Globe sees better business in H2 this year amid inflation downtrend

Leading digital solutions platform Globe anticipates improved business performance in the second half of the year due to a continued downtrend in inflation, which could potentially improve the purchasing power of Filipino consumers.

“The business is doing well. We saw a slight uptick in demand around May this year that seems to have continued on in June. We’re very happy about that,” said Globe Group President and CEO Ernest Cu in a recent interview with Bloomberg TV.

Cu expressed optimism that the current situation may eventually lead to more positive results for the business. This, even while inflation, which peaked at a 14-year high of 8.7% in January, still negatively impacts the lower-tier mobile market, specifically the prepaid sector.

“Of course, inflation has been affecting the lower end of our market, which is the biggest segment of the population in the Philippines. But I’m hopeful with the signs we’re seeing with inflation now going below 6%.  This will show good results for us in the latter half of the year,” he said.

Due to the aggressive tightening cycle by the Bangko Sentral ng Pilipinas (BSP) and the non-monetary policy measures implemented by the national government, inflation cooled to a 12-month low of 6.1% in May from 6.6% in April. However, the 7.5% average from January to May remains well above the 2-4% target range set by the central bank.

Based on its latest assessment, the BSP now expects inflation to average 5.5% instead of 6% this year and 2.8% instead of 2.9% next year. It has also raised key policy rates by 425 basis points since May last year but decided to keep interest rates steady last May 18, 2023 due to an inflation downtrend.

Cu said prices have remained stable in the telco sector over the last 15 years, or since he joined Globe in 2008.  Although there was a minor rise in prices due to cost increases, the company has been trying to make up for it with efficiencies of scale.

Given this scenario, he said:  “Our real hope is that the government continues its fight against inflation. They’ve shown some very good restraint when it comes to interest rates, so that’s very good as well.”

Likewise, Cu underscored the company’s continued dedication to crafting affordable products for Filipinos nationwide. Its latest product, GFiber Prepaid, provides customers a fully digital experience from application to scheduling of installation and account management. Customers may easily sign up for the service via the GlobeOne app.

GFiber Prepaid eliminates the need for a salesperson and physical billing. As part of Globe’s commitment to sustainability and circularity, GFiber Prepaid also comes in recyclable and upcyclable packaging,  which can be repurposed and used as a laptop stand.

“There is indeed a very distinct preference for the prepaid payment method. So why not try and create a product of lower cost, affordable enough for Filipinos to get in, but still feasible financially for a company like Globe,” he said.

He added: “Perhaps it’s something that the public would like given the fact that Filipinos, as I mentioned about the inflationary pressure, would not want to connect with a contract in terms of a fixed spend, that particular segment is highly sensitive to any changes in the budget.”

Globe holds a positive outlook on the market potential of GFiber Prepaid, which offers customers the convenience of activating or deactivating it whenever necessary. Additionally, the product provides consumers access to financing, lending, and “Buy Now, Pay Later” plans via affiliate GCash, making it more attractive to budget-conscious people.