Digital Transformation And Network Expansion Will Create Future Opportunity

Key Takeaways

• Growing digital financial services, subscriber bases, and digital infrastructure diversify Globe's revenue and support long-term growth as digital adoption expands in the Philippines and among overseas Filipinos.
  
• Enhanced network rollout, capital efficiency, and cost optimization boost operating margins, free cash flow, and dividend sustainability while shifting earnings to data and digital services.
  
• Persistent macroeconomic and regulatory challenges, legacy service declines, and rising competition pressure Globe Telecom's margins and growth outlook despite ongoing investments in network upgrades.

Catalysts

Engages in the provision of telecommunications services to individual consumers, corporate, and small and medium enterprise clients in the Philippines.

• The rapid expansion of digital payments and financial services through GCash (with overseas growth to 145 countries and product diversification into lending, investing, insurance, and payments integration such as MRT Commute QR) establishes Globe as a key platform to capture rising digital transaction volumes and financial inclusion across the Philippine (and, increasingly, overseas Filipino) population-supporting long-term revenue and net income growth as non-telco earnings accelerate.
  
• Accelerating data traffic, increased digital adoption in daily activities (remote work, online learning, e-commerce, video streaming), and steadily growing mobile and broadband subscriber bases (5% YoY mobile subs growth; 37% sequential growth in mass-market GFiber Prepaid subscribers) point to Globe benefiting from the ongoing digital transformation of Philippine society-driving sustainable top-line growth and higher ARPU in the medium to long term.
  
• Successful 5G and fiber network rollouts (with 98%+ 5G coverage in major cities, 600 towns fully converted to fiber, and robust improvements in 5G ARPU and data usage) position Globe to capture premium connectivity demand and reduce operating costs over time-supporting improved operating efficiency, higher margins, and enhanced earnings growth as the business mix shifts from legacy voice/SMS to data and value-added digital services.
  
• Enhanced capital efficiency through the tower sale and leaseback program (raising ₱89.3B and holding only ~550 towers left to monetize within the year), combined with a 33% YoY reduction in cash CapEx and strong cost optimization (OpEx down 3% YoY), suggests further upside to free cash flow generation and improved net margins supportive of sustainable dividend payments and balance sheet strength.
  
• Globe's expanding digital infrastructure portfolio-including data centers (STT GDC growing to 30MW+ capacity, rising rack utilization, and positioning for AI/cloud demand) and partnerships like the Asia United Gateway Cable-aligns with surging demand for secure enterprise IT, data sovereignty, and AI-driven connectivity. This underpins long-term revenue diversification and positions Globe to benefit from the secular shift toward cloud, cybersecurity, and digital economy services.

Globe Telecom Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Globe Telecom's revenue will grow by 2.0% annually over the next 3 years.
• Analysts assume that profit margins will increase from 12.7% today to 15.4% in 3 years time.
• Analysts expect earnings to reach ₱29.6 billion (and earnings per share of ₱195.1) by about August 2028, up from ₱23.0 billion today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 16.2x on those 2028 earnings, up from 10.8x today. This future PE is greater than the current PE for the PH Wireless Telecom industry at 10.0x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 12.2%, as per the Simply Wall St company report.

Globe Telecom Future Earnings Per Share Growth

Risks

• Globe Telecom's year-on-year revenue declined by 2% in the first half of 2025 due to a complex macroeconomic environment and persistent weak consumer sentiment, indicating continued vulnerability in topline growth if economic pressures or consumer spending challenges persist, potentially impacting revenue and earnings.
  
• The company's traditional mobile segments, particularly legacy voice and SMS services, continue to register declines, with mobile revenues down 2% year-on-year; this structural erosion in legacy services exposes Globe to secular risks from OTT alternatives, pressuring long-term net margins unless data revenue growth can sufficiently compensate.
  
• Intensifying competition from both established telecom rivals and emerging digital/payment platforms (e.g., Maya, DITO, alternative lending apps) poses a risk of potential market share dilution as well as pricing pressure, which could reduce ARPU and constrain future revenue and profit growth.
  
• While capital expenditures have been optimized and tower sales have funded investments, continued reliance on aggressive network upgrades (5G, fiber) and technology refreshes-amid rising depreciation and higher interest expenses-could pressure future net margins and levered free cash flows, especially if topline growth remains modest.
  
• Ongoing uncertainty regarding regulatory changes, such as the Konektadong Pinoy bill and more stringent requirements for digital platforms or infrastructure sharing, could increase compliance costs, promote more market entrants, or favor alternative technologies like satellite internet, thereby adding operational and revenue risks in the long run.

Valuation

• The analysts have a consensus price target of ₱2364.0 for Globe Telecom based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₱2750.0, and the most bearish reporting a price target of just ₱1550.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₱192.6 billion, earnings will come to ₱29.6 billion, and it would be trading on a PE ratio of 16.2x, assuming you use a discount rate of 12.2%.
  
• Given the current share price of ₱1718.0, the analyst price target of ₱2364.0 is 27.3% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.