Globe Telecom, Inc. SingTel Regional Mobile Investor Day 2011 2 December 2011 Presentation Outline 9 Globe Telecom, Inc. (GLO) 9 Macro-Economic & Telco Industry Overview 9 Highlights of 9M 2011 Performance 9 Network and IT Transformation: Program and Investment Highlights 9 9M 2011 Financial Results 2 2 Mobile Industry Backdrop: Industry revenues have recovered from declines of 2010. Globe with sustained revenue market share improvements. Subscriber & Industry Revenues Revenue Market Share • SIMs at 93Mn with penetration at 96.5%; multi- 57.8% 58.9% 58.3% 58.9% 57.7% 56.5% SIM usage still high, and is estimated at 16% 55.5% 55.1% 52.9% • Industry revenues have bottomed out and are up 36.6% 2.2% YoY 35.0% 33.9% 33.7% 32.8% 33.3% 34.3% 34.8% 34.8% • Revenue growth driven by domestic voice and mobile browsing, which offset impact of weak 7.2% 7.2% 8.0% 8.3% 9.0% 9.2% 9.7% 10.1% 10.5% international voice traffic and negative currency effect 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 Smart/PLDT Globe Digitel Competition Subscriber Market Share • Last October 26, 2011 NTC approved PLDT- 51.4% Digitel deal subject to (1) PLDT divesting 10MHz 17.2% of 3G spectrum held by CURE, and (2) Digitel to Smart/PLDT continue providing nationwide unlimited Globe services Digitel th • Entry of 4 player (San Miguel Corp) still looms, 31.4% but timing remains uncertain 5 Broadband: Continued industry growth, enabled by more affordable devices and operators’ sustained coverage expansion using wireless access technologies Subscriber & Industry Revenues Revenue Market Share* • 4.3 Mn subscribers as of 9M 2011, up 25% from 78.9% 76.5% 75.6% 72.6% same period LY -- About 72% of subs on wireless 71.0% 69.4% 68.5% 68.2% 68.3% access technology (3G HSDPA/HSPA, WiMax) • 9M 2011 industry revenues* at Php17.5 Bn , up 15% 29.0% 30.6% 31.5% 31.8% 31.7% 24.4% 27.4% • Room for further expansion – Internet users 21.1% 23.5% estimated at ~33Mn, comprising <35% of population. PC/tablet incidence among users only at 12-13% 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 • Nomadic expected to outpace growth in demand for fixed, @home services – Cheaper alternative Smart/PLDT Globe compared to fixed internet access Competition Subscriber Market Share • Intense competition in nomadic broadband 11.1% 3.3% 1.3% continues – basic prepaid broadband stick Smart/PLDT remains at 2Q11 price of Php995 (from Php1,245) Globe • Globe revenue market share at 31.7% in 3Q 2011, Digitel from 29% in 3Q 2010* Bayantel WiTribe 31.4% 52.9% * Based on a two-player market due to limited disclosures of other operators 6 Presentation Outline 9 Globe Telecom, Inc. (GLO) 9 Macro-Economic & Telco Industry Overview 9 Highlights of 9M 2011 Performance 9 Network and IT Transformation: Program and Investment Highlights 9 9M 2011 Financial Results 7 9M 2011 Performance – Maintaining momentum, extending our gains Highlights Growth as of Growth as Php Mn 9M 2011 • 3Q 2011 revenues at new 9M 2011 of 6M 2011 record high – Up 3% Q/Q, against expectations of a Service seasonally lean quarter 49,987 9% 7% • Compared to 3Q10, 3Q11 Revenues revenues higher by 13% • Mobile revenues up 7% Y/Y Net Income 7,994 7% 9% while broadband up 35% • Mobile and broadband subscribers higher although Core Net at a slower rate 8,176 15% 8% Income • 9M11 core net income growth (+15%) faster than growth in 6M11 – However, Subscribers core income flat Q/Q with •Mobile 29.1Mn 15% 15% rise in marketing spend & •Broadband 1.4Mn 36% 39% depreciation 8 Growth across all key product groups, and despite negative impact of strong currency Service Revenues by Product Category Service Revenue Growth in Php Mn YoY % change + 35% Reported +7% +16% +9% growth Growth at +9% +18% +11% constant fx + 9% + 9% 1,575 (682) 49,987 + 7% 3,279 45,815 Mobile Fixed Line Broadband Total Data Globe (11%) Fixed Line Voice 9M 2010 Mobile Broadband FX 9M 2011 & Fixed Line Impact Mobile revenue growth driven by continued rise in domestic voice, SMS, and mobile data services – Internet browsing revenues now at Php1.4Bn, up 64% YoY ILD voice traffic up 3% Y/Y but revenues lower with 5% peso appreciation & lower rates 9 Sustaining growth by innovating, differentiating, and delivering value to our customers Compelling device offers Blackberry Bold Blackberry PlayBook CloudFone Ice –The most Samsung Galaxy Y Apple iPad2 9900 affordable Android phone Globe Prepaid “Go lang nang go” Campaign • Strengthening Globe Prepaid’s position through the recently launched “Go lang nang Go”campaign.. • Load Watch – providing subscribers with regular (based on event triggers) “load” / promo balance notifications 13 Progress report on our 2011 key priorities… 2011 Priorities as outlined Progress to Date during Feb 2011 Analysts’ Call • Expansion of new concept stores into other cities • Improvements to IVR systems & call center operations Create step change in customer • 2-year BSS transformation project with Amdocs experience selected as technology partner • Network modernization program designed to significantly raise network performance Huawei Technologies selected as our partner in our Enhance network performance to serve network modernization endeavor. Target implementation growing traffic profile timeline at 2-3 years. Postpaid revenues up 6% YoY, while prepaid revenues up Accelerate postpaid momentum, 8% vs industry growth rate of <2%. Postpaid net revitalize prepaid subscriber additions at record highs Create preferred brand for “cellphone Mobile browsing revenues of Php1.4Bn as of 9M 2011, and internet” in the country is up 64% Y/Y Improve broadband profitability Fixed line and broadband EBITDA up 76% Y/Y Sustain growth of fixed line data 9M 2011 fixed line data revenues up 9% Y/Y business for corporate sector 14 Presentation Outline 9 Globe Telecom, Inc. (GLO) 9 Macro-Economic & Telco Industry Overview 9 Highlights of 9M 2011 Performance 9 Network and IT Transformation: Program and Investment Highlights 9 9M 2011 Financial Results 15 15 We will dramatically transform Globe’s mobile network and IT systems to enhance customer experience and remain competitive in the future 1 Network Modernization 2 IT Transformation • Entails change-out of existing mobile network • Involves replacement of ~90% of Business equipment, optimization of network, coverage support systems (BSS) and Business Intelligence expansion, and capacity build-out (BI) platforms over next 2 years – Includes billing, campaign management, front-end systems and enterprise data warehouse • Faster response to customer requests with • Supports expected significant growth in voice and integrated stores and call center applications data traffic while improving quality, reducing total • Convergent billing, better credit control cost ownership and implementing a future-proof • Quicker timer-to-market for new products network • Better analytic models to support campaigns • Capex of ~US$700Mn over next 5 years, with • Capex of US$90Mn over next 5 years, with US$570Mn to be spent in 2012/13 ~US$70Mn to be spent in 2012/13 16 Network modernization is Globe’s largest investment to date, 1 spanning all wireless network elements across all layers & regions Objectives of Network Modernization Expected Benefits • Significantly improve network service quality & • Increase revenue - From improved network quality customer experience and additional network capacity – Enhance voice connection and quality, SMS delivery – Building capacity ahead of demand by front- time, data/web browsing speeds, signal coverage & loading network rollout, enhancing weak coverage service consistency areas and extending services reach – Significantly enhance 2G/3G in-/outdoor coverage • Reduce costs – Capex and Opex savings – Increase network resiliency, and redundancy from an optimized network architecture • Provide for 5-year growth in voice and data traffic – Esti mated capex savings of ~US$200Mn over – Substantial network capacity deployment to put Globe 5 years – Competitive prices given magnitude / scale of modernization effort in a strategic position to manage the anticipated data bandwidth explosion – a three- to ten-fold increase in – Opex savings of ~US$170Mn over 5 years voice and data traffic • Reduced power consumption with more efficient equipment, e.g., increased use • Reduce total cost of ownership of mobile network of free cooling systems, green alternative – Adopting state-of-the-art equipment with a simplified energy solutions architecture to improve operational efficiency – e.g., • Savings from an increased fiber rollout reduce 2G network controllers by ~60% in 5 yrs • Lower equipment maintenance costs – Site facility modernization • Lower fuel costs with reduced running time for • Future-proof Globe’s mobile network infrastructure generators • Joint Innovation Centre to give Globe access to – Prepare for an effective future LTE deployment, and world-class R&D resources, and pool development increase fiberization of base stations by 50% efforts with other global leading operators – Evolve into an all-IP architecture to improve over-all scalability and traffic handling efficiency 17 We will build a modernized, scalable, and future-proof network 1 that is responsive to the future needs of our customers Where we are today… • Our current mobile network infrastructure is increasingly challenged in meeting the future needs of our customers in terms of robustness and scalability • We want to modernize our network in order to meet the anticipated high traffic growth projections, operate more efficiently, get ahead of the competition and to provide a great customer experience Where we are heading towards… • Deploying an HSPA+ and LTE-ready network that is more power efficient and future-proof, incl., e.g., ̶ Single-cabinet base stations with a more efficient site and energy footprint ̶ Software Defined Radio (SDR) base stations that supports multi-technology and allow flexible and quicker expansion according to capacity needs in the future Radio Access • Deploying upgraded, more resilient and higher capacity transport architecture, incl.