
ACTIVITIES
Income before income tax
Adjustments for:
Depreciation and amortization
Interest expense
Foreign exchange losses (gains) - net
Impairment losses on property and
equipment
Cost of share-based payments
Equity in net losses of a joint venture
Dividend income
Provisions for (reversals of) claims and
assessments
Loss (gain) on derivative instruments
Interest income
Gain on disposal of property and
equipment
Operating income before working capital
changes
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables
Inventories and supplies
Prepayments and other current assets
Increase (decrease) in:
Accounts payable and accrued
expenses
Unearned revenues
Other long-term liabilities
Cash generated from operations
Income tax paid
Net cash flows provided by operating
activities
(Forward)
136
Years Ended December 31
2011
2010
(In Thousand Pesos)
Notes
2009
=
P 14,097,069
=
P 14,038,192
=
P 17,972,702
7, 8, 9
22
20, 22
18,941,227
2,059,660
308,650
18,085,839
1,981,785
(465,373)
17,388,430
2,096,945
(286,530)
23
16, 18
10
128,614
49,338
27,345
(503)
63,126
104,788
2,968
(2,366)
75,017
126,437
7,009
(592)
23
20, 22
19
(47,916)
(25,495)
(297,388)
138,760
28,295
(218,532)
(88,047)
46,943
(271,806)
7
(319,250)
(32,535)
(597,786)
34,921,351
33,724,947
36,468,722
(1,678,456)
(67,358)
(774,230)
(1,932,420)
(185,583)
(438,809)
833,760
(529,428)
754,837
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
Collection of subscriptions receivable and
exercise of stock options
Interest paid
Net cash flows used in financing activities
14
14
17
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
28, 30
Years Ended December 31
2011
2010
(In Thousand Pesos)
2009
=
P 8,000,000
1,738,600
=
P 14,181,967
1,000,000
=
P 18,629,170
2,000,000
(11,552,501)
–
(8,986,275)
(3,000,829)
(9,820,330)
(4,001,330)
(8,205,605)
(45,399)
(10,587,865)
(50,492)
(15,087,144)
(60,637)
776
(2,456,763)
(12,520,892)
5,485
(2,734,000)
(10,172,009)
5,785
(3,009,233)
(11,343,719)
(784,434)
47,555
203,391
74,494
(118,496)
(45,688)
5,868,986
5,939,927
5,782,224
=
P 5,159,046
=
P 5,868,986
=
P 5,939,927
See accompanying Notes to Consolidated Financial Statements.
7,30
9
10
2,142,313
71,393
(180,080)
34,434,933
(4,508,758)
980,104
(579,131)
(314,998)
31,254,110
(4,105,733)
1,635,036
(265,831)
68,345
38,965,441
(5,589,227)
29,926,175
27,148,377
33,376,214
(18,007,055)
(145,208)
(79,010)
(17,552,246)
(169,329)
–
(20,988,768)
(99,164)
(141,330)
180,939
113,258
58,145
–
(399,878)
503
259,992
(18,189,717)
2,784
482,918
2,366
191,436
(16,928,813)
(2,784)
(863,889)
592
208,094
(21,829,104)
Globe 2011 Annual Report
CASH FLOWS FROM INVESTING
ACTIVITIES
Additions to:
Property and equipment
Intangible assets
Investment in joint ventures
Proceeds from sale of property and
equipment
Decrease (increase) in:
Short-term investments
Other noncurrent assets
Dividend received
Interest received
Net cash flows used in investing activities
-2-
137
GLOBE TELECOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
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 (GTIC HK), a limited
company organized under the Companies Ordinance (Chapter 32 of the Laws of Hong Kong). As of
December 31, 2011, GTIC HK has not yet started commercial operations.
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 5th Floor, Globe Telecom Plaza, Pioneer Highlands, Pioneer corner
Madison Streets, Mandaluyong City, Metropolitan Manila, Philippines. Globe Telecom is listed in the
Philippine Stock Exchange (PSE) and has been included in the PSE composite index since September 17,
2001. Major stockholders of Globe Telecom include Ayala Corporation (AC), Singapore Telecom
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-toperson fund transfers via short messaging services (SMS) and allows Globe Telecom and Innove subscribers
to easily and conveniently put cash into and get cash out of the GCash system.
Globe Telecom acquired 100% of Entertainment Gateway Group Corporation (EGGC) and EGGstreme
(Hong Kong) Limited (EHL) (collectively referred here as “EGG Group”) on
June 26, 2008 (see Note 9). EGG Group is engaged in the development and creation of wireless products
and services accessible through telephones or other forms of communication devices. 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 is in the process of liquidating its business and is
operating in a run-off mode.
2.
Summary of Significant Accounting Policies
2.1 Basis of Financial Statement Preparation
The accompanying consolidated financial statements of Globe Telecom and its wholly-owned
subsidiaries, collectively referred to as the “Globe Group”, have been prepared under the historical cost
convention method, except for derivative financial instruments and available-for-sale (AFS) investments
that are measured at fair value.
The consolidated financial statements of the Globe Group are presented in Philippine Peso (P
=), Globe
Telecom’s functional currency, and rounded to the nearest thousands except when otherwise indicated.
On February 10, 2012, the Board of Directors (BOD) approved and authorized the release of the
consolidated financial statements of Globe Telecom, Inc. and Subsidiaries as of and for the years ended
December 31, 2011, 2010 and 2009.
2.2 Statement of Compliance
The consolidated financial statements of the Globe Group have been prepared in compliance with
Philippine Financial Reporting Standards (PFRS).
2.3 Basis of Consolidation
The accompanying consolidated financial statements include the accounts of Globe Telecom and its
subsidiaries as of and for the years ended December 31, 2011, 2010 and 2009. The subsidiaries are as
follows:
Name of Subsidiary
Innove
GXI
EGG Group
EGGC
Philippines
EHL
Hong Kong
GTIC
Philippines
United States
GTI
Mobile content and application
development services
Mobile content and application
development services
Investment and holding company
Wireless and data communication
services
Percentage of
Ownership
100%
100%
100%
100%
100%
100%
Globe 2011 Annual Report
138
Place of Incorporation
Principal Activity
Philippines
Wireless and wireline voice and data
communication services
Philippines
Software development for
telecommunications applications
and money remittance services
139
Subsidiaries are consolidated from the date on which control is transferred to the Globe Group and
cease to be consolidated from the date on which control is transferred out of the Globe Group. The
financial statements of the subsidiaries are prepared for the same reporting year as Globe Telecom
using uniform accounting policies for like transactions and other events in similar circumstances. All
significant intercompany balances and transactions, including intercompany profits and losses, were
eliminated during consolidation in accordance with the accounting policy on consolidation.
2.4 Changes in Accounting Policies
The accounting policies adopted are consistent with those of the previous financial year, except for the
following new and amended Philippine Accounting Standards (PAS), PFRS and Philippine Interpretations
of International Financial Reporting Interpretations Committee (IFRIC) effective as of January 1, 2011.
Except as otherwise indicated, the adoption of the new and amended Standards and Interpretations, did
not have a significant impact on the consolidated financial statements.

Amendment to PAS 24, Related Party Disclosures
This Amendment clarifies the definition of a related party. The new definitions emphasize a
symmetrical view of related party relationships and clarify the circumstances in which persons and
key management personnel affect related party relationships of an entity.
The measurement options available for non-controlling interest (NCI) were amended. Only
components of NCI that constitute a present ownership interest that entitles their holder to a
proportionate share of the entity’s net assets in the event of liquidation should be measured at
either fair value or at the present ownership instruments’ proportionate share of the acquiree’s
identifiable net assets. All other components are to be measured at their acquisition date fair
value.

PFRS 7, Financial Instruments: Disclosures
This Amendment was intended to simplify the disclosures provided by reducing the volume of
disclosures around collateral held and improving disclosures by requiring qualitative
information to put the quantitative information in context.

PAS 1, Presentation of Financial Statements
This Amendment clarifies that an entity will present an analysis of other comprehensive income
(OCI) for each component of equity, either in the statement of changes in equity or in the notes
to the financial statements.

PAS 27, Consolidated and Separate Financial Statements
This Amendment clarifies that the consequential amendments from PAS 27 made to
PAS 21, The Effect of Changes in Foreign Exchange Rates, PAS 28, Investments in Associates
and PAS 31, Interests in Joint Ventures, apply prospectively for annual periods beginning on or
after July 1, 2009 or earlier when PAS 27 is applied earlier.

PAS 34, Interim Financial Reporting
This Amendment provides guidance to illustrate how to apply disclosure principles in PAS 34
and add disclosure requirements around:
a) The circumstances likely to affect fair values of financial instruments and their classification;
b) Transfers of financial instruments between different levels of the fair value hierarchy;
c) Changes in classification of financial assets; and
d) Changes in contingent liabilities and assets.

Philippine Interpretation IFRIC 13, Customer Loyalty Programmes
This Amendment clarifies that when the fair value of award credits is measured based on the
value of the awards for which they could be redeemed, the amount of discounts or incentives
otherwise granted to customers not participating in the award credit scheme, is to be taken
into account.
In addition, the amendment introduces an exemption from the general related party disclosure
requirements for transactions with government and entities that are controlled, jointly controlled or
significantly influenced by the same government as the reporting entity.

Amendment to PAS 32, Financial Instruments: Presentation - Classification of Rights Issues
It amends the definition of a financial liability in order to classify rights issues (and certain options or
warrants) as equity instruments in cases where such rights are given pro rata to all of the existing
owners of the same class of an entity’s non-derivative equity instruments, in order to acquire a fixed
number of the entity’s own equity instruments for a fixed amount in any currency.

Amendment to Philippine Interpretation IFRIC 14, Prepayments of a Minimum Funding Requirement
This Amendment removes an unintended consequence when an entity is subject to minimum
funding requirements and makes an early payment of contributions to cover such requirements. The
amendment permits a prepayment of future service cost by the entity to be recognized as a pension
asset. The Globe Group is not subject to minimum funding requirements in the Philippines,
therefore, the amendment of the interpretation has no effect on the financial position nor
performance of the Globe Group.

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.
Improvements to PFRSs
The omnibus amendments to PFRSs issued in May 2010 were issued primarily with a view to
removing inconsistencies and clarifying wording. There are separate transitional provisions for each
standard. Except otherwise stated, the Globe Group does not expect the adoption of these new
standards to have significant impact on the consolidated financial statements.
Effective 2012

Amendments to PAS 1, Financial Statement Presentation, Presentation of Items of Other
Comprehensive Income
This Amendment is effective for annual periods beginning on or after July 1, 2012. It changed the
grouping of items presented in OCI. 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. The amendment affects presentation only and
will have no impact on the Globe Group’s financial position or performance.

140
PFRS 3, Business Combinations (Revised)
This Amendment clarifies that the Amendments to PFRS 7, Financial Instruments: Disclosures,
PAS 32 and PAS 39 that eliminate the exemption for contingent consideration, do not apply to
contingent consideration that arose from business combinations whose acquisition dates
precede the application of PFRS 3 (as revised in 2008).
Globe 2011 Annual Report
Philippine Interpretation IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments
This Interpretation clarifies that equity instruments issued to a creditor to extinguish a financial
liability qualify as consideration paid. The equity instruments issued are measured at their fair value.
In case that this cannot be reliably measured, the instruments are measured at the fair value of the
liability extinguished. Any gain or loss is recognized immediately in profit or loss.
141


PAS 12, Income Taxes, Deferred Tax: Recovery of Underlying Assets
This Amendment to PAS 12 is effective for annual periods beginning on or after January 1, 2012.
The amendment clarified the determination of deferred tax on investment property measured at fair
value. The amendment introduces a rebuttable presumption that deferred tax on investment
property measured using the fair value model in PAS 40 should be determined on the basis that its
carrying amount will be recovered through sale. Furthermore, it introduces the requirement that
deferred tax on non-depreciable assets that are measured using the revaluation model in PAS 16
always be measured on a sale basis of the asset.
PFRS 7, Financial Instruments: Disclosures – Enhanced Derecognition Disclosure Requirements
The Amendments to PFRS 7 are effective for annual periods beginning on or after July 1, 2012. The
amendments require additional disclosure about financial assets that have been transferred but not
derecognized to enable the user of the entity’s financial statements to understand the relationship
with those assets that have not been derecognized and their associated liabilities. In addition, the
amendments require disclosures about continuing involvement in derecognized assets to enable
the user to evaluate the nature of, and risks associated with, the entity’s continuing involvement in
those derecognized assets.
Effective 2013

PFRS 7, Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities
The Amendments to PFRS 7 are to be retrospectively applied for annual periods beginning on or
after January 1, 2013. 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. 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, the following minimum quantitative information. This is presented separately for
financial assets and financial liabilities recognized at the end of the reporting period:
a) The gross amounts of those recognized financial assets and recognized financial liabilities;
b) The amounts that are set off in accordance with the criteria in PAS 32 when determining the net
amounts presented in the statement of financial position;
c) The net amounts presented in the statement of financial position;
d) The amounts subject to an enforceable master netting arrangement or similar agreement that
are not otherwise included in (b) above, including:
i.
Amounts related to recognized financial instruments that do not meet some or all of the
offsetting criteria in PAS 32; and
ii.
Amounts related to financial collateral (including cash collateral); and
e) The net amount after deducting the amounts in (d) from the amounts in (c) above.
The amendment affects disclosures only and has no impact on the Group’s financial position or
performance.


PFRS 11, Joint Arrangements
This Standard becomes effective for annual periods beginning on or after January 1, 2013. It
replaces PAS 31, Interests in Joint Ventures 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.

PFRS 12, Disclosure of Involvement with Other Entities
This Standard becomes effective for annual periods beginning on or after January 1, 2013.
It includes all of the disclosures that were previously in PAS 27 related to consolidated financial
statements, as well as all of the disclosures that were previously included in
PAS 31 and PAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint
arrangements, associates and structured entities. A number of new disclosures are also required.

PFRS 13, Fair Value Measurement
This Standard becomes effective for annual periods beginning on or after January 1, 2013. It
establishes a single source of guidance under PFRS for all fair value measurements. It does not
change when an entity is required to use fair value, but rather provides guidance on how to measure
fair value under PFRS when fair value is required or permitted. The Group is currently assessing the
impact that this standard will have on the financial position and performance.

Amendment to PAS 19, Employee Benefits
This Amendment becomes effective for annual periods beginning on or after
January 1, 2013. The Amendment provides changes which range from fundamental changes such
as removing the corridor mechanism and the concept of expected returns on plan assets to simple
clarifications and re-wording. The Group is currently assessing the full impact of the amendments.

PAS 27, Separate Financial Statements (Revised)
This Amendment becomes effective for annual periods beginning on or after
January 1, 2013. 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.

PAS 28, Investments in Associates and Joint Ventures (Revised)
This Amendment becomes effective for annual periods beginning on or after
January 1, 2013. 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.
Effective 2014

Amendments to PAS 32, Offsetting Financial Assets and Financial Liabilities
These Amendments are to be retrospectively applied for annual periods beginning on or after
January 1, 2014. It clarifies 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
Group is currently assessing the impact of these amendments.
Globe 2011 Annual Report
142
PFRS 10, Consolidated Financial Statements
This Standard becomes effective for annual periods beginning on or after January 1, 2013. 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 Standing
Interpretations Committee (SIC)-12, Consolidation - Special Purpose Entities.
PFRS 10 establishes a single control model that applies to all entities including special purpose
entities. The changes introduced by PFRS 10 will require management to exercise significant
judgment to determine which entities are controlled, and therefore, are required to be consolidated
by a parent, compared with the requirements that were in PAS 27. The Group is currently assessing
the full impact that this standard will have on the financial position and performance.
143
Effective 2015

PFRS 9, Financial Instruments: Classification and Measurement
This Standard becomes effective for annual periods beginning on or after January 1, 2015. The
Standard, as issued in 2010, reflects the first phase of the work on the replacement of PAS 39 and
applies to classification and measurement of financial assets and financial liabilities as defined in
PAS 39. In subsequent phases, hedge accounting and impairment of financial assets will be
addressed with the completion of this project expected in 2012. 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 classification and measurements of financial liabilities. The Group
will quantify the effect in conjunction with the other phases, when issued, to present a
comprehensive picture.
Postpaid service arrangements include fixed monthly service fees, which are
recognized over the subscription period on a pro-rata basis. Monthly service
fees billed in advance are initially deferred and recognized as revenues
during the period when earned. Telecommunications services provided to
postpaid subscribers are billed throughout the month according to the bill
cycles of subscribers. As a result of bill cycle cut-off, monthly service
revenues earned but not yet billed at the end of the month are estimated and
accrued. These estimates are based on actual usage less estimated
consumable usage using historical ratio of consumable usage over billable
usage.
Proceeds from over-the-air reloading channels and the sale of prepaid cards
are deferred and shown as “Unearned revenues” in the consolidated
statements of financial position. Revenue is recognized upon actual usage of
airtime value net of discounts on promotional calls and net of free airtime
value or SMS and bonus reloads. Unused load value is recognized as
revenue upon expiration.
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).
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.
Revenue is recognized when the delivery of the products or services has occurred and
collectability is reasonably assured.
Revenue is stated at amounts invoiced and accrued to customers, taking into consideration the
bill cycle cut-off (for postpaid subscribers), the amount charged against preloaded airtime value
(for prepaid subscribers), switch-monitored traffic (for carriers and content providers) and
excludes value-added tax (VAT) and overseas communication tax. Inbound traffic charges, net
of discounts and outbound traffic charges, are accrued based on actual volume of traffic
monitored by Globe Group’s network and in the traffic settlement system.
2.6.1.1
Service Revenues
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 statements of comprehensive income.
Globe 2011 Annual Report
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 amounts
settled with carriers owning the network where the outgoing voice call or
SMS terminates and payout to content providers; (4) mobile data services,
(5) inbound revenues from other carriers which terminate their calls to the
Globe Group’s network less discounts; (6) revenues from international
roaming services; (7) usage of broadband and internet services in excess of
fixed monthly service fees; and (8) one-time service connection fees (for
wireline voice and data subscribers).
144
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
statements 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.
145
2.6.1.3
Others
Interest income is recognized as it accrues using the effective interest rate method.
Lease income from operating lease is recognized on a straight-line basis over the lease
term.
Dividend income is recognized when the Globe Group’s right to receive payment is
established.
2.6.2
Subscriber Acquisition and Retention Costs
The related costs incurred in connection with the acquisition of 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 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
statements of comprehensive income upon delivery or when there is a contractual obligation to
deliver. Bill credits are deducted from service revenues upon application against qualifying
subscriber bills.
2.6.3
Cash and Cash Equivalents
Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash with original maturities of
three months or less from date of placement and that are subject to an insignificant risk of
change in value.
2.6.4
Financial Instruments
2.6.4.1
General
2.6.4.1.1 Initial recognition and fair value measurement
Financial instruments are recognized in the Globe Group’s consolidated
statements of financial position when the Globe Group becomes a party to
the contractual provisions of the instrument. Purchases or sales of financial
assets that require delivery of assets within the time frame established by
regulation or convention in the marketplace are recognized (regular way
trades) on the trade date, i.e., the date that the Globe Group commits to
purchase or sell the asset.
Financial instruments are recognized initially at fair value. Except for financial
instruments at fair value through profit or loss (FVPL), the initial measurement
of financial assets includes directly attributable transaction costs.
The fair value for financial instruments traded in active markets at the end of
reporting date is based on their quoted market price or dealer price
quotations (bid price for long positions and ask price for short positions),
without any deduction for transaction costs. When current bid and ask prices
are not available, the price of the most recent transaction provides evidence
of the current fair value as long as there has not been a significant change in
economic circumstances since the time of the transaction.
For all other financial instruments not listed in an active market, the fair value
is determined by using appropriate valuation techniques. Valuation
techniques include net present value techniques, comparison to similar
instruments for which market observable prices exist, option pricing models,
and other relevant valuation models. Any difference noted between the fair
value and the transaction price is treated as expense or income, unless it
qualifies for recognition as some type of asset or liability.
Where the transaction price in a non-active market is different from the fair
value of other observable current market transactions in the same instrument
or based on a valuation technique whose variables include only data from
observable market, the Globe Group recognizes the difference between the
transaction price and fair value (a “Day 1” profit 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 of payment
has been established. Both are recorded in profit or loss.
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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.
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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, available-for-sale or held to
maturity depends on the nature of the asset. This evaluation does not affect any
financial assets designated at fair value through profit or loss using the fair value
option at designation, 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
rate method, less any impairment losses. Amortized cost is calculated by taking into
account any discount or premium on acquisition and fees that are an integral part of
the effective interest rate. Gains and losses are recognized in profit or loss when the
HTM investments are derecognized or impaired, as well as through the amortization
process. The amortization is included in “Interest income” in the consolidated
statements of comprehensive income. The effects of restatement of foreign currencydenominated HTM investments are recognized in profit or loss.
2.6.4.1.4 Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are not entered into with the
intention of immediate or short-term resale and are not classified as financial assets
held for trading, designated as AFS investments or designated at FVPL.
This accounting policy relates to the consolidated statements of financial position
caption “Receivables”, which arise primarily from subscriber and traffic revenues and
other types of receivables, “Short-term investments”, which arise primarily from
unquoted debt securities, and other nontrade receivables included under
“Prepayments and other current assets” and loans receivables included under “Other
noncurrent assets”.
Receivables are recognized initially at fair value, which normally pertains to the billable
amount. After initial measurement, receivables are subsequently measured at
amortized cost using the effective interest rate method, less any allowance for
impairment losses. Amortized cost is calculated by taking into account any discount or
premium on the issue and fees that are an integral part of the effective interest rate.
Penalties, termination fees and surcharges on past due accounts of postpaid
subscribers are recognized as revenues upon collection. The losses arising from
impairment of receivables are recognized in the “Impairment losses and others”
account in the consolidated statements of comprehensive income. The level of
allowance for impairment losses is evaluated by management on the basis of factors
that affect the collectability of accounts (see accounting policy on 2.6.4.2 Impairment
of Financial Assets).
Short-term investments, other nontrade receivables and loans receivable are
recognized initially at fair value, which normally pertains to the consideration paid.
Similar to receivables, subsequent to initial recognition, short-term investments, other
nontrade receivables and loans receivables are measured at amortized cost using the
effective interest rate method, less any allowance for impairment losses.
2.6.4.1.5 AFS investments
AFS investments are those investments which are designated as such or do not qualify
to be classified as designated as at FVPL, HTM investments or loans and receivables.
They are purchased and held indefinitely, and may be sold in response to liquidity
requirements or changes in market conditions. They include equity investments,
money market papers and other debt instruments.
After initial measurement, AFS investments are subsequently measured at fair value.
Interest earned on holding AFS investments are reported as interest income using the
effective interest rate. The unrealized gains and losses arising from the fair 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 statements of financial position. When the investment is disposed of,
the cumulative gains or losses previously recognized in equity is recognized in profit or
loss.
There are no outstanding HTM investments as of December 31, 2011, 2010 and 2009.
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When the fair value of AFS investments cannot be measured reliably because of lack
of reliable estimates of future cash flows and discount rates necessary to calculate the
fair value of unquoted equity instruments, these investments are carried at cost, less
any allowance for impairment losses. Dividends earned on holding AFS investments
are recognized in profit or loss when the right of payment has been established.
2.6.4.1.7.2
The Globe Group evaluates its AFS investments whether the ability and intention to
sell them in the near term is still appropriate. When the Globe Group is unable to
trade the AFS investments due to inactive markets and management intent
significantly changes to do so in the foreseeable future, the Globe Group may elect to
reclassify it to HTM investment or loans and receivables provided they meet certain
criteria set by PAS 39 in rare circumstances.
The losses arising from impairment of such investments are recognized as
“Impairment losses and others” in the consolidated statements of comprehensive
income.
2.6.4.1.6 Other financial liabilities
Issued financial instruments or their components, which are not designated at FVPL
are classified as other financial liabilities where the substance of the contractual
arrangement results in the Globe Group having an obligation either to deliver cash or
another financial asset to the holder, or to satisfy the obligation other than by the
exchange of a fixed amount of cash or another financial asset for a fixed number of
own equity shares. The components of issued financial instruments that contain both
liability and equity elements are accounted for separately, with the equity component
being assigned the residual amount after deducting from the instrument as a whole
the amount separately determined as the fair value of the liability component on the
date of issue. After initial measurement, other financial liabilities are subsequently
measured at amortized cost using the effective interest rate method. Amortized cost
is calculated by taking into account any discount or premium on the issue and fees
that are an integral part of the effective interest rate. Any effects of restatement of
foreign currency-denominated liabilities are recognized in profit or loss.
This accounting policy applies primarily to the Globe Group’s debt, accounts payable
and other obligations that meet the above definition (other than liabilities covered by
other accounting standards, such as income tax payable).
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.
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, 2011, 2010 and 2009, there were no derivatives
designated and accounted for as fair value hedges.
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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.
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Cash Flow Hedges
The Globe Group designates as cash flow hedges the following
derivatives: (a) interest rate swaps as cash flow hedge of the interest rate
risk of a floating rate obligation, and (b) certain foreign exchange
forward contracts as cash flow hedge of expected United States Dollar
(USD) revenues.
A cash flow hedge is a hedge of the exposure to variability in future cash
flows related to a recognized asset, liability or a forecasted sales
transaction. Changes in the fair value of a hedging instrument that
qualifies as a highly effective cash flow hedge are recognized in “Other
reserves,” which is a component of equity. Any hedge ineffectiveness is
immediately recognized in profit or loss.
If the hedged cash flow results in the recognition of a nonfinancial asset
or liability, gains and losses previously recognized directly in equity are
transferred from equity and included in the initial measurement of the
cost or carrying value of the asset or liability. Otherwise, for all other
cash flow hedges, gains and losses initially recognized in equity are
transferred from equity to profit or loss in the same period or periods
during which the hedged forecasted transaction or recognized asset or
liability affect earnings.
Hedge accounting is discontinued prospectively when the hedge ceases
to be highly effective. When hedge accounting is discontinued, the
cumulative gains or losses on the hedging instrument that has been
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.
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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.
If, in a subsequent period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the impairment was
recognized, the previously recognized impairment loss is reversed. Any subsequent
reversal of an impairment loss is recognized in profit or loss to the extent that the
carrying value of the asset does not exceed what should have been its amortized cost
at the reversal date.
With respect to receivables, the Globe Group performs a regular review of the age
and status of these accounts, designed to identify accounts with objective evidence of
impairment and provide the appropriate allowance for impairment losses. The review
is accomplished using a combination of specific and collective assessment
approaches, with the impairment losses being determined for each risk grouping
identified by the Globe Group.
2.6.4.2.1.1
Subscribers
Full allowance for impairment losses, net of 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.
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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
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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.
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.
2.6.4.3
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:
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
2.6.4.2.1.3
Traffic
For traffic receivables, impairment losses are made for accounts
specifically identified to be doubtful of collection regardless of the age
of the account. For receivable balances that appear doubtful of
collection, allowance is provided after review of the status of settlement
with each carrier and roaming partner, taking into consideration normal
payment cycles, recovery experience and credit history of the
counterparties.

the rights to receive cash flows from the asset have expired;

the Globe Group retains the right to receive cash flows from the asset, but has
assumed an obligation to pay them in full without material delay to a third party
under a “pass-through” arrangement; or

the Globe Group has transferred its rights to receive cash flows from the asset
and either (a) has transferred substantially all the risks and rewards of ownership
or (b) has neither transferred nor retained the risk and rewards of the asset but has
transferred the control of the asset.
Where the Globe Group has transferred its rights to receive cash flows from an asset
and has neither transferred nor retained substantially all the risks and rewards of the
asset nor transferred control of the asset, the asset is recognized to the extent of the
Globe Group’s continuing involvement 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 Company could be required to
pay.
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.
Derecognition of Financial Instruments
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
Inventories and Supplies
Inventories and supplies are stated at the lower of cost or 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 100% for non-moving
items after a certain period. Cost is determined using the moving average method.
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2.6.6
Non-current Assets Held for Sale
Non-current assets classified as held for sale are measured at the lower of carrying amount and
fair value less cost to sell. Non-current assets are classified as held for sale if their carrying
amounts will be recovered through a sale transaction rather than through continuing use. This
condition is regarded as met only when the sale is highly probable and the asset is available for
immediate sale in its present condition.
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.
2.6.8
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.
The amount of ARO is recognized at present value and the related accretion is recognized as
interest expense.
Items of property and equipment and intangible assets once classified as held for sale are not
depreciated/ amortized.
2.6.9
2.6.7
Property and Equipment
Property and equipment, except land, are carried at cost less accumulated depreciation,
amortization and impairment losses. Land is stated at cost less any impairment losses.
The initial cost of an item of property and equipment includes its purchase price and any cost
attributable in bringing the property and equipment to its intended location and working
condition. Cost also includes: (a) interest and other financing charges on borrowed funds
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.
Depreciation of investment property is computed using the straight-line method over its useful
life, regardless of utilization. The EUL and the depreciation method are reviewed periodically
to ensure that the period and method of depreciation are consistent with the expected pattern
of economic benefits from items of investment properties.
Transfers are made to investment property, when, and only when, there is a change in use,
evidenced by the end of the owner occupation, commencement of an operating lease to
another party or completion of construction or development. Transfers are made from
investment property when, and only when, there is a change in use, evidenced by the
commencement of owner occupation or commencement of development with the intention to
sell.
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.
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.
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.
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.
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.
Subsequent costs are capitalized as part of property and equipment only when it is probable
that future economic benefits associated with the item will flow to the Globe Group and the
cost of the item can be measured reliably. All other repairs and maintenance are charged
against current operations as incurred.
Leasehold improvements are amortized over the shorter of their EUL or the corresponding
lease terms.
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.
Any gain or loss on derecognition of an investment property is recognized in profit or loss in
the period of derecognition.
2.6.10
Intangible Assets
Intangible assets consist of 1) costs incurred to acquire application software (not an integral part
of its related hardware or equipment) and telecommunications equipment software licenses;
and 2) intangible assets identified to exist during the acquisition of EGG Group for its existing
customer contracts. Costs directly associated with the development of identifiable software
that generate expected future benefits to the Globe Group are recognized as intangible assets.
All other costs of developing and maintaining software programs are recognized as expense
when incurred.
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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.
2.6.12
Under the equity method, the investments in JV are carried in the consolidated statements of
financial position at cost plus post-acquisition changes in the Globe Group’s share in net assets
of the JV, less any allowance for impairment losses. The profit or loss includes Globe Group’s
share in the results of operations of its JV. Where there has been a change recognized directly
in the JV’s equity, the Globe Group recognizes its share of any changes and discloses this,
when applicable, in other OCI.
A gain or loss arising from derecognition of an intangible asset is measured as the difference
between the net disposal proceeds and the carrying amount of the asset and is recognized in
the consolidated statements of comprehensive income when the asset is derecognized.
2.6.11
Business Combinations and Goodwill
Business combinations are accounted for using the purchase method. The cost of an
acquisition is measured as the 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.
2.6.13
When the Globe Group acquires a business, it assesses the financial assets and 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.
If the business combination is achieved in stages, the acquisition date fair value of the
acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the
acquisition date through profit or loss. 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
recognised 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.
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.
158
For assessing impairment of goodwill, a test for impairment is performed annually and when
circumstances indicate that the carrying value may be impaired. Impairment is determined for
goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the
goodwill relates. Where the recoverable amount of the CGU is less than their carrying amount,
an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in
future periods.
2.6.14
Income Tax
2.6.14.1 Current Tax
Current tax assets and liabilities for the current and prior periods are measured at the
amount expected to be recovered from or paid to the tax authority. The tax rates and
tax laws used to compute the amount are those that are enacted or substantively
enacted as at the end of the reporting date.
Globe 2011 Annual Report
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.
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 greater of its net selling price and value in use. Recoverable amounts are estimated
for individual assets or investments or, if it is not possible, for the CGU to which the asset
belongs. For impairment loss on specific assets or investments, the recoverable amount
represents the net selling price.
In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset.
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.
Investments in Joint Ventures
Investments in joint ventures (JV) classified as jointly controlled entities, are accounted for
under the equity method, less any impairment losses. A JV is an entity, not being a subsidiary
nor an associate, in which the Globe Group exercises joint control together with one or more
venturers.
159
2.6.14.2 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.
2.6.16
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.
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.
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.
Deferred income tax is not recognized when it arises from the initial recognition of an
asset or liability in a transaction that is not a business combination and, at the time of
transaction, affects neither the accounting income nor taxable income or loss.
Deferred income tax liabilities are not provided on nontaxable temporary differences
associated with investments in JV.
Deferred income tax relating to items recognized directly in equity or OCI is included
in the related equity or OCI account and not in profit or loss.
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.
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.
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.
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.
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).
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.
2.6.15
2.6.17
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.
2.6.18
Additional Paid-in Capital
Additional paid-in capital includes any premium received in excess of par value on the issuance
of capital stock.
Globe 2011 Annual Report
160
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 statements of comprehensive income.
Share-based Payment Transactions
Certain employees (including directors) of the Globe Group receive remuneration in the form of
share-based payment transactions, whereby employees render services in exchange for shares
or rights over shares (“equity-settled transactions”) (see Note 18).
161
2.6.19
Treasury Stock
Treasury stock is recorded at cost and is presented as a deduction from equity. When the
shares are retired, the capital stock account is reduced by its par value and the excess of cost
over par value upon retirement is debited to additional paid-in capital to the extent of the
specific or average additional paid-in capital when the shares were issued and to retained
earnings for the remaining balance.
2.6.20
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.

Pension Cost
Pension cost is actuarially determined using the projected unit credit method. This method
reflects services rendered by employees up to the date of valuation and incorporates
assumptions concerning employees’ projected salaries. Actuarial valuations are conducted
with sufficient regularity, with option to accelerate when significant changes to underlying
assumptions occur. Pension cost includes current service cost, interest cost, expected return on
any plan assets, actuarial gains and losses and the effect of any curtailment or settlement.

2.6.21
The net pension asset recognized by the Globe Group in respect of the defined benefit
pension plan is the lower of: (a) the fair value of the plan assets less the present value of the
defined benefit obligation at the end of the reporting period, together with adjustments for
unrecognized actuarial gains or losses that shall be recognized in later periods; or (b) the total
of any cumulative unrecognized net actuarial losses and past service cost and the present value
of any economic benefits available in the form of refunds from the plan or reductions in future
contributions to the plan. The defined benefit obligation is calculated annually by an
independent actuary using the projected unit credit method. The present value of the defined
benefit obligation is determined by applying a single weighted average discount rate that
reflects the estimated timing and amount of benefit payments.
A portion of actuarial gains and losses is recognized as income or expense if the cumulative
unrecognized actuarial gains and losses at the end of the previous reporting period exceeded
the greater of 10% of the present value of defined benefit obligation or 10% of the fair value of
plan assets. These gains and losses are recognized over the expected average remaining
working lives of the employees participating in the plan.
2.6.22
Borrowing Costs
Borrowing costs are capitalized if these are directly attributable to the acquisition, construction
or production of a qualifying asset. Capitalization of borrowing costs commences when the
activities for the asset’s intended use are in progress and expenditures and borrowing costs are
being incurred. Borrowing costs are capitalized until the assets are ready for their intended
use. These costs are amortized using the straight-line method over the EUL of the related
property and equipment. If the resulting carrying amount of the asset exceeds its recoverable
amount, an impairment loss is recognized. Borrowing costs include interest charges and other
related financing charges incurred in connection with the borrowing of funds, as well as
exchange differences arising from foreign currency borrowings used to finance these projects
to the extent that they are regarded as an adjustment to interest costs. Premiums on long-term
debt are included under the “Long-term debt” account in the consolidated statements of
financial position and are amortized using the effective interest rate method.
162
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.
2.6.23.1 Group as Lessee
Finance leases, which transfer to the Globe Group substantially all the risks and
benefits incidental to ownership of the leased item, are capitalized at the inception of
the lease at the fair value of the leased property or, if lower, at the present value of the
minimum lease payments and included in the “Property and equipment” account with
the corresponding liability to the lessor included in the “Other long-term liabilities”
account in the consolidated statements of financial position. Lease payments are
apportioned between the finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance
charges are charged directly as “Interest expense” in the consolidated statements of
comprehensive income.
Capitalized leased assets are depreciated over the shorter of the EUL of the assets and
the respective lease terms.
Leases where the lessor retains substantially all the risks and benefits of ownership of
the asset are classified as operating leases. Operating lease payments are recognized
as an expense in profit or loss on a straight-line basis over the lease term.
2.6.23.2 Group as Lessor
Finance leases, where the Globe Group transfers substantially all the risk and benefits
incidental to ownership of the leased item to the lessee, are included in the
consolidated statements of financial position under “Prepayments and other current
assets” account. A lease receivable is recognized equivalent to the net investment
(asset cost) in the lease. All income resulting from the receivable is included in the
“Interest income” account in the consolidated statements of comprehensive income.
Leases where the Globe Group does not transfer substantially all the risk and benefits
of ownership of the assets are classified as operating leases. Initial direct costs
incurred in negotiating operating leases are added to the carrying amount of the
leased asset and recognized over the lease term on the same basis as the rental
income. Contingent rents are recognized as revenue in the period in which they are
earned.
Globe 2011 Annual Report
Other borrowing costs are recognized as expense in the period in which these are incurred.
2.6.23
163
2.6.24
General, Selling and Administrative Expenses
General, selling and administrative expenses, except for rent, are charged against current
operations as incurred (see Note 2.6.23.1).
2.6.25
Foreign Currency Transactions
The functional and presentation currency of the Globe Group is the Philippine Peso, except for
EHL and GTIC HK whose functional currency is the Hong Kong Dollar (HKD) and GTIC US
whose functional currency is the United States Dollar (USD). 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.
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 HK 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 and HK, the cumulative translation adjustments shall be recognized in profit or loss.
2.6.26
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.
2.6.27
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.
3.
2.6.28
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.
2.6.29
Events after the Reporting Period
Any post period-end event up to the date of approval of the BOD of the consolidated financial
statements that provides additional information about the Globe Group’s position at the end of
reporting period (adjusting event) is reflected in the consolidated financial statements. Any
post period-end event that is not an adjusting event is disclosed in the consolidated financial
statements when material.
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.
Judgments and estimates are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
3.1 Judgments
3.1.1
Leases
The Globe Group has entered into various lease agreements as lessee and lessor. The Globe
Group has determined that it retains all the significant risks and rewards on equipment and
office spaces leased out on operating lease.
3.1.2
Fair value of financial instruments
When the fair value of financial assets and financial liabilities recorded in the 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.
Globe 2011 Annual Report
164
165
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 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:




Impairment losses on receivables for the years ended December 31, 2011, 2010 and 2009
amounted to =
P 1,599.97 million, =
P 1,285.53 million, and =
P 754.63 million, respectively (see
Note 23). Receivables, net of allowance for impairment losses, amounted to =
P 10,119.51 million,
=
P 8,374.12 million, and =
P 6,583.23 million as of December 31, 2011, 2010 and 2009, respectively
(see Note 4).
3.2.3
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.
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.
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.
Inventory obsolescence and market decline for the years ended December 31, 2011, 2010 and
P 42.12 million, and =
P 58.74 million, respectively (see
2009 amounted to =
P 237.92 million, =
Note 23).
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.
Inventories and supplies, net of allowances, amounted to =
P 1,911.19 million, =
P 1,839.33 million,
and =
P 1,653.75 million as of December 31, 2011, 2010 and 2009, respectively (see Note 5).
3.2 Estimates
3.2.1
Revenue recognition
The Globe Group’s revenue recognition policies require management to make use of estimates
and assumptions that may affect the reported amounts of revenues and receivables.
The Globe Group estimates the fair value of points awarded under its loyalty programmes,
which are within the scope of Philippine Interpretation IFRIC 13, based on historical trend of
availment. As of December 31, 2011 and 2010, the estimated liability for unredeemed points
included in “Unearned revenues” amounted to =
P 21.71 million and =
P 121.81 million, respectively.
There are no loyalty programs qualifying under IFRIC 13 as of
December 31, 2009.
As a result of continuous improvements in the Globe Group’s estimation process, the Group
recognized a one-time upward adjustment (included in the “Service revenues” account of the
P526.00 million in the fourth quarter of
statements of comprehensive income) amounting to =
2010, representing prepaid load credits that have either expired or have already been used up.
3.2.2
Allowance for impairment losses on receivables
The Globe Group maintains an allowance for impairment losses at a level considered adequate
to provide for potential uncollectible receivables. The Globe Group performs a regular review
of the age and status of these accounts, designed to identify accounts with objective evidence
of impairment and provide the appropriate allowance for impairment losses. The review is
accomplished using a combination of specific and collective assessment approaches, with the
impairment losses being determined for each risk grouping identified by the Globe Group.
The amount and timing of recorded expenses for any period would differ if the Globe Group
made different judgments or utilized different methodologies. An increase in allowance for
impairment losses would increase the recorded operating expenses and decrease current
assets.
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 6.98%, 9.27% and 10.09% in 2011, 2010 and 2009, 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
=1.64 million, =
P 64.45 million and =
P 7.19 million in 2011, 2010 and 2009 against the
book value of the assets on leased premises (see Note 15).
P 1,476.60 million, |
As of December 31, 2011, 2010 and 2009, ARO amounted to =
=
P 1,341.53 million and =
P 1,269.29 million, respectively (see Note 15).
Globe 2011 Annual Report
166
Obsolescence and market decline
The Globe Group, in determining the NRV, considers any adjustment necessary for
obsolescence which is generally provided 100% for nonmoving items after a certain period.
The Globe Group adjusts the cost of inventory to the recoverable value at a level considered
adequate to reflect market decline in the value of the recorded inventories. The Globe Group
reviews the classification of the inventories and generally provides adjustments for recoverable
values of new, actively sold and slow-moving inventories by reference to prevailing values of the
same inventories in the market.
167
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.
3.2.6
Asset impairment
3.2.6.1
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:

Years
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
Impairment of nonfinancial assets other than goodwill
The Globe Group assesses impairment of assets (property and equipment, investment
property, intangible assets and investments in joint ventures) whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. The factors that the Globe Group considers important which could
trigger an impairment review include the following:

20
7 and 10
significant underperformance relative to expected historical or projected future
operating results;
significant changes in the manner of use of the acquired assets or the strategy for
the overall business; and
significant negative industry or economic trends.
An impairment loss is recognized whenever the carrying amount of an asset or
investment exceeds its recoverable amount. The recoverable amount is the higher of
an asset’s net selling price and value in use. The net selling price is the amount
obtainable from the sale of an asset in an arm’s length transaction, while value in use is
the present value of estimated future cash flows expected to arise from the continuing
use of an asset and from its disposal at the end of its useful life. Recoverable amounts
are estimated for individual assets or investments or, if it is not possible, for the CGU
to which the asset belongs.
10-20
2-10
3-10
20
5 years or lease term, whichever is shorter
15
3-5
3-5
For impairment loss on specific assets or investments, the recoverable amount
represents the net selling price.
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. Customer contracts acquired during
business combination are amortized over five (5) years.
For the Globe Group, the CGU is the combined mobile and wireline asset groups of
Globe Telecom and Innove. This asset grouping is predicated upon the requirement
contained in Executive Order (EO) No.109 and RA No.7925 requiring licensees of
Cellular Mobile Telephone System (CMTS) and International Digital Gateway Facility
(IGF) services to provide 400,000 and 300,000 LEC lines, respectively, as a condition for
the grant of such licenses.
In 2011, 2010 and 2009, 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 243.04 million, =
P 119.03 million and =
P 347.62 million in 2011, 2010 and 2009,
respectively.
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.
During the year 2011, the EUL of certain wireless and wireline equipment were changed as a
result of continuing upgrade, expansion, and migration to a modernized network. The effect of
change in EUL resulted to higher depreciation expense of =
P 632.62 million in 2011.
Property and equipment, investment property, intangible assets, and investments
in joint ventures amounted to =
P 102,972.81 million, =
P 105,169.71 million and
=
P 104,820.14 million as of December 31, 2011, 2010 and 2009, respectively (see
Notes 7, 8, 9 and 10).
As of December 31, 2011, 2010 and 2009, property and equipment, investment property and
intangible assets amounted to =
P 102,723.81 million, =
P 104,972.70 million, and
=
P 104,586.34 million, respectively (see Notes 7, 8 and 9).
Impairment of goodwill
The Globe Group’s impairment test for goodwill is based on value in use calculations
that use a discounted cash flow model. The cash flows are derived from the budget
for the next five years and do not include restructuring activities that the Group is not
yet committed to or significant future investments that will enhance the asset base of
the CGU being tested. The recoverable amount is most sensitive to the discount rate
used for the discounted cash flow model as well as the expected future cash inflows
and the growth rate used for extrapolation purposes. As of December 31, 2011, 2010
and 2009, the carrying value of goodwill amounted to =
P 327.13 million (see Note 9).
Globe 2011 Annual Report
168
3.2.6.2
169
3.2.7
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).
As of December 31, 2011, 2010 and 2009, Globe Group has unrecognized net actuarial losses of
=
P 1,215.69 million, =
P 781.01 million, and =
P 799.54 million, respectively
(see Note 18.2).
The recoverable amount of the CGU which exceeds the carrying amount by
=
P 461.88 million, =
P 165.30 million and =
P 63.00 million as of December 31, 2011, 2010 and
2009, 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 is 11% in 2011 and 12% in 2010 and
2009, and cash flows beyond the five-year period are extrapolated using a 3% longterm growth rate in 2011, 2010 and 2009.
The Globe Group also determines the cost of equity-settled transactions using assumptions on
the appropriate pricing model. Significant assumptions for the cost of share-based payments
include, among others, share price, exercise price, option life, risk-free interest rate, expected
dividend and expected volatility rate.
Cost of share-based payments in 2011, 2010 and 2009 amounted to =
P 49.34 million,
=
P 104.79 million and =
P 126.44 million, respectively (see Notes 16.5 and 18.1).
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).
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.
As of December 31, 2011, 2010 and 2009, Innove, GXI and EGG Group has net deferred
income tax assets amounting to =
P 765.67 million, while as of December 31, 2010 and 2009,
Innove and EGG Group has net deferred income tax assets amounting to =
P 670.59 million
and =
P 742.54 million, respectively.
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, 2011, 2010 and 2009 amounted to
=
P 434.04 million, =
P 406.14 million and =
P 371.61 million, respectively
(see Notes 12 and 15).
As of December 31, 2011, 2010 and 2009, Globe Telecom has net deferred income tax liabilities
amounting to =
P 3,929.41 million, =
P 4,620.49 million, and =
P 4,627.29 million, respectively (see
Note 24). Globe Telecom and Innove have no unrecognized deferred income tax assets as of
December 31, 2011, 2010 and 2009.
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.
As of December 31, 2011, GXI recognized deferred income tax assets from NOLCO amounted
to P
=1.01 million (see Note 24).
3.2.10
As of December 31, 2010 and 2009, Innove and EGG Group’s recognized deferred income tax
assets from NOLCO amounted to =
P 13.50 million and =
P 138.05 million and MCIT amounted to
=
P 0.95 million and =
P 46.71 million, respectively (see Note 24).
3.2.8
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
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
P 109.09 million, =
P 121.77 million and
December 31, 2011, 2010 and 2009, amounted to =
=
P 118.03 million, respectively, and financial liabilities comprising of derivative liabilities
carried at fair values as of December 31, 2011, 2010 and 2009, amounted to =
P 266.62 million,
=
P 245.87 million and =
P 92.46 million, respectively (see Note 28.11).
3.2.9
Receivables
This account consists of receivables from:
Subscribers
Traffic settlements - net
Dealers
Others
Less allowance for impairment
losses
Subscribers
Traffic settlements and others
Notes
2011
16, 28.2.2
12, 16, 28.2.2
28.2.2
28.2.2
=
P 10,245,268
2,291,862
677,270
285,735
13,500,135
28.2.2
28.2.2
3,131,289
249,341
3,380,630
=
P 10,119,505
2010
2009
(In Thousand Pesos)
=
P 8,038,451
=
P 4,980,195
2,130,238
2,319,273
455,238
556,929
203,640
77,822
10,827,567
7,934,219
2,173,912
279,532
2,453,444
=
P 8,374,123
1,162,792
188,199
1,350,991
=
P 6,583,228
Globe 2011 Annual Report
170
Pension and other employee benefits
The determination of the obligation and cost of pension is dependent on the selection of
certain assumptions used in calculating such amounts. Those assumptions include, among
others, discount rates, expected returns on plan assets and salary rates increase (see Note 18).
In accordance with PAS 19, actual results that differ from the Globe Group’s assumptions,
subject to the 10% corridor test, are accumulated and amortized over future periods and
therefore, generally affect the recognized expense and recorded obligation in such future
periods.
4.
Contingencies
Globe Telecom and Innove are currently involved in various legal proceedings. The estimate of
the probable costs for the resolution of these claims has been developed in consultation with
internal and external counsel handling Globe Telecom and Innove’s defense in these matters
and is based upon an analysis of potential results. Globe Telecom and Innove currently do not
believe that these proceedings will have a material adverse effect on the consolidated
statements of financial position. It is possible, however, that future results of operations could
be materially affected by changes in the estimates or in the effectiveness of the strategies
relating to these proceedings (see Note 26).
171
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
P 2,474.14 million, =
P 2,402.75 million and =
P 2,981.88 million as of December 31, 2011,
subscribers amounted to =
2010 and 2009, respectively.
There are no unusual purchase commitments and accrued net losses as of December 31, 2011.
6.
This account consists of:
Advance payments to suppliers and
contractors
Prepayments
Deferred input VAT
Miscellaneous receivables - net
Creditable withholding tax
Input VAT - net
Other current assets
Traffic settlements receivable are presented net of traffic settlements payable from the same carrier
amounting to =
P 3,838.82 million, =
P 4,099.08 million and =
P 3,130.28 million as of December 31, 2011, 2010 and
2009, respectively.
Receivables are noninterest-bearing and are generally collectible in the short-term.
5.
Inventories and Supplies
This account consists of:
At NRV:
Handsets, devices and accessories
Modems and accessories
Spare parts and supplies
SIM packs
Tattoo prepaid kits
Call cards and others
2010
(In Thousand Pesos)
2009
=
P 3,068
1,931
20
–
–
2,905
7,924
=
P 1,454
98
–
592,709
–
22,244
616,505
=
P 98
980
1,624
–
81,842
154,466
239,010
1,016,844
451,727
273,911
55,930
31,140
73,714
1,903,266
=
P 1,911,190
518,145
240,578
298,331
42,928
27,738
95,108
1,222,828
=
P 1,839,333
260,442
615,514
464,476
69,347
–
4,961
1,414,740
=
P 1,653,750
Inventories recognized as expense during the year amounting to =
P 6,142.34 million, =
P 4,281.08 million and
=
P 3,006.69 million in 2011, 2010 and 2009, respectively, are included as part of “Cost of sales” and
“Impairment losses and others” accounts (see Note 23) in the consolidated statements of comprehensive
income. An insignificant amount is included under “General, selling and administrative expenses” as part of
“Utilities, supplies and other administrative expenses” account (see Note 21).
Cost of sales incurred consists of:
2011
172
2011
25.3
25.1
11
16, 28.11
P 1,674,923
=
1,288,290
815,503
662,203
295,102
844,089
6,309
=
P 5,586,419
28.11
2010
(In Thousand Pesos)
=
P 764,699
983,545
1,020,060
455,005
494,942
954,636
31,311
=
P 4,704,198
2009
=
P 723,327
534,304
853,870
853,243
334,723
889,941
9,912
=
P 4,199,320
=
P 4,928,921
545,354
245,418
89,423
1,440
77,033
P 5,887,589
=
2010
2009
(In Thousand Pesos)
=
P 3,185,163
=
P 1,602,018
597,430
810,655
274,882
367,120
141,272
129,616
13,164
16,630
27,049
21,911
=
P 4,238,960
=
P 2,947,950
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, 2011, Innove and GXI reported net input VAT amounting to =
P 884.09 million and net of
output VAT of =
P 94.36 million. As of December 31, 2010, Innove, GXI and EGG reported net input VAT
amounting to =
P 954.64 million and net of output VAT of =
P 102.45 million. As of December 31, 2009, Innove
and GXI reported net input VAT amounting to =
P 889.94 million and net of output VAT of =
P 89.26 million.
7.
Property and Equipment
The rollforward analysis of this account follows:
2011
Buildi ngs and
Leasehold Investment s in
Telecommun ications
Equipment Improvement s Cable Systems
Cost
At January 1
Additions
Retirements/disposals
Reclassifications/
adjustments
At December 31
Accumu lated
Depreciation
and Amort ization
At January 1
Depreciation and
amortization
Retirements/disposals
Reclassifications/
adjustments
At December 31
Impairment Losses
At January 1
Additions
Write-off/adjustments
At December 31
Net Bo ok Va lue at
Decem ber 31
Office Transportat ion
Equipment
Equipment
(In Thousand Pesos)
Assets Under
Land Construction
Total
P 174,34 2,419
=
1,837, 618
(2,969 ,817)
=
P 25,605 ,238
67,71 7
(2,894)
=
P 13,028 ,303
87,90 0
–
=
P 6,395, 943
163,90 9
(137,6 69)
=
P 2,153, 222
260,99 1
(208,4 32)
14,713 ,892
187,92 4,112
1,703, 959
27,374 ,020
12,95 0
13,129 ,153
911,57 1
7,333, 754
1,19 3
2,206, 974
113,48 6,718
11,955 ,511
4,736, 035
5,642, 866
1,497, 090
–
–
137,31 8,220
14,802 ,833
(2,811 ,884)
1,134, 039
(2,782)
659
833,83 3
–
(225)
646,07 3
(136,1 95)
190
263,63 4
(178,2 31)
–
–
–
–
–
17,680 ,412
(3,129 ,092)
(59,93 8)
125,41 7,729
13,087 ,427
5,569, 643
6,152, 934
1,582, 493
–
–
–
–
(59,31 4)
151,81 0,226
151,75 1
11,20 0
(3,114 )
159,83 7
–
–
–
–
3,18 2
–
–
3,18 2
–
–
–
–
–
–
–
–
170,89 1
117,41 4
(78,61 8)
209,68 7
325,82 4
128,61 4
(81,73 2)
372,70 6
=
P 62,346 ,546
=
P 14,286 ,593
=
P 1,177, 638
=
P 624,48 1
–
–
–
–
=
P 7,559, 510
=
P 1,514, 332 =
P 16,441 ,841 =
P 239,48 1,298
13,04 3
14,840 ,996
17,272 ,174
–
(99,69 8)
(3,418 ,510)
–
1,527, 375
(19,22 7,815)
(1,884 ,250)
11,955 ,324 251,45 0,712
=
P 1,527, 375 =
P 11,745 ,637 =
P 99,267 ,780
Globe 2011 Annual Report
Handsets, devices and accessories
Tattoo prepaid kits
SIM packs
Modems and accessories
Spare parts and supplies
Callcards and others
Notes
The “Prepayments” account includes prepaid insurance, rent, maintenance and NTC spectrum users’ fee
among others.
2011
At cost:
Spare parts and supplies
Handsets, devices and accessories
SIM packs
Modems and accessories
Tattoo prepaid kits
Callcards and others
Prepayments and Other Current Assets
173
- 37 The costs of fully depreciated property and equipment that are still being used in the network amounted to
=
P 70,229.60 million, =
P 52,467.14 million and =
P 35,832.53 million as of December 31, 2011, 2010 and 2009,
respectively.
2010
Cost
At January 1
Additions
Retirements/disposals
Reclassifications/adjustm
ents
At December 31
Accumulated
Depreciation and
Amortization
At January 1
Depreciation and
amortization
Retirements/disposals
Reclassifications/adjustm
ents
At December 31
Impairment Losses
At January 1
Additions
Write-off/adjustments
At December 31
Net Book Value at
December 31
Telecommunications
Equipment
Buildings and
Leasehold
Improvements
=
P 161,614,664
1,071,562
(408,040)
=
P 24,149,664
185,264
(29,092)
=
P 14,444,009
–
–
=
P 6,052,613
228,646
(87,113)
=
P 2,074,149
305,186
(237,996)
12,064,233
174,342,419
1,299,402
25,605,238
(1,415,706)
13,028,303
201,797
6,395,943
11,883
2,153,222
Investments in
Office Transportation
Cable Systems Equipment
Equipment
(In Thousand Pesos)
Assets Under
Land Construction
=
P 1,551,558 =
P 14,039,942 =
P 223,926,599
504
17,506,382
19,297,544
(14,025)
(4,162)
(780,428)
(23,705)
1,514,332
(15,100,321)
(2,962,417)
16,441,841 239,481,298
99,668,498
11,009,763
4,758,210
5,065,820
1,431,233
–
–
121,933,524
14,403,724
(354,424)
1,054,839
(25,502)
899,440
–
693,641
(81,707)
265,153
(207,716)
–
–
–
–
17,316,797
(669,349)
(231,080)
113,486,718
(83,589)
11,955,511
(921,615)
4,736,035
(34,888)
5,642,866
8,420
1,497,090
–
–
–
–
(1,262,752)
137,318,220
3,182
–
–
3,182
–
–
–
–
–
–
–
–
110,887
57,805
2,199
170,891
299,207
57,805
(31,188)
325,824
=
P 749,895
=
P 656,132
=
P 1,514,332
185,138
–
(33,387)
151,751
–
–
–
–
–
–
–
–
=
P 60,703,950
=
P 13,649,727
=
P 8,292,268
Telecommunications
Equipment
Buildings and
Leasehold
Improvements
Investments in
Cable Systems
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 3.19%, 5.61% and 3.96% capitalization rates in
2011, 2010 and 2009, respectively. The Globe Group’s total capitalized borrowing costs amounted to
=
P 591.66 million, =
P 1,091.21 million and =
P 979.03 million for the years ended December 31, 2011, 2010 and
2009, respectively (see Note 22).
Total
In 2011, the Globe Group entered into a sale-buy back 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 =
P244.37 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.
In 2009, the Globe Group entered into an exchange transaction with an equipment supplier whereby Globe
Group conveyed and transferred ownership of certain equipment and licenses in exchange for more
advanced systems. This exchange resulted in a gain amounting to =
P 568.12 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 stipulated in the purchase
agreement and the carrying amount of the old platforms and equipment at the time the exchange was
consummated.
=
P 16,270,950 =
P 101,837,254
2009
Office Transportation
Equipment
Equipment
Assets Under
Land Construction
Total
(In Thousand Pesos)
Cost
At January 1
Additions
Retirements/disposals
Reclassifications/adjustm
ents
At December 31
Accumulated
Depreciation and
Amortization
At January 1
Depreciation and
amortization
Retirements/disposals
Reclassifications/adjustm
ents
At December 31
Impairment Losses
At January 1
Additions
Write-off/adjustments
At December 31
Net Book Value at
December 31
8.
=
P 149,198,002
1,308,160
(9,013,358)
=
P 22,235,361
169,162
(13,228)
=
P 10,185,208
353
–
=
P 5,483,835
379,911
(9,418)
=
P 2,125,186
225,515
(111,951)
=
P 1,495,841
50,511
–
=
P 13,994,643 =
P 204,718,076
22,469,550
24,603,162
(24,258)
(9,172,213)
20,121,860
161,614,664
1,758,369
24,149,664
4,258,448
14,444,009
198,285
6,052,613
(164,601)
2,074,149
5,206
1,551,558
(22,399,993)
3,777,574
14,039,942 223,926,599
91,235,779
9,984,888
3,918,995
4,558,370
1,252,372
–
–
110,950,404
13,800,566
(5,501,257)
969,115
(7,155)
787,648
–
497,005
(6,431)
305,715
(126,854)
–
–
–
–
16,360,049
(5,641,697)
133,410
99,668,498
62,915
11,009,763
51,567
4,758,210
16,876
5,065,820
–
1,431,233
–
–
–
–
264,768
121,933,524
3,984
(802)
3,182
–
–
–
–
–
–
–
–
14,281
75,017
21,589
110,887
227,282
75,017
(3,092)
299,207
=
P 983,611
=
P 642,916
=
P 1,551,558
209,017
–
(23,879)
185,138
=
P 61,761,028
–
–
–
–
=
P 13,139,901
–
–
–
–
=
P 9,685,799
=
P 13,929,055 =
P 101,693,868
Assets under construction include intangible components of a network system which are reclassified to
depreciable intangible assets only when assets become available for use
(see Note 9).
174
The rollforward analysis of this account follows:
2011
2010
(In Thousand Pesos)
2009
Cost
At January 1 and December 31
=
P 390,641
=
P 390,641
=
P 390,641
Accumulated Depreciation
At January 1
Depreciation
Reclassifications/adjustments
At December 31
Net Book Value at December 31
176,449
22,547
–
198,996
=
P 191,645
153,902
22,547
–
176,449
=
P 214,192
131,418
22,547
(63)
153,902
=
P 236,739
Investment property represents the portion of a building that was held for lease to third parties in 2009 (see
Note 25.1b).
The details of income and expenses related to the investment property follow:
2011
Lease income
Direct expenses
=
P–
16,055
2010
(In Thousand Pesos)
=
P–
23,450
2009
=
P 31,274
23,396
The fair value of the investment property, as determined by market data approach, amounted to
=
P 592.08 million based on the report issued by an independent appraiser dated November 25, 2011.
Globe 2011 Annual Report
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.
Investment Property
175
9.
2009
Intangible Assets and Goodwill
Licenses and
Application
Software
The rollforward analysis of this account follows:
2011
Licenses and
Application
Software
Cost
At January 1
Additions
Retirements/disposals
Reclassifications/
adjustments (Note 7)
At December 31
Accumulated Depreciation
and Amortization
At January 1
Amortization
Retirements/disposals
Reclassifications/adjustments
At December 31
Impairment Losses
At January 1
Write-off/adjustments
At December 31
Net Book Value at
December 31
=
P 8,362,110
145,208
(862,847)
Total
Customer
Intangible
Assets
Contracts
(In Thousand Pesos)
=
P 28,381
–
–
=
P 8,390,491
145,208
(862,847)
Goodwill
=
P 327,125
–
–
=
P 8,717,616
145,208
(862,847)
–
327,125
1,418,743
9,418,720
1,418,743
9,063,214
–
28,381
1,418,743
9,091,595
5,449,729
1,232,592
(848,131)
(26,850)
5,807,340
14,190
5,676
–
–
19,866
5,463,919
1,238,268
(848,131)
(26,850)
5,827,206
–
–
–
–
–
5,463,919
1,238,268
(848,131)
(26,850)
5,827,206
5,321
(5,321)
–
–
–
–
5,321
(5,321)
–
–
–
–
5,321
(5,321)
–
=
P 3,255,874
=
P 8,515
=
P 3,264,389
=
P 327,125
=
P 3,591,514
Goodwill
Total
Intangible
Assets and
Goodwill
2010
Licenses and
Application
Software
Cost
At January 1
Additions
Retirements/disposals
Reclassifications/
adjustments (Note 7)
At December 31
Accumulated Depreciation
and Amortization
At January 1
Amortization
Retirements/disposals
Reclassifications/adjustments
At December 31
Impairment Losses
At January 1
Additions
At December 31
Net Book Value at
December 31
Total
Intangible
Assets and
Goodwill
Total
Customer
Intangible
Contracts
Assets
(In Thousand Pesos)
=
P 7,431,159
169,329
(128,606)
=
P 28,381
–
–
=
P 7,459,540
169,329
(128,606)
=
P 327,125
–
–
=
P 7,786,665
169,329
(128,606)
890,228
8,362,110
–
28,381
890,228
8,390,491
–
327,125
890,228
8,717,616
4,795,295
740,819
(120,561)
34,176
5,449,729
8,514
5,676
–
–
14,190
4,803,809
746,495
(120,561)
34,176
5,463,919
–
–
–
–
–
4,803,809
746,495
(120,561)
34,176
5,463,919
–
5,321
5,321
–
–
–
–
5,321
5,321
–
–
–
=
P 2,907,060
=
P 14,191
=
P 2,921,251
=
P 327,125
–
5,321
5,321
=
P 3,248,376
Cost
At January 1
Additions
Retirements/disposals
Reclassifications/
adjustments (Note 7)
At December 31
Accumulated Depreciation
and Amortization
At January 1
Amortization
Retirements/disposals
Reclassifications/adjustments
At December 31
Net Book Value at
December 31
Total
Customer
Intangible
Contracts
Assets
(In Thousand Pesos)
Goodwill
Total
Intangible
Assets and
Goodwill
=
P 6,968,572
99,164
(685,577)
=
P 28,381
–
–
=
P 6,996,953
99,164
(685,577)
=
P 327,125
–
–
=
P 7,324,078
99,164
(685,577)
1,049,000
7,431,159
–
28,381
1,049,000
7,459,540
–
327,125
1,049,000
7,786,665
3,985,282
997,320
(211,736)
24,429
4,795,295
–
8,514
–
–
8,514
3,985,282
1,005,834
(211,736)
24,429
4,803,809
–
–
–
–
–
3,985,282
1,005,834
(211,736)
24,429
4,803,809
=
P 2,635,864
=
P 19,867
=
P 2,655,731
=
P 327,125
=
P 2,982,856
In 2008, Globe Telecom acquired EGG Group with net assets at fair value amounting to =
P 24.37 million for a
total consideration paid in cash of =
P 351.49 million. This transaction resulted to a Goodwill of =
P 327.13 million,
which is attributable to the significant synergies expected to arise after the Globe Group’s acquisition of the
EGG Group.
10. Investments in Joint Ventures
This account consists of:
2011
Acquisi tion 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
2010
(In Thousand Pesos)
2009
P 252,610
=
79,010
331,620
=
P 252,610
–
252,610
=
P 111,280
141,330
252,610
(47,728)
(27,345)
(75,073)
(7,547)
(82,620)
=
P 249,000
(44,760)
(2,968)
(47,728)
(7,866)
(55,594)
=
P 197,016
(37,751)
(7,009)
(44,760)
25,950
(18,810)
=
P 233,800
10.1 Investment in BPI Globe BanKO Inc., A Savings Bank (BPI Globe BanKO)
On July 17, 2009, Globe acquired a 40% stake in BPI Globe BanKO (formerly Pilipinas Savings Bank, Inc.
or PS Bank) for =
P141.33 million, pursuant to a Shareholder Agreement with Bank of the Philippine Islands
(BPI), AC and PS Bank, and a Deed of Absolute Sale with BPI. BPI Globe BanKO will have the capability
to provide services to micro-finance institutions and retail clients through mobile and related
technology.
Globe 2011 Annual Report
176
177
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 79.00 million on May 10, 2011, while the
balance of =
P 21.00 million will be made after approval of Globe BanKO’s increase in capital stock to
=
P 1,000.00 million by the BSP and the SEC. As of December 31, 2011, the investment of Globe Telecom
in BPI Globe BanKO amounted to =
P 179.51 million, representing 40% interest.
The Globe Group’s interest in BPI Globe BanKO is as follows:
Assets:
Current
Non-current
Liabilities:
Current
Income
Expenses
2011
2010
(In Thousand Pesos)
2009
=
P 530,179
16,208
=
P 283,305
4,386
=
P 147,745
3,650
(339,212)
50,379
(78,040)
(151,150)
16,409
(24,839)
(10,064)
12,572
(9,627)
The Globe Group has no share of any contingent liabilities as of December 31, 2011, 2010 and 2009.
10.2 Investment in Bridge Mobile Pte. Ltd. (BMPL)
Globe Telecom and other leading Asia Pacific mobile operators (JV partners) signed an Agreement in
2004 (JV Agreement) to form a regional mobile alliance, which will operate through a Singaporeincorporated 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, 2011, Globe Telecom has invested a total of USD2.20 million in the joint venture.
The Globe Group’s interest in BMPL is accounted for as follows:
2011
Assets:
Current
Non-current
Liabilities:
Current
Income
Expenses
2010
(In Thousand Pesos)
2009
=
P 75,011
1,750
=
P 67,722
2,744
=
P 104,280
1,769
(7,591)
24,337
(24,021)
(7,023)
19,693
(14,231)
(6,571)
17,872
(27,826)
The Globe Group has no share of any contingent liabilities as of December 31, 2011, 2010 and 2009.
11. Other Noncurrent Assets
This account consists of:
Loan receivable from Globe Group
retirement plan
Prepaid pension
Miscellaneous deposits
Deferred input VAT
Loan receivable from Bethlehem
Holdings, Inc. (BHI)
AFS investment in equity securities
Others - net
Notes
2011
16.3, 18.2
18.2
25.1
6
P 968,000
=
876,970
534,088
372,771
=
P 968,000
951,083
473,862
43,320
=
P 968,000
1,055,444
431,221
372,618
16.3, 25.5
28.10,
28.11
25.1
295,000
295,000
295,000
99,319
63,329
P 3,209,477
=
101,877
42,544
=
P 2,875,686
81,727
134,400
=
P 3,338,410
2009
12. Accounts Payable and Accrued Expense s
This account consists of:
Notes
Accounts payable
Accrued project costs
Accrued expenses
Traffic settlements - net
Output VAT
Dividends payable
16
25.3
16, 18.2
4
17.3
2010
(In Thousand Pesos)
=
P 7,314,069
=
P 5,617,380
8,638,119
6,906,943
5,995,940
5,587,799
2,172,426
2,722,809
99,479
67,458
35,295
–
=
=
P 22,115,203
P 23,042,514
2011
2009
=
P 5,769,355
8,081,684
4,898,403
1,866,012
172,735
50,492
=
P 20,838,681
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 2,372.03 million, =
P 2,335.95 million and =
P 1,019.65 million as of December 31, 2011, 2010 and
2009, respectively.
As of December 31, 2011, Globe and EGG reported net output VAT amounting to =
P 67.46 million, net of
input VAT of =
P 458.67 million. As of December 31, 2010, Globe Telecom reported net output VAT amounting
to =
P 99.48 million, net of input VAT of =
P 359.93 million. As of December 31, 2009, Globe Telecom and EGG
Group reported net output VAT amounting to =
P 172.74 million, net of input VAT of =
P 361.59 million.
13. Provisions
The rollforward analysis of this account follows:
Notes
2011
=
P 224,388
23
(47,916)
(9,699)
P 166,773
=
2010
2009
(In Thousand Pesos)
=
P 89,404
=
P 202,514
138,760
(3,776)
=
P 224,388
(88,047)
(25,063)
=
P 89,404
Globe 2011 Annual Report
At beginning of year
Provisions for (reversals of) claims
and assessments
Adjustments
At end of year
178
2010
(In Thousand Pesos)
179
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, 2012, the remaining pending claims and assessments are still being
resolved.
The provisions for National Telecommunications Commission (NTC) permit fees amounting to
=
P 117.26 million for an assessment by the NTC on March 27, 1996 and contested by Innove and other
members of the Telecommunications Operators of the Philippines was reversed in 2009 after taking into
account all available evidence including the merits of the ruling of the Court of Appeals (CA) in favor of
another telecommunications service provider.
The interest rates and maturities of the above debt are as follows:
Maturities
Interest Rates
2011-2018
1.42% to 7.03% in 2011
5.26% to 7.03% in 2010
5.12% to 7.87% in 2009
Foreign
2011-2016
0.68% to 3.86% in 2011
0.74% to 4.13% in 2010
0.74% to 6.44% in 2009
Corporate notes
2011-2016
2.78% to 8.43% in 2011
5.52% to 8.38% in 2010
5.62% to 8.80% in 2009
Retail bonds
2012-2014
7.50% to 8.00% in 2011
7.50% to 8.00% in 2010
7.50% to 8.00% in 2009
Banks:
Local
14. Notes Payable and Long-term Debt
Notes payable consist of short-term unsecured promissory notes from local banks for working capital
requirements amounting to =
P 1,756.76 million, which bears interest ranging from 1.57% to 1.91% and =
P
2,000.83 million, which bears interest rate ranging from 4.35% to 10% as of December 31, 2011 and 2009,
respectively. There is no outstanding notes payable as of
December 31, 2010.
Long-term debt consists of:
2011
Banks:
Local
Foreign
Corporate notes
Retail bonds
Less current portion
=
P 27,555,234
3,541,621
10,839,226
4,985,865
46,921,946
9,597,367
P 37,324,579
=
2010
(In Thousand Pesos)
=
P 20,352,194
7,317,483
17,729,939
4,971,854
50,371,470
8,677,209
=
P 41,694,261
2009
=
P 15,933,027
6,810,357
17,775,866
4,956,772
45,476,022
5,667,965
=
P 39,808,057
The maturities of long-term debt at nominal values excluding unamortized debt issuance costs as of
December 31, 2011 follow (amounts in thousands):
Due in:
2012
2013
2014
2015
2016 and thereafter
=
P 9,613,443
9,771,627
9,763,498
8,441,743
9,543,662
=
P 47,133,973
Unamortized debt issuance costs included in the above long-term debt as of December 31, 2011, 2010 and
2009 amounted to =
P 212.03 million, =
P 279.24 million and =
P 197.99 million, respectively.
Total interest expense recognized, excluding the capitalized interest amounted to =
P 2,059.66 million,
=
P 1,981.79 million and =
P 2,096.95 million in 2011, 2010 and 2009, respectively (see Notes 7 and 22).
14.1 Bank Loans and Corporate Notes
Globe Telecom’s unsecured bank 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.
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 February 10, 2012, the Globe Group is not in breach of any loan covenants.
14.2 Retail Bonds
On February 25, 2009, Globe Group issued =
P5,000.00 million fixed rate bonds. This amount comprises
=
P 1,974.00 million and =
P 3,026.00 million fixed rate bonds due in 2012 and 2014, respectively, with interest
of 7.50% and 8.00%, respectively. The proceeds of the retail bonds were used to fund Globe Group’s
various capital expenditures.
The five-year retail bonds may be redeemed in whole, but not in part, on the twelfth (12th) interest
payment date at a price equal to 102.00% of the principal amount of the bonds and all accrued interest
to the date of redemption. Globe Group may not redeem the retail bonds unless allowed under
conditions specified in the agreements with respect to redemption for tax reasons, purchase and
cancellation and change in law or circumstance.
The Globe Group has to meet certain bond covenants including a maximum debt-to-equity ratio of 2 to
1. As of February10, 2012, the Globe Group is not in breach of any bond covenants.
On January 17, 2012, Globe Group exercised its option to redeem the =
P 3,026.00 million fixed rate bonds
thru an irrevocable notice issued to its trustee bank. The full settlement is expected on February 27,
2012 with an estimated redemption cost of =
P 60.52 million.
Globe 2011 Annual Report
180
181
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:
15. Other Long-term Liabilities
This account consists of:
ARO
Accrued lease obligations and others
Noninterest bearing liabilities
Advance lease
Notes
2011
3.2.4, 7
25.1
25.4
25.4
=
P 1,476,597
635,122
–
–
2,111,719
–
=
P 2,111,719
Less current portion
2011
2010
2009
(In Thousand Pesos)
=
P 1,341,526
=
P 1,269,291
640,927
647,416
–
735,944
–
67,673
1,982,453
2,720,324
–
803,617
=
P 1,982,453
=
P 1,916,707
Technical assistance fee
Maintenance and restoration costs
and other transactions
Software development, supply,
license and support
At beginning of year
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
2011
27,403
109,309
(1,641)
=
P 1,476,597
2010
2009
(In Thousand Pesos)
=
P 1,269,291
=
P 1,081,408
41,473
95,207
(64,445)
=
P 1,341,526
96,959
98,117
(7,193)
=
P 1,269,291
Technical assistance fee
Software development, supply,
license and support
Maintenance and restoration costs
and other transactions

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:
2011
25,999
26,904
26,924
=
P 54,873
=
P 36,994
1,136,294
2010
2009
(In Thousand Pesos)
=
P 124,319
=
P 34,487
1,857,336
2,097,734
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.
Subscriber receivables
Service revenues

2010
(In Thousand Pesos)
=
P 48,870
2009
=
P 24,180
80,377
26,640
45,734
23,103
28,818
33,555
=
P 1,718
12,640
2010
(In Thousand Pesos)
=
P 3,152
13,214
2009
=
P 1,454
12,553
Globe Telecom reimburses AC for certain operating expenses. The net outstanding liabilities
(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 statements of comprehensive income) are as follows:
2011
General, selling and administrative
expenses
Accounts payable and accrued expenses
=
P 7,878
234
2010
(In Thousand Pesos)
=
P 26,847
–
2009
=
P 21,118
31,343
16.2 Joint Ventures in which the Globe Group is a venturer

Globe Telecom has preferred roaming service contract with BMPL. Under this contract, Globe
Telecom will pay BMPL for services rendered by the latter which include, among others,
coordination and facilitation of preferred roaming arrangement among JV partners, and
procurement and maintenance of telecommunications equipment necessary for delivery of seamless
roaming experience to customers. Globe Telecom also earns or incurs commission from BMPL for
regional top-up service provided by the JV partners. The net outstanding liabilities to BMPL related
to these transactions amounted to =
P 1.00 million, =
P 2.89 million and =
P 1.02 million as of December 31,
2011, 2010 and 2009, respectively. Balances related to these transactions (included in “General,
selling and administrative expenses” account in the consolidated statements of comprehensive
income) amounted to =
P 12.24 million, =
P 12.07 million and =
P 23.98 million, as of December 31, 2011,
2010 and 2009, respectively.
Globe 2011 Annual Report
182
216,701
2011
Globe Telecom and Innove, 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:

86,901
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:
16. Related Party Transactions
Traffic settlements receivable - net
Interconnection revenues - net
53,996
2011
=
P 1,341,526
30
22
3.2.4
=
P 99,903
=
P 179,014
2009
The net outstanding balances due to STI (included in the “Accounts payable and accrued
expenses” account in the consolidated statements of financial position) arising from these
transactions are as follows:
The rollforward analysis of the Globe Group’s ARO follows:
Notes
2010
(In Thousand Pesos)
=
P 149,662
183

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 =
P 2.86 million and =
P 9.99 million in 2011 and 2009, respectively.
The revenue earned in 2010 is immaterial. The related receivables amounted to =
P 2.01 million,
=
P 9.19 million and =
P 11.19 million in 2011, 2010 and 2009, respectively.
16.3 Transactions with the Globe Group retirement plan (see Note 11)

In 2008, the Globe Group granted a short-term loan to the Globe Group retirement plan amounting
to P
=800.00 million with interest at 6.20%. Upon maturity in 2009, the loan was rolled over until
September 2014 and bears interest at 7.75%. Further, in 2009, the Globe Group granted an
additional loan to the retirement fund amounting to =
P 168.00 million which bears interest at 7.75%
and is due also in September 2014.
The Globe Group retirement plan utilized the loan to fund its investments in BHI, a domestic
corporation that organized to invest in media ventures. In 2008 and 2009, BHI acquired controlling
interest in Altimax Broadcasting Co., Inc. (Altimax) and Broadcast Enterprises and Affiliated Media
Inc. (BEAM), respectively.



On August 13 and December 21, 2009, the Globe Group granted five-year loans amounting to
P 250.00 million loan
=
P 250.00 million and =
P 45.00 million, respectively, to BHI at 8.275% interest. The =
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, BHI’s subsidiary,
from the Globe Group. The =
P 45.00 million loan is fully secured by a chattel mortgage agreement
dated December 21, 2009 between 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 250.00 million in 2011 and 2010, and =
P 245.58 million
in 2009.
On October 1, 2009, the Globe Group entered into a MOA with Altimax, a subsidiary of BHI, for the
Globe Group’s co-use of specific frequencies of Altimax’s for the rollout of broadband wireless
access to the Globe Group’s subscribers. As a result, the Globe Group recognized an expense
(included in “General, selling and administrative expenses” account in the consolidated statements
of comprehensive income) amounting to =
P 90.00 million in 2011 and 2010, and
=
P 70.00 million in 2009.
16.4 Transactions with other related parties
Globe Telecom has subscriber receivables (included in “Receivables” account in the consolidated
statements of financial position) and earns service revenues (included in the “Service revenues” account
in the consolidated statements of comprehensive income) from its other related parties namely, Ayala
Land Inc., Ayala Property Management Corporation, BPI, Manila Water Company, Inc., Integrated
Microelectronics, Inc., 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 IOffice 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.
and Michigan Power.
The balances with other related parties are recorded under the following accounts:
Notes
2011
30
=
P 1,098,168
306,846
21
7
288,351
137,209
270,819
78,321
282,064
55,992
4
12
65,694
150,403
112,981
32,750
21,496
14,913
Cash and cash equivalents
Service revenues
General, selling and administrative
expenses
Property and equipment
Subscriber receivables (included in
“Receivables” account)
Accounts payable and accrued
expenses
2010
2009
(In Thousand Pesos)
=
P 694,277
=
P 1,302,806
243,346
233,388
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
2011
21
18.1
18.2
=
P 1,024,519
49,338
56,700
=
P 1,130,557
2010
2009
(In Thousand Pesos)
=
P 976,103
=
P 1,025,734
104,788
126,437
132,406
53,289
=
P 1,213,297
=
P 1,205,460
There are no agreements between the Globe Group and any of its directors and key officers providing
for benefits upon termination of employment, except for such benefits to which they may be entitled
under the Globe Group’s retirement plans.
The Globe Group granted short-term loans to its key management personnel amounting to
=
P 18.64 million, =
P 11.02 million and =
P 13.76 million in 2011, 2010 and 2009, respectively, included in the
“Prepayments and other current assets” in the consolidated statements of financial position.
The summary of consolidated outstanding balances resulting from transactions with related parties
follows:
Cash and cash equivalents
Accounts payable and accrued
expenses
Property and equipment
Subscriber receivables (included in
“Receivables” account)
Traffic settlements receivable - net
(included in “Receivables”
account)
Other current assets
2010
2009
(In Thousand Pesos)
=
P 694,277
=
P 1,302,806
Notes
2011
30
=
P 1,098,168
12
7
193,304
137,209
128,719
78,321
150,747
55,992
4
69,311
162,741
125,621
4
6
36,994
3,312
124,319
5,461
34,487
1,475
Globe 2011 Annual Report
184
185
The revenues and expenses from related parties are made at terms equivalent to those that prevail in arm’s
length transactions. Outstanding balances as of December 31, 2011, 2010 and 2009 are unsecured and
interest free and settlement occurs in cash. There were no guarantees provided and received for any related
party receivables and payables.
17.2 Common Stock
The rollforward of outstanding common shares are as follows:
Shares
17. Equity and Other Comprehens ive Income
Globe Telecom’s authorized capital stock consists of:
Preferred stock - =
P 5 per share
Common stock - =
P 50 per
share
2010
2009
2011
Shares
Amount
Shares
Amount
Shares
Amount
(In Thousand Pesos and Number of Shares)
250,000 P
=1,250,000
250,000 =
P 1,250,000
250,000 =
P 1,250,000
179,934
8,996,719
179,934
8,996,719
179,934
At beginning of year
Exercise of stock
options
At end of year
2010
2009
2011
Amount
Shares
Amount
Shares
Amount
(In Thousand Pesos and Number of Shares)
P 6,617,424
132,348 =
132,346 =
P 6,617,280
132,340 =
P 6,617,008
5
227
P 6,617,651
132,353 =
2
144
132,348 =
P 6,617,424
6
272
132,346 =
P 6,617,280
17.3 Cash Dividends
Information on Globe Telecom’s declaration of cash dividends follows:
8,996,719
Per share
Globe Telecom’s issued and subscribed capital stock consists of:
Preferred stock
Common stock
Total shares issued
and subscribed
Less subscriptions receivable
Total capital stock
2010
2009
2011
Shares
Amount
Shares
Amount
Shares
Amount
(In Thousand Pesos and Number of Shares)
158,515
=
P 792,575
158,515
=
P 792,575
158,515
=
P 792,575
132,348
6,617,424
132,346
6,617,280
132,353 6,617,651
7,410,226
–
P
=7,410,226
7,409,999
(776)
=
P 7,409,223
7,409,855
(776)
=
P 7,409,079
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
10th 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;
(d) Call option - Exercisable any time by Globe Telecom starting at the end of the 5th 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 of 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.
Date
Amount
Record
Payable
(In Thousand Pesos, Except Per Share Figures)
Preferred stock dividends declared on:
December 4, 2009
February 8, 2011
December 15, 2011
0.32
0.29
0.22
=
P 50,492
45,399
35,295
December 18, 2009
February 22, 2011
December 29, 2011
March 18, 2010
March 18, 2011
March 18, 2012
Common stock dividends declared on:
February 3, 2009
August 4, 2009
November 6, 2009
February 4, 2010
August 3, 2010
February 8, 2011
August 8, 2011
32.00
32.00
50.00
40.00
40.00
31.00
31.00
=
P 4,234,885
4,234,979
6,617,280
5,293,926
5,293,939
4,102,803
4,102,802
February 17, 2009
August 19, 2009
November 20, 2009
February 19, 2010
August 17, 2010
February 22, 2011
August 22, 2011
March 10, 2009
September 15, 2009
December 15, 2009
March 15, 2010
September 13, 2010
March 18, 2011
September 19, 2011
The dividend policy of Globe Telecom as approved by the BOD is to declare cash dividends to its
common stockholders on a regular basis as may be determined by the BOD. The dividend payout rate
starting 2006 is approximately 75% of prior year’s net income payable semi-annually in March and
September of each year. This is reviewed annually, taking into account Globe Telecom’s operating
results, cash flows, debt covenants, capital expenditure levels and liquidity.
On November 6, 2009, the BOD amended the dividend payment rate from 75% to a range of 75% - 90%
and declared a special dividend of =
P 50.00 per common share based on shareholders on record as of
November 20, 2009 with the payment date of December 15, 2009.
On November 8, 2011, the BOD approved the change in dividend policy from 75% - 90% of net income
to 75% - 90% of core net income.
17.4 Retained Earnings Available for Dividend Declaration
The total unrestricted retained earnings available for dividend declaration amounted to
=
P 10,682.12 million as of December 31, 2011. This amount excludes the undistributed net earnings of
consolidated subsidiaries, accumulated equity in net earnings of joint ventures accounted for under the
equity method, and unrealized gains recognized on asset and liability currency translations and
unrealized gains on fair value adjustments. The Globe Group is also subject to loan covenants that
restrict its ability to pay dividends (see Note 14).
Globe 2011 Annual Report
186
187
- 52 17.5 Other Comprehensive Income
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:
Other Reserves
Cash flow hedges
AFS financial
assets
Exchange
differences arising
from translations
of foreign
investments
Total
Date of Grant
April 4,
April
4,2003
2003
Number of
Options
Granted
680,200
680,200
Exercise Price
=
P 547.00 per share
Exercise Dates
50% of options exercisable from
April 4, 2005 to April 14, 2013;
the remaining 50% exercisable
from April 4, 2006 to April 14,
2013
July
2004
July 1,
1, 2004
803,800
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
2006 749,500
March 24,
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
604,000
604,000
=
P 1,270.50 per
share
50% of the options become
exercisable from May 17, 2009
to May 16, 2017, the remaining
50% become exercisable from
May 17, 2010 to May 16, 2017
=
P 375.89
Trinomial option
pricing model
August 1, 2008 635,750
=
P 1,064.00 per
share
50% of the options become
exercisable from August 1,
2010 to July 31, 2018, the
remaining 50% become
exercisable from August 1,
2011 to July 31, 2018
=
P 305.03
Trinomial
option pricing
model
=
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
Trinomial
option pricing
model
For the Year Ended December 31, 2011 (In Thousand Pesos)
As of January 1, 2011
Fair value changes
Transferred to profit or loss
Tax effect of items taken
directly to or transferred
from equity
Exchange differences
As of December 31, 2011
(P
= 115,834)
(239,094)
185,900
=
P 35,032
1,269
–
(P
= 7,508)
–
–
(P
= 88,310)
(237,825)
185,900
15,958
–
(P
= 153,070)
–
–
=
P 36,301
–
(625)
(P
= 8,133)
15,958
(625)
(P
= 124,902)
For the Year Ended December 31, 2010 (In Thousand Pesos)
As of January 1, 2010
Fair value changes
Transferred to profit or loss
Tax effect of items taken
directly to or transferred
from equity
Exchange differences
As of December 31, 2010
(P
=22,554)
(116,679)
(16,578)
=
P 14,882
20,150
–
=
P 26,190
–
–
=
P 18,518
(96,529)
(16,578)
39,977
–
(P
=115,834)
–
–
=
P 35,032
–
(33,698)
(P
=7,508)
39,977
(33,698)
(P
=88,310)
May
17,2007
2007
May 17,
For the Year Ended December 31, 2009 (In Thousand Pesos)
As of January 1, 2009
Fair value changes
Transferred to profit or loss
Tax effect of items taken
directly to or transferred
from equity
Exchange differences
As of December 31, 2009
(P
=37,219)
(35,116)
60,156
=
P 329
14,553
–
=
P 1,508
–
–
(P
=35,382)
(20,563)
60,156
(10,375)
–
(P
=22,554)
–
–
=
P 14,882
–
24,682
=
P 26,190
(10,375)
24,682
=
P 18,518
October
298,950
October 1,
1, 2009
2009 298,950
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.
Fair Value
of each
Option
=
P 283.11
Fair Value
Measurement
Black-Scholes
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:
The average share prices at dates of exercise of stock options as of December 31, 2011, 2010 and 2009
amounted to =
P 1,005.55, =
P 948.65 and =
P 975.26, respectively.
188
Globe 2011 Annual Report
2011
2010
2009
Weighted
Weighted
Weighted
Average
Average
Average
Number of
Exercise Number of
Exercise
Exercise
Number of
Shares
Price
Shares
Price
Shares
Price
(In Thousands and Per Share Figures)
Outstanding, at beginning of year 1,848,081
=
P 1,047.80
2,038,106 =
P 1,041.62
1,929,732 =
P 1,035.76
–
–
–
298,950
993.75
Granted
–
Exercised
(50,705)
856.65
(34,900)
817.79
(137,626)
843.22
997.06
(155,125)
1,018.39
(52,950)
1,073.58
Expired/forfeited
(57,050)
Outstanding, at end of year
1,740,326
=
P 1,055.03
1,848,081 =
P 1,047.80
2,038,106 =
P 1,041.62
Exercisable, at end of year
1,661,401
=
P 1,057.94
1,267,506 =
P 1,055.41
828,281
=
P 962.78
189
As of December 31, 2011, 2010 and 2009, the weighted average remaining contractual life of options
outstanding is 5.70 years, 6.65 years, and 7.59 years, respectively.
The following tables present the changes in the present value of defined benefit obligation and fair
value of plan assets:
The following assumptions were used to determine the fair value of the stock options at effective grant
dates:
Present value of defined benefit obligation
2011
Share price
Exercise price
Expected volatility
Option life
Expected dividends
Risk-free interest rate
October 1,
2009
=
P 995.00
=
P 993.75
48.49%
10 years
6.43%
8.08%
August 1,
2008
=
P 1,130.00
=
P 1,064.00
31.73%
10 years
6.64%
9.62%
May 17,
2007
=
P 1,340.00
=
P 1,270.50
38.14%
10 years
4.93%
7.04%
March 24,
2006
=
P 930.00
=
P 854.75
29.51%
10 years
5.38%
10.30%
July 1,
2004
=
P 835.00
=
P 840.75
39.50%
10 years
4.31%
12.91%
April 4,
2003
=
P 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, 2011, 2010 and 2009 amounted to =
P 49.34 million, =
P 104.79 million and =
P 126.44 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.
The components of pension expense (included in staff costs under “General, selling and administrative
expenses”) in the consolidated statements of comprehensive income are as follows:
Pension expense
2011
Current service cost
Interest cost on benefit obligation
Expected return on plan assets
Net actuarial losses (gains)
Total pension expense
Actual return on plan assets
=
P 199,555
150,463
(259,605)
(26)
=
P 90,387
=
P 140,792
2010
(In Thousand Pesos)
=
P 245,766
181,638
(232,747)
47,110
=
P 241,767
=
P 234,071
2009
=
P 163,382
156,182
(234,018)
(41)
=
P 85,505
=
P 181,051
The funded status for the pension plan of Globe Group is as follows:
2011
Present value of benefit obligation
Fair value of plan assets
Unrecognized net actuarial losses
Asset recognized in the consolidated
statements of financial position*
=
P 2,720,266
(2,376,680)
343,586
(1,215,686)
(P
=872,100)
2010
2009
(In Thousand Pesos)
=
P 2,186,228
=
P 2,079,316
(2,355,730)
(2,334,772)
(169,502)
(255,456)
(781,014)
(799,539)
(P
=950,516)
(P
=1,054,995)
*This amount consists of =
P 873.26 million included in “Other noncurrent assets” account and =
P 1.16 million
included in “Accrued expenses” under “Accounts payable and accrued expenses” account as of December 31,
2011 (see Note 12).
Balance at beginning of year
Current service cost
Interest cost
Benefits paid
Transfers out
Actuarial losses (gains)
Balance at end of year
Fair value of plan assets
2011
Balance at beginning of year
Expected return
Contributions
Benefits paid
Asset transfer
Actuarial losses
Balance at end of year
=
P 2,355,730
259,605
16,151
(90,945)
(9,334)
(154,527)
=
P 2,376,680
2010
2009
(In Thousand Pesos)
=
P 2,334,772
=
P 2,344,764
232,747
234,018
137,287
104
(167,620)
(129,761)
–
–
(181,456)
(114,353)
=
P 2,355,730
=
P 2,334,772
The recommended contribution for the Globe Group retirement fund for the year 2012 amounted to
=
P 92.67 million. This amount is based on the Globe Group’s actuarial valuation report as of
December 31, 2011.
As of December 31, 2011, 2010 and 2009, the allocation of the fair value of the plan assets of the Globe
Group follows:
Investments in fixed income securities:
Corporate
Government
Investments in equity securities
Others
2011
2010
2009
12.83%
26.14%
58.76%
2.27%
12.66%
20.96%
63.89%
2.49%
12.40%
18.71%
66.81%
2.08%
In 2008, Globe, Innove and GXI pooled its plan assets for single administration by the fund managers.
The EGG Group’s retirement fund is being managed separately and the amount of defined benefit
obligation is immaterial.
As of December 31, 2011, the pension plan assets of the Globe Group include shares of stock of Globe
Telecom with total fair value of =
P 18.72 million, and shares of stock of other related parties with total fair
value of =
P 23.99 million.
The assumptions used to determine pension benefits of Globe Group are as follows:
2011
6.25%
10.00%
4.50%
2010
8.50%
10.00%
6.00%
2009
9.00%
10.00%
7.00%
Globe 2011 Annual Report
Discount rate
Expected rate of return on plan assets
Salary rate increase
190
=
P 2,186,228
199,555
150,463
(90,945)
(9,334)
284,299
=
P 2,720,266
2010
2009
(In Thousand Pesos)
=
P 2,079,316
=
P 1,319,742
245,766
163,382
181,638
156,182
(167,620)
(129,761)
–
–
(152,872)
569,771
=
P 2,186,228
=
P 2,079,316
191
In 2011, 2010 and 2009, the Globe Group applied a single weighted average discount rate that reflects
the estimated timing and amount of benefit payments and the currency in which the benefits are to be
paid.
These combinations of net liability movements and peso rate depreciation/appreciation resulted in foreign
exchange loss in 2011 and foreign exchange gains in 2010 and 2009, respectively
(see Note 22).
The overall expected rate of return on plan assets is determined based on the market prices prevailing
on that date, applicable to the period over which the obligation is to be settled.
The “Others” account includes insurance claims and other items that are individually immaterial.
Amounts for the current and previous four years are as follows:
2011
Present value of defined
benefit obligation
Fair value of plan assets
Deficit (surplus)
Experience adjustments:
Gain (loss) on plan
liabilities
Gain (loss) on plan
assets
2010
21. General, Sellin g and Administrative Expenses
2009
(In Thousand Pesos)
2008
2007
This account consists of:
P 2,720,266
=
2,376,680
343,586
=
P 2,186,228
2,355,730
(169,502)
=
P 2,079,316
2,334,772
(255,456)
=
P 1,319,742
2,344,764
(1,025,022)
=
P 1,690,615
1,341,568
349,047
=
P 343,102
(P
=23,901)
=
P 18,390
(P
=51,340)
(P
=170,819)
(154,527)
(181,456)
(114,327)
(272,539)
29,780
19. Interest Income
Interest income is earned from the following sources:
Short-term placements
Cash in banks
Loans Receivables
Globe Group retirement plan
BHI
=
P 188,557
8,025
2010
(In Thousand Pesos)
=
P 90,889
23,121
=
P 145,623
67,288
76,056
24,750
P 297,388
=
78,766
25,756
=
P 218,532
51,799
7,096
=
P 271,806
Notes
2011
30
30
11, 16.3
2009
Staff costs
Selling, advertising and promotions
Professional and other contracted
services
Utilities, supplies and other
administrative expenses
Repairs and maintenance
Rent
Insurance and security services
Taxes and licenses
Courier, delivery and miscellaneous
expenses
Others
2010
2009
(In Thousand Pesos)
=
P 5,088,990
=
P 4,980,769
4,268,843
3,766,390
Notes
2011
16.5, 18
=
P 5,809,831
4,756,425
16
4,214,284
3,587,635
2,695,598
5
16
16, 25
3,804,762
3,522,778
2,830,382
1,381,633
1,380,270
3,338,608
3,272,514
2,808,906
1,701,258
1,175,417
2,692,958
2,581,565
3,469,319
1,732,888
1,131,280
1,116,181
487,917
P 29,304,463
=
984,274
465,659
=
P 26,692,104
906,451
539,664
=
P 24,496,882
The “Others” account includes various other items that are individually immaterial.
22. Financing Costs
This account consists of:
20. Other Income
This account consists of:
Notes
Lease income
Gain on derivative instruments
Foreign exchange gain - net
Others
8, 25.4,
25.1.b
22, 28.2.1.2
2011
=
P 172,499
25,495
–
376,774
=
P 574,768
2010
(In Thousand Pesos)
=
P 173,261
–
465,373
218,307
=
P 856,941
2009
=
P 204,505
–
286,530
573,441
=
P 1,064,476
The peso to US dollar exchange rates amounted to =
P 43.919, =
P 43.811 and =
P 46.425 as of December 31, 2011,
2010 and 2009, respectively.
192
2011
7
=
P 2,059,660
28
20, 28.2.1.2
211,404
–
308,650
P 2,579,714
=
2010
2009
(In Thousand Pesos)
=
P 1,981,785
=
P 2,096,945
58,321
28,295
–
=
P 2,068,401
38,993
46,943
–
=
P 2,182,881
*This account is net of the amount capitalized borrowing costs (see Note 7).
In 2010 and 2009, net foreign exchange gain amounting to =
P 465.37 million and =
P 286.53 million, respectively,
was presented as part of “Other income - net” account in the consolidated statements of comprehensive
income (see Note 20).
In 2011, gain on derivative instruments amounting to =
P 25.50 million was presented as part of “Other
income - net” account in the consolidated statements of comprehensive income (see Note 20).
Globe 2011 Annual Report
The Globe Group’s net foreign currency-denominated liabilities amounted to USD188.97 million, USD267.77
million and USD207.18 million as of December 31, 2011, 2010 and 2009, respectively (see Note 28.2.1.2).
Interest expense - net*
Swap and other financing costs net
Loss on derivative instruments
Foreign exchange loss - net
Notes
193
- 58 Interest expense - net is incurred on the following:
Long-term debt
Accretion expense
Amortization of debt issuance cost
Short term notes payable
2011
Notes
2011
14
15, 25.4
14
14
=
P 1,762,501
176,718
116,618
3,823
P 2,059,660
=
2010
2009
In Thousand Pesos
=
P 1,658,291
=
P 1,688,201
173,687
175,317
110,570
63,222
39,237
170,205
=
P 1,981,785
=
P 2,096,945
23. Impairment Losses and Others
This account consists of:
Notes
Impairment loss on:
Receivables
Property and equipment and
intangible assets
Provisions for (reversal of):
Inventory obsolescence and
market decline
Other claims and assessments
28.2.2
5
13
2010
In Thousand Pesos
2011
2009
Net deferred income tax liabilities
=
P 1,599,967
=
P 1,285,533
=
P 754,633
128,614
63,126
75,017
237,918
(47,916)
=
P 1,918,583
42,115
138,760
=
P 1,529,534
58,743
(88,047)
=
P 800,346
The significant components of the deferred income tax assets and liabilities of the Globe Group represent
the deferred income tax effects of the following:
2011
194
=
P 4,382,211
=
P 4,799,099
=
P 5,116,298
1,324,137
167,834
33,658
1,166,689
279,037
23,059
839,330
160,761
21,709
22,277
4,870
15,396
5,950,383
=
P 3,163,744
39,718
6,572
–
6,314,174
=
P 3,949,896
67,178
8,228
–
6,213,504
=
P 3,884,756
(a) Sum-of-the-years digit method
(b) Straight-line method
Net deferred tax assets and liabilities presented in the consolidated statements of financial position on a net
basis by entity are as follows:
2011
Net deferred tax assets*
Net deferred tax liabilities (Globe Telecom)
=
P 765,670
3,929,414
2010
(In Thousand Pesos)
=
P 670,594
4,620,490
2009
=
P 742,538
4,627,294
2010
(In Thousand Pesos)
GXI did not recognize its deferred income tax assets because the management believes that there is no
assurance that GXI will generate sufficient taxable income to allow all or part of its deferred income tax assets
to be utilized. The unrecognized deferred income tax assets consist of the tax effects of the following:
2011
2009
P 1,033,282
=
=
P 737,311
=
P 400,352
760,762
406,953
744,504
374,106
918,938
346,668
126,247
112,842
98,389
120,753
88,808
130,805
98,752
90,788
77,056
56,632
13,208
1,012
43,265
84,168
67,793
73,592
5,819
13,499
87,311
76,402
16,845
33,097
23,555
138,054
8,980
–
125
2,786,639
–
954
125
2,364,278
–
46,711
21,202
2,328,748
Deferred tax assets on:
NOLCO
Unearned revenues already subjected to
income tax
MCIT
Allowance for impairment losses on
receivables
Accumulated impairment losses on
property and equipment
Accrued employee benefits
Unrealized foreign exchange losses
Inventory obsolescence and market
decline
Deferred income tax assets
=
P 38,987
2010
(In Thousand Pesos)
=
P 58,538
2009
33,898
1,545
3,349
1,871
1,733
2,053
1,411
3,927
1,070
55
955
232
–
955
207
156
955
150
67
59
=
P 49,054
–
=
P 64,530
15
=
P 38,604
The details of GXI’s and GTI’s NOLCO and MCIT and the related tax effects are as follows
(in thousand pesos):
Inception Year
2011
2010
2009
MCIT
=
P 1,854
322
1,174
=
P 3,350
NOLCO
=
P 1,204
129,956
3,373
=
P 134,533
Tax Effect of
NOLCO
=
P 361
38,987
1,012
=
P 40,360
Expiry Year
2014
2013
2012
Globe 2011 Annual Report
(Forward)
2009
*2011 consists of Innove, GXI and EGG Group; 2010 and 2009 consists of Innove and EGG Group.
24. Income Tax
Deferred income tax assets on:
Allowance for impairment losses on
receivables
Unearned revenues already subjected to
income tax
ARO
Accumulated impairment losses on
property and equipment
Accrued rent expense under PAS 17
Inventory obsolescence and market
decline
Accrued vacation leave
Unrealized loss on derivative transactions
Provisions for claims and assessments
Cost of share-based payments
NOLCO (see Note 3.2.7)
Allowance for doubtful accounts for longoutstanding net advances
MCIT (see Note 3.2.7)
Unrealized foreign exchange losses
Deferred income tax liabilities on:
Excess of accumulated depreciation and
amortization of Globe Telecom
equipment for tax reporting(a) over
financial reporting(b)
Undepreciated capitalized borrowing costs
already claimed as deduction for tax
reporting
Unrealized foreign exchange gain
Prepaid pension
Unamortized discount on noninterest
bearing liability
Customer contracts of acquired company
Others
2010
(In Thousand Pesos)
195
GXI’s NOLCO amounting to =
P 34.87 million expired in 2011.
(b) Operating lease commitments - Globe Group as lessor
The reconciliation of the provision for income tax at statutory tax rate and the actual current and deferred
provision for income tax follows:
2010
(In Thousand Pesos)
=
P 4,229,121
=
P 4,211,458
2009
2011
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
Equity in net losses of joint ventures
Income subjected to lower tax rates
Others
Actual provision for income tax
5,324
8,203
(517,986)
540,602
P 4,265,264
=
47,806
890
(51,205)
84,609
=
P 4,293,558
Globe Telecom and Innove 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).
=
P 5,391,811
Total lease income amounted to =
P 172.50 million for the years ended December 31, 2011, 2010 and
2009, respectively.
15,405
2,103
(62,175)
56,685
=
P 5,403,829
The future minimum lease receivables under these operating leases are as follows (in thousand
pesos):
Within one year
After one year but not more than five years
=
P 156,755
509,455
=
P 666,210
The current provision for income tax includes the following:
2010
(In Thousand Pesos)
=
P 5,011,849
=
P 4,166,153
37,630
21,472
=
=
P 4,187,625
P 5,049,479
2009
2011
RCIT or MCIT whichever is higher
Final tax
=
P 5,543,242
40,567
=
P 5,583,809
The corporate tax rate is 30% in 2011, 2010 and 2009.
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
(a) Operating lease commitments - Globe Group as lessee
Globe Telecom and Innove lease certain premises for some of its telecommunications facilities and
equipment and for most of its business centers and network sites. The operating lease agreements
are for periods ranging from 1 to 10 years from the date of the contracts and are renewable under
certain terms and conditions. The agreements generally require certain amounts of deposit and
advance rentals, which are shown as part of the “Other noncurrent assets” and “Prepayment and
other current assets” accounts in the consolidated statements of financial position (see Notes 6 and
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)
P 2,808.91 million and =
P 3,469.32 million for the years ended
amounted to =
P 2,830.38 million, =
December 31, 2011, 2010 and 2009, respectively (see Note 21).
As of December 31, 2011, the future minimum lease payments under these operating leases are as
follows (in thousand pesos):
196
=
P 2,074,417
7,091,914
2,406,696
=
P 11,573,027
25.3 Arrangements and Commitments with Suppliers
Globe Telecom and Innove have entered into agreements with various suppliers for the
development or construction, delivery and installation of property and equipment. Under the terms
of these agreements, advance payments are made to suppliers and delivery, installation,
development or construction commences only when purchase orders are served. While the
development or construction is in progress, project costs are accrued based on the billings
received. Billings are based on the progress of the development or construction and advance
payments are being applied proportionately to the milestone billings. When development or
construction and installation are completed and the property and equipment is ready for service,
the balance of the value of the related purchase orders is accrued.
The consolidated accrued project costs as of December 31, 2011, 2010 and 2009 included in the
“Accounts payable and accrued expenses” account in the consolidated statements of financial
position amounted to =
P 6,906.94 million, =
P 8,638.12 million and =
P 8,081.68 million, respectively (see
Note 12). As of December 31, 2011, the consolidated expected future billings on the unaccrued
portion of purchase orders issued amounted to =
P 11,724.15 million. The settlement of these
liabilities is dependent on the payment terms and project milestones agreed with the suppliers and
contractors. As of December 31, 2011, the unapplied advances made to suppliers and contractors
relating to purchase orders issued amounted to =
P 1,674.92 million (see Note 6).
In November 2011, Globe Telecom announced to undertake a network modernization program over
the next two or three years. The massive network upgrade is aimed at significantly improving
network quality and customer experience, increase capacity, drive down costs, as well as prepare
the network to meet the needs of customers today and in the future. At the same time, Globe
Telecom is initiating an IT transformation project to create a streamlined and integrated information
environment, in response to changing market and business demands. External partners will be
tapped to help manage the modernization efforts. Globe Telecom estimated investment for this
program amounts to USD790.00 million.
Globe 2011 Annual Report
Not later than one year
After one year but not more than five years
After five years
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.
197
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. The carrying value of this obligation amounted to =
P 735.94 million as of
December 31, 2009 (see Note 15).
In January 2003, Globe Telecom received advance lease payments from C2C for its use of a portion
of Globe Telecom’s cable landing station facilities. Accordingly, based on the amortization
schedule, Globe Telecom recognized lease income amounting to =
P 12.26 million, =
P 12.26 million and
=
P 11.90 million for the years ended December 31, 2011, 2010 and 2009, respectively.
In 2009, the said advances amounting to =
P 67.67 million were shown as part of the current portion of
“Other long-term liabilities” account in the consolidated statements of financial position (see
Note 15):
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.
In the second quarter of 2010, the specific equipment, portion of the property and facilities, and the
liabilities associated with the transfer were identified and were classified as current and shown
separately in the consolidated statement of financial position as “Assets classified as held for sale”
and “Liabilities directly associated with the assets classified as held for sale” (see Note 7).
As of December 31, 2011, the Globe Group retains the classification of its non-current assets as held
for sale. 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.
The closing documents are expected to be fully executed within 2012.
P 778.32 million.
As of December 31, 2011 and 2010, assets classified as held for sale amounted to =
As of December 31, 2011 and 2010, liabilities directly associated with assets classified as held for
sale amounted to =
P 583.37 million and =
P 697.73 million, respectively.
25.5 Agreement with BHI
On August 11, 2009, Globe Telecom signed a credit facility agreement with BHI amounting to
=
P 750.00 million. The total drawdown under this loan made by BHI in 2009 amounted to =
P 295.00
million. The loan is payable in one full payment, five years from the date of initial drawdown with a
prepayment option in whole or in part on an interest payment date. Interest is at the rate of 8.275%
payable semi-annually in arrears and the loan is secured by a pledge and chattel mortgage
agreement. As of December 31, 2011 and 2010, the undrawn balance of the credit facility is
=
P 455.00 million (see Note 11).
25.6 Agreement with STI
In 2009, STI agreed to sell to Globe Telecom its own capacity in a certain cable system. In 2009 also,
Globe Telecom agreed to sell to STI capacities that it owns in a certain cable system (see Note 16).
In March 2011, the final agreements were executed between Globe Telecom and STI whereby
Globe Telecom conveyed and transferred ownership of certain Indefeasible Rights of Use (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 =
P 120.19 million.
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 9 other international
carriers. Globe Telecom’s estimated investment for this project amounts to USD63.60 million and
total expenditures incurred was at 20% as of December 31, 2011.
25.8 Commitment to increase GXI’s paid-up capital
On May 5, 2009, the BOD of Globe Telecom approved the issuance of a guarantee to the Bangko
Sentral ng Pilipinas (BSP) for the proposal of GXI to increase its paid-up capital to =
P 100.00 million on
a staggered basis over a period of two (2) years to meet the required minimum capital and qualify as
E-Money Issuer-Others in compliance with BSP Circular No. 649. On August 27, 2009, the Monetary
Board of the BSP approved GXI’s compliance with this circular under Resolution No. 1223.
On August 3, 2010, the BOD of Globe Telecom approved the transfer of GXI’s related assets
booked under Globe Telecom to GXI books in compliance with BSP’s first tranche requirement to
increase GXI’s paid up capital to at least =
P 50.00 million by 2010. Globe Telecom made the
additional capital infusion to GXI through transfer of assets and GXI recorded the assets at its fair
P 82.69 million as of
value amount of =
P 53.69 million increasing its total paid-up capital to =
December 31, 2010.
On December 15, 2011, the BOD of Globe Telecom approved the transfer of GXI’s related assets
booked under Globe Telecom to GXI books to comply with BSP’s second tranche requirement to
increase GXI’s paid up capital to =
P 100.00 million by 2011. Globe Telecom made the additional
capital infusion to GXI through transfer of assets in December 2011 and GXI recorded the assets at
P 18.92 million.
its fair value amount of =
Total paid up capital of GXI as of December 31, 2011 is =
P 103.87 million. After consolidation, where
the additional infusion and transfer of assets are eliminated, the assets remain under Globe
Telecom at its net book value amounting to =
P 43.37 million.
26. Contingencies
198
Globe 2011 Annual Report
On July 23, 2009, the NTC issued NTC Memorandum Circular (MC) No. 05-07-2009 (Guidelines on Unit of
Billing of Mobile Voice Service). The MC provides that the maximum unit of billing for the cellular mobile
telephone service (CMTS) whether postpaid or prepaid shall be six (6) seconds per pulse. The rate for the first
two (2) pulses, or equivalent if lower period per pulse is used, may be higher than the succeeding pulses to
recover the cost of the call set-up. Subscribers may still opt to be billed on a one (1) minute per pulse basis
or to subscribe to unlimited service offerings or any service offerings if they actively and knowingly enroll in
the scheme.
199
On December 28, 2010, the CA rendered its decision declaring null and void and reversing the decisions of
the NTC in the rates applications cases for having been issued in violation of Globe and the other carrier’s
constitutional and statutory right to due process. However, while the decision is in Globe’s favor, there is a
provision in the decision that NTC did not violate the right of petitioners to due process when it declared via
circular that the per pulse billing scheme shall be the default.
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.
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, 2012.
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 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.
The succeeding discussion focuses on Globe Group’s capital and financial risk management.
27. Earnings Per Share
28.2 Capital and Financial Risk Management Objectives and Policies
The primary objective of the Globe Group’s capital management is to ensure that it maintains a strong
credit rating and healthy capital ratios in order to support its business and maximize shareholder value.
The Globe Group’s earnings per share amounts were computed as follows:
Net income attributable to common
shareholders for basic earnings per share
Add dividends on preferred shares
Net income attributable to shareholders for
diluted earnings per share
Weighted average number of shares for basic
earnings per share
Dilutive shares arising from:
Stock options
Convertible preferred shares
Adjusted weighted average number of
common stock for diluted earnings per
share
Basic earnings per share
Diluted earnings per share
The Globe Group continues to monitor and manage its financial risk exposures according to its BOD
approved policies.
2010
2009
2011
(In Thousand Pesos and Number of Shares,
Except Per Share Figures)
=
P 9,796,510
35,295
=
P 9,699,235
45,399
=
P 12,518,381
50,492
9,831,805
9,744,634
12,568,873
132,349
132,343
132,342
40
882
42
890
66
867
133,271
=
P 74.02
=
P 73.77
133,275
=
P 73.29
=
P 73.12
133,275
=
P 94.59
=
P 94.31
The Globe Group monitors its use of capital using leverage ratios, such as debt to total capitalization
and makes adjustments to it in light of changes in economic conditions and its financial position.
The Globe Group is not subject to externally imposed capital requirements. The ratio of debt to total
capitalization for the years ended December 31, 2011, 2010 and 2009 was at 50%, 52% and 50%,
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
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.
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, 2011,
2010 and 2009. 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:


200
Globe 2011 Annual Report

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, 2011, 2010 and 2009 including the effect of hedge accounting.
The sensitivity of equity is calculated by considering the effect of any associated cash flow
hedges for the effects of the assumed changes the underlying.
201
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 costefficient 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, 39% and 58%, 32%
and 65%, and 34% and 45% of the Globe Group’s USD and PHP borrowings as of
December 31, 2011 and 2010, and 2009, 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.
2011
Increase/decrease
in basis points
USD*
PHP
+35bp s
-35bp s
+100bp s
-100bp s
2010
Increase/decrease
in basis points
USD
PHP
+35bps
-35bps
+100bps
-100bps
2009
Increase/decrease
in basis points
USD
PHP
+200 bps
-200 bps
+100 bps
-100 bps
Effect on income
Effect on equity
before income tax
Increase (decrease)
Increase (decrease)
(In Thousand Pesos)
(P
= 2,599)
=
P 193
2,570
(193)
(151,509)
145,932
151,504
(150,577)
Effect on income
before income tax
Effect on equity
Increase (decrease)
Increase (decrease)
(In Thousand Pesos)
(P
=14,607)
=
P 7,086
14,622
(7,009)
(134,008)
153,121
133,980
(160,664)
Effect on income
before income tax
Effect on equity
Increase (decrease)
Increase (decrease)
(In Thousand Pesos)
(P
=31,983)
=
P 38,989
29,784
(17,214)
(121,820)
–
121,747
–
*The Globe Group revised the USD interest rates to a more reasonable estimate due to declining USD
LIBOR
202
2011
Assets
Cash and cash equivalents
Receivables
Prepayments and other
current assets
Long-term notes
receivable
Liabilities
Accounts payable and
accrued expenses
Short-term notes payable
Long-term debt
Net foreign currencydenominated liabilities
2010
US
Peso
Dollar
Equivalent
(In Thousands)
US
Dollar
Peso
Equivalent
$57,337
65,555
=
P 2,517,883
2,879,122
$41,573
58,257
–
–
1,590
124,482
2009
US
Dollar
Peso
Equivalent
=
P 1,821,337
2,552,308
$45,684
50,359
=
P 2,120,901
2,337,915
–
–
–
5
69,831
5,466,836
–
99,830
–
4,373,645
–
96,043
–
4,458,821
191,159
40,000
82,290
313,449
8,395,498
1,756,760
3,614,095
13,766,353
197,586
–
170,011
367,597
8,656,460
–
7,448,357
16,104,817
155,085
–
148,133
303,218
7,199,819
–
6,877,090
14,076,909
$188 ,967
=
P 8,299,517
$267,767
=
P 11,731,172
$207,175
=
P 9,618,088
*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).
2011
Increase/decrease
Effect on income before
in Peso to
income tax Increase
Effect on equity
US Dollar exchange rate
(decrease)
Increase (decrease)
(In Thousand Pesos)
+.40
(P
=74,558)
(P
=12)
-.40
74,558
12
2010
Increase/decrease
in Peso to
US Dollar exchange rate
+.40
-.40
Effect on income before
income tax Increase
Effect on equity
(decrease)
Increase (decrease)
(In Thousand Pesos)
(P
=106,051)
(P
=14,181)
106,051
14,181
2009
Increase/decrease
in Peso to
US Dollar exchange rate
+.40
-.40
Effect on income before
income tax Increase
Effect on equity
(decrease)
Increase (decrease)
(In Thousand Pesos)
(P
=81,857)
(P
=278)
81,857
278
Globe 2011 Annual Report
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,
11%, 15% and 14% of debt as of December 31, 2011, 2010 and 2009, 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:
203
- 68 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 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.
2011
53%
40%
7%
–
2010
52%
16%
29%
3%
2009
48%
25%
15%
12%
The movement in equity arises from changes in the fair values of derivative financial
instruments designated as cash flow hedges.
Local bank deposits
Onshore foreign bank
Special deposit account
Offshore bank deposit
In addition, the consolidated expected future payments on foreign currency-denominated
purchase orders related to capital projects amounted to USD203.47 million, USD274.51
million and USD255.79 million as of December 31, 2011, 2010 and 2009, 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 2011, 2010 and 2009 movement in PHP
to USD rate on commitments amounted to =
P 81.39 million, =
P 109.80 million and
=
P 102.32 million gain or loss, respectively.
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 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 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
Following are the Globe Group exposures with its investment counterparties for cash and
cash equivalents as of December 31:
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 tables below show the aging analysis of the Globe Group’s receivables as of
December 31.
2011
Wireless receivables:
Consumer
Key corporate accounts
Other corporations and
Small and Medium
Enterprises (SME)
Wireline receivables:
Consumer
Key corporate accounts
Other corporations and
SME
Other trade receivables
Traffic receivables:
Foreign
Local
Other receivables
Total
Neither Past
Due Nor
Impaired
Less than
30 days
Past Due But Not Impaired
31 to 60
61 to 90
More than
days
days
90 days
(In Thousand Pesos)
Impaired
Financial
Assets
Total
Tota
=
P 668,475
51,246
=
P 651,816
169,990
=
P 381,531
201,517
=
P 227,761
132,861
=
P 538,984
326,724
=
P 713,729
81,418
=
P 3,182,296
963,756
288,812
1,008,533
254,929
1,076,735
250,509
833,557
137,686
498,308
436,163
1,301,871
161,668
956,815
1,529,767
5,675,819
241,871
70,771
240,349
162,774
117,342
310,188
57,601
205,506
50,462
687,907
1,782,483
214,751
2,490,108
1,651,897
46,243
358,885
80,443
483,566
31,990
459,520
24,599
287,706
30,733
769,102
192,679
2,189,913
406,687
4,548,692
–
3,986
1,940
5,553
9,278
–
20,757
1,890,996
163,068
2,054,064
951,302
=
P 4,372,784
–
–
–
–
=
P 1,564,287
–
–
–
–
=
P 1,295,017
–
–
–
–
=
P 791,567
–
–
–
–
=
P 2,080,251
165,261
72,537
237,798
11,703
=
P 3,396,229
2,056,257
235,605
2,291,862
963,005
=
P 13,500,135
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.
Globe 2011 Annual Report
204
205
- 69 2010
Wireless receivables:
Consumer
Key corporate accounts
Other corporations and
SME
Wireline receivables:
Consumer
Key corporate accounts
Other corporations and
SME
Other trade receivables
Traffic receivables:
Foreign
Local
Other receivables
Total
Neither Past
Due Nor
Impaired
Past Due But Not Impaired
31 to 60
61 to 90
days
days
(In Thousand Pesos)
More than
90 days
Impaired
Financial
Assets
Less than
30 days
Tota
Total
=
P 521,771
19,975
=
P 739,554
103,032
=
P 311,860
150,689
=
P 139,330
127,929
=
P 744,827
201,733
=
P 346,499
74,131
=
P 2,803,841
677,489
129,570
671,316
152,544
995,130
76,092
538,641
18,802
286,061
175,710
1,122,270
83,920
504,550
636,638
4,117,968
235,480
3,066
215,510
182,566
111,297
165,621
66,806
216,576
76,989
823,085
1,252,527
179,015
1,958,609
1,569,929
86,869
325,415
–
50,922
448,998
–
30,474
307,392
8,447
16,125
299,507
5,186
49,166
949,240
4,214
140,542
1,572,084
374,098
3,902,636
17,847
1,731,708
133,474
1,865,182
647,464
=
P 3,509,377
–
–
–
–
=
P 1,444,128
–
–
–
–
=
P 854,480
–
–
–
–
=
P 590,754
–
–
–
–
=
P 2,075,724
175,241
89,815
265,056
11,414
=
P 2,353,104
1,906,949
223,289
2,130,238
658,878
=
P 10,827,567
More than
90 days
Impaired
Financial
Assets
Tota
Total
The table below provides information regarding the credit risk exposure of the Globe
Group by classifying assets according to the Globe Group’s credit ratings of receivables as
of December 31. The Globe Group’s credit rating is based on individual borrower
characteristics and their relationship to credit event experiences.
2011
Wireless receivables:
Consumer
Key corporate accounts
Other corporations and SME
Wireline receivables:
Consumer
Key corporate accounts
Other corporations and SME
Total
2010
2009
Wireless receivables:
Consumer
Key corporate accounts
Other corporations and
SME
Wireline receivables:
Consumer
Key corporate accounts
Other corporations and
SME
Other trade receivables
Traffic receivables:
Foreign
Local
Other receivables
Total
Neither Past
Due Nor
Impaired
Past Due But Not Impaired
31 to 60
61 to 90
days
days
(In Thousand Pesos)
Less than
30 days
=
P 262,965
32,777
=
P 354,222
133,249
=
P 151,239
106,967
=
P 93,469
69,193
=
P 255,714
116,094
=
P 88,088
20,154
=
P 1,205,697
478,434
110,527
406,269
103,315
590,786
39,450
297,656
20,535
183,197
49,246
421,054
47,690
155,932
370,763
2,054,894
158,475
16,282
152,776
97,368
82,966
153,984
79,941
242,937
129,685
804,630
610,142
76,400
1,213,985
1,391,601
71,041
245,798
–
48,108
298,252
16,407
25,663
262,613
2,715
13,690
336,568
–
46,182
980,497
–
93,228
779,770
2,681
297,912
2,903,498
21,803
1,838,777
303,090
2,141,867
626,640
=
P 3,420,574
–
–
–
–
=
P 905,445
–
–
–
–
=
P 562,984
–
–
–
–
=
P 519,765
–
–
–
–
=
P 1,401,551
97,971
79,435
177,406
8,111
=
P 1,123,900
1,936,748
382,525
2,319,273
634,751
=
P 7,934,219
Total allowance for impairment losses amounted to =
P 3,380.63 million, =
P 2,453.44 million
and =
P 1,350.99 million includes allowance for impairment arising from collective assessment
amounted to =
P337.65 million, =
P 328.72 million, and =
P 99.21 million as of December 31, 2011,
2010 and 2009, respectively (see Note 4).
Wireless receivables:
Consumer
Key corporate accounts
Other corporations and SME
Wireline receivables:
Consumer
Key corporate accounts
Other corporations and SME
Total
2009
Wireless receivables:
Consumer
Key corporate accounts
Other corporations and SME
Wireline receivables:
Consumer
Key corporate accounts
Other corporations and SME
Total
Neither past-due nor impaired
Medium
Low
High
Quality
Quality
Quality
(In Thousand Pesos)
Total
=
P 389,075
7,007
156,570
552,652
=
P 188,526
1,202
27,688
217,416
=
P 90,874
43,037
104,554
238,465
=
P 668,475
51,246
288,812
1,008,533
212,613
67,753
39,948
320,314
=
P 872,966
29,258
3,010
6,120
38,388
=
P 255,804
–
8
175
183
=
P 238,648
241,871
70,771
46,243
358,885
=
P 1,367,418
Neither past-due nor impaired
High
Medium
Low
Quality
Quality
Quality
(In Thousand Pesos)
Total
=
P 280,831
9,817
60,842
351,490
=
P 64,889
1,183
4,358
70,430
=
P 176,051
8,975
64,370
249,396
=
P 521,771
19,975
129,570
671,316
196,067
2,912
79,049
278,028
=
P 629,518
39,413
154
7,512
47,079
=
P 117,509
–
–
308
308
=
P 249,704
235,480
3,066
86,869
325,415
=
P 996,731
Neither past-due nor impaired
High
Medium
Low
Quality
Quality
Quality
(In Thousand Pesos)
Total
=
P 183,594
27,339
25,054
235,987
=
P 41,292
3,867
37,693
82,852
=
P 38,079
1,571
47,780
87,430
=
P 262,965
32,777
110,527
406,269
70,395
13,658
34,676
118,729
=
P 354,716
10,563
116
4,036
14,715
=
P 97,567
77,517
2,508
32,329
112,354
=
P 199,784
158,475
16,282
71,041
245,798
=
P 652,067
Globe 2011 Annual Report
206
207
High quality accounts are accounts considered to be high value and have consistently
exhibited good paying habits. Medium quality accounts are active accounts with
propensity of deteriorating to mid-range age buckets. These accounts do not flow
through to permanent disconnection status as they generally respond to credit actions and
update their payments accordingly. Low quality accounts are accounts which have
probability of impairment based on historical trend. These accounts show propensity to
default in payment despite regular follow-up actions and extended payment terms.
Impairment losses are also provided for these accounts based on net flow rate.
Traffic receivables that are neither past due nor impaired are considered to be high quality
given the reciprocal nature of the Globe Group’s interconnect and roaming partner
agreements with the carriers and the Globe Group’s historical collection experience.
Other receivables are considered high quality accounts as these are substantially from
credit card companies and Globe dealers.
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, 2011, 2010 and 2009, Globe Group has available
uncommitted short-term credit facilities of USD76.00 million and =
P 8,170.00 million,
USD59.00 million and =
P 11,017.40 million, USD19.00 million and =
P 9,004.90 million,
respectively. As of December 31, 2011, 2010 and 2009, the Globe Group has available
committed long-term facilities of P
=10,000.00 million, =
P 1,000.00 million, and
USD93.00 million, respectively, which remain undrawn.
As part of its liquidity risk management, the Globe Group regularly evaluates its projected
and actual cash flows. It also continuously assesses conditions in the financial markets for
opportunities to pursue fund raising activities, in case any requirements arise. Fund raising
activities may include bank loans, export credit agency facilities and capital market issues.
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):
2011
Subscribers
At beginning of year
Charges for the year
Reversals/write offs/
adjustments
At end of year
Key corporate
accounts
Consumer
=
P 1,677,691
=
P 245,622
1,093,575
57,449
(338,044)
=
P 2,433,222
(39,607)
=
P 263,464
Other
corporations
and SME
=
P 250,599
235,782
Traffic
Settlements
and Others
=
P 279,532
84,306
Non-trade
(Note 6)
=
P 21,045
102,540
Total
=
P 2,474,489
1,573,652
(51,778)
=
P 434,603
(114,497)
=
P 249,341
(35,229)
=
P 88,356
(579,155)
=
P 3,468,986
Other
corporations
and SME
=
P 165,416
124,549
Traffic
Settlements
and Others
=
P 188,199
91,333
Non-trade
(Note 6)
=
P 34,776
620
Total
=
P 1,385,767
1,285,533
(39,366)
=
P 250,599
–
=
P 279,532
(14,351)
=
P 21,045
(196,811)
=
P 2,474,489
Other
corporations
and SME
=
P 264,900
79,898
Traffic
Settlements
and Others
=
P 400,847
(211,351)
Non-trade
(Note 6)
=
P 43,753
(5,998)
Total
=
P 1,230,412
754,633
(179,382)
=
P 165,416
(1,297)
=
P 188,199
(2,979)
=
P 34,776
(599,278)
=
P 1,385,767
2010
Subscribers
At beginning of year
Charges for the year
Reversals/write offs/
adjustments
At end of year
Key corporate
Consumer
accounts
=
P 820,403
=
P 176,973
987,636
81,395
(130,348)
=
P 1,677,691
(12,746)
=
P 245,622
2009
Subscribers
At beginning of year
Charges for the year
Reversals/write offs/
adjustments
At end of year
Key corporate
Consumer
accounts
=
P 400,926
=
P 119,986
856,184
35,900
(436,707)
=
P 820,403
21,087
=
P 176,973
Globe 2011 Annual Report
208
209
- 73 -
=
P 3,397,450
5.97%, 7.03%,
7.4%
2013
=
P 4,381,850
7.03%, 7.4%,
8%, 8.36%
2014
$2,718
=
P 1,711,349
$2,104
=
P 1,376,164
=
P 7,033,150
5.97%, 6.68%, 7.03%,
7.4%, 7.5%
2012
$4,578
=
P 2,023,562
=
P 2,067,800
8.36%
$810
=
P 525,410
$348
=
P 423,967
2013
2014
=
P 4,008,900
7.03%, 8.36%
2015 and
thereafter
$1,918
=
P 1,152,815
=
P 5,747,343
PDSTF 3mo + 0.75%
margin; PDSTF3mo +
1.25% margin;
PDSTF3mo + 1%
margin; PDSTF6mo +
1.25% margin
$1,355
=606,723
P
=
P 4,603,843
PDSTF 3mo +
0.75% margin;
PDSTF3mo +
1.25% margin;
PDSTF3mo + 1
margin %;
PDSTF6mo +
1.25% margin
$1,061
=
P 416,655
=
P 5,025,000
PDSTF 3mo +
0.75% margin;
PDSTF 3mo +
0.65% margin
$14,273
$17,710
$21,665
6-mo. LIBOR+3.4% 6-mo. LIBOR+3.4% 6-mo. LIBOR+ 3.4%
margin; 6-mo.
margin; 6-mo.
margin
LIBOR+2.65% margin
LIBOR+2.65%
margin
=
P 4,381,850
7.03%, 7.4%, 8%,
8.36%
- 74 -
Corporation (PDEX) rates.
$1,483
=
P 813,874
=
P 3,397,450
5.97%, 6.68%, 7.03%,
7.4%
*Using =
P=
*Using
P43.8143.92 USD exchange rate as of December 31, 2010.
$2,605
=
P 1,494,852
$87,721
$28,642
6-mo. LIBOR+ 3.4%
6-mo. LIBOR+3.4%
margin; 6-mo.
margin; 6-mo. LIBOR+
2.65% margin; 3mo or
LIBOR+2.65% margin;
3mo or 6mo LIBOR
6mo LIBOR +.43%
margin (rounded to
+.43% margin
(rounded to 1/16%); 1/16%); 6mo LIBOR +3%
margin
6mo LIBOR +3%
margin; 1mo or 3mo
or 6mo LIBOR+2%
margin; 6mo LIBOR+
.85%
=
P 743,771
=
P 4,122,343
PDSTF 3mo + 0.75%
PDSTF 3mo + 0.75%
margin; PDSTF3mo +
margin; PDSTF3mo +
1.25% margin;
1.25% margin;
PDSTF3mo + 1% PDSTF3mo + 1% margin;
PDSTF6mo + 1.25%
margin; PDSTF6mo +
margin; PDSTF 3 mo +
1.25% margin
1.50% margin
=
P 4,138,700
5.97%, 6.68%,
7.03%, 7.4%
**Used
Used month-end
USD LIBOR
andLIBOR
PDEX rates.
*Used
month-end
month-e
USD
and PDEX rates.
* Using ₱43.81 - USD Exchange rate as of December 31, 2010
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
2011
*Using =
P 43.92 - USD exchange rate as of December 31, 2011.
2010
=
P 1,941,100
7.03%, 8.36%
2015
2016 and
thereafter
$28,643
$14,273
$17,710
$10,830
$10,834
Libor 6-mo. plus
Libor 6-mo. plus
Libor 6-m o. plus Libor 6-m o.plus Libor 6-mo.plus
3.4% margin; Libor
3.4% m argin; Libor
3.4% m argin; Libor
3.4% margin
3.4% m argin
6-mo. plus 2.65%
6-mo. plus 2.65%
6-mo. plus 2.65%
margin; 3mo or 6mo
margin
margin
LIBOR + .43%
margin (rounded to
1/16%); 6m o LIBOR
+ 3% m argin
=
P 1,322,343
=
P 5,747,343
=
P 4,603,843
=
P 6,025,000
=
P 7,000,000
PDSTF 3mo + 0.75% PDSTF 3mo + 0.75%
PDSTF 3mo +
PDSTF 3mo +
PDSTF 3mo + 0.75%
0.75% margin;
margin; PDSTF3mo margin; PDSTF3mo + margin; PDSTF3mo +
0.75% margin;
+ 1.25% margin;
1.25% margin;
PDSTF 3mo +
1.25% margin; PDSTF-3 month +
PDSTF6mo + 1.25%
0.65% margin
PDSTF6mo + 1.25%
PDSTF6mo + 1.25%
.35% margin
margin; PDSTF 3mo margin; PDSTF 3m o margin; PDSTF 3mo +
1% margin
+ 1% m argin
+ 1% margin
=
P 7,033,150
5.97%, 7.03%, 7.4%,
7.5%
2012
**Used
Used month-end
USD LIBOR
and Philippine
and Exchange Corporation
rates.
month-end
USD
LIBOR Dealing
and Philippine
Dealing (PDEX)
and Exchange
* Using ₱43.92 - USD Exchange rate as of December 31, 2011
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
2011
Long-term Liabilities:
$11,517
$–
=
P 5,694,607
=
P 43,202,350
$170,011
=
P–
20,242,300
–
=22,960,050
P
Total
(in PHP)
$7,463
–
170,011
$–
Total
(in USD)
$–
=
P 4,850,764
=
P 43,519,879
$82,290
$–
24,698,529
–
=
P 18,821,350
Total
(in PHP)
–
82,290
$–
Total
(in USD)
$–
=
P–
=
P 279,237
76,725
130,874
=
P 71,638
Debt
Issuance Costs
$–
=
P–
=
P 212,028
100,836
72,474
=
P 38,718
Debt
Issuance
Costs
$–
=
P–
=
P 50,371,470
20,165,575
7,317,483
=
P 22,888,412
Carrying Value
(in PHP)
$–
=
P–
=
P 46,921,946
24,597,693
3,541,621
=
P 18,782,632
Carrying Value
(in PHP)
$–
=
P–
=
P 52,363,638
20,136,024
7,410,651
=
P 24,816,963
Fair Value
(in PHP)
$–
=
P–
=
P 48,496,762
24,608,340
3,618,373
=
P 20,270,049
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).
Globe 2011 Annual Report
210
211
=
P 2,369,013
$2,727
$66,622
6mo LIBOR+.85%
;6mo LIBOR+3%
margin; 1mo or 3mo
or 6mo LIBOR+2%
margin; 3mo or 6mo
LIBOR+.43% margin
(rounded to 1/16%)
=
P 2,580,873
PDSTF3mo + 1%
margin; PDSTF
3mo+ 1.30% ,
PDSTF3mo + 1.10%
margin, PDSTF3mo +
1% margin; PDSTF
6mo + 1.25% margin
7.24%; 8.36%
=
P 13,700
2010
=
P 2,181,085
$1,305
$68,511
6mo LIBOR+ .85%;
6mo LIBOR + 3%
margin; 1mo or 3mo
or 6mo LIBOR+ 2%
margin; 3mo or 6mo
LIBOR + .43% margin
(rounded to 1/16%)
=
P 718,771
PDSTF3mo + 1%
margin; PDSTF3mo+
1.30% , PDSTF3mo +
1.10% margin,
PDSTF3mo + 1%
margin; PDSTF6mo +
1.25% margin
=
P 4,093,700
5.97%;
6.68%; 7.03%;
7.24%; 8.36%
2011
=
P 6,988,150
5.97%;
6.68%;7.03%;
7.50%; 8.00%
2012
$–
=
P 933,700
5.97%;
6.68%; 7.03%;
7.24%; 8.36%
2013
- 75 -
$–
7.24%; 7.50%;
8.00%; 8.36%
=
P 6,450,750
2014 and
thereafter
- 76 -
=
P 1,020,253
$–
=
P 638,566
$–
=
P 7,692,264
$–
=
P 38,796,923
$148,133
=
P–
$4,189
20,316,923
–
=
P 18,480,000
Total
PHP Debt
–
148,133
$–
Total
USD Debt
=
P–
$–
=
P 197,992
35,654
66,734
=
P 95,604
Debt
Issuance
Costs
=
P–
$–
=
P 45,476,022
20,281,269
6,810,357
=
P 18,384,396
Carrying Value
(in PHP)
=
P 20,431,535
1,756,760
540,206
–
=
P 22,728,501
–
–
=
P 684,963
Less than
1 ye ar
=
P 684,963
–
On demand
=
P–
1,953
Receive
2012
P
=1,508
167,387
Pay
=
P–
1,485
Receive
2013
=
P–
90,036
Pay
–
–
=
P–
=
P–
–
1 to 2 ye ars
$2,500
Pay
=
P 140,825
2012
$–
Receive
2013
=
P–
Pay
$–
Receive
=
P–
–
Receive
–
–
=
P–
=
P–
–
2 to 3 years
2014
2014
=
P–
Pay
=
P–
P2,218
Pay
–
–
=
P–
=
P–
–
3 to 4 years
*Used month-e
*Using =
P 43.92
maturities.
$–
2015
2015
=
P–
Pay
=
P–
–
Pay
–
635,122
=
P 635,122
=
P–
–
Over 5 years
=
P–
–
$–
=
P–
2016 and beyond
Receive
Pay
=
P–
–
=
P–
$–
=
P 45,130,753
20,245,723
5,472,014
2016 and beyond
Receive
Pay
540,206
635,122
=
P 24,048,586
=
P 21,116,498
1,756,760
Total
of USD debt payments with the same
Receive
=
P–
P33,517
Receive
–
–
=
P–
=
P–
–
4 to 5 ye ars
principal
Principal
only swaps
represent
commitment
purchase
for payment
**Projected
Projected principal
exchangesexchanges
for Principal onlyfor
swaps
represent commitment
to purchase
USD for payment
of US debt to
payments
with the USD
same maturities
Projected Principal Exchange s*:
Principal Only Swaps
Receive
*Projected USD swap coupons were converted to PHP at the balance sheet date.
Projected Swap Coupons*:
Principal Only Swaps
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 long-term liabilities
Other Financial Liabilities:
2011
Fair Value
(in PHP)
=
P 19,413,016
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 1,483,347
$157
=
P 6,947,343
=
P 7,566,093
=
P 2,503,843
PDSTF3mo + 1%
PDSTF3mo + 1%
PDSTF3mo + 1%
margin; PDSTF 3mo+
margin; PDSTF3 margin; PDSTF6mo
1.30% , PDSTF3mo +
mo+ 1.30% ,
+ 1.25% margin
1.10% margin, PDSTF PDSTF3mo + 1.10%
3mo + 1% margin; margin, PDSTF3mo
PDSTF6mo + 1.25%
+ 1% margin;
margin; PDSTF3mo + PDSTF6mo + 1.25%
1.50% margin
margin
$13,000
6mo LIBOR + 3%
margin; 3mo or 6mo
LIBOR + .43% margin
(rounded to 1/16%)
* Used month-end USD LIBOR and PDEX rates.
*Used
month-end USD LIBOR and PDEX rates.
* Using ₱46.425 - USD exchange rate as of December 31, 2009.
*Using =
P46.425 - USD exchange rate as of December 31, 2009.
Interest payable*
PHP debt
USD debt
Philippine peso
Interest rate
Floating rate
USD notes
Interest rate
Liabilities:
Long-term debt
Fixed rate
Philippine peso
Interest rate
2009
Globe 2011 Annual Report
212
213
642,313
–
=
P20,548,957
–
–
=
P426,696
=
P–
–
2011
Receive
=
P 4,048
146,821
Pay
=
P–
4,065
=
P 2,572
51,911
Pay
=
P–
16,745
2013
Receive
–
–
=
P–
=
P–
–
–
=
P–
=
P–
=
P–
–
=
P–
19,889
=
P–
–
Pay
–
640,927
=
P640,927
=
P–
Over 5 years
2014
Receive
–
–
=
P–
=
P–
4 to 5 years
Pay
3 to 4 years
=
P–
11,388
2015 and beyond
Receive
642,313
640,927
=
P 21,616,580
=
P 20,333,340
Total
$–
=
P 1,539,082
=
P–
$35,000
Pay
$2,500
–
2012
Receive
=140,825
P
–
Pay
=
P 2,201,314
–
–
=
P 2,201,314
On demand
=
P–
–
2010
Receive
=
P 4,290
21,424
Pay
=
P–
–
=5,436
P
4,401
Pay
=
P–
4,240
2012
Receive
=
P–
–
–
=
P–
Pay
=
P–
–
2013
Receive
=
P–
–
–
=
P–
4 to 5 years
=
P 2,726
–
=
P–
–
–
=
P–
3 to 4 years
=
P–
–
Pay
=
P–
–
Pay
=
P–
–
647,416
=
P647,416
Over 5 years
$–
–
2014
Receive
=
P–
–
2014 and beyond
Receive
=
P 18,660,131
2,000,829
1,383,360
=
P 22,044,320
Total
$–
–
2015 and beyond
Receive
=
P–
=
P 959,500
$20,000
$–
$20,000
=
P 964,150
Pay
–
–
$–
2011
Receive
–
–
=
P–
Pay
**Nondeliverable
**Projected
Projected principal
exchangesexchanges
represent commitments
to purchase
USD for payment
USD debts with
thefor
same
maturities.
principal
represent
commitments
to of
purchase
USD
payment
** Nondeliverable
Projected Principal Exchanges*:
Principal Only Swaps
Forward Purchase of
USD**
Forward Sale of USD**
2010
Receive
–
–
=
P 140,825
Pay
–
–
$–
2013
Receive
of USD debts with the same maturities.
–
–
$2,500
2012
Receive
–
–
=
P–
Pay
–
–
$–
2014 and beyond
Receive
*Projected USD swap coupons were converted to PHP at the balance sheet rate. Further, it was assumed that 3m Libor, 3m PDSTF, and 6m PDSTF would stay at
December 31, 2009 levels.
Projected Swap Coupons*:
Principal Only Swaps
Interest Rate Swaps
Derivative Instruments:
=
P–
–
–
=
P–
=
P–
–
Pay
USD debts with the same maturities.
$–
–
2013
Receive
2 to 3 years
- 78 -
1 to 2 years
2011
Receive
=
P16,458,817
2,000,829
735,944
=
P19,195,590
Less than
1 year
*Excludes taxes payable which is not a financial instrument.
Accounts payable and accrued
expenses*
Notes payable
Other long-term liabilities
Other Financial Liabilities:
2009
**Nondeliverable
principal
exchanges
represent
commitments
to purchase
forsame
payment
**Projected
Projected principal
exchanges
represent commitments
to purchase
USD for payment
of USD debtsUSD
with the
maturities.of
** Nondeliverable
Projected Principal Exchanges*:
Principal Only Swaps**
Forward Sale of USD**
2011
Receive
*Projected USD swap coupons were converted to PHP at the balance sheet rate. Further, it was assumed that 3m Libor, 3m PDSTF, and 6m PDSTF would stay at
December 31, 2010 levels.
Projected Swap Coupons*:
Principal Only Swaps
Interest Rate Swaps
Derivative Instruments:
–
–
=
P–
=
P–
2 to 3 years
- 77 -
1 to 2 years
2012
Receive
=
P19,906,644
Less than
1 year
=
P426,696
On demand
*Excludes taxes payable which is not a financial instrument.
Accounts payable and accrued
expenses*
Liabilities directly associated with
the assets
classified as held for sale
Other long-term liabilities
Other Financial Liabilities:
2010
Globe 2011 Annual Report
214
215
–
–
=
P–
Pay
=
P–
–
Pay
=
P–
–
Pay
=
P–
–
Pay
- 80 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.
2009
Derivative Financial Instruments
The Globe Group’s freestanding and embedded derivative financial instruments are accounted
for as hedges or transactions not designated as hedges. The table below sets out information
about the Globe Group’s derivative financial instruments and the related fair values as of
December 31 (in thousands):
2011
Notional
Amount
Notional
Amount
Derivative instruments designated as
hedges:
Cash flow hedges:
Interest rate swaps
$15,000 =
P 6,637,500
Derivative instruments not designated
as hedges:
Freestanding:
–
Interest rate swaps
27,083
Principal only currency swaps
2,500
–
Embedded
–
Currency forwards*
10,579
Net
*The embedded currency forwards are at a net sell position.
2010
Notional
Amount
Notional
Amount
Derivative instruments designated as
hedges:
Cash flow hedges:
Interest rate swaps
$57,000
=
P 5,000,000
Nondeliverable forwards*
35,000
–
Derivative instruments not designated
as hedges:
Freestanding:
Interest rate swaps
6,667
–
Principal only currency swaps
2,500
–
Embedded
Currency forwards**
14,651
–
Net
* All in sell position.
** The embedded currency forwards are at a net sell position.
Derivative
Asset
Derivative
Liability
=
P–
=
P 224,893
Notional
Amount
Derivative
Asset
Derivative
Liability
=
P–
=
P–
=
P 32,221
–
–
–
14,424
15,468
–
9,775
5,084
26,789
–
6,413
=
P 36,305
18,587
=
P 92,456
Derivative instruments designated as
hedges:
Cash flow hedges:
Interest rate swaps
$51,000
Derivative instruments not designated
as hedges:
Freestanding:
Nondeliverable forwards*
40,000
Interest rate swaps
10,000
Principal only currency swaps
2,500
Embedded
Currency forwards**
9,972
Net
position:
USD20,000;
Sell position: USD20,000.
** BuyBuy
position:
USD20,000;
Sell position: USD20,000.
** The embedded currency forwards are at a net sell position.
** The embedded currency forwards are at a net sell position.
It is the Globe Group’s policy to ensure that capabilities exist for active but conservative
management of its foreign exchange and interest rate risks. The Globe Group does not
engage in any speculative derivative transactions. Authorized derivative instruments
include currency forward contracts (freestanding and embedded), currency swap contracts,
interest rate swap contracts and currency o ption contracts (freestanding and
embedded). Certain swaps are entered with option combination or structured provisions.
28.3
Notional
Amount
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).
2011
4,692
–
–
31,610
5,074
P 9,766
=
10,114
=
P 266,617
Derivative
Asset
Derivative
Liability
=
P–
6,255
=
P 163,448
8,285
<1 year
Derivatives:
Principal Only Currency
Swaps:
Notional amount
Weighted swap rate
Pay fixed rate
Interest Rate Swaps
Fixed-Floating
Notional USD
Pay-floating rate
Receive-fixed rate
Floating-Fixed
Notional Peso
Notional USD
Pay-fixed rate
Receive-floating rate
11,743
–
210
35,519
1,890
=
P 19,888
38,403
=
P 245,865
>1-<2
years >2-<3 years
>3-<4
years
>4-<5
years
Total
$2,500
$–
$–
$–
$–
$2,500
=
P 56.33
4.62%
$5,000
$–
$–
$–
$–
$5,000
USD LIBOR+4.23%
9.75%
=
P 2,287,500 =
P 2,025,000
$–
$–
=
P–
$–
=
P 6,637,500
$37,083
3.90% - 4.92% for PHP;
0.78% - 1.78% for USD
USD LIBOR,
3moPDSTF
=
P 450,000 =
P 1,875,000
$17,915
$19,168
Globe 2011 Annual Report
216
217
8
2010
28.4
<1 year >1-<2 years >2-<3 years >3-<4 years >4-<5 years
Derivatives:
Principal Only Currency
Swaps:
Notional amount
Weighted swap rate
Pay fixed rate
Interest Rate Swaps
Fixed-Floating
Notional USD
Pay-floating rate
Receive-fixed rate
Floating-Fixed
Notional Peso
Notional USD
Pay-fixed rate
Receive-floating rate
Nondeliverable Forwards
Notional USD
Forward rate
Total
Derivative Instruments Accounted for as Hedges
The following sections discuss in detail the derivative instruments accounted for as cash flow
hedges.

$–
$2,500
$–
$–
$–
$2,500
=
P 56.33
4.62%
$–
$5,000
$–
$–
$–
$5,000
USD LIBOR+4.23%
9.75%
=
P 50,000
$43,667
=
P 200,000
$15,000
=
P 625,000
–
=
P 2,100,000
–
=
P 2,025,000
–
=
P 5,000,000
$58,667
4.92% for PHP; 1.01% 4.84% for USD
USD LIBOR, 3mo PDSTF
$–
$–
$–
$–
$35,000
=
P 42.84 –P45.21
<1 year >1-<2 years >2-<3 years >3-<4 years >4-<5 years
Total
–
$35,000
The Globe Group also has PHP interest rate swap contracts with a total notional amount of
=6,637.50 million and P
P
=5,000.00 million as of December 31, 2011 and 2010, 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% to
4.92% over the duration of the swaps, with quarterly payment intervals up to September
2015.
As of December 31, 2011, 2010 and 2009, the fair value of the outstanding swap amounted to
=224.89 million, =
P
P 163.45 million, and =
P 32.22 million losses, respectively, of which =
P 153.07
million, =
P 115.83 million, and =
P 22.55 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).
2009
Derivatives:
Principal Only Currency
Swaps:
Notional amount
Weighted swap rate
Pay fixed rate
Interest Rate Swaps
Fixed-Floating
Notional USD
Pay-floating rate
Receive-fixed rate
Floating-Fixed
Notional USD
Pay-fixed rate
Receive-floating rate
Nondeliverable Forwards
Notional USD
Forward rate
Interest Rate Swaps
As of December 31, 2011, 2010 and 2009, the Globe Group has USD15.00 million, USD57.00
million, and USD51.00 million, respectively, in notional amount of USD interest rate swap that
have been designated as cash flow hedge of interest rate risk from USD loans. These interest
rate swaps effectively fixed the benchmark rate of the hedged USD loans at 1.01% to 1.78%
over the duration of the agreement, which involves semi-annual or quarterly payment
intervals up to April 2012.
Accumulated swap cost for the years ended December 31, 2011, 2010 and 2009 amounted to
=213.66 million =
P
P 58.98 million, and =
P 40.21 million, respectively.
$–
$–
$2,500
$–
$–
$2,500
=
P 56.33
4.62%
$–
$–
$5,000
$–
$–
$5,000
USD LIBOR+4.23%
9.75%
$27,333
$23,667
$5,000
$–
$–
$56,000
1.64% - 4.84%
USD LIBOR
$40,000
$–
$–
$–
$–
$40,000
=
P 47.63 - =
P 48.70

The fair value of the outstanding short-term nondeliverable currency forwards as of
December 31, 2010 amounted to a loss of =
P 2.03 million of which =
P 1.42 million (net of tax) is
reported in the equity section of the consolidated statements of financial position.
Hedging gains or losses on derivatives intended to manage foreign currency fluctuations on
dollar based revenues for the years ended December 31, 2011, 2010 and 2009 amounted to
=28.27 million gain, P
P
=75.56 million gain, and P
=18.47 million loss, respectively. These hedging
gains or losses are reflected under “Service revenues” in the consolidated statements of
comprehensive income.
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 longterm 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.
Nondeliverable Forwards
The Globe Group entered into short-term nondeliverable currency forward contracts to
hedge the changes in the cash flows of USD revenues related to changes in foreign currency
exchange rates. All forward contracts matured in December 2011. These currency forward
contracts have a notional amount of USD35.00 million as of December 31, 2010. There were
no outstanding non-deliverable forward as of December 31, 2011 and 2009.
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.
Globe 2011 Annual Report
218
219
8
28.6
Freestanding Derivatives
Freestanding derivatives that are not designated as hedges consist of currency forwards, options,
currency and interest rate swaps entered into by the Globe Group. Fair value changes on these
instruments are accounted for directly in profit or loss in the consolidated statements of
comprehensive income.


- 84 28.8
2011
Nondeliverable Forwards
As of December 31, 2011 and 2010, the Globe Group has no more outstanding
nondeliverable currency forward contracts not designated as hedges. As of December 31,
2009, the short-term nondeliverable currency forward contracts have a notional amount of
USD40.00 million and a net fair value of =
P 4.65 million gain.
Interest Rate Swaps
The Globe Group has outstanding interest rate swap contracts, some with option-like
structures which swap certain fixed and floating USD-denominated loans into floating and
fixed rate with semi-annual payments interval up to July 2013. The swaps have outstanding
notional amount of USD27.08 million, USD6.67 million and USD10.00 million as of
December 31, 2011, 2010, and 2009, respectively.
At beginning of year
Net changes in fair value of derivatives:
Designated as cash flow hedges
Not designated as cash flow hedges
Less fair value of settled instruments
At end of year
28.9
The fair values on the interest rate swaps as of December 31, 2011, 2010 and 2009 amounted
to a net gain of =
P 4.69 million, =
P 11.53 million and =
P 10.38 million, respectively.

28.7
Principal Only Currency Swaps
The Globe Group also has an outstanding foreign principal only currency swap agreement
with a certain bank, under which it swaps the principal of USD-denominated loans into PHP
up to April 2012. Under these contracts, swap costs are payable in semi-annual intervals in
USD. The notional of the swaps amounted to USD2.50 million as of December 31, 2011,
2010, and 2009. The fair value loss of the principal only currency swaps as of December 31,
2011, 2010 and 2009 amounted to =
P 31.61 million, =
P 35.52 million, and =
P 26.79 million,
respectively.
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, 2011, 2010 and 2009, the total outstanding notional amount of currency
forwards embedded in nonfinancial contracts amounted to USD10.58 million, USD14.65
million, and USD9.97 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, 2011, 2010 and 2009 amounted to =
P 5.04 million, =
P 36.51 million, and =
P 12.18 million,
respectively.

Embedded Currency Options
As of December 31, 2011, the Globe Group does not have an outstanding currency option
embedded in non-financial contracts.
Fair Value Changes on Derivatives
The net movements in fair value changes of all derivative instruments are as follows:
(P
=225,977)
(239,094)
28,261
(436,810)
(179,959)
(P
=256,851)
December 31
2010
(In Thousand Pesos)
(P
=56,151)
(116,679)
(27,631)
(200,461)
25,516
(P
=225,977)
2009
(P
=16,642)
(35,116)
(44,253)
(96,011)
(39,860)
(P
=56,151)
Hedge Effectiveness Results
As of December 31, 2011, 2010 and 2009, the effective fair value changes on the Globe Group’s
cash flow hedges that were deferred in equity amounted to =
P 153.07 million, =
P 115.83 million, and
=
P 22.56 million loss, net of tax, respectively. Total ineffectiveness for the years ended December
31, 2011, 2010 and 2009 is immaterial.
The distinction of the results of hedge accounting into “Effective” or “Ineffective” represent
designations based on PAS 39 and are not necessarily reflective of the economic effectiveness of
the instruments.
28.10
Categories of Financial Assets and Financial Liabilities
The table below presents the carrying value of Globe Group’s financial instruments by category as
of December 31:
2011
2010
(In Thousand Pesos)
2009
Financial assets:
Financial assets at FVPL:
Derivative assets designated as
=
=
P 6,255
=
P–
cash flow hedges
P–
Derivative assets not designated as
hedges
9,766
13,633
36,305
AFS investment in equity securities
101,877
81,727
(Note 11)
99,319
Loans and receivables - net*
18,311,110
17,724,991
14,704,734
Financial liabilities:
Financial liabilities at FVPL:
Derivative liabilities designated as
171,733
32,221
cash flow hedges
224,893
Derivative liabilities not designated as
hedges
41,724
74,132
60,235
71,988,050
67,520,342
Financial liabilities at amortized cost**
70,970,531
** ThisThis
consists
cash
and cash
equivalents,
short-term
investments
andother
long-term
consists
of cash andof
cash
equivalents,
short-term
investments and
long-term investments,
receivables,
nontrade receivables and
loans
receivables.
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,This
consists
accounts
accrued
expenses,
accrued project cost, traffic settlement(including
current of
portion)
and otherpayable,
long-term liabilities
(including
current portion).
net, dividends payable, notes payable, long-term debt (including current portion) and other
long-term liabilities (including current portion).
As of December 31, 2011, 2010 and 2009, the Globe Group has no investments in foreign
securities.
Globe 2011 Annual Report
220
221
6
28.11
Fair Values of Financial Assets and Financial Liabilities
The table below presents a comparison of the carrying amounts and estimated fair values of all
the Globe Group’s financial instruments as of:
2011
Carrying Value
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.
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 0.13% to 1.13% (for USD floating
loans) and from 1.72% to 3.45% (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.
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 cross currency
swap transactions are determined based on changes in the term structure of interest
rates of each currency and the spot rate.
December 31
2010
2009
Fair Value Carrying Value
Fair Value Carrying Value
Fair Value
(In Thousand Pesos)
Financial assets:
Cash and cash equivalents
P 5,159,046
=
=
P 5,159,046
=
P 5,868,986
=
P 5,868,986
=
P 5,939,927
=
P 5,939,927
_
_
Short-term investments
–
–
2,784
2,784
10,119,505
8,374,123
8,374,123
6,583,228
6,583,228
Receivables - net
10,119,505
Derivative assets
9,766
9,766
19,888
19,888
36,305
36,305
3,032,559
3,481,882
3,481,882
2,178,795
2,178,795
Other nontrade receivables*
3,032,559
AFS investment in equity
99,319
101,877
101,877
81,727
81,727
securities (Note 11)
99,319
Financial liabilities:
Accounts payable and
21,116,498
20,333,340
20,333,340
18,660,131
18,660,131
accrued expenses**
21,116,498
Derivative liabilities
266,617
245,865
245,865
92,456
92,456
(including current portion)
266,617
Liabilities directly associated
with the assets classified as
540,206
642,313
642,313
–
–
held for sale
540,206
Notes payable
1,756,760
1,756,760
–
–
2,000,829
2,000,829
Long-term debt (including
48,496,762
50,371,470
52,363,670
45,476,022
45,130,753
current portion)
46,921,946
Other long-term liabilities
635,122
640,927
640,927
1,383,360
1,383,360
(including current portion)
635,122
*
This consists of loan, accrued interest and miscellaneous receivables included under “Prepayments and other current
assets” and “Other noncurrent assets” (see Notes 6 and 11).
** This consists of accounts payable, accrued expenses, accrued project cost, traffic settlement-net and dividends
payable.
28.11.1
28.11.2.
Embedded currency options are valued using the simple option pricing model of third
party provider.
28.11.3
Fair Value Hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of
financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs which have a significant effect on the
recorded fair value are observable, either directly or indirectly
Level 3: techniques which use inputs which have a significant effect on the recorded
fair value that are not based on observable market data.
2011
Level 1
AFS investment in equity securities net
Level 2
Derivative assets
Derivative liabilities (including
noncurrent portion)
December 31
2010
(In Thousand Pesos)
2009
P 99,319
=
=
P 101,877
=
P 81,727
9,766
19,888
36,305
266,617
245,865
92,456
There were no transfers from Level 1 and Level 2 fair value measurements for the years
ended December 31, 2011, 2010 and 2009. The Globe Group has no financial
instruments classified under Level 3.
29. Operating Segment Information
The Globe Group’s reportable segments consist of: (1) mobile communications services;
(2) wireline communication services; and (3) others, which the Globe Group 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.
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.
222
Globe 2011 Annual Report
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.
223
- 87 -
- 88 -
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.
2010
Mobile
Communications
Services
The Globe Group’s segment information is as follows (in thousand pesos):
2011
Mobile
Communications
Services
Wireline
Communications
Services
Others
Consolidated
=
P 25,704,158
28,140,513
–
=
P 2,569,718
3,791,928
7,496,503
=
P–
108,481
–
=
P 28,273,876
32,040,922
7,496,503
3,028,245
56,872,916
725,038
14,583,187
–
108,481
3,753,283
71,564,584
32,145,366
(11,402,577)
20,742,789
3,056,714
(7,527,599)
(4,470,885)
(87,007)
(11,051)
(98,058)
35,115,073
(18,941,227)
16,173,846
18,634,742
(4,190,298)
=
P 14,444,444
(4,478,893)
(34,101)
(P
= 4,512,994)
(96,410)
(3,235)
(P
= 99,645)
14,059,439
(4,227,634)
=
P 9,831,805
=
P 34,747
(2,091,403)
172,156
(1,994,371)
(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
(P
= 476,855)
(2,134,306)
259,758
(2,059,660)
(27,345)
(1,918,583)
(17,417,382)
REVENUES:
Service revenues
External customers:
Voice
Data
Broadband
Nonservice revenues:
External customers
Segment revenues
EBITDA
Depreciation and amortization
EBIT
NET INCOME (LOSS)
BEFORE INCOME TAX2
Benefit from (provision for) income tax 2
NET INCOME (LOSS)
Other segment information
Intersegment revenues
Subsidy1
Interest income 2
Interest expense
Equity in net losses of joint ventures
Impairment losses and others
Capital expenditure
Cash Flows
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
11
Computed
as non-service
revenues less cost
of sales
Computed
as non-service
revenues
2Net of final taxes
2
Net of final taxes
–
–
(109,925)
REVENUES:
Service revenues
External customers:
Voice
Data
Broadband
Nonservice revenues:
External customers
Segment revenues
EBITDA
Depreciation and amortization
EBIT
NET INCOME (LOSS)
BEFORE INCOME TAX2
Benefit from (provision for) income tax2
NET INCOME (LOSS)
Other segment information
Intersegment revenues
Subsidy1
Interest income2
Interest expense
Equity in net losses of joint ventures
Impairment losses and others
Capital expenditure
Cash Flows
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
11 Computed as non-service revenues less cost of sales
Wireline
Communications
Services
Others
(In Thousand Pesos)
Consolidated
=
P 25,970,607
24,451,917
–
=
P 2,815,565
3,487,999
5,748,266
=
P–
80,335
–
=
P 28,786,172
28,020,251
5,748,266
2,374,542
52,797,066
618,759
12,670,589
–
80,335
2,993,301
65,547,990
31,924,609
(11,734,900)
20,189,709
1,719,351
(6,346,429)
(4,627,078)
(84,928)
(4,510)
(89,438)
33,559,032
(18,085,839)
15,473,193
18,768,054
(4,518,236)
=
P 14,249,818
(4,661,415)
246,150
(P
=4,415,265)
(89,919)
–
(P
=89,919)
14,016,720
(4,272,086)
=
P 9,744,634
=
P 35,545
(900,760)
168,300
(1,975,932)
(2,968)
(820,978)
(13,982,817)
(P
=191,933)
(344,899)
28,666
(5,823)
–
(708,556)
(5,478,589)
(P
=107,080)
–
94
(30)
–
–
(5,467)
(P
=263,468)
(1,245,659)
197,060
(1,981,785)
(2,968)
(1,529,534)
(19,466,873)
21,802,415
(12,194,022)
(10,171,150)
5,338,255
(4,729,510)
–
7,707
(5,281)
(859)
27,148,377
(16,928,813)
(10,172,009)
Computed as non-service revenues less cost of sales
Net of final taxes
2
2 Net of final taxes
23,605,233
(13,734,642)
(12,520,892)
less cost of sales
6,114,936
(4,345,211)
–
206,006
(109,864)
–
29,926,175
(18,189,717)
(12,520,892)
Globe 2011 Annual Report
224
225
0
- 89 -
The reconciliation of the EBITDA to income before income tax presented in the consolidated statements of
comprehensive income is shown below:
2009
Mobile
Communications
Services
REVENUES:
Service revenues
External customers:
Voice
Data
Broadband
Nonservice revenues:
External customers
Segment revenues
EBITDA
Depreciation and amortization
EBIT
INCOME (LOSS) BEFORE
INCOME TAX2
Benefit from (provision for) income tax2
NET INCOME (LOSS)
Other segment information:
Intersegment revenues
Subsidy1
Interest income2
Interest expense
Equity in net losses of joint venture
Impairment losses and others
Capital expenditure
Cash Flows
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
1 1 Computed as non-service revenues less cost of sales
Wireline
Communications
Services
Others
(Audited and (In
In Thousand Pesos)
Consolidated
=
P 26,497,050
26,736,627
–
=
P 2,794,855
3,037,749
3,289,462
=
P–
87,775
–
=
P 29,291,905
29,862,151
3,289,462
916,655
54,150,332
501,959
9,624,025
–
87,775
1,418,614
63,862,132
34,509,924
(12,881,171)
21,628,753
1,997,203
(4,495,831)
(2,498,628)
(33,605)
(11,428)
(45,033)
36,473,522
(17,388,430)
19,085,092
20,526,499
(5,866,931)
=
P 14,659,568
(2,549,049)
501,115
(P
=2,047,934)
(45,315)
2,554
(P
=42,761)
17,932,135
(5,363,262)
=
P 12,568,873
(P
=1,046,315)
(1,146,914)
192,620
(2,086,307)
(7,009)
(683,953)
(17,609,324)
(P
=172,625)
(382,422)
38,511
(10,455)
–
(116,393)
(7,086,349)
(P
=57,013)
–
108
(183)
–
–
(6,653)
(P
=1,275,953)
(1,529,336)
231,239
(2,096,945)
(7,009)
(800,346)
(24,702,326)
29,576,009
(16,603,578)
(11,330,388)
3,796,387
(5,215,702)
(12,000)
3,818
(9,824)
(1,331)
33,376,214
(21,829,104)
(11,343,719)
Computed as non-service revenues less cost of sales
Net of final taxes
EBITDA
Gain on disposal of property and
equipment - net
Interest income
Equity in net losses of joint ventures
Financing costs
Depreciation and amortization
Other items
INCOME BEFORE INCOME TAX
319,250
297,388
(27,345)
(2,579,714)
(18,941,227)
(86,356)
=
P 14,097,069
597,786
271,806
(7,009)
(2,182,881)
(17,388,430)
207,908
=
P 17,972,702
32,535
218,532
(2,968)
(2,068,401)
(18,085,839)
385,301
=
P 14,038,192
29.1.1
Mobile communication voice net service revenues include the following:
a) Monthly service fees on postpaid plans;
b) 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;
c) 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
d) 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.
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:
Gross service revenues
Interconnection charges
Net service revenues
Nonservice revenues
Segment revenues
Interest income
Other income - net
Total revenues
=
P 36,473,522
2009
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.
2
2 Net of final taxes
2010
2011
(In Thousand Pesos)
=
P 77,764,964
=
P 72,742,090
(9,953,663)
(10,187,401)
67,811,301
62,554,689
3,753,283
2,993,301
71,564,584
65,547,990
297,388
218,532
574,768
856,941
=
P 72,436,740
=
P 66,623,463
2011
2010
(In Thousand Pesos)
=
P 35,115,073
=
P 33,559,032
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.
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.
2009
=
P 72,909,773
(10,466,255)
62,443,518
1,418,614
63,862,132
271,806
1,064,476
=
P 65,198,414
The Globe Group also provides its subscribers with mobile payment and remittance services
under the GCash brand.
Globe 2011 Annual Report
226
227
1
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
Revenues from (a) to (c) are net of any settlement payments to domestic and international
carriers.
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.
Consumers - the Globe Group’s postpaid voice service provides basic landline services
including toll-free NDD calls to other Globe landline subscribers for a fixed monthly fee.
For wired broadband, consumers can choose between broadband services bundled with a
voice line, or a broadband data-only service. For fixed wireless broadband connection
using its WiMax network and 3G with High-Speed 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.

The principal noncash transactions are as follows:
2011
Increase (decrease) in liabilities related to the
acquisition of property and equipment
Capitalized ARO
Dividends on preferred shares
=1,353,939)
(P
27,403
35,295
2010
(In Thousand Pesos)
=
P 612,613
41,473
–
2009
=
P 2,548,409
96,959
50,492
The cash and cash equivalents account consists of:
2011
Cash on hand and in banks
Short-term placements
=
P 1,182,895
3,976,151
P 5,159,046
=
2010
2009
(In Thousand Pesos)
=
P 944,866
=
P 1,104,231
4,924,120
4,835,696
=
P 5,868,986
=
P 5,939,927
Cash in banks earn interest at the respective bank deposit rates. Short-term placements represent shortterm money market placements.
Corporate/SME clients - for corporate and SME enterprise clients wireline voice
communication needs, the Globe Group offers postpaid service bundles which come with
a business landline and unlimited dial-up internet access. The Globe Group also provides
a full suite of telephony services from basic direct lines to Integrated Services Digital
Network (ISDN) services, 1-800 numbers, International Direct Dialing (IDD) and National
Direct Dialing (NDD) access as well as managed voice solutions such as Voice Over
Internet Protocol (VOIP) and managed Internet Protocol (IP) communications. Valuepriced, high speed data services, wholesale and corporate internet access, data center
services and segment-specific solutions customized to the needs of vertical industries.
The ranges of interest rates of the above placements are as follows:
2011
2011
Placements:
PHP
USD
1.50%
to to
4.88%
1.50%
4.88%
0.05%
to to
1.75%
0.05%
1.75%
2010
2009
2.00% to 4.25% 2.00% to 5.00%
0.09% to 1.55% 0.05% to 1.63%
31. Events after the Reporting Period
On February 10, 2012, the BOD approved the declaration of the first semi-annual cash dividend of =
P 32.50 per
common share, payable to common stockholders of record as of February 24, 2012. Total dividends
amounting to =
P 4,301.44 million will be payable on March 16, 2012.
On February 10, 2012, the BOD approved and authorized a corporate bond program to fund the Globe
P 15,000.00 million for issuance in one or more
Group’s capital expenditures with a principal amount of up to =
tranches due in up to seven and/or ten years. 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.
Globe 2011 Annual Report
228
30. Notes to Consolidated Statements of Cash Flows
Broadband service revenues consist of the following:
a) Monthly service fees on mobile and fixed wireless and wired broadband plans and charges
for usage in excess of plan minutes; and
b) Prepaid usage charges consumed by mobile broadband subscribers.
29.2.4
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.
Wireline data net service revenues consist of the following:
a) Monthly service fees from international and domestic leased lines. This is net of any
settlement payments to other carriers;
b) Other wholesale transport services;
c) Revenues from value-added services; and
d) One-time connection charges associated with the establishment of service.
29.2.3
29.3
Wireline voice net service revenues consist of the following:
a) Monthly service fees including CERA of voice-only subscriptions;
b) 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;
c) Revenues from inbound local, international and national long distance calls from other
carriers terminating on our network;
d) Revenues from additional landline features such as caller ID, call waiting, call forwarding,
multi-calling, voice mail, duplex and hotline numbers and other value-added features; and
e) Installation charges and other one-time fees associated with the establishment of the
service.
29.2.2
- 92 -
229
GRI content index
Profile
Disclosure
Message from
the Chairman
Description of key
impacts, risks and
opportunities
Message from the
President and CEO
Name of
Organization
Our Business
2.2
Primary Brands,
Products and / or
services
Our Business
19
2.3
Operational
Structure of the
organization
Corporate
Governance
57
2.4
Location of
Organization’s
Headquarter
Our Business
20
Number of
countries of
operation
Our Business
2.6
Nature of
ownership and
legal form
Our Business
2.7
Markets Served
(Geographic
Breakdowns)
Stores Directory
2.8
Scale of Reporting
Organization
About Globe
1
2.9
Significant
changes during
Reporting Period
About the Report
2
2.10
Awards Received
during Reporting
Period
2011 Key Highlights
1.2
2.1
2.5
Organizational
Profile
3.1
Reporting Period
(fiscal / calendar
year) of the report.
About the Report
IFC
3.2
Date of most
recent previous
report
About the Report
IFC
3.3
Reporting Cycle
(Annual, Biennial,
etc)
About the Report
IFC
3.4
Contact point
for questions
regarding report
and its content
Acknowledgements
249
3.5
Process for
defining Report
Content
Materiality Analysis
71
3.6
Boundary of
Report
About the Report
IFC
3.7
About the Report
Specific
Limitations on
scope of boundary
of report
IFC
3.8
Basis for
Reporting on
joint ventures,
subsidiaries etc.
3.9
Data Measurement Materiality Analysis
Techniques
and bases of
calculations
3.10
About the Report
Explanation of
effect of any
Re-statements
of information
provided in earlier
reports and reason
for re-statements
IFC
3.11
Significant
Changes from
previous reporting
periods
About the Report
IFC
3.12
GRI Content Index
GRI Content Index
230
3.13
External
Assurance
Certificate
External Assurance
Certificate
240
2
8
18
18
20
242
Report
Parameters
26
Organizational
Profile
21
71
Globe 2011 Annual Report
230
Page No.
Statement from
the senior most
decision maker of
the organization
1.1
Strategy and
Analysis
Section
231
GRI content index
Governance
Structure of the
Organization
Corporate
Governance
57
4.2
Indicate whether
chair of highest
governance
body is also an
executive officer
Corporate
Governance
57
Structure of
Members of the
Board of highest
governing body
Corporate
Governance
4.4
Mechanism for
Shareholders and
Employees
Corporate
Governance
65
4.5
Linkage between
compensation
for members
of highest
governance body,
Managers and
Executives
Corporate
Governance
60
Process to ensure Corporate
conflicts of interest Governance
are avoided
among the highest
governance body
56
Process to
determine
qualifications
and expertise
of members
of highest
governance body
Corporate
Governance
56
Internally
developed
statements
of mission or
values, code
of conduct and
principles relevant
to Economic,
Environmental
and Social
performance.
The Heart of Globe
4.3
Governance,
Commitments
and
Engagements
4.6
4.7
4.8
232
66
Procedures
for overseeing
Economic,
Environmental and
Social associated
Risk and
opportunities.
4.10
Corporate
Process for
evaluating highest Governance
governance body’s
performance
4.11
Explanation on
how precautionary
approach or
principle is
addressed by
organization
Enterprise Risk
Management
4.12
Externally
developed
Economic,
Environmental and
Social charters
or initiatives
organization
endorses.
Nil
-
4.13
Membership with
associations at
organizational
level
Nil
-
4.14
List of Stakeholder Stakeholder
groups engaged
Engagement
by organization
70
4.15
Basis of
identification
and selection of
stakeholders with
whom to engage
Stakeholder
Engagement
70
4.16
Stakeholder
Approaches
Engagement
to stakeholder
engagement,
including
frequency of
engagement
by type and
stakeholder group.
70
4.17
Key Topics
and concern
that have been
raised through
stakeholder
engagement
Stakeholder
Engagement
70
57
Governance,
Commitments
and
Engagements
Enterprise Risk
Management
4.9
12
58
66
Globe 2011 Annual Report
4.1
233
GRI content index
Management’s
Direct Economic
Discussion and
values generated
Analysis
and distributed,
including revenues
and other costs
EC3
Coverage of
organization’s
defined benefit
plan
Our People,
Our Globe
Range of ratio
of standard
entry level wage
compared to
minimum wage
of operation
at significant
locations of
operation.
Our People,
Our Globe
Direct Energy
Consumption by
primary energy
source
Greening
the Globe
100
Indirect Energy
Consumption by
primary energy
source
Greening
the Globe
101
EN5
Energy saved due
to conservation
and Efficiency
improvements
Greening
the Globe
99
EN6
Initiatives to
provide energy
efficient or
renewable energy
based products
and services
Greening
the Globe
102
EN7
Initiatives
to reduce
Indirect Energy
Consumption
Greening
the Globe
102
EN8
Total Water
Withdrawal by
Source
Greening
the Globe
101
Economic
EC5
EN3
EN4
Environment
234
123
EN9
Significant affect
on water sources
caused due to
withdrawal
Greening
the Globe
101
EN16
Total Direct or
indirect GHG by
Weight
Greening
the Globe
108
EN17
Other relevant
Indirect GHG by
Weight
Greening
the Globe
108
EN18
Initiatives to
reduce GHG
emissions and
reductions
achieved
Greening
the Globe
109
EN24
Percentage of
waste imported of
exported
Greening
the Globe
103, 104
EN26
Initiatives
to mitigate
environmental
impacts of
products /
services
Greening
the Globe
106
HR3
Our People,
Total hours of
training on policies Our Globe
and procedures
concerning human
rights aspects
relevant to
operations.
86
HR4
Total number
of incidents of
discrimination and
actions taken
Our People,
Our Globe
79
HR6
Significant
initiatives and
risk taken for
eliminating
incidents of child
labor
Our People,
Our Globe
91
85
81
Environment
Human Rights
Globe 2011 Annual Report
EC1
235
GRI content index
LA1
Total Workforce
by employment
type, contract and
region
Our People,
Our Globe
82
LA2
Total number and
rate of employee
turnover by age
group, gender and
religion
Our People,
Our People
83
Benefits provided
to full time
employees that
are not provided
to temporary
or part time
employees.
Our People,
Our Globe
85
LA3
Labor
Practices and
Decent Work
LA 15
Our People,
Return to work
and retention rates Our Globe
after parental
leave by gender
85
LA4
Percentage
of employees
covered by
collective
bargaining
agreements
Our People,
Our Globe
84
LA5
Minimum notice
periods for
operational
changes
Our People,
Our Globe
91
LA6
Percentage of
total workforce
represented in
health and safety
committee
Our People,
Our Globe
89
LA7
Rates of injury,
occupational
diseases, fatalities
by region
Our People,
Our Globe
90
LA 8
Our People,
Education,
Our Globe
Training,
counseling
programs in place
to assist workforce
86, 87, 88
LA10
Average hours of
training per year
per employee
by employee
category
Our People,
Our Globe
86
LA11
Programs for skill
management and
lifelong learning
Our People,
Our Globe
87
LA12
Percentage
of employees
receiving regular
performance
and career
development
reviews
Our People,
Our Globe
86
LA13
Our People,
Composition
Our Globe
of governance
bodies and
employees
according to
gender, age group,
minority group
and other diversity
indicators
80
LA14
Ratio of basic
salary of men
to women
by employee
category
Our People,
Our Globe
81
Labor
Practices and
Decent Work
Globe 2011 Annual Report
236
237
GRI content index
SO1
Society
PR3
Product
Responsibility
Disclosure of
Management
Approach
Nature, Scope
and effectiveness
of any programs
and practices
that assess and
manage impacts
of operations on
communities.
Bridging
Communities
114
Product
and Service
information
Your Globe,
Your Way
30,32,34,35,36,37
Measures and
practices for
customer
satisfaction
Your Globe,
Your Way
42
ASM
Annual Stockholders Meeting
BCM
Business Continuity Management
BPI
Bank of the Philippine Islands
CBU
Central Business Unit
CCT
Conditional Cash Transfer
CSME
Corporate and Small Medium Enterprises
DSWD
Department of Social Welfare and Development
DOLE
Department of Labor and Employment
EBITDA
Earnings Before Interest, Taxes,
Depreciation and Amortization
ERMS
Enterprise Risk Management Service Division
GHG
Green House Gas
GILAS
Gearing Up Internet Literacy and
Access for Students
GMA
Greater Manila Area
Economic
Our Commitments
122
GRI
Global Reporting Initiative
Environmental
Our Commitments
122
GTI
Globe Telecom, Inc.
Social
Our Commitments
122
GXI
G-Xchange, Inc.
HSPA
High Speed Packet Access
ICD
Internal Control Division
ICT
Information and Communication Technology
IDD
International Direct Dialing
Kwh
Kilowatt Hour
LED
Light Emitting Diode
LTE
Long Term Evolution
MT
Metric Tonne
NDD
National Direct Dialing
NOx
Nitrogen Oxide
Pb
Lead
PhP
Philippine Peso
PLDT
Philippine Long Distance Telephone Company
PSE
Philippine Stock Exchange
PSTD
Philippine Society for Training and Development
SEC
Securities and Exchange Commission
SingTel
Singapore Telecom
SOx
Sulfate
SM
Shoemart
TM
Touch Mobile
UNEP
United Nation’s Environmental Protection
VOC
Vanadium Catalyst
WFP
World Food Program
WRI
World Resource Institute
Globe 2011 Annual Report
238
PR5
table of abbreviations
239
The Assurance was performed by our multidisciplinary team of experienced professionals in the field of Corporate
Sustainability, Environment, Social and Stakeholder Engagement. We are of the opinion that our work offers a sufficient and
substantiated basis to enable us to come to a conclusion mentioned below and based on the content of our contract.
Independent Assurance Statement
Introduction:
TUV Rheinland India Private Ltd., member of TUV Rheinland Group, Germany (We, TUV) has been entrusted by the
management of Globe Telecom, Inc. (Globe Telecom, the Company) to conduct independent assurance of Globe Telecom
Corporate Sustainability Report 2011 (the Report). All contractual contents for this assurance engagement rest entirely within
the responsibility of Globe Telecom. Our task was to give a fair and adequate judgment on the Globe Telecom Report 2011.
The intended users of this assurance statement are stakeholders having relevance to the Globe Telecom overall Sustainability
Performance and impacts of its business activities during 2011 (January 2011 ~ December 2011). TUV Rheinland is a global
service provider of CSR & Sustainability Services in over 61 countries, having qualified professionals in the field of Corporate
Sustainability Assurance, Environment, Social and Stakeholder Engagement. We have maintained complete impartiality and
independence during the assurance engagement and were not involved in the preparation of report contents.
Assurance Standard:
The Independent Assurance was carried out in accordance with AccountAbility, U.K Standard AA 1000 AS (2008) and related
standards AA 1000 APS(2008), AA 1000 SES 2011 (Final exposure draft), Principles of Inclusivity, Materiality & Responsiveness,
Global Reporting Initiative (GRI) Reporting guidelines Version 3.1(G3.1) and TUV STAR (Sustainability‐Trustworthy‐
Accountability‐Responsiveness) assessment protocol.
Scope & Type of Assurance:
Our assurance engagement covers the following:
•
Globe Telecom Corporate Sustainability performance as described in the report 2011 in accordance with GRI
reporting guidelines and performance indicators from Economic, Environment & Social category (GRI application
Level “B”), also defined in Reporting boundaries.
•
Evaluation of disclosed information in the report as per the Assurance Standards.
•
Type‐2, Moderate as per AA 1000 AS (2008)
Limitation: The assurance engagement was carried out at Globe Telecom Headquarter at 5/F, Globe telecom plaza,
Mandaluyong City, and visits to major operational locations like Network department at BPI Building and Safety, Health &
Environment (SHE) at 2F New Solid building, Makati and Globe concept stores at Greenbelt Mall, Makati and SM North Edsa
Mall, Edsa within Philippines. The consultations with external stakeholder were not carried out. We have not observed any
significant situations to limit our assurance activity. The verification is carried out based on the data and information provided
by Globe Telecom, assuming they are complete and true. We did not verify the reported financial data as same is verified by
another third party.
Assurance Methodology:
TUV has challenged the report contents and assess the process undertaken by Globe Telecom from source to aggregate in
disclosure of information/data and reliability related to Sustainability performance. Our judgment is based on the objective
review of reported information as per criteria defined under Assurance standards.
Positive Observation:
We would like to mention some of the positive aspects observed during Globe Telecom assurance engagement as below:
•
The “Circle of Happiness” exemplifies Globe Telecom strategy and commitment towards its stakeholders (Employees,
Customers & Shareholders).
•
Globe Telecom has undertaken momentous “Transformation Plan” which includes Network Modernization,
Customer centric processes, Cost Transformation, IT transformation project for business processes and culture
transformation.
Opportunity for Improvement:
During assurance engagement, we found further opportunity for improvements reported back to Globe Telecom management
as below. However, these do not affect our conclusion on the report.
•
To enhance further “Transformation Plan & Circle of Happiness” related process implementation and on‐going
compliance checks including entire value chain.
•
To further align existing CSR management system with International standards like Guidance on Social responsibility
ISO 26000 (2010) and ICT sector initiative like GeSI (Global e‐Sustainability Initiative)
•
To further enhance stakeholder participation & communication both internal & external, leading to Innovation,
Learning and Sustainability Performance improvement.
•
To disclose more performance indicators in future report
Adherence to AA 1000 principles:
Inclusivity: Globe Telecom has identified, prioritize and engaged with its internal and external stakeholders through formal and
informal mechanism like customer survey internally and by third party, Intranet & Employees blogs (ICON) etc. as a response to
sustainable development issue.
Materiality: Globe Telecom has identified the material issues related to sustainable development viz. economic, environment &
social performance and provide balance information in the report. The Corporate strategy is align to address identified material
issues.
Responsiveness: Globe Telecom has responded to its stakeholders against identified material issues critical to sustainable
development through disclosure made in report 2011, Corporate Strategy strategy, Policies, implementation systems and
processes, allocation of resources to stakeholder engagement and communication.
Conclusion:
In conclusion, we can mention that no instances or information came to our attention that would be to the contrary of the
statement made below:
•
Globe Telecom Corporate Sustainability Report 2011 meets the requirement of Type‐2, Moderate Assurance
according to AA1000AS(2008) and GRI application level “B+”
•
The performance data we found in the report are collected, stored and analyzed in a systematic and professional
manner and were plausible. A more stringent and target oriented data collection would enhance the quality and is a
goal for the future
•
TUV Rheinland shall not bear any liability or responsibility to a third party for perception and decision about Globe
Telecom based on this assurance statement.
For TUV Rheinland India Private Ltd.,
Ganga C. SHARMA
Lead Verifier
New Delhi, 28th March, 2012
1
240
2
Globe 2011 Annual Report
Analytical methods and the performance of interviews as well as verification of data, done as random sampling, to verify and
validate the correctness of reported data and contents in light of contractual agreement and the factual Globe Telecom
strategy as mentioned in the report. Our work included consultation with over 70 Globe Telecom representatives including
senior management and relevant employees. The approach deemed to be appropriate for the purpose of assurance of the
report since all data therein could be verified through original proofs, verified database entries.
241
store directory
Central GMA
REGULAR STORE
STORES
ADDRESS
Contact Number
GLORIETTA
Ground Floor Glorietta 3,
Ayala Center, Makati City
(near National Bookstore)
Fax: (02) 752-7739
GREENHILLS
Ground Floor Greenhills
Connecticut Carpark 1 Bldg.,
Ortigas Avenue, San Juan
Landline: (02) 744-0875
Fax: (02) 744-0866
GT PLAZA
Upper Ground Floor Globe
Telecom Plaza Tower 1,
Cor, Pioneer and Madison
Sts., Mandaluyong City
Fax: (02) 730-4149 / (02) 7302828
PARK SQUARE 1
Park Square 1 South Drive
Ayala Center Makati City (near
Exit of Park Square 1 parking)
Fax: (02) 752-8137
PODIUM
5/F The Podium Bldg ADB Ave.,
Ortigas Center, Madaluyong
City (near SM Cinema)
Fax: (02) 914-3842
SM MAKATI
4/F Concourse Area, SM
Makati Dept. Store, Ayala
Center, Makati City
Fax: (02) 818-3382
TOWER ONE
Unit C, Ground Floor Tower
One and Exchange Plaza
Ayala Avenue, Makati City
Landline: (02) 759-4132
Fax: (02) 759-4128
GMA REGION
North GMA
REGULAR STORE
QUEZON AVENUE
Unit 103-A, Ground Floor
National Bookstore Inc.,
Quezon Ave., Quezon City
Fax: (02) 374-7453
SM VALENZUELA
Unit 338-339, 3/F SM
Center Valenzuela, McArthur
Highway, Valenzuela City
Landline: (02) 293-1845
Fax: (02) 291-0448
UP Ayalaland Technohub, Diliman
Commonwealth Quezon City
Fax: (02) 508-7350
UP TECHNO STORE
NEW CONCEPT STORE/FLAGSHIP
SM NORTH EDSA
TRINOMA
4/F Cyberzone Bldg, New
SM Annex, SM City North
Edsa , Quezon City
Fax: (02) 621-9028
M1 Unit 1034, Trinoma Mall,
EDSA, Quezon City
Landline: (02) 916-9027
Fax: (02) 916-9028
NEW CONCEPT STORE/REGIONAL
GATEWAY
3/F Gateway Mall, Araneta
Center, Cubao, Quezon City
SM NOVALICHES
Unit 216-217, 2/F SM
City Novaliches Quirino
Highway San Bartolome 2,
Novaliches Quezon City
SM MARIKINA
Unit 148-149, Ground
Floor Cyberzone SM City
Marikina, Marcos Highway,
Calumpang, Marikina
Fax: (02) 799-6113
SM FAIRVIEW
Unit 318 A, 3/F Cyberzone SM
City Fairview Quirino Hi-way Cor.
Regalado Avenue, Bgy. Greater
Lagro, Novaliches Quezon City
Fax: (02) 419-6656
SM TAYTAY
2/F Bldg. B SM City Taytay,
Manila East Rd., Taytay, Rizal
Fax: (02) 286-1944 to 45
ROBINSON’S GALLERIA
Unit 440-441, Level 1 East
Wing Robinson’s Galleria Mall,
Ortigas St. Quezon City
Fax: (02) 914-3693
SM MASINAG
Unit 205, 2/F Cyberzone
Marcos Hi-way Antipolo
Fax: (02) 213-9871
EASTWOOD MALL
2/F Eastwood Mall, Eastwood
City, Cyberpark E. Rodriguez
Ave., Bagumbayan Quezon City
Landline: (02) 635-9863
Fax: (02) 633-1449
Unit 35, Ali Mall II Upper Ground
Flr., Araneta Cubao, Quezon City
Fax: (02) 912-6193
ALI MALL CUBAO
PREMIUM DEALER
STA. LUCIA
G1-2 to G1A-2, Ground Floor
Araneta Square, Bonifacio
Monument Circle, Kalookan City
3/F Bldg 3 (beside KFC) Sta.
Lucia Mall Marcos Highway
cor. Felix Ave. Cainta, Rizal
NEW CONCEPT STORE/FLAGSHIP
GREENBELT 4
2/F Greenbelt4, Ayala
Center, Makati City
Fax: (02) 504-3870
SM MEGAMALL
4/F Cyberzone Area, SM Megamall
Bldg. B Ortigas Center, Pasig City
Fax: (02) 910-6521
MARKET MARKET
Unit 444 and 445, 4/F Market
Market, Lot C, Bonifacio
Global City, Taguig
Fax: (02) 757-2693
NEW CONCEPT STORE/REGIONAL
SHANGRI-LA
Level 1 Shangri-la Plaza, EDSA
cor. Shaw Blvd., Mandaluyong City
Fax: (02) 910-2048
SOUTH GMA
REGULAR STORE
BINONDO
Ground Floor and 2/F Enrique T.
Yuchengco Bldg., 484 Quintin
Paredes St., Binondo, Manila
Fax: (02) 245-9046
SM BICUTAN
Unit 212, 2/F SM Bicutan
Bldg B (near SM Cinema)
Fax: (02) 776-1408
SM CENTERPOINT
Unit 310, 3/F Magsaysay Blvd. cor
Araneta Ave., Sta Mesa Manila
Fax: (02) 713-1606
SM MUNTINLUPA
Unit 240, 2/F SM Center
Muntinlupa National Rd.,
Tunasan, Muntinlupa City
Fax: (02) 659-2358
SM SAN LAZARO
3/F SM San Lazaro Feliz
Huertas St. cor. Lacson
St., Sta. Cruz, Manila
Fax: (02) 786-2624
NEW CONCEPT STORE/FLAGSHIP
ALABANG TOWN CENTER
2/F Alabang Town Center,
Madrigal Cor. Commerce
Ave, Alabang Muntinlupa
Fax: (02) 846-7494
SM MALL OF ASIA
Unit 202, 2/F North Parking Bldg.
SM Mall of Asia Pasay City
Landline: (02) 915-1690
Fax: (02) 915-1692
Globe 2011 Annual Report
ARANETA SQUARE
242
Fax: (02) 912-7750
243
store directory
SOUTH LUZON AREA 2
REGULAR STORE
NEW CONCEPT STORE/REGIONAL
SM MANILA
CALAPAN
014 JP Rizal St. San
Vicente Central, Calapan
City, Oriental Mindoro
Fax: (043) 441-0652
PUERTO PRINCESA
G-7 and M-7, Pacific Plaza
Bldg., Rizal Avenue, Puerto
Princesa City, Palawan
Fax: (048) 434-7855
LGF Cyberzone SM City
Manila, Arroceros St. Cor.
Marcelino Sts., Manila
Fax: (02) 522-8894
Unit 1412, 3/F Cyberzone SM
Southmall Alabang-Zapote
Road, Las Piñas 1740
Fax: (02) 846-5870
SM SUCAT
3/F SM SuperSucat Center,
Sucat Road, Parañaque
City (near SM Cinema)
Fax: (02) 820-7734
SM NAGA
Unit 212, 2/F SM City Naga
Central Business II, Brgy
Triangulo Naga City
ROBINSON’S PLACE MANILA
Unit 04107, 4/F Pedro Gil Wing
Robinson’s Place Manila
Fax: (02) 400-1430
SM LUCENA
FESTIVAL SUPERMALL
08 and XS-09, 3/F Filinvest Festival
Supermall,Filinvest Corporate
City, Alabang Muntinlupa
Landline: (02) 850-1937
Fax: (02) 842-8026
3/F CZ 014 Cyberzone
SM Lucena, Dalahican cor.
Pagbilao Rds., Lucena City
LEGASPI
2/F Pacific Mall, Landco Business
Park, Bitano, Legaspi City
SM SOUTHMALL
NEW CONCEPT STORE/REGIONAL
LUZON REGION
NORTH LUZON
SOUTH LUZON AREA 1
REGULAR STORE
REGULAR STORE
LEMERY - GPS
CJ Bldg., Independencia
St., Lemery, Batangas
Fax: (043) 409-0074
SM MOLINO
2/F SM Center Molino,
Molino IV, Bacoor, Cavite
Fax: (046) 519-3962
SM ROSARIO
Unit 250, 2/F SM City Rosario,
Gen. Trias Drive, Rosario Cavite.
Fax: (046) 971-1485
SM STA. ROSA
Unit 281, 2/F SM City Sta.
Rosa, Brgy. Tagapo, Sta.
Rosa City, Laguna
Fax: (02) 900-1013
2/F SM San Pablo, Maharlika
Highway, San Pablo City
Fax: (049) 300-0031
SM CALAMBA
2/F Cyberzone SM City
Calamba National Highway,
Bgy Real Calamba City
Fax: (049) 306-0521
CB 324-325, 3/F Cyberzone
Area SM City Bacoor Tirona
Highway cor. Aguinaldo
Highway, Bacoor, Cavite
Fax: (046) 970-8134
SM BACOOR
KanPing Commercial Bldg.
Maharlika Highway, Bgy. San
Antonio Candon City, Ilocos Sur
Fax: (077) 742-5565
DAGUPAN
Ground Floor 127 Nepo
Mall Dagupan Arellano Ave.,
Dagupan, Pangasinan
Fax: (075) 523-0527
LAOAG
Ground Floor Lazo Bldg.,
Abadilla cor. Bonifacio Sts.,
Bgy. San Lorenzo, Laoag City
Fax: (077) 770-3895
SAN FERNANDO, LA UNION
Ground Floor La Union Provincial
Administrative Commercial
Bldg., Quezon Ave., 2500
San Fernando, La Union
Fax: (02) 246-3003
SM ROSALES
Unit 1102, Ground Floor SM City
Rosales MacArthur Highway Brgy.,
Carmen East, Rosales Pangasinan
Fax: (075) 202-41115
SOLANO
225 J.P. Rizal Avenue,
Maharlika Highway, Solano,
Nueva Vizcaya 3709
Fax: (078) 326-7413
VIGAN
Collegio Business Center, Mart 1
Nueva Segovia St., Vigan City
Fax: (077) 722-1697
NEW CONCEPT STORE/REGIONAL
NEW CONCEPT STORE/FLAGSHIP
SM BATANGAS
Unit 229 and 230, 2/F SM
City Batangas, Pastor Village,
Pallocan West, Batangas City
Fax: (043) 980-5039
SM BAGUIO
Unit 349 and 350, 3/F SM City
Baguio, Luneta Hill, Upper
Session Road, Baguio City
Fax: (074) 304-1223
SM LIPA
2/F SM Mall Ayala,
Highway Lipa City
Fax: (043) 981-6031
TUGUEGARAO
Fax: 078) 255-1201
SM DASMARIÑAS
E201, 2/F SM Dasmariñas
Governor Drive 1 Brgy.
Sampaloc Dasmariñas, Cavite
Fax: (046) 973-0376
Unit 79 Chowking Bldg.
Balzain Rd. Tuguegarao
City, Cagayan Valley
PREMIUM DEALER
AKC BLDG National Highway
Villasis Santiago City, Isabela
PD NUVALI
Unit 53, Solenad 2 Brgy. Sto.
Domingo Sta. Rosa, Laguna
SAN CARLOS PD STORE
15 Palaris Street, San
Carlos City, Pangasinan
PA TANAUAN
Ground Floor Waltermart
Tanauan, Batangas
PD TAGAYTAY
K5 and 6, Magallanes
Square, Tagaytay City
CENTRAL LUZON
REGULAR STORE
CABANATUAN
Ground Level GL-4B NE Pacific
Mall, Km. 111, Maharlika Highway
Cabanatuan City, Nueva Ecija
Fax: (02) 246-5006
OLONGAPO
1750 Rizal Ave., East BajacBajac, Olongapo City
Fax: (047) 304-5074
Globe 2011 Annual Report
SANTIAGO PD STORE
PREMIUM DEALER
244
Fax: (052) 480-8134
CANDON
NEW CONCEPT STORE/REGIONAL
SM SAN PABLO
Fax: (054) 811-6169
245
store directory
WESTERN VISAYAS
REGULAR STORE
MARQUEE MALL
Unit 1053, Ground Floor Level
1, Angeles City, Pampanga
Fax: (045) 304-0629
BACOLOD
27th cor. Lacson Sts.,
Mandalangan Bacolod City
Fax: (034) 709-9481
SM BALIUAG
SM City Baliwag Doña
Remedios Trinidad Hiway,
Pagala Baliuag Bulacan
Fax: (044) 308-0420 to 22
GAISANO ILOILO
2/F Gaisano City, La Paz, Iloilo City
Fax: (033) 508-0000
GAISANO ROXAS
(Wireless and Wireline
Center-Enabled)
Area 9 Gaisano Arcade Arnaldo
Boulevard, Roxas City
Fax: (036) 522-2082
KALIBO, AKLAN
(Wireless and Wireline - Enabled)
Unit 3, Waldolf Bldg.,
Osmeña, Kalibo Aklan
Fax: (036) 500-7243
(036) 500-7244
NEW CONCEPT STORE/REGIONAL
SM TARLAC
Unit 345, 3/F Cyberzone, SM City,
McArthur Highway, Tarlac City
Fax: (045) 309-0073
SM MARILAO
Unit 219, 2/F SM City
Marilao, Km. 21 Brgy. Ibayo,
McArthur Highway, Bulacan
Fax: (044) 933-2026
Unit 203-204, 2/F SM City
Clark, Clarkfield, Pampanga
Fax: (045) 449-0034
SM CLARK
SM ILOILO
NEW CONCEPT STORE/FLAGSHIP
SM PAMPANGA
Unit 129, Cyberzone area SM City,
City of San Fernando Pampanga
NEW CONCEPT STORE/FLAGSHIP
SM BACOLOD
Unit 115, Southwing SM
City, Poblacion reclamation
Area, Bacolod City
Fax: (034) 707-1100
(034) 707-9595
SM DELGADO
Ground Floor SM Delgado cor.
Valeria and Delgado Sts. Iloilo City
Fax: (033) 508-7605
ROBINSON’S BACOLOD
3/F Robinsons Place,
Mandalagan, Bacolod City
Fax: (034) 709-7600
PREMIUM DEALER
PLARIDEL PD STORE
Grid E-F and 1-2, Walter Mart
Supermarket Cagayan Valley Road,
Barrio Banga 1, Plaridel, Bulacan
GRACELAND MALOLOS
PD STORE
2/F Graceland Mall McArthur
Highway, Barangay Ginhawa
Malolos, Bulacan
BALANGA PD STORE
Recar Commercial Complex,
JP Rizal, Brgy. Poblacion,
Balanga City 2100
SAN JOSE NUEVA ECIJA
PREMIUM DEALER
SAN JOSE, ANTIQUE
AML Bldg cor. Dalipe Atabay,
San Jose, Antique
CENTRAL VISAYAS
REGULAR STORE
Mokara Bldg. Maharlika Rd.
San Jose City NE 3121
VISAYAS REGION
BOGO
Ground Floor Sim Bldg, P.
Rodriguez St, Bogo City, Cebu
Fax: (032) 434-8472
GAISANO TABUNOK
2FF-17, 2/F Gaisano Grand
Fiesta Mall Hi-way Tabunok,
Talisay City, Cebu
Fax: (032) 491-8114
MANDAUE
2/F Fortune Square Bldg.,
MC Briones Hi-Way cor. AS
Fortune St., Mandaue City
Fax: (032) 420-6104
SM CEBU
2/F Cyberzone SM City
Cebu Northwing, North
Reclamation Area, Cebu City
Fax: (032) 412-9957
(032) 412-9435
SM CEBU 2
2/F SM City Cebu, North
Reclamation Area, Cebu City
Fax: (032) 412-8979
TOLEDO
Unit 14, Ground Floor Toledo
Commercial Village, Reclamation
Area, Poblacion, Toledo City
Fax: (032) 467-8501
EASTERN VISAYAS
REGULAR STORE
BORONGAN
2/F Wilsam Uptown Mall,
Borongan, Samar
Fax: (055) 560-9881
CALBAYOG
Unit 2, Crown Bldg.
Magsaysay Blvd., Calbayog
City, Western Samar
Fax: (055) 533-9126
ISLAND CITY MALL
UG Island City Mall, Dao
District, Tagbilaran City
Fax: (038) 501-0029
MAASIN
Maasin Port Terminal
Commercial Complex, Demetrio
St., Agbao, Maasin City
Fax: (053) 570-8452
ORMOC
MFT Bldg., Real St., Ormoc City
Fax: (053) 561-4400
TACLOBAN
(Wireless and Wireline
Center-Enabled)
22 P. Burgos St., Tacloban City
Fax: (053) 523-1972
TAGBILARAN
(Wireless and Wireline
Center-Enabled)
Door 5, EB Gallares Bldg., Carlos
P. Garcia Ave., Tagbilaran City
Fax: (038) 501-7666
(038) 501-0090
UBAY
N. Reyes St., Poblacion,
Ubay, Bohol
Fax: (038) 518-8108
CATBALOGAN
Unit 2, Samar College Bldg.,
Mabini Avenue Catbalogan Samar
Fax: (055) 543-9747
NEW CONCEPT STORE/FLAGSHIP
AYALA CEBU
Active Zone, Ayala Center Cebu,
Cebu Business Park, Cebu City
Fax: (032) 412-2525
(032) 412-2216
NEW CONCEPT STORE/REGIONAL
GAISANO MACTAN
Ground Floor Gaisano Grand
Mall of Mactan Agus Road corner
Basak, Lapulapu City, Cebu
Fax: (032) 494-0781
ELIZABETH MALL, CEBU
(Wireless and Wireline
Center-Enabled)
Elizabeth Mall T-020 3/F
cor. N Bacalso and Keon
Kilat Sts., Cebu City
Fax: (032) 417-7792
(032) 417-7798
DUMAGUETE
Unit 276-279, 2/F Robinson’s
Dumaguete, Calingdanga,
Dumaguete City, Negros Oriental
Fax: (035) 422-0105
Globe 2011 Annual Report
246
Fax: (033) 509-6777
NEW CONCEPT STORE/REGIONAL
Fax: (045) 875-1741
STA. MARIA BULACAN PD STORE Ground Floor Waltermart
Sta. Maria Provincial Road,
Sta. Maria Bulacan
2/F SM City Iloilo, B. Aquino
Ave. Mandurriao, Iloilo City
247
store directory
acknowledgements
PREMIUM DEALER
CARCAR
C-9, Ground Floor Gaisano
Prize Club Carcar,Poblacion 3
Awayan, Carcar City, Cebu
Fax: (032) 487-7757
(032) 487-8818
TANJAY
Magallanes St., Poblacion 9,
Tanjay City, Negros Oriental
Fax: (035) 400-5255
NORTH MINDANAO
REGULAR STORE
SM CAGAYAN DE ORO
B-5, Ground Floor Gaisano
Ozamis City Mall, cor. Rizal Ave.
and Zamora Extension, Ozamiz
City, Misamis Occidental
Fax: (088) 521-4054
Unit 313, 3/F SM City-CDO,
Gran Via St. corner Mastersons
Ave. Cagayan De Oro City
Fax: (088) 859-1150
NEW CONCEPT STORE/REGIONAL
CDO LIMKETKAI
New Concourse, Limketkai Mall,
Lapasan, Cagayan de Oro City
Fax: (088) 856-6750
BUTUAN
3/F Gaisano Mall, J.C. Aquino
Avenue, Butuan City
Fax: (085) 300-0300
3/F Gaisano Mall, Roxas
Ave., Villa Verde, Iligan City
Fax: (063) 492-2093
ILIGAN
Unit 29, 2/F Robinsons
CDO, Limketkai Center,
Cagayan de Oro City
SOUTH MINDANAO
REGULAR STORE
COTABATO CITY
BPI Bldg. Makakua
St., Cotabato City
Fax: (064) 421-9993
GENERAL SANTOS
Unit 201, 2/F KCC Mall of
Gensan J. Catololico Ave.,
General Santos City
Fax: (083) 553-1303
SM DAVAO
3/F SM City Davao, Ecoland
Subd., Quimpo Blvd., Davao
City (near SM Cinema)
Fax: (082) 297-7727
ZAMBOANGA
Door 2and3, ARV Bldg., San
Jose Road, Zamboanga City
Fax: (062) 992-3944
NEW CONCEPT STORE/REGIONAL
4and5, Upper Ground Floor
Gaisano Grand Mall Tagum,
Apokon Road Visayan
Village, Tagum City
Fax: (084) 308-0953
DAVAO GAISANO MALL
3/F Gaisano Mall, JP Laurel
Avenue, Davao City
Fax: (082) 221-6283
NEW CONCEPT STORE/FLAGSHIP
3/F Abreeza Mall, JP Laurel
Avenue, Davao City
Fax: (082) 321-5050
PREMIUM DEALER
PD DAVAO NCCC
248
2/F NCCC Mall, McArthur
Highway, Matina, Davao City
Photography:
Wig Tysmans
Niccolo Cosme
Consultant:
ECC International (www.eccigroup.com)
Jose Mari Fajardo
Fax: (082) 321-6530
Globe Chat Assist: http://chat.globe.com.ph/
Twitter: http://twitter.com/talk2Globe
Facebook: http://facebook.com/GlobePH
YM ID: Talk2GlobeChat
Text: HELP to 1234
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.
UG Floor, Globe Telecom Plaza 1
Pioneer corner Madison Streets
1552 Mandaluyong City
Trunkline: (02) 730-4617
Corporate Information
Head Office
Investor Relations
5th Floor, Globe Telecom Plaza 1
Pioneer corner Madison Streets
1552 Mandaluyong City
Tel: (02) 730-2820
Fax: (02) 739-0072
Email: ir@globetel.com.ph
Corporate Communications
5th Floor, Globe Telecom Plaza 1
Pioneer corner Madison Streets
1552 Mandaluyong City
Tel: (02) 730-2627
Fax: (02) 739-3075
Email: globe.corpcomm@gmail.com
Stock Trading Information
Globe Telecom, Inc. is listed on the Philippine Stock Exchange
Ticker symbol: GLO
Customer Services
For inquiries about our products and services, please contact:
Mobile: 211 (toll free access)
Hotline: (02) 730-1000
Email: talk@globetel.com.ph
Entertainment Gateway Group
3rd Floor, Bloomingdale Building
Salcedo Street, Legaspi Village
1229 Makati City
Trunkline: (02) 892-8101 / (02) 840-1576 / (02) 892-8103
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
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
Head, Corporate Communications
e-mail: globe.corpcomm@gmail.com
Globe 2011 Annual Report
TAGUM
DAVAO ABREEZA
Concept and Design:
Medium3 Inc.
Globe Telecom, Inc.
Globe Telecom Plaza
Pioneer corner Madison Streets,
1552 Mandaluyong City
Trunkline: (02) 730-2000
Website: www.globe.com.ph
PREMIUM DEALER
ROBINSON’S CDO
Project Manager:
Cristina Lacuna
Project Assistant:
Kristel Or
MINDANAO REGION
OZAMIZ
Project Lead:
Ma. Yolanda Crisanto
249
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