Globe 2016 Annual Report

2016 ANNUAL REPORT

1

WE ARE A THOUGHT LEADER IN EVERYTHING WE CREATE.

2

GLOBE TELECOM

Technology marvels like Virtual Reality allows us to push the boundaries of the known universe.

Similarly, Globe is committed to pushing the limits of the digital lifestyle experience. We bring something new into every product and service, oftentimes challenging convention in the industry. Regardless of how we strategize for the future, we remain firmly grounded in delivering extraordinary value to all of our stakeholders.

From our loyal subscribers, to businesses of all sizes, to the larger nation of Filipinos who are waking up to a richer, more connected world, Globe will always Create Wonderful.

2016 ANNUAL REPORT

3

About Us

The Globe Purpose

GRI 102-1, 102-3, 102-4, 102-6

GRI 102-16

Globe Telecom, Inc. is the number one mobile

Globe Telecom has risen to become the country’s

company in the Philippines. We provide cellular,

leading mobile company, driving highly customer-

broadband and mobile data services, recognizing

centric value with keen focus on enriching Filipino

the growing preference of our customers towards

lives in the digital age. True to our nature of

content-rich offerings and multimedia applications

innovation and going beyond achieving business

that enrich the Filipino digital lifestyle.

success, Globe sought and found a purpose larger than itself to serve customers more meaningfully.

Supported by 7,180 employees; with over 1.1 million retailers, distributors, suppliers and

Our new purpose is expected to further enhance our

business partners nationwide, serving more than

Circle of Happiness whereby happy and engaged

65 million customers, we operate one of the largest,

employees deliver wonderful customer experiences

most technologically-advanced and robust mobile,

and strong business growth for happy shareholders.

fixed line and broadband networks catering to

As a purpose-led organization, we are poised to

individual customers, small and medium-sized

create wonderful, positive, and sustainable impact to

businesses as well as corporate and enterprise

society.

clients. We believe that with first world internet connectivity, we can help drive a nation that is admired all over the world.

Our principal shareholders are Ayala Corporation and Singtel, both industry leaders in their respective countries and in the region. We are a member of Bridge Alliance, a partnership of 34 mobile operators from Asia-Pacific, Middle East and Africa with a combined customer base of over 800 million customers. Globe operates internationally with presence in over 236 calling destinations worldwide.

The executive office of Globe is located at The Globe Tower, 32nd Street corner 7th Avenue, Bonifacio Global City, Taguig, Metro Manila, Philippines, 1634.

Vision We see a Philippines where families’ dreams come true, businesses flourish, and the nation is admired.

Mission We create wonderful experiences for people to have choices, overcome challenges, and discover new ways to enjoy life.

Purpose In everything we do, we treat people right to create a Globe of Good.

Values We put customers first.

We value people and together, we make the difference.

We act with integrity.

We care like an owner.

We keep things simple.

We move fast, we are better, every day.

CONGLOMERATE MAP GRI 102-45

SUBSIDARIES Innove Communications, Inc. (100% ownership) Provides fixed line telecommunications and broadband services, high speed internet and

Asticom Technology, Inc. (Asticom) (100% ownership) Provides shared services, a system integrator and an information technology services provider to domestic and international markets.

Taodharma, Inc. (TAO) (67% ownership) Engaged mainly in the operations of mobile communication devices and accessories in retail stores which are strategically located across the Philippines.

private data networks for enterprise clients, services for internal applications, internet protocol-based solutions and multimedia content delivery.

• Techglobal Data Center, Inc.*

Globe Capital Venture Holdings, Inc. (GCVHI) (100% ownership) A holding company through which strategic businesses and initiatives are intented to be

JOINT VENTURES Bridge Mobile Pte. Ltd. (BMPL) (10% ownership) Provides different regional mobile services

consolidated.

to our customers.

G-Xchange, Inc. (GXI) (100% ownership) Provides mobile commerce services under

• Globe Fintech Innovations, Inc. (100% ownership) ■ Fuse Lending, Inc.

Vega Telecom, Inc. (VTI) (50% ownership) Principal activities involve

GCash brand.

• Adspark Holdings, Inc. (100% ownership) ■ Adspark, Inc. ■ Socialytics, Inc.

telecommunications.

(49% ownership)

GTI Business Holding, Inc. (GTI) (100% ownership)

Bow Arken Holdings Company, Inc (BAHC) (50% ownership) A holding company.

Provides VoIP service.

• GTI Corporation (100% ownership) • Globe Telecom HK Limited

• Global Telehealth, Inc.* (50% ownership)

(100% ownership) • Globetel Singapore Pte. Ltd. (100% ownership)

(98.57% ownership) Provides data and communications services such as dedicated domestic and international

ASSOCIATES AF Payments, Inc, (AFPI) (20% ownership) A Public-Private Partnership project to

• Globetel European Limited (100% ownership)

leased lines, frame relay services, Internet access, and other managed data services like

design, build, and operate the Automated Fare Collection System (AFCS).

UK Globetel Limited** Globe Mobile’ Italy S.r.l.**

Digital Subscriber Lines (DSL).

• Radio Communications of the Philippines,

Yondu (49% ownership)

Globetel Internacional European España, S.L.**

Inc. (RCPI) (91% ownership) • Sky Internet, Incorporated (Sky Internet) (100% ownership)

Provides internet and mobile value-added services, information technology, and technical services including software

Kickstart Ventures, Inc. (KICKSTART) (100% ownership)

• GlobeTel Japan (100% ownership) • BTI Global Communications Ltd. (BTIUK)

development and related services.

Provides aspiring technopreneurs with funds and facilities, mentorship and market access needed to build new businesses.

(100% ownership) • NDTN Land, Inc. (NLI) (65% ownership) • Telecoms Infrastructure Corp. of

■ ■ ■

• Flipside Publishing Services, Inc.** (40% ownership)

Brightshare Holdings Corporation (BHC) (50% ownership) A holding company.

Bayan Telecommunications, Inc. (BTI)

the Philippines (Telicphil) (58% ownership)

*Globe Telecom’s stake in these companies are from a joint venture agreement signed by Globe Telecom’s subsidiary and other joint venture companies. **Ceased operations in 2016 or in the process of winding down.

RECOGNITIONS Telecom Service Provider of the Year

3rd Place, Honored Companies in the Telecommunications Sector

2016 Frost & Sullivan Asia Pacific ICT Award

Ernest Cu: 2nd Place, Overall Best CEO for Telecommunications Ernest Cu: 3rd Place, Sell-Side Best CEO

Asiamoney Best Managed Large Cap Company Philippines

Institutional Investor's 2016 All Asia (ex-Japan) Executive Team

2016 Asiamoney Best Managed Company Awards Ernest Cu (One of the Ten Operators from Asia) 1st in Best Disclosure and Transparency Philippines

2016 Global Telecoms Business Power 100

4th in Best Overall for Corporate Governance Philippines

Philippines Company of the Year 2016 (Top 15)

2016 Asiamoney Corporate Governance Poll

Philippines Diversified Telecommunication Services Company of the Year 2016

6

GLOBE TELECOM

Charlton EastColes Corporate Performance Awards 2016

Marriage or Responsible Parenthood for Globe x Star Wars

Platinum Award for Excellence in Governance, CSR and Investor

Campaign

Relations

2016 ARAW Values Awards

The Asset Corporate Awards 2016 Silver Anvil Award in Public Relations Programs Most Committed to Corporate Governance

Directed at Specific Stakeholders:

Best in Investor Relations

Entrepreneurship / Job Generation / SME for

Best CEO: Ernest Cu

Globe myBusiness Inspiring Success Campaign

FinanceAsia: Asia's Best Companies 2016

52nd Anvil Awards

2016 Global High Performance Companies Norm

MEMBERSHIPS

Willis Towers Watson

GRI 102-13

Runner up, Ethics and Governance

1. GSM Association (GSMA)

ASEAN Corporate Sustainability Summit 2016 Awards

2. IT and Business Process Association Philippines (IBPAP) 3. Philippine Association of National Advertisers (PANA) 4. Internet and Mobile Marketing Association of the Philippines

Ranked 77, Top 100 Sustainability Reports Worldwide Ranked 22, Top 80 Sustainability Reports in the Asia Pacific Region

(IMMAP)

Gold Award Worldwide for Sustainability Report

5. Philippine Business for the Environment (PBE)

Bronze Award in the Asia-Pacific Region for Best In-House Report

6. Pollution Control Association of the Philippines, Inc. (PCAPI)

League of American Communications Professionals' 2016

7. Corporate Network for Disaster Response (CNDR)

Visions Awards

8. National Disaster Risk Reduction Management Council (NDRRMC)

Bronze Award in Specialized Annual Report: Combined Annual and Sustainability Report

9. Philippine Disaster Resilience Foundation (PDRF)

REPORTING PARAMETERS

2016 ARC Awards International

GRI 102-46, 102-50, 102-51, 102-52, 102-54, 102-56

Best Payment Deployment in Asia: Globe GCash and Amdocs The 2016 Financial and Sustainability Report covers data

Global Payments Awards

from January 1, 2016 to December 31, 2016. Select data from Top Corporate Governance Awardee

previous year may be included to quantify and show year-on-year

1st Institutional Investors' Corporate

comparison, if applicable.

Governance Awards We have limited the reporting coverage to Globe Telecom, Inc., Mobile Service Provider of the Year

Innove Communications, and G-Xchange, Inc. particularly on the

Telecom Service Provider of the Year

environmental, social and governance aspects. Economic covers

2016 Frost & Sullivan Philippines Excellence Awards

operations from Globe Telecom, Inc. and our subsidiaries with 100% ownership. We have aligned our sustainability reporting with

Branded Communications on Love of Country and Respect for

the Global Reporting Initiative (GRI) Standard framework. This

National Customs and Traditions for Globe myBusiness Inspiring

report has been prepared in accordance with the GRI Standards:

Success Campaign

Core option and 23 Specific Disclosures. Our report has undergone

Advocacy Communications on Reverence for Family Unit or

third party external assurance conducted by DNV-GL.

Marriage or Responsible Parenthood for #LetDadKnow Campaign Branded Communications on Reverence for Family Unit or

2016 ANNUAL REPORT

7

WHAT’S INSIDE 12

44

16

50

MESSAGE FROM THE CHAIRMAN

MESSAGE FROM THE PRESIDENT 7 WAYS WE CREATE WONDERFUL EXPERIENCES

GIVING DELIGHTFUL SURPRISES

MAKING LIFE EASIER

58

OFFERING THE BEST IN ENTERTAINMENT

24

66

28

96

38

140

FORGING STRONGER BONDS

FUELING GROWTH OF ENTERPRISES

BUILDING A DIGITAL NATION

CREATING A GLOBE OF GOOD

GOVERNANCE

RISK MANAGEMENT

12

GLOBE TELECOM

MESSAGE FROM THE CHAIRMAN GRI 102-14

I am happy to report Globe Telecom’s record results

with the company’s own to serve customers more

for 2016, setting new marks in service revenues,

meaningfully, creating a “Globe of Good”. This year,

EBITDA and core net income. Despite the heightened

Globe received a score of 91% in the Sustainable

industry competition, the company delivered

Engagement Index (SEI), 6 points higher than the

double-digit growth across all data-related services,

global telecommunications norm and 5 points

helped in part by the consolidation of Bayan for

higher than the global high performing norm.

the full year. By focusing on customer experience

Once again, we gained recognition on being the

and the enrichment of the Filipino digital lifestyle,

first telecommunications company included in the

Globe gained recognition as the number one mobile

2016 Global High Performance Companies Norm,

company in the Philippines.

comprised of organizations with exemplary financial performance and human resource practices. We

Beyond business success, we are similarly embarking

believe these recognitions validate our efforts in

on a transformation journey to become a truly

developing a culture of empowerment, collaboration,

purpose-led organization that casts a positive and

and innovation at Globe.

sustainable impact to society. We believe that to become successful, we need to start the engagement among our employees. Every Ka-Globe is able to channel his or her personal purpose and align it

2016 ANNUAL REPORT

13

2016 PHILIPPINE ECONOMIC PERFORMANCE

Mobile penetration rose to an estimated 120% by the end of the year, with nearly 126 million industry subscribers. The incidence of multi-SIMming

In 2016, the Philippine economy enjoyed its highest

remained high due to the enticing industry data

growth in three years, with gross domestic product

offers, and the increased availability and affordability

(GDP) up by 6.8%, ranking among the highest in

of tablet and portable WiFi devices.

Asia. Growth continued to be broad-based, driven by the increase in both domestic and external demand.

Going forward, we welcome rational competition to

Domestic demand growth was fueled by increases in

unlock more value from the industry, as this allows

consumer spending, government consumption and

the sector to properly monetize growing data traffic,

gross fixed capital formation, while external demand

driven by increasing smartphone penetration and

grew from an increase in both exports and imports of

the Filipino penchant for social networking and

goods and services.

online content. Furthermore, home broadband and corporate data segments represent exciting

With the new government’s thrust to increase fiscal

opportunities as more households and enterprises

investment and infrastructure spending, and to

require broadband and data connectivity.

undertake a comprehensive tax reform program,

OUR VISION OF FIRST WORLD INTERNET CONNECTIVITY IN THE PHILIPPINES

the economy is in a strong position to maintain its current growth trajectory and promote more inclusive growth. This is in spite of the potential external headwinds that may affect the inflow of

In line with our vision for the Philippines to

remittances from overseas Filipinos and the growth

have an Internet connectivity that is at par with

of the Business Process Outsourcing (BPO) sector,

developed markets, the company is fast-tracking the

which, together with a robust tourism sector, have

deployment of LTE services using the 700 megahertz

driven the growth in private consumption in the last

(MHz) and 2600 MHz frequencies obtained from

few years.

the San Miguel deal. We continue to invest heavily on network infrastructure and deployment of

2016 INDUSTRY GROWTH AND COMPETITIVE DYNAMICS

fiber optic cables to bring about a better internet experience in the country. As Information and Communications Technology (ICT) development

The telecommunications sector barely grew in

has a direct impact to the country’s GDP growth,

2016 due to the re-rating of mobile revenues,

Globe has steadily increased its portfolio of business

which accounts for 65% of total operating

solutions to both large multinational companies

revenues, with the continued shift in traffic from

and the small and medium enterprises. Combining

legacy voice and SMS to data, and the heightened

our homegrown knowledge of the Philippine market

industry competition. However, Globe once again

with the latest innovations, Globe is able to provide

outperformed the sector, growing by 5% as we

the right technology, infrastructure, and know-how,

delivered a better customer experience and provided

customized to the needs of our enterprise partners

a wide variety of choice content through our

from a wide range of industries. With this, we are

partnerships with the best of breed internet and

also creating opportunities for growth and progress

content companies.

for the emerging and medium sized businesses.

14

GLOBE TELECOM

COMMITMENT TO CREATING SHAREHOLDER VALUE

sports training by FCB Escola in Barcelona. These programs respond to the United Nations Sustainable Development Goal 4 (UN SDG 4) which calls for

Consistent with our commitment to creating

quality education.

shareholder value, Globe paid out a total of P11.7 billion in common share dividends in 2016, which

In closing, I thank our Board of Directors, the

was 6.0% higher than 2015. This represents

management team, and employees for their

approximately 77% of 2015 core net income and

untiring commitment and dedication in serving

is in line with the company’s policy of distributing

our customers. Our board members remained

dividends equivalent to 75% to 90% of prior year’s

engaged across a variety of governance committees

core net income. This translated to a 4.8% dividend

throughout the year and our employee and executive

yield, which remained competitive versus the yields

teams worked determinedly to elevate the way

of government securities and other Philippine listed

we innovate to continuously improve customer

companies.

experience. I also thank our business partners for their support, our customers for their loyal

More than financial gains, we exerted great effort

patronage, and our fellow shareholders for their

to create our lasting contribution to society. We

trust and confidence in our ability to build and create

worked with key partners Singtel and Optus to bring

stakeholder value in the years ahead.

the Digital Thumbprint Program in the Philippines to educate our youth on responsible digital citizenship.

On behalf of the Board of Directors, I take this

This goes hand in hand with our responsibility as

opportunity to welcome Mr. Arthur Lang who will

the purveyor of the Filipino digital lifestyle and

take over from Mr. Mark Chong as one of Singtel’s

the service provider of mobile and fixed internet.

representatives on the Board. I am certain Mr. Lang’s

Together with the Department of Education, we

expertise and experience will contribute significantly

institutionalized the Global Filipino Schools (GFS)

to the governance and management of our company.

program in 80 public schools nationwide. Through

I would also like to acknowledge the significant

this program, teachers and students developed

contributions of Mr. Chong as a member of the

21st century skills such as creativity, critical

Board for a combined five years, including two years

thinking, collaboration and communication. Mobile

as the Co-Vice Chairman, and three years as Vice

applications such as the Mind Museum App and the

Chairman of the Executive Committee, and member

GFS e-library were incorporated into the program.

of the Compensation and Nomination Committees.

I wish him continued success as the Group Chief

We also collaborated with one of our content

Technology Officer of Singtel.

partners, Astro in Malaysia to participate in their Astro Kem Bola overseas training program benefitting 49 grassroots football communities comprising 590 participants. Five children with ages 10-12 years old were given the privilege of

Jaime Augusto Zobel de Ayala Chairman

2016 ANNUAL REPORT

15

16

GLOBE TELECOM

MESSAGE FROM THE PRESIDENT AND CEO GRI 102-14, 203-1

Our story in 2016 is an exciting mix of many “firsts”

For the first time in our company’s history, Globe

and going full steam ahead with our network

embarked on a purpose-led transformation that will

expansion amidst the growing public clamor for

be our anchor to win our future. Our new purpose

improved services in the sector.

enabled us to define our vision of seeing a Philippines where families’ dreams come true, businesses

For many years, we have focused on strengthening

flourish, and the nation is admired, as well as our

our portfolio of offerings and drive to enhance

mission of creating wonderful experiences for people

customer experience to be the preferred mobile

to have choices, overcome challenges, and discover

company across all market segments. This year, we

new ways to enjoy life.

achieved a milestone in successfully capturing overall revenue market share, making us the #1 mobile

With changing lifestyles and the continuing digital

company in the country, our first after many years of

shift, internet services have become even more

being a challenger brand in an intensely competitive

pervasive. In June, the United Nations (UN) Human

industry.

Rights Council declared internet access as a basic human right which cemented the global need for

Leadership, however, can only be sustainable if we

connectedness. Expectedly, the public clamor for

play to win the infinite game. So we set our sights

better, more affordable and accessible internet

towards our unique purpose as a business – In

services grew louder, resonating in the halls of

everything we do, we treat people right to do a Globe

lawmakers and opinion leaders alike.

of Good.

2016 ANNUAL REPORT

17

Globe is at the forefront of the industry in advocating reforms by bringing out key challenges and solutions

FINANCIAL AND OPERATIONAL PERFORMANCE

to build the much-needed infrastructure the country needs so that all Filipinos may enjoy pervasive

Our consolidated service revenues hit a new record

connectivity. Central to these are the permitting

high of P120.0 billion, a solid 6% from the previous

and right of way issues that hampered network roll

year’s record of P113.7 billion. On the back of these

outs and builds over many years, severely impacting

revenues, our EBITDA also reached a record P50.0

coverage, speed and reliability of mobile services.

billion in 2016, up 9% year-on-year. Net income,

We also engaged various stakeholders in educating

however, dipped 4% to P15.9 billion, which includes

the public about difficulties in deploying fiber to

expenses from our P70-billion acquisition of the

homes and businesses and the necessary capital

stranded telecommunications business of Vega

investments needed to keep up with technology

Telecom owned by San Miguel Corporation in May

shifts as we ride on the digital bandwagon.

2016.

In all these, the timely acquisition of the stranded

We continue to attribute our strong revenue

telco assets of San Miguel Corporation allowed us to

performance to broad-based growth across all

increase capacity and improve network experience by

businesses, particularly as the uptake in data-related

immediately using the valuable 700 MHz and other

services continued to offset the decline in traditional

LTE spectrum, such that for the first time, we were

voice and SMS revenues. Total data-related revenues

able to blanket the entire National Capital Region

accounted for 49% of consolidated services in 2016

and key regional cities with 4G/LTE experience.

from 42%, previously.

With customers having a better network experience,

Mobile revenues grew 1% to P91.9 billion from the

a purpose-led organization, dedicated and passionate

P91.2 billion recorded a year ago as we continued to

corps of talents, Globe once again registered

gain market share as the No. 1 mobile company in

substantial business gains, breaking past records

the country. As of end-2016, our mobile subscriber

anew and solidly building a future where data

base has grown to 62.8 million, up 12% year-on-

overshadows voice and SMS services. Let me share

year. Once again, we have managed to dominate the

the highlights of this transformational year.

postpaid segment with revenues of P34.3 billion, up 1% year-on-year from P34.0 billion in 2015.

18

GLOBE TELECOM

This segment accounted for 37% of our mobile

of being a mobile-first company. However in the

revenues and has led to gains in the prepaid segment

past, we were relating to our customers in the

as well. Prepaid revenues grew to P57.6 billion, a

manner of a utility company. A lot has changed

1% increase due to a 13% growth in our prepaid

since then, as we focus on the changing habits of our

subscriber base, which now numbers 60.3 million.

customers and the way they use technology in their daily lives.

This year, we achieved another milestone as smartphone penetration in our network reached

In 2009, we started offering customizable services

61% by the fourth quarter of 2016, breaking past

that put the customers first — giving them the power

the critical 50% mark. As a result, total wireless data

of choice to subscribe to postpaid plans and prepaid

traffic surged by 44% year-on-year. We see this trend

promos that are attuned to their needs and budgets.

persisting as mobile users continue to transition from traditional voice and legacy SMS and towards more

We have since evolved into becoming the purveyor

VoIP-type of communication or messaging platforms

of the digital lifestyle, serving the growing demand

such as Viber, WhatsApp, and Facebook Messenger,

for lifestyle and entertainment-driven connectivity

and enjoy more streaming video and music.

needs: music, video, gaming, information, commerce, shopping, banking, movies and TV series, and social

In step with the surging demand for internet and

media. While still in its early stages, we entered into

data connectivity, our home broadband service

this ecosystem by forging collaborative partnerships

revenues reached P14.5 billion or 28% higher than

with global giants in the world of content, in addition

P11.3 billion in 2015. Meanwhile, corporate data

to our existing content providers such as Spotify,

services hit P9.9 billion, a 28% growth year-on-year,

HOOQ, Disney and NBA.

driven by rising demand for corporate connectivity, managed service solutions, and cloud-based services.

In 2016, we became the mobile and broadband Philippine partner of the foremost video streaming

LEADING THE SHIFT TO THE DIGITAL LIFESTYLE

service Netflix, which boasts of over 81 million members in over 190 countries who are enjoying more than 125 million hours of TV shows and movies

Throughout our company's history, Globe has

per day, including original series, documentaries and

always led innovations in mobile because of strong

feature films.

consumer demand. As a result, we gained recognition

2016 ANNUAL REPORT

19

We also brought in Disney Channel and Cartoon

CONNECTING EVERY HOME

Network for our younger audiences, as well as Malaysian media powerhouse Astro to give Filipinos

Offering content that people want to consume

access to eGG Network or Every Good Game,

also drove the use of data at home. However,

Southeast Asia’s first dedicated 24/7 e-Sports

majority of our fixed-line customers only experience

network.

internet speeds ranging from 1-2 Mbps. To improve connectivity at home, we have to roll out fiber and

As we partnered with global iconic brands, we

update our copper infrastructure as fast as we can

likewise altered the landscape of Philippine

so we can extend faster internet connectivity for

entertainment with Globe Studios and Globe Live,

families.

two new businesses designed to stimulate growth in the local entertainment industry. Our opening salvo

For the Philippines to take full advantage of new

was the production of our first full-length movie and

digital opportunities, we need to create an Internet

a nine-episode series airing on HOOQ. By creating

superhighway and provide ultra-fast internet

original shows, live events, and feeding content

connection that will enable growth in every corner

that is relevant to the Filipino, we strengthened our

of our country. We launched an initiative to deploy

stronghold as the preferred mobile content provider

ultra-fast internet service in 20,000 barangays all

of our customers.

over the country within the next five (5) years to provide faster and more reliable internet access in

Revolutionizing the Philippine retail and

about 2 million homes nationwide. We want to make

entertainment industry, we also opened a

use of technological innovations to make internet

US$7-million ICONIC store at Bonifacio Global City

service experience at par with other countries in the

that features a live entertainment venue complete

world.

with two massive Times Square-like LED walls that provide live video feed and on-ground entertainment.

As our “proof of concept” of how we are ushering the Philippines to become a digital nation by 2020,

In 2016, we mounted successful large-scale live

we collaborated with the city government of Manila

events such as Green Day’s American Idiot and the

to install fiber broadband throughout the Binondo

“A Christmas Carol” musical, as well as NBA Fit and a

district, providing world-class internet experience

series of HOOQ Hangouts. Not only does the ICONIC

with speeds of up to 1 Gbps to the world's oldest

store serve as the premiere lifestyle destination of

Chinatown and one of the main hubs of SME activity

Globe, the entertainment facility can lay claim as the

in the metro.

most innovative and experiential retail telco store in the world.

To complement our massive infrastructure buildup, we also launched exciting new revolutionary Globe Broadband plans that allow our customers to make

20

GLOBE TELECOM

their home the ultimate hub for groundbreaking

With these, Globe is well on its way of achieving our

entertainment and elevate their digital lifestyle. In

target to deploy about 4,500 multiband, multimode

November 2016, we unveiled a 10-Mbps connection

software-defined radio base station equipment

plan that can be availed for as low as P1,299 a

in 95% of cities and municipalities in the country

month, which includes a 100-gigabyte data allocation

within a 3-year period, as committed to the National

with six-month free subscription to NBA League Pass,

Telecommunications Commission (NTC).

Netflix and HOOQ. Our GoWiFi service, a premium open national WiFi

GOING FULL THROTTLE ON EXPANSION

network launched in 2015, has expanded to over 6,300 access points by the end of 2016. GoWiFi is

To fulfill our commitments, Globe went full throttle

now available in all major airports, water ports, major

in expanding our network infrastructure and capacity

malls, convenience store chains, food and beverage

to enhance the internet experience of our customers.

establishments, schools, universities and government offices.

In May, we initiated the acquisition of additional frequency assets from San Miguel Corporation-

We are also deploying WiFi services at all MRT Line 3

owned Vega Telecom. Most important in the asset

stations and all 20 LRT stations to enable

base was the spectrum in various frequencies: 700

1.5 million daily passengers and Globe customers

MHhz, 1800 MHz and 2600 MHz, which we consider

riding the MRT to efficiently make use of their transit

as prime real estate from which to broadcast the

time through internet access.

LTE spectrum, the main 4G vehicle for mobile data transport. As we roll out and fully maximize the

BUILDING AN ADMIRED NATION

use of these spectrums, the public can expect vast improvements in their overall customer experience

All these efforts are in support of our campaign to

in terms of speed and reliability of mobile internet

make the Philippines an admired nation globally by

services of Globe.

having first-world internet connectivity.

Barely half a year since acquiring the stranded assets

We are emboldened by the fact that the Philippines

of SMC, we hit our target of deploying over 500 LTE

is now the highest among 15 countries in Asia Pacific

sites using the 700 MHz band (L700), a majority of

in terms of average connection speeds for mobile

which were deployed in Metro Manila and other

connection, with 14.3 Mbps speed, according to

highly populated areas where majority of customers

the 4th Quarter Akamai State of Internet Report of

using LTE-based handsets are located. We also

Akamai Technologies. The country also achieved

activated over 1,200 additional LTE sites using the

105.1 Mbps peak mobile speed in the 2nd quarter of

additional spectrum allocation in the 2600 MHz

2016, the third highest in Asia Pacific after Australia

band, which mostly benefitted customers in Metro

and Thailand.

Cebu and Metro Davao.

2016 ANNUAL REPORT

21

But there is still much to do. As more and more

As our employees live out our values at the

Filipinos depend on fast and reliable internet

heart of our Circle of Happiness where engaged

connectivity, telco operators must all work

employees result in delighted customers and happy

closely with the national government and local

stakeholders, we are inspired by their collective

government units, particularly in addressing the

dedication to our customers and willingness to do a

circuitous permitting process in the establishment of

Globe of Good. Employee volunteerism reached an

telecommunication infrastructure such as cell sites. It

all time high at 45% of total employee base where

is thus no surprise that the Philippines lags behind its

3,222 employees shared 51,552 man-hours and

Asian neighbors in terms of total cell sites.

P 883,793.77 financial donations.

As we deploy more LTE sites in 2017 using our

One area that showcases employee commitment

additional spectrum assets, we will further accelerate

to Put Customers First is during disaster. In

our network build and collaborate with various local

response to the UN SDG 9 that calls for building

government units, homeowner associations, and

resilient infrastructure to support human well-

other government agencies on workable solutions

being, we continue to build a better network to

that will enable Globe to stay ahead in meeting rising

harness mobile and ICT solutions that empower

consumer demands.

public service and help uplift public welfare — from emergency response to disaster preparedness and

SUSTAINING OUR BUSINESS

management. When different parts of Luzon were devastated by Super Typhoon Lawin and Typhoon

Not many companies can transform their business at

Nina, Globe in partnership with the National

a time of exhilarating change because it puts to test

Disaster Risk Reduction Management Council

the level of employee engagement and resiliency.

(NDRRMC), transmitted mobile disaster alerts via

Globe enters the rank of global high performing

SMS containing vital information that communities

organizations powered by a highly engaged

at risk can use to prepare for and respond to disaster.

workforce that does many things at once: maintain a

This early warning service helps increase survivability

strong core business, bring first-to-market products

rates and reduce cost of damage to properties.

and services, and grow new businesses while being

Immediate disaster response provided by Globe

fueled by an inexorable passion for innovation.

include free calls and text services, free charging and

Underpinning all these is a strong commitment

internet stations in severely hit provinces to connect

to look farther than business by caring for the

families with their loved ones at the most critical

environment and our impact to communities at large.

moment. Priority was also given to relief operations distributing food and water to affected communities.

22

GLOBE TELECOM

Yet perhaps the most effective response we gave was

MOVING FORWARD

the immediate restoration of mobile services within 24 hours after the typhoons hit land.

We expect 2017 to bring more opportunities for business growth while creating new challenges,

Having an expansive network also translates to a

particularly as we manage our capex budget, rollout

large business footprint so it is inevitable for us to

more fiber optic connection across cities, develop

recognize our responsibility to mitigate effects of

more compelling content, deliver a pervasive and

climate change. We continue to invest in a low-

reliable internet service where it matters while living

carbon future by encouraging more customers to

out our new purpose of creating a Globe of Good for

shift to paperless billing to reduce waste, as well

our customers, employees, partners, communities,

as raise public awareness on adopting lifestyles

and stakeholders.

that are in harmony with nature. We entered into a five-year partnership with Hineleban Foundation

Much has been achieved in 2016, yet much more still

to preserve and restore rainforests and watersheds,

need to be done especially as we endeavor to remain

involving indigenous peoples in Bukidnon and Lanao

true to our promise of delivering superior customer

del Sur that help provide food security for them.

experience. We are confident that our advocacy to

These programs respond to SDG 12 that calls for

gain reforms in the sector can only translate to the

responsible consumption and production and SDG

fulfillment of our collective aspirations of having

15 on sustaining life on land.

first world internet connectivity in the country. After all, we are armed with two key elements essential

We promote inclusion by having over 1,500

for any company to succeed over the long term: a

Department of Social Welfare and Development

strong, customer-centric culture and a purpose to

(DSWD) beneficiaries employed as broadband sales

build a better future for the nation.

agents and airtime load retailers thus responding to SDG 8 that calls for decent work and economic growth. Filipino micro-enterprises are likewise assisted through our partnership with KIVA, a US-based humanitarian organization present in over 80 countries, by tapping on our customer base to support local entrepreneurs through an

Ernest Cu President and CEO

online donation platform. At least P20 million was generated through various sustainable livelihood programs directly benefitting the base of the pyramid sector.

2016 ANNUAL REPORT

23

FORGING STRONGER BONDS

24

GLOBE TELECOM

2016 ANNUAL REPORT

25

FORGING STRONGER BONDS FOR A FAMILY SEPARATED BY DISTANCE, TECHNOLOGY PLAYS A VITAL ROLE IN SUSTAINING RELATIONSHIPS AND SHARED DREAMS GRI 102-2

It’s never easy to navigate the challenges of

After several years, her stepfather, Edgar Sabando, a

being a blended family, especially in the face of

welder in Turkmenistan, came along and stepped in

physical distance. But for 28-year-old Bretzy Grace

to be the father they all have in common.

Pitogo, nothing can get in the way of love and understanding.

“He wholeheartedly accepted us as his own children and married my mother despite our peculiar

An early childhood care and development specialist

circumstances,” Bretzy said. At first, she did not warm

working in a government agency, Bretzy does not

up to the idea that her mother, Pilar Sabando, was

shy away from the fact that she and her two siblings,

marrying again.

23-year-old Ryza Faith and 13-year-old Red, have different birth fathers.

WHEN LOVE KNOCKS

“My real father left us when I was just a baby,” Bretzy

Mommy Pilar, the single mother who was making

shared. “My mother decided to work in Japan and

ends meet as a beauty consultant at major

met my sister’s father there, but fate was cruel to

department stores and engaging in buy-and-sell,

them and they had to part ways eventually as well.”

eventually introduced her cute half-Japanese toddler to Edgar as stepdad.

26

GLOBE TELECOM

Turning 50 years old this year, Mommy Pilar knew it

possible. Their Globe home broadband subscription

was God talking to her and fulfilling her heart’s desires

enables Mommy Pilar to call Daddy Edgar overseas

when she said “yes” to love again 13 years ago.

three times a day, and video chats with him whenever time permits. She gets connected to her daughters

“You won’t even tell they came from different dads. They

over Facebook Messenger almost every day to check

look so alike and resemble either me or my husband,” she

on how their days went by.

said of her children. “But we are very open about this and are never ashamed of who we are.”

Despite the distance, Mommy Pilar never felt lacking in affection and assurance. “My husband

CONNECTED BY HEART

would tell me about his meals and say ‘I love you’ in the morning, afternoon, and at night. I would take

In early 2016, Mommy Pilar’s health issues led the

pictures of dishes I cook and send it in return,” she

family to arrive at the big decision to move from

shared.

fast-paced, urban Makati to a quiet provincial life in Alfonso, Cavite. In a humble two-unit apartment, the

Her daughters would be treated with home cooking,

newly-designated housewife stays with the seventh-

and would occasionally be asked to convince Red –

grader Red, while Edgar works in the Middle East

who likes playing basketball and hanging out with his

and the two sisters remain in Manila to build their

friends – to sleep early and finish his errands at home.

respective careers.

“Over Messenger, Mama sends me pictures of dishes The decision was three years in the making, with each

she cooks, and I come home on weekends with DVDs

family member making individual adjustments: the

for our movie marathons and bonding sessions over

mommy pining for her daughters, who in return

karaoke,” said Bretzy, a Globe postpaid customer for

commute for at least five hours each way to get

five years. Despite her busy schedule, Bretzy makes

home every weekend.

it a point to text, call and even go online to catch up with her Mommy Pilar and rest of her siblings.

Mommy loves the fresh air in her new home, as well as its close proximity to the church and the friends

Bretzy will soon take a teaching licensure exam and

she has made in the small community. “Renting this

is excited to make wedding plans with her fiancé,

property instead of coming home to Iloilo, my home

while Mommy Pilar is setting her sights on putting

province, is a decision I’ve made to keep our family

up a small restaurant business. Daddy Edgar is now

together,” she said.

saving up for the venture that he will ultimately manage with Ryza, who currently works at a dim sum

A STRONG ‘GLUE’

place in San Juan.

Indeed, Mommy Pilar is the glue that keeps the

Life, after all, has taught the family that bridging the

family bond stronger despite the physical distance

gap not only means getting physically and digitally-

that separates them, said Bretzy.

connected, but opening one’s heart to what is still possible, like a new lease in life and love.

The goal is to stay connected with each other amid the physical separation, and technology makes this

This is published for our Annual Report with prior consent by our Globe customer.

2016 ANNUAL REPORT

27

FUELING GROWTH OF ENTERPRISES

28

GLOBE TELECOM

2016 ANNUAL REPORT

29

FUELING GROWTH OF ENTERPRISES 10 WAYS GLOBE CAN MAKE YOUR BUSINESS FLOURISH GRI 102-2

The world is changing, society is transforming, and

Michael Frausing, Senior Advisor for Enterprise and

every day, we find ourselves at the cusp of another

IT-Enabled Services Group, and Derrick Heng, Senior

technological advancement. Innovation is, and will

Advisor for Globe myBusiness, discuss some of

always be, our primary driver to move and grow

the ways Globe helps drive innovation in business,

businesses built by passion.

whether big or small.

Armed with an intimate understanding of our

1

customers and partners, we provide a full range of wireless or wireline ICT offerings for businesses of any

MORE INDUSTRY-FOCUSED SOLUTIONS

size or type.

With the growing trend for enterprises to go fullyThrough Globe Business, we enable large

digital and as part of its commitment to enable a

corporations and catapult their business towards

digital nation, Globe Business is accelerating the

infinite possibilities. Combining our homegrown

adoption of data through cloud technology and

knowledge of the Philippine market with the latest

digital services across Philippine enterprises with its

innovations, Globe Business is able to provide the

industry-focused solutions, leveraging on the latest

right technology, infrastructure, and know-how,

ICT capabilities and innovations that will drive global

customized to the needs of the business from a wide

competitiveness.

range of industries. We create opportunities for growth and progress, not only for enterprises, but

In 2016, Globe Business strengthened its offerings to

also for the entire country.

the retail, IT-BPO, education and logistics industries, helping Philippine enterprises to go fully-digital so

Our Globe myBusiness maximizes the potential of

they can become locally and globally competitive.

micro, small and medium enterprises (MSMEs) so they can take their passion for business onwards and

Companies in the retail industry, for instance, can

upwards to achieve success. Offering customizable

benefit from managed security services, mobility

business solutions designed to fit their needs, Globe

solutions, and connectivity solutions that Globe

myBusiness empowers Filipino MSMEs to embrace

Business offers.

the digital shift, giving them the competitive advantage to improve efficiency and productivity, reduce cost, and further grow their business, allowing them to create their own stories of success.

30

GLOBE TELECOM

Globe Business offers BPOs solutions such as Canvas,

In 2016, Globe myBusiness empowered Filipino SMEs

which converts paper-based processes to dynamic,

to embrace the digital shift with its latest portfolio of

feature-rich mobile apps, Globe Work Ready Seats,

postpaid plans and innovative business solutions, giving

as well as Media Storage facilities help BPOs secure

them the competitive advantage to improve efficiency

large files for their customers.

and productivity, reduce cost, and further grow their business.

Finally, the logistics industry can leverage on ICT to boost operations for companies using solutions such

Globe myBusiness launched the new myBusiness

as M2M Fleet Management, managed connectivity

Unli Plus Postpaid Plan, a new mobile postpaid

services, as well as Canvas to save time and resources

plan that gives them more value for their business

from physical processing of forms and other

with built-in unlimited calls and texts to Globe/TM

documents, thereby improving efficiencies in the

numbers, allowing them to focus on choosing the right

workplace.

business solutions that they need with their plan. The myBusiness Unli Plus Postpaid Plan also comes with a choice of freebie such as mobile data services or discounts to business solutions.

Globe myBusiness also offered the myBusiness Tracker, a do-it-yourself portable GPS tracking solution that enables users to monitor the real-time location of their vehicles and assets. The Globe myBusiness tracker can help SMEs improve delivery planning, real-time monitoring, improve driving habits and save and avoid unnecessary costs.

2

DIGITIZING MSMEs MSMEs make up 99% of businesses in the country, making them a major engine of growth according to the Philippine Institute for Development Studies (PIDS). Globe myBusiness takes front and center to boost the SME industry in the Philippines as it provides customized digital solutions and empowers MSMEs with knowledge of the latest digital trends.

2016 ANNUAL REPORT

31

3

4

Since adopting a “cloud-first” strategy in 2011, Globe

Forging strong partnerships with global industry

has been harnessing the power of cloud technology

leaders such as Google, Microsoft, Huawei and

to help manage costs while pursuing our relentless

Alcatel (now Nokia) allows us to stay ahead of the

drive towards sustainability.

pack in digitizing businesses.

We bring the same benefits of world-class wireless

One of our partners is Shopify, a leading global

solutions to our enterprise clients. These solutions

e-commerce platform that customizes websites

enable their employees to easily access, store,

for any business regardless of product or location.

transmit, and manipulate information, files, and

Shopify has a simple user interface that features

applications virtually using any personal computer,

reports, in-depth analytics, as well as functionalities

tablet or device.

such as loyalty ratings, reviews, social account

TOE TO TOE WITH INNOVATION LEADERS

RIDING THE CLOUD

integration, live chat and embedding of marketing G Suite, from Google Cloud, is a set of intelligent

materials.

apps including Gmail, Docs, Drive and Calendar to connect the people in a company, no matter where in the world they are.

Other dynamic cloud platforms include Virtual Private Cloud, Back-up-as-a-Service, Microsoft Office 365 and AppMarket. These solutions not only eliminate the demand for server maintenance, updates, deployment and compliance, but also ensure safer, more accessible email and business operation systems right in the cloud.

With Shopify, Filipino entrepreneurs can start their own business in less than 5 minutes – their gateway to building and managing their own online store.

Globe myBusiness has also developed an online bazaar called Digimall powered by Shopify that showcases products from local businesses over the web. A weekend “bazaarista” can now sell to anyone with an internet connection, nationwide, or around the globe, at any time or day.

32

GLOBE TELECOM

5

WINDOW TO GLOBAL BEST PRACTICES As part of our commitment to help build a digital nation that sees businesses flourish and succeed, Globe keeps large, medium and small businesses abreast of the latest industry trends by inviting experts and thought leaders.

Globe Business holds its annual Enterprise Innovation Forum (EIF) for leaders and corporations to participate in an insightful learning session and sharing of best practices. The highly-anticipated EIF brings together thought leaders and speakers from around the world to instill the importance of innovation in leading businesses and industries.

In October 2016, the seventh annual EIF was held

Globe myBusiness and the company’s digital

with the theme “Find your purpose: Transform

advertising business, AdSpark, also organized DigPH,

Business to Greatness,” featuring an elite roster

an annual convention that equips entrepreneurs

of thought leaders topbilled lined by Strategic

with up-to-date knowledge on using effective, cost-

Communications and Leadership Expert Heath

efficient digital tools and platforms to expand and

Slawner.

revolutionize their business. The country’s largest digital and mobile marketing summit also serves

Globe also expanded its presence and reach among

as a venue for entrepreneurs to learn practical tips

MSMEs all over the Philippines through its Globe

on social media, e-commerce techniques, and other

myBusiness Day caravan, a one-stop exhibit for

pressing digital topics that they can apply in their

entrepreneurs that allows MSMEs to explore new

business.

business opportunities, find new ways to increase their revenues, and discover new solutions to stay competitive in the digital age. The caravan also enables MSMEs to meet, be inspired by successful entrepreneurs and participate in insightful speaker discussions.

2016 ANNUAL REPORT

33

6

7

A stronger nation requires a well-educated and

A stronger nation also demands a healthy citizenry.

informed citizenry. Thus we provide schools with

Thus, we help bridge the healthcare gap in the

innovative, interactive, cutting-edge learning tools

country, particularly in remote and rural areas, by

to give students and teachers access to 21st-century

delivering ICT solutions to the healthcare industry.

PROMOTING 21ST-CENTURY LEARNING

BETTER ACCESS TO HEALTHCARE

learning. Our solutions include the following: We launched KonsultaMD in 2015, a 24/7 health •

•

•

Learning Management System for personalized,

hotline service manned by skilled and licensed

adaptive, and monitored learning to address

Filipino doctors who provide over-the-phone medical

student engagement in schools.

assessment and advice, including basic healthcare

School Management System for access to

and permissible medication. This addresses problems

consolidated learning resources and tools for

such as lack of experienced healthcare professionals,

better and faster school management decisions.

limited access to public hospitals and facilities, as

Virtual Private Cloud to eliminate the cost of

well as individual self-medication.

expensive IT equipment to run new applications for teachers and school staff.

We also mounted the Healthcare Industry Forum, which discussed healthcare industry insights and trends, business apps to mobilize the workforce, and a range of digital marketing tools to make Globe the brand of choice for patients.

34

GLOBE TELECOM

8

DISASTER-PROOF BUSINESSES We became the first telecommunications company in the country to be certified in business continuity on an enterprise-wide scale (ISO 22301). For our clients and stakeholders, this means assurance that our business is prepared to tackle and survive major calamities and disasters.

We share the same approach in business continuity and disaster recovery with companies from various industries. They can outsource their data management requirements and media storage to us to shore up their protection and capabilities in times of unfortunate events.

2016 ANNUAL REPORT

35

9

ENHANCING DATA SECURITY AND PRIVACY The unprecedented growth of technology has made data protection and safety a bigger challenge more than ever. Across all industries, the frequency and sophistication of cyber-attacks and breaches are on the rise, which prompts us to take a more proactive stance.

We take a holistic approach to manage threats and security breaches and ease enterprises’ security, compliance, consolidation and cost concerns.

Through solutions such as Managed Security Services that leverage on the latest ICT capabilities and innovations, we take the lead in averting cybercrime attacks and threats.

10

We also put a premium on customer education.

Through our #ProTECH101 campaign, customers

IMPROVE CUSTOMER EXPERIENCE

learn about the dangers of online crimes and practical tips to keep their accounts and other

Globe Business and Globe myBusiness unveiled the

valuable data safe.

country’s first mobile app designed for large enterprises and SMEs to drive better customer experience via self-service account management.

Available for free at the App Store for iOS users and on Google Play for Android users, the mobile app is a self-service, business automation app that gives enterprise and SME customers easier, faster, and more convenient access to their accounts while on the go, providing better and more personalized user control and eliminating the need to transact with traditional customer service channels.

36

GLOBE TELECOM

With the Globe Business mobile app, users can view their account details (account name, account type, billing address, plan details, plan inclusion, DUO number, among others), view their bill details and billing statement, file service modification requests such as changing of SIM and plans as well as activation of roaming services, get access to service modification request dashboard to allow viewing of requests filed and status, and send remarks and converse with an authorized Globe agent.

Globe myBusiness also extended its services beyond telecommunications products with the introduction of its free business consultancy services. With this exclusive service, Globe myBusiness helps entrepreneurs review their business processes and operations and provide advice and recommendations to help the business run more efficiently.

Entrepreneurs will be able to get in touch with inhouse expert business consultants with certifications on Certified Management Consultants (CMC), Lean Six Sigma, Business Process Reengineering (BPR), EN 16114 Management Consultancy Services, Information Security Management System (ISMS), eSourcing Capability Model, Supply Chain Management, Customer Operations Performance Center (COPC), Total Quality Management for free.

To learn more about how Globe makes business flourish, visit http://business.globe.com.ph/ or https://mybusiness.globe.com.ph/.

2016 ANNUAL REPORT

37

BUILDING A DIGITAL NATION

38

GLOBE TELECOM

2016 ANNUAL REPORT

39

BUILDING A DIGITAL NATION

HARNESSING TECHNOLOGY TOWARDS A MORE PROGRESSIVE PHILIPPINES GRI 102-12, 103-1, 103-2, 103-3, 203-1, 413-1

More than two decades ago, waiting for a telephone

20 million households, and a million businesses. They

line in the Philippines was often likened to waiting for

all benefit from digital transformation—how we

Godot. It was typical to hear middle-class Filipinos

work, how we play, how we get connected, how we

grumbling about their decade-long application for a

manage our supply chain—almost all the things we

fixed-line subscription, or having a “party line” shared

do everyday use the power of technology powered by

by more than one subscriber.

a telecoms network like Globe,” he added.

The country has grown by leaps and bounds since.

ECONOMIC CONNECTION

Nowadays, many Filipinos can dispense with having a fixed line but cannot go by without a mobile phone.

Getting connected to the information superhighway

Many even have more than one SIM, and households

is the “modern-day equivalent of having farm-to-

can now connect to the internet. Those in the

market roads, bridges, and railways” that enables the

countryside are not only able to exchange messages

country to make economic development a reality, he

via SMS or email, but can also check farm gate

said.

prices, get connected to buyers here and abroad, and transact wherever and whenever they are.

“By overcoming information barriers, augmenting factors, and transforming products, digital

Gil Genio, Chief Technology and Information Officer

technologies can make development more

(CTIO) of Globe, said all these were made possible

inclusive, efficient, and innovative,” according to the

by telecommunications players such as Globe. “Our

World Bank’s World Development Report 2016:

public is made up of about 100 million individuals,

Digital Dividends (http://www.worldbank.org/en/ publication/wdr2016).

40

GLOBE TELECOM

The Philippines, currently one of Asia’s fastestgrowing economies, ranked 15th in the world in terms of number of internet users, with 44 million or 43.5% of its population. It ranked highest among 15 countries in Asia Pacific, in terms of average connection speeds for mobile connection, with a speed of 13.9 Mbps, according to the 3rd quarter Akamai State of Internet Report.

Globe believes, however, that the country needs to do more to be at par with the world’s tiger economies and how they harness ICT as catalyst to progress.

“We always look at it, not as a beginning with an end, and know that our work will not be done. When you think about this industry, about Globe, and our customers, every year and every month, people are looking for more. There’s always something to improve and something better. What’s important for us is that the work we do today always builds on something better for next month or next year,” Genio said.

NO LONGER THIRD WORLD Guided by its purpose of “treating people right Five years after its successful network modernization

to create a Globe of Good” the company is also

program that saw mobile data exploding in the

aggressively fast tracking a multi-pronged network

Philippines, Globe embarked on a US$1 billion

infrastructure and capacity expansion build to

nationwide infrastructure program to achieve its

provide its customers a better internet experience. As

vision for the Philippines to become an admired

of December 2016, Globe has already installed 500

nation for its first-world internet connectivity.

long-term evolution (LTE) cell sites, mostly in Metro Manila and other highly populated areas. It has also

It has allotted the bulk of its Capital Expenditures

committed to deploy about 4,500 multi-band, multi-

to the deployment of fiber optic cables in 20,000

mode software-defined radio station equipment to

barangays all over the country to provide faster

about 95% of cities and municipalities in the country

and more reliable Internet access in about two

within a 3-year period.

million homes nationwide. The infrastructure build is expected to take five years and will extend network coverage to more areas that currently have no connection or spotty service.

2016 ANNUAL REPORT

41

“If we can leverage modern technologies, pervasive

the physical infrastructure. Most people don’t realize

networks, faster internet speeds, and greater

that building infrastructure takes time. We’re more

efficiency, there will always be a better experience

than willing to provide the needed capital, but we

for everyone. This creates more happiness for people,

need to overcome challenges such as securing

more time with family, more efficient businesses. All

permits to build new cell sites,” he explained. The

these can lead to something positive for the country,”

process usually takes eight months to get at least 25

said Genio.

permits to build one cell site, leading to considerable delay in the deployment of telecommunication

OPPORTUNITIES AND CHALLENGES AHEAD

facilities.

Building additional cell sites is critical in improving

In many parts of the world, new trends such as cloud

internet services in the country to deliver more

technology, mobile web services, and e-commerce

bandwidth to customers. While Globe has started to

are already radically changing the digital landscape.

utilize the 700 MHz frequencies from the telecom

Globe views this as an opportunity “to push

assets it acquired from San Miguel Corporation in

individuals and businesses into realizing that there

2016, more cell sites are still needed to provide many

are new ways of doing things, enabled by better

areas in the country with better indoor penetrability

technology, new devices, and better bandwidth.”

and coverage.

However, for this to happen, the needed telecom

As it is, the Philippines has an estimated 16,400 cell

infrastructure must be in place to enable a pervasive

sites servicing about 47.1 million internet users. On

internet network. “Our bigger challenge is putting

the other hand, Vietnam, which is similar in size to

42

GLOBE TELECOM

the Philippines, has 70,000 cell sites for its 47.3 million internet users, more than thrice the number of cell sites compared to the Philippines.

While the government recognizes the role telcos play in national development and growth, Genio said Globe needs to clearly demonstrate to its other stakeholders the impact of better internet services to the economy including GDP growth, jobs and productivity, among others.

A major step towards securing the company’s future is to ensure that our infrastructure is ready for tomorrow’s business needs. Re-energizing our internal Cloud strategy is vital to our workplace and we have made significant headway in building the foundations for our Cloud infrastructure. We

THE LAST MILE

expanded our private cloud portfolio to VMware and Openstack, with the latter being our first venture into

As far as Globe is concerned, Genio said the

Open Source Cloud Computing – cheaper, simpler

Philippines still has a lot of catching up to do in terms

and massively scalable. This engagement gives us

of ICT adoption, led by greater access to a pervasive

the flexibility of public cloud and the benefits of

network. “Insofar as having a fundamental telecom

a private cloud with its subscription-based model

infrastructure that can be accessed by everyone

and flexibility allowing upgrade and downgrades

with reliable value, we are not there yet. But we will

anytime. Applications and systems are more reliable

definitely be. It’s just a matter of time.”

and perform faster on the cloud, thus improving customer experience.

“Our responsibility at Globe is to provide a pervasive and reliable communications network. But let’s not

Globe currently has a backlog of about 3,000 cell

forget there’s a whole ecosystem out there — such

sites owing to difficulties in securing permits from

as those who make mobile phones, laptops, tablets,

various local government units, homeowners

large screens, apps — people who supply what people

associations, and other government agencies. “If we

need. It’s important to sustain this ecosystem,” he

have high-speed internet in their locality, what does

stressed.

that mean? It means government and citizens will have better engagement, better opportunities, better

“All these players have to be motivated by the same

local taxes, and reduced poverty levels,” he added.

goal: how to make the Philippines a nation admired with world-class connectivity. Only good things can happen if we do our jobs well.”

2016 ANNUAL REPORT

43

GIVING DELIGHTFUL SURPRISES

44

GLOBE TELECOM

2016 ANNUAL REPORT

45

GIVING DELIGHTFUL SURPRISES GRI 102-2, 103-1, 103-2, 103-3

Loyalty is its own reward, and every loyal Globe

“We have gone through an inspiring and exciting

customer knows it can unlock the door of wonderful

journey with our customers – from milestone

experiences, too.

services to network upgrades — all bringing us to where we are today. We are grateful to our millions

For the entire month of September, all Globe

of customers for staying with us and making us as

customers, as well as employees and partners

part of their lives. With this 917 celebration, we look

who all made Globe the country’s leading mobile

forward to sharing with our customers, partners,

company, were treated to rewarding giveaways and

and employees delightful treats to make wonderful

on-ground events.

Globe moments with us. We will continue to be inspired by our stakeholders to provide Filipinos

And as the signature Globe prefix ‘917’ always carried

reliable services and fast mobile internet and

a special bond with our customers, our month-

make their digital lifestyle truly wonderful,” Globe

long festival was dubbed ‘917’. The most special

President and CEO Ernest Cu said via Facebook Live

date, September 17, 2016 was marked with a full-

at the Globe Facebook page.

day event for all customers at the Globe ICONIC entertainment zone at BGC Central at the Bonifacio

From trivia to heartwarming stories of family and

Global City in Taguig.

hope, our loyal Globe customers responded with their own wonderful Globe experiences.

46

GLOBE TELECOM

From: Grace

From: Patrick

Sent: Oct 9

Sent: Sep 20

Subject: Our Family’s Globe experiences

Subject: Globe experience and why I stayed

My husband and I have been loyal Globe postpaid

I hope this message finds you well, as my enthusiasm

subscribers for more than 12 years now. Globe has

had just pumped up after knowing that I already had

been our means to connect with each other and our

11 years of postpaid subscription to Globe not to

extended family and support groups for both joyful

mention the prepaid era in the beginning.

and challenging times of our journey as a family.

I should not be saying I am under a subscription, We would like to thank you for the wonderful gift of

more like... I am in a relationship. You see, there are

900+ points each. These gifts had allowed us to bond

reasons why I stayed in Globe. It’s not a seamless

with our boys after a week long of challenge against

experience, we had fights, annoyance, happiness,

cough, colds and flu virus for the whole family. After

surprises and high expectations. It’s a relationship

our 2nd medical checkup of the week, we were able

really.

to have mini celebration after our doctor assured us we are all recovering or on our way to recovery after

I rely on signals to get my thoughts across other

being down all at the same time from cough, colds,

networks. I look at the Statement of Accounts as if

or flu virus. We had a good treat at Wendy’s in Sta.

I am planning my finances. Logged in to MyGlobe

Lucia Mall. We enjoyed salad, burger, fried chicken,

as if I am checking your Facebook profile. It’s a

fries, rice and iced tea together.

relationship really.

Your gift had also allowed us to honor the head and

I got involved in a rebuttal with persons from another

leader of our family – my husband and the father of

network while comparing the benefits when I am in

our 3 sons. He provides for all our needs with all his

a ‘relationship’, but really any loyalty can be tested

best. He helps at home with laundry. He takes our

across time.

boys on biking adventures. He takes us to the doctor when we are all sick. He takes care of himself by

And this is a proven fact for me.

biking to work everyday. He loves the Lord more than anything else. He is our hero

we were able to

I hope I made my point that Globe is not providing

buy him new polo shirt for office and comfort shirt

subscription but it is building a relationship that can

for recreation activities at Bench store in Robinsons

last.

Metroeast.

Have a pleasant day.

Thank you for the wonderful gift you have blessed us with for this month.

These are published for our Annual Report with prior consent by our Globe customers.

2016 ANNUAL REPORT

47

GIVING DELIGHTFUL SURPRISES

The signature Globe prefix 917 always had a special bond to most of the company’s customers, especially those who are loyal to the brand for over 10 years. Brought to life through the actual date, September 17, 917 serves as the perfect time to set a wonderful celebration nationwide.

48

GLOBE TELECOM

Through delightful and rewarding experiences, Globe expresses its gratitude to all its customers for their continued patronage, making it the country’s leading mobile company. For one day, all Globe customers nationwide were in for an exciting line-up of events, treats and exclusive deals from shopping to food and travel.

2016 ANNUAL REPORT

49

MAKING LIFE EASIER

50

GLOBE TELECOM

2016 ANNUAL REPORT

51

MAKING LIFE EASIER HOW INNOVATION IS EMPOWERING FILIPINOS GRI 102-2

Imagine walking 10 kilometers to a health center to

fulfill our social responsibility — doing a Globe of

get a check-up for flu. Or traversing rough roads just

Good — but also ultimately create a wonderful world

to go to the nearest remittance office to get money

for every Filipino. Our passion for innovation extends

sent by a family member.

beyond business. We innovate to create positive societal impact so that more Filipinos can overcome

These scenarios may now be far-fetched, but this is

socio-economic challenges.

how life was when digital technology had yet to exist.

And with innovation companies like Globe that have built their business on the idea that change – often radical change – can be very good for business as well

KONSULTAMD: HEALTH ADVICE AT YOUR FINGERTIPS

as for society, the way we do things has been rapidly evolving.

Imagine the convenience of being able to get a doctor on the line anytime you need one, wherever you may

Globe continues to offer relevant and groundbreaking

be. With KonsultaMD, a Globe affiliate, your immediate

solutions that harness the power of information and

health care and medical concerns can now be

communications technology. By so doing, we not only

addressed 24/7 by a licensed Filipino doctor.

52

GLOBE TELECOM

Apart from bringing you easy access to doctors,

TOP 5 INQUIRIES IN 2016

KonsultaMD partnered with several establishments to bring health care within every Filipino’s reach. Several partnerships were forged this year to enrich the whole value chain for customers. MedGrocer, an online pharmacy for door-to-door delivery of medicine and health supplements in GMA area; Lifeline Ambulance Rescue, Inc. for emergency quick-response; Generika drugstore chain to provide a wide range of low cost, high quality generic medicines from approximately 600 outlets in the country; FamilyDOC, a 3-in-1 facility that houses a clinic, a diagnostics laboratory, and a pharmacy.

KonsultaMD has also started to cater to overseas Filipino workers (OFWs) in Hong Kong. These OFWs can conduct unlimited calls to a maximun of 5 Globe numbers and gain unlimited access to KonsultaMD for 30 days for just HK$129.

TOTAL SUCCESSFUL HEALTH-RELATED CONSULATIONS

CALLS BY GENDER

Customers acquired

2016 ANNUAL REPORT

53

CALLS BY REGION

60%

KICKSTART VENTURES: BREAKING BARRIERS FOR STARTUPS

5%

No one knows how many aspiring startups have withered on the vine due to lack of funding opportunity. With Kickstart, the wholly-owned corporate venture capital firm of Globe 28 digital tech firms in four countries have had a better shot at growth, with some outstanding ones now starting to bloom and send out shoots across geographic

5%

30%

borders. Along with this, a dynamic #startupPH community of more than 4,000 young minds with big ideas — innovators, investors, mentors, corporate advocates, and policymakers — have begun to collaborate and set the standard for the Philippine startup community through Slingshot Philippines, a National Summit on Startups and Innovation organized by the Department of Trade and Industry

CALLS BY AGE

18-35

(DTI), and supported by Globe Business.

46%

Among the new startups in Kickstart’s portfolio are Zipmatch, a data analytics company focused on the high-value real estate sector, using its brokerage and

24%

listing site to bring together a community of home seekers and real estate professionals; and Coins.ph, Southeast Asia’s leading mobile blockchain-enabled

13%

platform that enables anyone, including the millions of unbanked, to easily access financial services directly from their mobile device. Using Coins.ph, customers

1%

have access to a mobile wallet and services such as remittances, airtime, bill payments, and online shopping at over 63,000 merchants who accept

16%

digital currency. Operating in the Philippines and Thailand, Coins.ph’s mission is to increase financial inclusion by delivering financial services directly to people through their mobile phones.

54

GLOBE TELECOM

MYNT: CREATING POSSIBILITIES FOR THE UNBANKED THROUGH FINTECH There are over 400 million people in Southeast Asia who remain unbanked and underserved. Through Mynt, a wholly-owned financial services company of Globe, these sectors in the Philippines can now partake of economic growth without going through formal banking channels.

Mynt has so far over three million customers doing P4 billion transaction value per month serviced through a network of more than 12,000 partner outlets. Its subsidiary G-Xchange operates GCash, a mobile money service that taps into the wide customer base of Globe. Moreover, Mynt has recently started its own lending company under the name Fuse, and has disbursed approximately 4,000 loans to 3,000 borrowers in the last quarter of 2016.

Millions of Filipinos use their GCash mobile money accounts to easily pay bills, buy prepaid load, and send and receive money, anytime and anywhere, for a fraction of the cost charged by traditional remittance centers. They can also apply for a debit Beep Mastercard to shop and dine in more than 32 million establishments worldwide, shop online, and pay for their MRT/LRT rides.

2016 ANNUAL REPORT

55

Through GCash, Filipino taxpayers can also pay their

2015

2016

2.32M

3.31M

387,747

444,819

7,555

12,255

5,567

8,400

954

1,867

1,034

1,988

3.65

4.62

Disbursed Loans

n/a

4,004

# of Borrowers

n/a

3,302

annual income tax with greater ease. Globe teamed up with the Bureau of Internal Revenue (BIR) and the United States Agency for International Development (USAID) in developing the mobile payment system — a significant milestone for the government’s tax collection effort.

Accound Holders (YoY) Monthly Active Customers Partner Outlets

GCash has also enabled over nine million Filipinos

Luzon

who are Social Security System (SSS) members to

Visayas

pay their contributions and monthly amortizations for salary and real estate loans using their mobile

Mindanao

phones. The GCash payment scheme is available for SSS members registered as self-employed or voluntary, including non-working spouses, Overseas Filipino Workers (OFWs), farmers and fisherfolk.

Mo. Transaction Amount in Bn

GLOBE DIGITAL VENTURES: ENHANCING THE FILIPINO LIFESTYLE THROUGH DIGITAL SOLUTIONS Mobile applications have become an integral part of today’s digitally-connected lifestyle, and through Globe Digital Ventures, the company’s digital services arm, Globe is able to provide services that will upgrade the connected experience.

The company’s GMovies app leads the pack in enhancing the digital lifestyle and entertainment

56

GLOBE TELECOM

experience. GMovies forged partnerships with SM

Digital Ventures also launched this year a new loyalty

Lifestyle and Entertainment to widen the footprint of

service platform, RUSH, which offers a complete

cinema ticket reservations and booking nationwide.

end-to-end loyalty solution to fit any business. It

Globe also reached greater heights in its partnership

features a white label loyalty suite that provides

with Ayala Land Inc. as GMovies is poised to takeover

both points-based and punch card loyalty, aiming

the revamp and management of Sureseats’ digital

to expand the horizon for loyalty programs that are

channels.

still largely underserved and underdeveloped in the country. Digital Ventures also developed out-of-the-

In addition, cinema-goers now have more options

box products that aim to create value for customers,

to pay for their tickets with GCash and make

one of which is Load Up, a load selling app which

advanced booking and ticket pre-selling for premium

doesn’t require a retailer SIM card and an internet

blockbuster titles as GMovies empowers its

connection. Retailers can get 4.5% load discount

customers to secure cinema seats even weeks before

every time they sell.

their release to create a truly wonderful cinema experience.

2016 ANNUAL REPORT

57

OFFERING THE BEST IN ENTERTAINMENT

58

GLOBE TELECOM

2016 ANNUAL REPORT

59

OFFERING THE BEST IN ENTERTAINMENT 10 WAYS TO ENJOY THE NEW GLOBE LIFE GRI 102-2

You may have been a Globe subscriber for more

Offering these innovations will not be possible

than a decade now, and chances are, you don't leave

without a reliable, affordable, and pervasive network

home without your mobile phone. But how much do

that empowers the digital life of a Globe customer. In

you actually know about us and the many new and

2016, Globe made leaps and bounds to improve the

fascinating ways you can enjoy a wonderful world

internet experience in the Philippines with a series of

with Globe? Take a look at our gallery of fun facts,

improvements in its network infrastructure amid the

1

MAKING FIRST WORLD INTERNET A REALITY

growing demand for internet connectivity.

Its top-selling mobile data service GoSURF50 was the company’s response to the rising mobile data adoption, especially among its prepaid customers.

In 2016, GoSURF was upgraded with 1GB of mobile data allocation, making it the 2nd most competitive offer across the Asia Pacific region in terms of pricing at only P48.82 per GB in comparison to top prepaid telco offerings in the region including Brunei, Singapore, India, Malaysia, Sri Lanka, and Indonesia. The promo, offered at retail price of only P50, valid for 3 days, also includes unlimited texts to all networks as well as free access to Facebook.

GoSURF50’s 1GB of data gives customers 700 MB for surfing while the remaining 300 MB allocation allows access to the customer’s app of choice such as Snapchat, Viber, Spotify Basic, YouTube + Daily Motion, Clash Royale, or Clash of Clans.

60

GLOBE TELECOM

As more customers embrace the digital lifestyle, Globe made significant headway with the rollout of its LTE network. With the deployment of LTE sites

2

WATCH ORIGINAL CONTENT

using both the 700 and 2600 bands, Globe is now able to deliver a more comprehensive LTE coverage in Metro Manila, Metro Cebu, Metro Davao and other major urban areas in the country.

These infrastructure milestones have paved the way for the country to be recognized for its improvements in connectivity. For the first time in years, American content delivery network and cloud services provider Akamai Technologies included the Philippines in its 2016 ranking for mobile internet speeds. With 13.9 Mbps, the Philippines ranked highest among 15 countries in Asia Pacific, in terms of average connection speeds for mobile connection according to the 3rd quarter Akamai State of Internet

The company also ventured into original local and

Report. The report also reveals that the Philippines

international content creation via its production arm

is among countries where fewer than 25,000 unique

Globe Studios and partnerships with international

IP addresses classified as mobilized were observed in

media outfits such as Astro of Malaysia and Netflix.

the third quarter. Globe has assigned about 10,000

Globe Studios is backed by Viva Films, Reality

public IP addresses to cover our current mobile data

Entertainment, Quantum Films, Spring Films, and

subscribers. Each public IP address can cover up to

Astro.

64,000 data sessions, while each mobile subscriber can take up multiple data sessions, depending on the

In collaboration with HOOQ, Asia’s first and largest

number and type of applications he is using.

premium video-on-demand service, Globe Studios is bringing the most-awaited and star-studded series, On The Job (OTJ), a spinoff from the original blockbuster movie directed by Erik Matti. HOOQ signed a landmark co-production deal with Globe and independent studio Reality Entertainment in 2016 to produce the six-episode story revolving around a hard-hitting topic in Philippine society.

Aside from the Philippines, the original mini-series will be released in Thailand, India, and Indonesia.

Globe Home Broadband subscribers can also enjoy free access to HOOQ which delivers over 10,000 Hollywood and local movies and TV series starting at Plan 1299.

2016 ANNUAL REPORT

61

Globe Studios also pioneered the country’s first online film festival — the Globe Independent Film Festival (GIFF), which showcased laudable short

4

GET INTO THE GROOVE

films by five esteemed Filipino directors who have garnered numerous recognitions for their body of work. It also produced a seven-episode travel video series dubbed as SceneZoned, which starred its top ambassadors as they embarked on ultimate travel adventures in some of the best destinations in the Philippines.

3

EXPERIENCE LIVE SHOWS AND EVENTS

Musical.ly, currently one of the most popular video communities among Gen Z, seals its first ever telco partnership with Globe. musical.ly is the world’s fastest growing online video community for creating, sharing and discovering 15-second videos.

With this collaboration, we aim to give the best online experience to customers through easy access to a platform that allows creation of original content, and published by users themselves.

Using your mobile devices, you can also sing more than half a million songs through the popular singing app Sing! by Smule. Share your karaoke-crazy love for music by recording a video duet with your favorite

Globe is also changing the landscape of Philippine

artists like Jessie J and Jason Derulo and beaming it

entertainment with the creation of Globe Live

to a global audience.

designed to produce high-quality live shows, concerts and musical performances, and at the same time tap

Music lovers can also get their groove from Spotify’s

the wide distribution coverage of Globe to promote

music streaming service, as the service gives them

and assemble events that are of international size

on-demand access to over 30 million tracks. To

and quality. Globe Live became the platform for

complement the overall the experience, Spotify

Filipinos to see Green Day’s American Idiot and

makes it easier than ever to discover, manage and

Menken & Ahrens’ A Christmas Carol The Musical.

share music with your friends, while making sure that artists get a fair deal. In addition to that, Spotify Premium lets you create your own playlists, and even download them for offline listening. From Discover Weekly to Daily Mix to New Music Friday, there is something for everyone.

62

GLOBE TELECOM

5

6

The Pokémon Company, creators of one of the most

Globe also brings the dynamic world of sports into

popular entertainment properties in the world,

your mobile devices. In collaboration with Twitter,

Niantic, Inc., innovative developer and publisher of

customers enjoy live streaming of two new weekly

‘real world games’, and Globe, are working together

NBA shows with first-of-its-kind elements created

to bring Filipinos a richer and more enjoyable mobile

specifically for integration with Twitter conversation.

entertainment experience centered around Pokémon

As the first official live stream advertising partner

GO. This includes activating Globe retail locations

of Twitter in Asia, Globe lets subscribers watch the

and charging stations as PokéStops and Gyms within

weekly live stream of The Starters Twitter Show,

the game and allowing Filipinos to catch, battle,

and the weekly 30-minute show, The Warmup, both

and train at any of Globe’s outlets throughout the

produced by Turner Sports and featured exclusively

country.

for millions of Twitter followers.

PUT YOUR GAME FACE ON

JUMP INTO THE ACTION

Globe and Malaysian media powerhouse Astro have teamed up to offer the Philippines’ gaming fans a wonderful experience. Through the partnership, Globe subscribers will gain access to Every Good Game (eGG) Network, Southeast Asia’s first dedicated 24/7 e-Sports network, via the Tribe App. e-Sports fans will be able to watch tournaments like League of Legends, Dota 2, Counter Strike: Global Offensive, and many more.

2016 ANNUAL REPORT

63

7

8

ENTERTAIN THE KIDS

STREAM YOUR FAVORITE MOVIES AND TV SHOWS

Globe and Disney tied up to launch the Disney Channels Apps where kids and families in the Philippines can watch Disney Channel, Disney XD, and Disney Junior entertainment channels on their

Globe became the first mobile and broadband

mobile devices, anytime and anywhere. Designed for

Philippine partner of leading video streaming service

kids to watch their favorite Disney shows, the Disney

Netflix which boasts of over 81 million members in

Channels Apps will provide hours of fun in a safe and

over 190 countries who enjoy more than 125 million

kid-friendly digital environment that will immerse

hours of TV shows and movies per day, including

viewers in Disney’s magical world of storytelling and

original series, documentaries and feature films. With

characters.

a Globe home broadband subscription of Plan 1299 and above, customers can a Netflix gift worth of 6

Dialing up the fun is Cartoon Network, the 5th most

months subscriptions.

popular channel across all genres in the Philippines.

Apps created by the Turner-owned brand are the Cartoon Network Anything, which is free to Globe subscribers and also available via the Globe Switch app; and Cartoon Network Watch and Play, with premium content available with daily, weekly and monthly offers.

64

GLOBE TELECOM

9

10

LOAD UP ON THE LATEST TECH

WEAR GLOBE

Globe collaborated with leading technology and device partners to bring wonderful experiences to homes. Aside from blazing internet speeds powered by fiber broadband technology, you can load up on

You can now sport the new collections of lifestyle

the latest Samsung and TCL smart HD TVs, Bose

apparel and accessories that represent the vibrant

speakers, Harman Kardon headphones, Google

and wonderful world of Globe. With the launch of

Chromecast streaming device, Sony Playstation

Globe Lifestyle, Globe customers will be able to

gaming console, Airties WiFi mesh, and Belkin and

imbibe fresh and wonderful experiences through

Giraffe security cameras with your home broadband

fashion and retail. During the 917 month-long

plans for a complete entertainment and connectivity

celebration in September 2016, two new collections

experience.

— 0917 and Pop Art — were made available in select Globe Gen3 stores nationwide.

2016 ANNUAL REPORT

65

CREATING A GLOBE OF GOOD

66

GLOBE TELECOM

2016 ANNUAL REPORT

67

CREATING A GLOBE OF GOOD GRI 102-40, 102-42, 102-43, 102-44,102-46,102-47

DISCUSSION ON MANAGEMENT APPROACH

The management approach on economic

GRI 102-9,102-40,102-42, 102-43, 102-44, 102-46, 102-47

and Management Discussion and Analysis sections.

performance is covered by the Corporate Governance We have undertaken recovery and buy-back

From fundamental shifts in technology, industry

initiatives that address our environment indicators,

structure, and demographics, to climate change

direct financial gains for economic indicators, robust

and natural resource scarcity, our world is facing

employee training and engagement programs that

challenges that will impact generations to come.

address labor practice indicators, diversity at the workplace for human rights, multi-channel platforms

As a leading telecommunications company in

to define customer satisfaction and a suite of

the Philippines, Globe is well positioned to create

products for digital inclusion that pertain to product

innovative solutions to tackle these challenges.

responsibility, and significant community relations

This is not just what our business dictates, but is

programs that answer society indicators.

also driven by our new purpose: to create a Globe of Good in everything we do to benefit customers,

MATERIALITY

stakeholders, and the communities we serve.

Prepared in accordance with the GRI Standard Aligned with our purpose is the way we communicate

guidelines and the 2030 UN Sustainable

our sustainability approach, actions and performance

Development Goals, our Sustainability Report

to our different stakeholders. Our Sustainability

follows a process to help us identify material issues

Report presents an opportunity to be transparent

for reporting. Material issues and an update on

and to share the details of our performance on these

the stakeholder map were defined through the

sustainability focus areas: Care for the Environment,

consultancy services of ThePurposeBusiness, Ltd.

Care for our People, Positive Societal Impact, and a

founded in Hong Kong. The Materiality Analysis and

Digital Nation. Globe aligns its four focus areas with

Stakeholder Engagement exercises were done late

the United Nation’s 17 Sustainable Development

2015 which are completed and reported in 2016.

Goals allowing it to contribute to nine (9) of the Global Goals:

STAKEHOLDER ENGAGEMENT Our stakeholders based on their level of influence in terms of environmental, social, and governance performances have been grouped into eight (8) categories after a full stakeholder engagement exercise in 2015. These groups are: customers, frontline vendor partner, service vendor partner, government, parent companies and affiliates, employees, media, and disaster respondents.

Stakeholder engagement takes many forms and it

68

GLOBE TELECOM

can be formal and informal. Rather than having one-

alignment for our employees (Ka-Globe), regular

off consultations around specific topics, we prefer

townhalls

to take an integrated approach. This means that we

• Program/product launches, forums, conferences

have an ongoing dialogue about our role in society,

and meetings, email correspondences, and round

our products and services, our business performance,

table discussions with media;

and other issues. This is done at both the business unit and Group level.

• Conference, meetings, and/or electronic dialogue, compliance with laws and regulations, and partnerships for government;

The instruments we use to conduct this dialogue include:

• Meetings and SMS text message alerts for disaster respondents;

• Customer hotlines and other self-service channels and/or touchpoints, satisfaction and engagement surveys, field visits, and product launches for customers;

• Board and committee meetings for parent companies and affiliates; • Meetings, alignment and operations review and audit for service vendor partners;

• Engagement surveys, independent development plan discussion, performance evaluation,

• Vendor engagement survey and town halls for frontline vendor partners.

planning, meeting and/or kick-offs, strategy

MATERIALITY MATRIX

2016 ANNUAL REPORT

69

GREENING GLOBE

This is in response to two of the United Nations’

GRI 102-12, 103-1, 103-2, 103-3, 302-1, 302-2, 304-1, 305-1,

Sustainable Development Goals (SDGs): Responsible

305-2, 305-3,305-5, 306-2

Consumption and Production and Climate Action.

These two global goals go hand in hand in urgently

Climate change remains a real, immediate threat to

seeking to reduce our ecological footprint and

our existence. Developing countries — particularly

mitigating the drastic effects of climate change

low-lying, coastal areas like the Philippines — bear

— with human and material losses at stake —as

the biggest brunt as they are usually the worst hit

significantly brought about and accelerated by

by droughts, flooding, famine, and extreme weather

human activities.

events.

We are relentless in promoting environmental Thus, environmental sustainability emerges as our

sustainability by reducing and managing the

immediate responsibility, especially in the face of

impact of our business operations on the planet.

two contrasting events: global warming and the

This is a mission embraced by all our employees,

rising demand for energy in homes and industries.

partners, and customers which is reflected in our Environmental Sustainability Policy.

70

GLOBE TELECOM

In 2016, we invested P2.371 million on total

Orders, Republic Act 8749, the Philippine Clean

environmental protection, particularly on

Air Act; Republic Act 9136, Electric Power

reforestation programs, solid waste management in

Industry Reform Act of 2001; Republic Act

our corporate offices; and hazardous waste disposal

9003, the Ecological Solid Waste Management

and treatment (including the construction and

Act; and Republic Act 6969, Hazardous Waste

upgrade of Hazwaste staging areas in 40 sites).

Management Act; •

Attained certifications, namely the Quality

At the end of the year, we donated P1.4 million

Management Systems (ISO 9001:2015),

as initial grant for 13,500 seedlings to non-profit

Environmental Management System (ISO

organization Hineleban Foundation, which advocates

14001:2004 and ISO 14001:2015), and

environmental conservation and livelihood

Occupational Health and Safety (OHSAS

development by preserving and restoring mountain

18001:2007) for specific Globe sites.

rainforests and watersheds, as well as providing livelihood opportunities for indigenous people

Globe also complies with the Environmental Impact

in Bukidnon and Lanao del Sur. We leveraged on

Statement (EIS) system of the DENR and pays

our iPhone 7 launch in November to enable our

nominal filing fees required for the submission

recontracting iPhone 7 customers to participate in

of applications for Environmental Clearance

this worthwhile advocacy as we collaborated with

Certificates (ECC) or Certificates of Non-Coverage

Hineleban Foundation to drive the reforestation

(CNC) for all cell sites and other facilities, as

of 4,396 hectares across six mountain ranges at

well as miscellaneous expenses incurred in the

the heart of Mindanao, and jointly entered into

preparation of applications and the related

a memorandum of agreement for a five-year

environmental impact studies.

rainforestation program composed of three key components: reforestation, food security, and

On the operations front, we continued to push our

sustainable livelihood development. Aside from

paperless billing initiative, with electronic billing

financial support, we also provided infrastructure

statements sent to Globe postpaid customers to

capability to enable the public to extend their

eliminate further environmental stress and billing

support to the reforestation efforts of Hineleban

delays. In 2016, we introduced Bill via Text through

Foundation by texting TREE to 2158-8733, an SMS-

GlobeMYBILL, where customers received a text

based donation platform powered by Globe.

from Globe with a link to access their latest billing statements online. On top of Globe myAccount

Our efforts in energy and waste management across

and email, we continuously innovate and introduce

all Globe sites are reflected in our compliance

more channels on how to view customers’ billing

records and certifications:

statements with more ease and flexibility.

•

Fully compliant with the Department of Environment and Natural Resources (DENR), Department of Labor and Employment (DOLE), and Department of Health (DOH) Administrative

2016 ANNUAL REPORT

71

We also set up e-waste recycling bins called Project

pilot year, Globe identified and tracked 84 sites with

1Phone (P1P) stations at Globe stores to entice

PUE greater than 1.4. We implemented both quick

our customers to return electronic products and

environmental fixes and long-term solutions, such

accessories that have reached end-of-life to further

as installing new free cooling systems and replacing

promote environmental awareness and protection.

automatic transmission systems. In addition, 750

We still work with Total Environment Solutions Asset

out of the targeted 797 Globe sites successfully

Material Management (TES-AMM), through its local

adopted “green” solutions. Despite upgrades to sites

arm TES-AMM Philippines, on recovering precious

and additional network capabilities, average PUE

metals and plastics for remanufacture from the

readings dropped from 2.23 to 1.56. We will continue

disposed gadgets. Aside from responsibly collecting

PUE roll-out to more than 1000 additional sites

and recycling our operations’ electronic wastes,

nationwide in the coming years so we can monitor

we continued to expand the scope of this program

the efficiency of our site.

by initiating stronger partnerships with Huawei Technologies Philippines, BPI, Accenture, LeadSurf

As critical partners in our mission, Globe employees

Data Marketing, Unionbank, Oxfam, among others;

help magnify and multiply our environmental efforts.

and exceeding our target of collecting and recycling

Employees are treated to free rides to work through

120,000 kg of e-waste this year.

Globe Shuttle in support of carpooling. We also have bike facilities in numerous Globe locations and offer

Energy management and the constant pursuit of energy

various telecommuting solutions, including online

efficiency are another vital part of our environmental

messaging apps like Google Hangouts and Skype,

policy, a serious step toward achieving the UN’s

Cisco IP conference phone calls, and large-screen

Sustainable Development Goal of affordable and

MondoPad sessions to minimize our employees’

clean energy for all.

carbon footprint when they travel to work.

As we continuously upgrade our sites to cater to

Through constant collaboration with our various

the growing demand of our customers, we also

stakeholders, Globe is able to help make the

look for ways to efficiently use energy so we won’t

Philippines a more environmentally responsible

exhaust our natural resources. We have adopted

nation that will work hard to mitigate climate

the power-usage effectiveness (PUE) calculator, a

impacts for the greater good.

widely accepted benchmarking standards proposed by the Green Grid Association, to determine how energy efficient our infrastructures and facilities are, and to monitor the impact of our efficiency efforts.

According to Green Grid, infrastructure with more than 2.5 level of PUE is inefficient. In this regard, as a

72

GLOBE TELECOM

ENERGY

EFFLUENTS AND WASTE

GRI 302-1; GRI 302-2

GRI 306-2

2015

2016

8,451,856.46

8,249,735.26

10,729

12,149.26

Gasoline

2016

Solid Wastes disposed and weight by type (in tonnes)

Fuel consumption from generators (in liters) Diesel

2015

Recyclables

24.2

24.4

Residuals

172

178.9

196.2

203.3

Total Diesel

1,568,337.63

1,806,318.21

Gasoline

2,821,659.26

3,604,151.76

EMISSIONS

Hazardous wastes disposed and weight by type (in kg) Used lead acid battery

GRI 305-1, 305-2, 305-3, 305-5

Grease Waste Electronic Waste

58,926.0

231,336.0

8,848.5

5,115.0

124,572.2

143,460.8

844

5,594

5,018

2,714.0

Used oil disposed (in liters) Used oil disposed and treated -from total fuel consumed (transport and gensets)

Hazardous waste disposed (in pcs)

-from purchased electricity

Busted Flourescent Lamps -from business travel via air 255,373.2

2016 ANNUAL REPORT

73

CUSTOMER HEALTH AND SAFETY

measurements of our sites and public hearings to

GRI 416-1, 418-1

Health Organization (WHO). Despite the radiation-

provide awareness based on studies from the World safety certificates from the DOH and assurances

Product responsibility plays a key role in our

from the WHO, several villages have lobbied for

advocacy of creating a Globe of Good. Just as we

the removal of cell sites in their areas because of

have sought for greater cooperation with national

health risk concerns. This resulted in poor mobile

agencies and local government units (LGUs) to allow

services to the detriment of other customers within

faster processing of permits to facilitate building

the five-kilometer radius area. Such villages include

of cell sites, we also cooperate with homeowners’

Sitio Calvary Hills in Barangay Apas, Cebu City, Green

associations (HOAs) to expedite the construction

Meadows Subdivision in Quezon City; and Upper

of cell sites to improve internet services. Globe cell

Market Subdivision, Baguio City.

sites have been issued radiation-safety certificates by the DOH, proof that radio frequency signals

In order to create a wonderful world for our

coming from such facilities do not pose any adverse

customers, partners, and the community, we

health impact. The radiation-safety certificates

prioritize protecting our customers’ data and regard

issued by the DOH are based on the guidelines of the

privacy with utmost importance. We have set and

International Commission on Non-Ionizing Radiation

observe clear-cut measures on:

Protection (ICNIRP) and the Institute of Electrical and Electronics Engineers (IEEE) on maximum

•

Judicious use and collection of customer data,

human exposures to radio frequency fields. Globe

whether the information is personal or non-

also has 10 certified radio-frequency radiation safety

personal

officers, who conduct radio frequency radiation

•

Limiting access to or processing of private data to authorized personnel and with strict confidentiality

74

GLOBE TELECOM

•

Abide by Groupe Speciale Mobile (GSM)

Given the rapid growth in connectivity that has

Association’s high-level privacy principles based

become increasingly accessible to minors, it has

on internationally recognized and accepted

become imperative for us to also build awareness

principles on privacy and data protection

and strive to make the internet safe for children. The protection of children against exploitation online is

As part of our mission to promote the intelligent

the goal behind the Memorandum of Understanding

and judicious use of the internet, we also educate

that Globe signed with UNICEF Philippines and the

the youth to better understand the impact of their

Ateneo Human Rights Center (AHRC).

online behavior so they can be responsible digital citizens. This cyber wellness advocacy takes the form

Through the MoU, Globe hopes to determine how

of the award-winning Digital Thumbprint Program

child rights protection can be integrated into our

(DTP), held in partnership with Optus and Singapore

business principles. This will not only ensure our

Telecommunications Ltd. (Singtel), which targeted

compliance with international standards on online

grades 7-12 students in public and private high

child protection, but our employees will also be

schools nationwide.

informed properly about related laws.

An assessment by global consulting firm Karrikins

Intensifying our customer protection efforts, we are

Group of Australia, the country where the program

now entering the second phase of our anti-spam/

started and first succeeded, showed that DTP had a

scam campaign that utilizes a fully automated

very high impact among over 2,200 students of two

anti-spamming tool for blocking messages sent by

pilot schools – Dasmariñas East National High School

other networks. During the first phase rolled out in

in Dasmariñas, Cavite, and Sico 1.0 National High

February 2016, we were able to rid our own network

School in San Juan, Batangas – particularly on the

of 165 million spam/scam messages.

topic of privacy and security settings on social media platforms. In 2016, we cascaded DTP to 64 public and

We continue to work closely with police authorities

private schools, empowering 24 Globe employees

in the implementation of our anti-fraud campaign

and 123 GFS lead teachers, benefitting 703 non-GFS

to prevent illegal activities that involve our products

lead teachers and 4,962 students nationwide.

and services. Dovetailing this is an online advocacy among our customers to step up their online vigilance so they can better protect themselves

Digital Thumbprint Program

4,962 826 64

against becoming victims of online hacks, identify theft, and other cybercrimes. Our #ProTECH101 campaign is aimed at combatting online security

Students

threats, particularly those that involve issues on weak account passwords, the dangers of the auto-fill feature, online sharing of information, and awareness

Teachers

on new software, among others.

Public and Private Schools trained

2016 ANNUAL REPORT

75

EMPLOYEE WELFARE

EMPLOYEE WELFARE, HEALTH AND SAFETY, HUMAN RIGHTS, LEARNING AND DEVELOPMENT

GRI 102-7, 102-8, 102-41

GRI 102-7, 102-8, 102-12, 102-43, 103-1, 103-2, 103-3

People Make the Difference Globe believes that empowered employees deliver better and more innovative Globe products and services, that in turn, will make customers feel special and valued. Happy customers, in turn, develop brand affinity and loyalty that redound to higher shareholder value, making shareholders feel confident and rewarded. This is rooted in our philosophy of “Circle of Happiness.”

Hence, we put a premium on workplace diversity, just compensation and benefits, engagement, safety and wellbeing, human rights, and continued learning of every employee — our Ka-Globe — and strive to create a wonderful work environment for everyone.

By promoting full and productive employment and decent work for all women and men and espousing a safe and secure working environment for all workers, we respond to the UN Sustainable Development Goal of promoting sustained, inclusive, and sustainable economic growth. Incorporated in this mission are factors that spur the desired growth, from labor productivity and eliminating hazardous work, to enhancing trade assistance and access to financial services.

76

GLOBE TELECOM

EMPLOYMENT

2015

GRI 401-1, 401-2, 405-1

New Hires

2016

Turnover

2016

2016

HEALTH AND SAFETY Occupational Health and Safety GRI 403-1

Loss Days

2016 ANNUAL REPORT

77

Collective Bargaining Agreement

Talent and development

GRI 102-41

GRI 404-2

In conformance with the Department of Labor

In today’s knowledge-based economy, human capital

and Employment’s (DOLE) Collective Bargaining

development as a valuable organizational resource

Agreement (CBA), Globe Telecom Employees Union-

has become central to business strategy. With the

Federation of Free Workers (GTEU-FFW) remains

rising trend towards teamwork and empowerment

active to pledge the right of every Ka-Globe to form a

to hurdle the pace of technological advancement,

collective bargaining unit. Employees may participate

organizational learning and the agility to learn

in the CBA and, through GTEU-FFW, every member is

faster than the competition is seen as the route to

informed and made aware of the mandates.

competitive advantage and market leadership.

Globe University is the venue for competency

The company has a longstanding, healthy, and

building requirements of the company, enabling the

constructive relationship with GTEU-FFW,

Next Globe and offer innovative learning solutions

characterized by industrial peace and anchored on a

beyond Globe. Through an emphasis on creating

mutual agreement to focus on shared goals such as

and facilitating a corporate learning culture and

attaining higher levels of productivity and consistent

developing the capability of Globe and its employees,

quality of service to customers across different

it seeks to amplify organizational know-how to

segments.

deliver the industry’s best-trained workforce as a source of competitive advantage.

The strong partnership and mutual understanding between our company and the union has been

Globe University is home to five Academies:

continuously demonstrated throughout the years

Technology and Innovation (from Telco 101 to

and amid many changes and transformations. In

product management), Sales and Marketing (from

fact, Globe and GTEU-FFW renewed a five-year

consultative selling, account management to being a

collective bargaining agreement for year 2016-2020,

certified digital marketer), Professional Development

a testament to a stable and peaceful relationship.

(from Lean Six Sigma programs, presentation skills,

EMPLOYEE WELFARE GRI 405-1

Diversity and Equal Opportunity

project management to business intelligence and analytics), Leadership (from evolving leaders to management development programs partnered with AIM and Ateneo School of Business) and Culture (from onboarding to service-oriented programs).

Partnerships with the different training groups as well as individual advocates of learning are nurtured through The Learning Circle.

With the need to develop key talent imperatives for the organization, Globe University is a visionary step in the right direction to drive a step change in workforce capabilities and performance.

78

GLOBE TELECOM

Globe also developed a Learning Management

we invite graduating students from universities

System to track the progress of an employee’s

nationwide and give them the opportunity to bring

individual development plan, as well as continue

out the most innovative ideas that will change

to offer learning-on-the-go and books-on-the-go

the game in and beyond the telecommunications

so employees will be able to learn at their most

industry. The top 30 qualifiers will advance and

convenient time.

learn more about leadership, innovation, and the digital lifestyle in a fun yet challenging three-day

We have also expanded training and development

business case workshop, who will be mentored

to our partners. 120 retail managers across our

by leaders from Globe. Winners will take home

Premium Dealer-owned stores developed action

gadgets and cash prizes, plus an all-expense-paid

learning projects for their respective branches.

trip to Singapore. They will also get a chance to be

Not only do we nurture our employees and partners,

the next management trainees in the Management

we also look into the future by getting newly

Development Program of Globe. In 2016, we hired 12

graduate students and encourage them to join

management trainees who competed in Globe Game

Globe. Through Globe Game Changer, one of the

Changer in 2015.

country’s premiere digital innovation competition,

2016 ANNUAL REPORT

79

LEARNING AND DEVELOPMENT

partners to adopt these principles;

GRI 404-1

•

Training and Education

Report our occupational safety and health performance to our stakeholders; and

•

Conduct a regular review of our management system to ensure that the commitments of this policy are being delivered, and strive for

Ratio of training hours

22 hours per headcount

24.61 hours per headcount

Executives and Heads

12 hours per headcount

19.45 hours per headcount (62% up vs 2015)

Managers and Senior Specialist

25 hours per headcount

29.76 hours per headcount (18% up vs 2015)

Specialist and CBUs

18 hours per headcount

17.50 hours per headcount (3% down vs 2015)

continual improvement.

Training Courses GRI 403-4

Defensive Driving Industrial Hygiene Industrial Climbing, Hauling, and Rope Access Industrial First-Aid and Basic Life Support

Occupational Health and Safety

Water Safety and Rescue

GRI 403-1, 403-2, 403-4

Collapsed Structure Management We value our workplace’s health and safety. We commit to zero fatality among our employees and strive for best practices by being Occupational Health and Safety (OHSAS 18001:2007) certified in

Articulated Vehicle: Driving Course Advanced Industrial Fire Fighting

select sites.

To provide a healthy, happy, and safe workplace, we commit to: •

Continuously assess all health and safety hazards in the workplace and provide programs to eliminate these hazards;

•

Comply with occupational safety and health standards applicable to our business;

•

Train and motivate our employees to work in a safe manner and encourage our business

80

GLOBE TELECOM

Human Rights Globe complies with RA 7610 or the Special

fear of discrimination or violation towards any of

Protection of Children Against Child Abuse,

our employees. Our company does not condone the

Exploitation and Discrimination Act, and has full

violation of the rights of indigenous people, nor do

observance of the principles of the Human Rights Act

we promote any operational activities that would

and Child Labor Law. Benchmarking such regulations

pose hazardous risks or damages to children or

generate a happy workplace without presenting any

young employees.

2016 ANNUAL REPORT

81

Heart for Volunteerism We recognize our employees and partners’ passion for service and desire to be agents of societal change.

Every Ka-Globe is provided with 2 days of Volunteer Time-Off annually to pursue their advocacy. Globe provides activity-based and skill-based volunteering to support the work of a partner group or community, organizing everyone who wants to join various advocacies and providing pro-bono services, skills transfer, or capacity building. We also offer volunteaming, where employees can freely choose which advocacy they want to support.

Since 2011, we have been bringing in volunteers from Singtel and Optus through the Singtel Group Corporate Social Responsibility’s Overseas

an immersive experience inside their classroom,

Volunteering Program to help rebuild communities

additional appliances — electric fans, computers, and

devastated by natural disasters in partnership with

smart TVs — through the funds they raised on their

Gawad Kalinga (GK). In 2016, we extended our

own.

volunteering activities to our contact center agents so they can also co-create a Globe of Good.

In addition to Brigada Eskwela, we also partnered with DepEd on various ICT initiatives for education

In time for the opening of school year 2016-2017, a

such as the Global Filipino Schools and Global

total of 1,187 employee-volunteers participated in

Filipino Teachers programs, and Text2Teach. We have

the annual classroom painting and repair activity

also built and donated classrooms in Aklan to DepEd

of the Department of Education (DepEd) dubbed

as part of the Project 1 Phone e-waste recycling

Brigada Eskwela. Along with partner organizations

advocacy and in support of the rehabilitation and

such as Habitat for Humanity and the Ayala

recovery of the province after the onslaught of Super

Foundation, our volunteers lent their time and

Typhoon Yolanda (Haiyan).

energy to help in the restoration and beautification of 81 public elementary and high schools, in turn

This year’s Gawad Kalinga (GK) five-day Bayani

benefitting over 96,000 learners.

Challenge was attended by over 45 volunteers from Globe, Singtel, Optus and Optus’ local contact center

Not content with simply making the classrooms

partners Convergence and [24]7. The challenge was

presentable and usable, Globe volunteers also

composed of a coastal cleanup in Freedom Island

provided snacks and school supplies for the

wildlife sanctuary inside the Las Pinas Paranaque

children, virtual reality devices for students to have

Critical Habitat and Ecotourism Area (LPPCHEA),

82

GLOBE TELECOM

Kalinga Escopa, created a community garden for a group of distressed mothers and abandoned toddlers in the Heart of Mary Villa of the Good Shepherd Convent to help sustain food and vegetable supplies at the center, planted trees at Buhay Punlaan, Caliraya-Lumot Watershed Area in Laguna, re-packed relief goods for victims of Typhoon Lawin, shared joy of reading on how to use technology in Andres Bonifacio Integrated School (ABIS), and distributed Wonderboxes in time for Christmas to the Charity Patients of the Philippine General Hospital together with Amdocs’ employee volunteers and contact center agents of Tech Mahindra, Teleperformance, and Convergys.

In addition, our program served as a venue to train house build at GK Manggahan-Kawayanan,

volunteers who share the same passion and cause

Marcelo Green Village, Paranaque, participation in

with other partners. Globe, in partnership with My

Paraisong Pambata workshops doing arts and crafts,

Brave Little Warriors, held workshops and trainings

storytelling, sports, and other games for the youth

to our volunteers who believe that play is an

age ranging from 3-21 years old.

important part of childhood and an essential tool for therapy and healing for young patients with medical

Meanwhile, Globe volunteers played big sisters and

conditions.

brothers and bonded with 580 special children over play, arts, crafts, and dance at “The Kids Festival: La Viva Niño - A Carnival of Wonders” held at the DLSU campus. Globe volunteers also took part in #METamorphosis, a cleanup and restoration campaign to regain the former glory of the longabandoned Metropolitan Theater (MET) in Manila.

The volunteers cleared the theater’s arcades, trimmed hedges, and cleared the area of scattered debris to give the MET a new lease in life.

Globe also participated in the Servathon 2016 of Hands On Manila Foundation, Inc. where volunteers assembled solar bottle bulbs using soda bottles that will provide daytime light to urban indigent communities in Manila. We also built houses for the community of People with Disabilities in Gawad

2016 ANNUAL REPORT

83

CARE FOR OUR PEOPLE Employee Welfare

Sustainable Engagement Score

GRI 102-43, 102-48

5ppts (Global High Performing Norm) 6ppts (Global Telecommunication Norm)

91%

3ppts (Philippine National Norm)

net of retention score

1ppt (PTCN) 4ppts (Ayala Group Norm)

*In 2016, the formula for computing the SEI was changed, by the removal of retention in the SEI formula.

As a result, the 2015 Globe Annualand Sustainability Report should reflect 92% SEI score (net of retention) instead of 89%.

This change was brought about by the recent study of WillisTowers Watson that the drivers influencing employee retention is different from the drivers of employee engagement.

POSITIVE SOCIETAL IMPACT Community Development and Public Service

Employee Volunteerism

GRI 413-1

Volunteer hours

51,552 (3% higher vs target)

Unique Volunteers

3,222 23 69

Impact

45% of total employee base

international volunteers vendor partners

105 6

LGUs served

54 4

schools serviced

NGOs benefitted National Government agencies engaged

109, 211

individual benefeciaries

P2,011,202.77

84

GLOBE TELECOM

donations raised

BUILDING A STRONGER NATION

Education

GRI 102-12, 103-1,103-2, 103-3, 304-1

Through our five-year expanded Global Filipino School (GFS) program, Globe intends to transform

Community Development and Public Service

select public schools into centers of excellence in ICT and innovative teaching methods. This program is expected to benefit all 218 school divisions of the DepEd nationwide by 2020.

As the leader in mobile technology in the Philippines, it is only fitting for Globe to take care of the local

GFS started four years ago in Bilar National High

communities impacted by our business operations

School and is now operating in 80 public schools

and put development programs in place to help

around the country, cumulatively influencing 5,788

improve the quality of life and provide livelihood

teachers and benefitting 151,526 students. Public

opportunities.

Elementary and High School Filipino students are transformed into 21st-century learners through

In accordance to ISO 26000, we constantly embed

unparalleled online connectivity and homeroom

shared value in our business model to create a Globe

teachers’ access to limitless teaching and learning

of Good. We respond to the following Sustainable

engagements available on the internet.

Development Goals of the UN through a wealth of The schools also enjoyed quality education content

overarching principles and practices:

from Mind Museum App and received a Globe Digital • •

•

•

Good Health and Well Being – Promoting sound

Laboratory package containing netbooks/tablets,

mental health and well-being

mobile projectors, printers, and sound systems, while

Quality Education – Helping ensure all youth and

over a thousand educational e-books apt for K-12

a substantial proportion of adults, both men and

learning are made available to more than 15 million

women, have achieved digital literary through

public elementary and high school students and

ICT training by 2030

some 500,000 teachers through GFSLibrary.com.

Decent Work and Economic Growth – Helping

Together with thousands of our postpaid customers,

achieve higher levels of economic productivity

we realized the creation of GFS in General Santos

through diversification, technological upgrading

City, allowing teachers and students to access 21st-

and innovation, including a thorough focus on

century learning within and beyond the classroom.

high-value added and labor-intensive sectors

For every approved iPhone 7 renewed contract,

Peace, Justice and Strong Institutions –

Globe made a donation to selected partner causes,

Contributing to national capacity to prevent

which included the GFS program. For this activity,

violence and crime, starting with our own workplaces and organizational jurisdiction •

Sustainable Cities and Communities – Making human settlements inclusive, safe, and resilient

2016 ANNUAL REPORT

85

Sustainable Livelihood

Global Filipino Schools Program Public schools Teachers Students

80 5,788 151,526

Through a partnership with San Francisco-based nonprofit organization Kiva, Globe provided crowdfunded loans to deserving micro-enterprises in the areas of agriculture, food, retail, and services in the Philippines. Leveraging on our SMS capabilities, GCash mobile money service and Globe Rewards, we made a difference in the lives of millions of local micro-entrepreneurs who are most in need of financial assistance. Kiva is also one of the beneficiaries of the Globe of Good bundle offered during the iPhone 7 launch. As a result, we were able

all proceeds went to General Santos City SPED

to generate P8,161,550 in revenues for Kiva’s micro-

Integrated School (GSCSIS) where one-fourth of

enterprises.

the 4,000 student population comprises of kids with special needs. The transformation of GSCSIS into

We also have ongoing ecotourism efforts that cater

a GFS not only benefits regular students but also

to communities involved in fisheries and aquatic

the special children who require online therapy and

resources. We have partnered with USAID to stage

learning engagements using ICT.

the first Fishackathon in the Philippines that aims to develop usable technology solutions to address the

DepEd also tapped Globe to be its official partner

glaring worldwide problem of overfishing.

for the Adopt-a-School (AAS) Program, which calls for private entities to assist public schools

Fishackathon 2016 was not our only initiative in

in infrastructure, health and nutrition, teaching

line with our sustainability advocacy to create a

skills and development, compute and science lab

#WonderfulPH through positive impact with the

equipment, and learning support.

use of modern technology. Similar programs include partnerships with: •

PUSOD, on the protection and enhancement of Taal Lake in the Batangas ecosystem;

•

Save Philippine Seas, on the protection of thresher sharks through the engagement and education of community stakeholders in Malapascua, Cebu;

86

GLOBE TELECOM

•

•

Sangkalikasan Producers Cooperative, on the

the production and sourcing of eco-friendly natural

establishment of an environment hotline center

dyes and fibers and work with artisans in indigenous

in Boracay, Malay, Aklan; and

upland and rural communities, such as members

Casa San Miguel, on livelihood opportunities for

of the Mangyan Alangan, Mangyan Hanunoo and

those living along the coastal barangays of San

Mangyan Iraya from the island of Mindoro.

Antonio, Zambales.

As a pilot year, we’ve partnered with the Department Our key ecotourism campaigns benefit sites such

of Social Welfare and Development (DSWD) to

as Taal Lake and the Cordilleras for low-impact

provide livelihood opportunities and create value

alternatives to commercial tourism and sustained

to Pantawid Pamilyang Pilipino Program (4Ps)

conservation of their respective ecosystems.

beneficiaries, out-of-school youths, and technical

Sustainable livelihood also rests on preserving

vocational graduates. At the end of the year,

the very fabric of our culture. We actively support

we oriented a total of 1,559 beneficiaries to be

collaborative programs such as the Indigo

Broadband Sales Agents from Regions 1, 7, 8, 9, 11

Project, which promotes the development and

and the National Capital Region (NCR).

implementation of ecological and social standards in the hand-woven textiles productions. We champion

2016 ANNUAL REPORT

87

We implement the same in certain localities. We have collaborated with the Davao City government to help improve its peace and order situation through the 0917-DUTERTE hotline, which receives calls and texts relating to the security concerns in the city.

This accessible and easy-to-remember number for reporting security leads and information comes on the heels of the Davao bombing incident that left 14 dead and 70 injured in a night market in Davao City in September 2016.

Public Service We are also a proud partner of HOPELINE, a free We harness mobile and ICT solutions for the welfare

24/7 suicide hotline founded by the Natasha

of the public at large, from emergency response

Goulbourn Foundation (NGF) to echo mental health

to disaster preparedness and management. Globe

awareness and the grim reality of lives being lost to

recognizes that communication is a critical tool

suicide every 40 seconds. Responders for the hotline

for capacity building and an effective emergency

have been trained by psychologists and psychiatrists

response mechanism that is why we have been at the

to provide aid to callers. Globe and TM customers

frontlines of supporting 911 as the new nationwide

can call this hotline toll-free. In addition, we helped

emergency hotline number.

launch “Hope in 40 Seconds�, a 40-seconder animated digital video competition aiming to bring

We have also expedited the migration of our system

the sensitive issue of suicide (as well as cyber

to immediately enable transmission of SMS or text

bullying and its effects on mental health) to the fore.

messages through 8888, and have put in place regular voice charges plus an added P5 per call (when using the 911 hotline) as a way to discourage prank calls and compliance with the law. In addition, we provide inbound and outbound SMS accessibility for 2286 (BATO), an SMS hotline for the public to directly report incidents to the Philippine National Police.

88

GLOBE TELECOM

Globe implemented its grassroots development program called TM Sports Para Sa Bayan in 7 key areas. The program utilizes sports to instill the importance of having good values, promote academic excellence and encourage a healthy lifestyle among the youth. In partnership with Astro Malaysia, Green Archers United, and Method Basketball Academy, Globe was able to train 718 participants coming from 53 cities and municipalities and 65 various sports organizations.12 kids were sent to Kuala Lumpur, Malaysia and 6 to Barcelona, Spain to undergo football training conducted by FCB Escola.

Disaster Risk Resilience and Management Disaster risk resilience and management are a

planning and implementation in our workplaces.

cornerstone of our public service roadmap. By 2020,

The Metro Manila Shakedown 2016 is a step

we seek to substantially increase the number of cities

towards cultivating a culture of preparedness for

and human settlements that adopt and implement

metro residents for a 7.2-magnitude earthquake.

integrated policies toward climate change mitigation

•

and resilience to disasters.

Sponsored the development of hazard maps for 54 out of 81 Philippine provinces, which will be used by Phivolcs to assist the provinces in their

Towards this end, we have actively pursued the following programs and partnerships:

disaster management plans.

•

Reinforced Ayala ASSIST, an app that enables our Ka-Globe and other Ayala employees to easily

•

Partnered with the Metropolitan Manila

seek assistance during disasters. This makes it

Development Authority (MMDA) and the

easier to alert employees in times of emergency,

Philippine Disaster Recovery Foundation (PDRF),

for people managers to account for their staff,

the Philippines’ primary private sector vehicle

and to request for help.

for disaster management, to create a network

•

Joined six (6) telcos in 6 countries in accelerating

of support during disasters. We also internally

development to enhance the flow of crisis-

participate in the MMDA Shakedrill and Halalan

related information and equip the country’s

Task Force for prompt, proactive, and appropriate

disaster preparedness program to help minimize vulnerabilities when a calamity strikes. This is in line with the company’s commitment as a signatory to GSMA’s Humanitarian Connectivity Charter: http://www.gsma. com/mobilefordevelopment/wp-content/ uploads/2016/12/Charter_Principles_document. pdf

2016 ANNUAL REPORT

89

90

GLOBE TELECOM

•

As prescribed by law, we take the lead in

in the event of a major incident or disaster.

transmitting text messages to warn our

Our business continuity protocols include activating

customers of potential dangers. In 2016, we sent

network redundancies that reduce the impact of

out 35 SMS blasts to various areas, from August

service disruption to our customers. For example, we

to December. This included those affected by

have installed generator sets for cell site towers to

Typhoon Lawin, which ravaged Northern Luzon

allow customers to use basic telecommunications

in October 2016, where we sent out 11 Lawin-

services such as calls and text messaging even

related SMS alerts to our customers in Cagayan,

during calamities and disasters. We are also able to

Apayao, Abra, Ilocos Norte, Mt. Province,

deploy Globe technical teams to restore our network

Kalinga, Ifugao, and Calayan Group of Islands

services as soon as weather permits. We likewise

at no cost to them. In December 2016, Globe

coordinate with our on-ground sales team, local

also started transmitting SMS alerts to warn

government units and various government agencies

customers in Catanduanes, Albay, Sorsogon, and

related to the deployment of relief operations, as

Northern Samar against dangers brought by

well as Libreng Tawag and charging stations, in areas

Typhoon Nina. The initiative is in coordination

affected by the typhoons.

with the National Disaster Risk Reduction and Management Council (NDRRMC). We continue

In addition, we have also taken steps to ensure

to support government initiatives in our network

network readiness during earthquakes. These include

to disseminate information for public safety and

enhancing network capacity in our core links that

security.

connect Metro Manila, and Northern and Southern Luzon to minimize service disruption; and setting

After becoming the first telecommunications

up high-capacity microwave links in one of our

company in the country to be re-certified in Business

low-risk areas. These contingencies will not only

Continuity Management System (ISO 22301) on

ease congestion, but also restore Globe call and

an enterprise-wide scale in 2016, we stepped up on

text services, and enable government emergency

the implementation of best practices on business

responders to conduct rescue operations.

resiliency to assure our customers and stakeholders that we are equipped to handle business disruptions

2016 ANNUAL REPORT

91

GRI CONTENT INDEX GRI 102-55

PROFILE

Reporting Practice

Strategy

Ethics and Integrity

Governance

92

DISCLOSURE NUMBER

DISCLOSURE TITLE

SECTION

PAGE

102-1

Name of the organization

About Us

102-2

Activities, brands, products, and services

Forging Stronger Bonds Fuelling Growth of Enterprises Giving Delightful Surprises Making Life Easier Offering the Best in Entertaiment

102-3

Location of headquarters

About Us

4

102-4

Location of operations

About Us

4

102-5

Ownership and legal form

Governance

102-6

Markets served

About Us

102-7

Scale of the organization

People Make the Difference

76

102-8

Information on employees and other workers

People Make the Difference

76

102-9

Supply chain

At a Glance Creating a Globe of Good Governance

8 68 117

102-10

Significant changes to the organization and its supply chain

Governance

117

102-11

Precautionary Principle or Approach

Risk Management

142

102-12

External initiatives

Greening Globe People Make the Difference Building a Stronger Nation

102-13

Membership of associations

Memberships

102-14

Statement from senior decision-maker

Message from the Chairman Message from the President and CEO

102-15

Key impacts, risks, and opportunities

Risk Management

102-16

Values, priciples, standards, and norms of behavior

The Globe Purpose

102-17

Mechanism for advice and concerns about ethics

Governance

99 116 123

102-18

Governance structure

Governance

100 123 142

102-19

Delegating authority

Governance

100 142

102-20

Executive-level responsibility for economic, environmental, and social topics

Governance

100 142

102-21

Consulting stakeholders on economic, environmental, and social topics

Governance

100 123

102-22

Composition of the highest governance body and its committees

Governance

100 142

102-23

Chair of the highest governance body

Governance

100 142

102-24

Nominating and selecting the highest governance body

Governance

100 142

102-25

Conflicts of interest

Governance

94

GLOBE TELECOM

4 24 28 44 50 58

98 125 4

70 76 85 6 12 16 116 142 4

PROFILE

Governance

Stakeholder Engagement

Reporting Practice

DISCLOSURE NUMBER

DISCLOSURE TITLE

SECTION

PAGE

102-26

Role of highest governance body in setting purpose, values, and strategy

Governance

100 125

102-27

Collective knowledge of highest governance body

Governance

100 125

102-28

Evaluating the highest governance body’d, performance

Governance

100

102-29

Identifying and managing economic, environmental, and social impacts

Risk Management

140 142

102-30

Effectiveness of risk management purposes

Risk Management

140 142

102-31

Review of economic, environmental, Risk Management and social topics

140 142

102-32

Highest governance body’s role in sustainability reporting

Governance

108

102-33

Communicating critical concerns

Governance

108

102-34

Nature and total number of critical concerns

Governance

108

102-35

Remuneration policies

Governance

100

102-36

Process for determining remuneration

Governance

100

102-37

Stakeholders involvement in remuneration

Governance

100

102-38

Annual total compensation ratio

Governance

100

102-39

Percentage increase in annual total compensation ratio

Governance

100

102-40

List of stakeholder groups

Creating a Globe of Good: Discussion on Management Approach

68

102-41

Collective bargaining agreements

People Make the Difference: Collective Bargaining Agreement

66

102-42

Identifying and selecting stakeholders

Creating a Globe of Good: Discussion on Management Approach

68

102-43

Approach to stakeholder engagement

Creating a Globe of Good: Discussion on Management Approach People Make the Difference

68 76

102-44

Key topics and concerns raised

Creating a Globe of Good: Discussion on Management Approach

68

102-45

Entities included in the consolidated financial statements

Conglomerate Map

102-46

Defining report content and topic boundaries

Reporting Parameter Creating a Globe of Good: Discussion on Management Approach

68

102-47

List of material topics

Creating a Globe of Good: Discussion on Management Approach

68

102-48

Restatements of Information

People Make the Difference: Change in Engagement Score Disclosure in 2015

84

2016 ANNUAL REPORT

6

93

PROFILE

Reporting Practice

Management Approach

DISCLOSURE NUMBER

DISCLOSURE TITLE

SECTION

PAGE

102-49

Changes in reporting

None

0

102-50

Reporting period

Reporting Parameter

6

102-51

Date of most recent report

Reporting Parameter

6

102-52

Reporting cycle

Reporting Parameter

6

102-53

Contact point for questions regarding the report

Location - Inside Back Cover

0

102-54

Claims of reporting in accordance with the GRI Standards

Reporting Parameter

6

102-55

GRI context index

GRI content index

102-56

External assurance

Reporting Parameter

103-1

Explanation of the Material topic and its Boundary

Greening Globe People Make the Difference Building a Digital Nation Giving Delightful Surprises

40 70 76

103-2

The management approach and its components

Greening Globe People Make the Difference Building a Digital Nation Giving Delightful Surprises

40 70 76

103-3

Evaluation of the management approach

Greening Globe People Make the Difference Building a Digital Nation Giving Delightful Surprises

40 70 76

92 6

SPECIFIC DISCLOSURE PROFILE

DISCLOSURE NUMBER

DISCLOSURE TITLE

SECTION

PAGE

ECONOMIC

Economic Performance

201-1

Direct Economic value generated and distributed

At a Glance

Indirect Economic Impacts

203-1

Infrastructure investments and services supported

At a Glance Message of the President and CEO Building a Digital Nation

Procurement Practices

204-1

Proportion of spending on local suppliers

At a Glance

Anti-corruption

205-2

Communication and training about anti-corruption policies and procedures

Governance: Ethics and Integrity

8 8 16 40 8

116

ENVIRONMENT 302-1

Energy consumption within the organization

Greening Globe

73

302-2

Energy consumption outside the organization

Greening Globe

73

304-1

Habitats protected or restored

Greening Globe

70 86

305-1

Direct (Scope 1) GHG emissions

Greening Globe

73

305-2

Energy indirect (Scope 2) GHG emissions

Greening Globe

73

Energy

Biodiversity

Emissions

94

GLOBE TELECOM

PROFILE

Emissions Effluents and Waste

DISCLOSURE NUMBER

DISCLOSURE TITLE

SECTION

PAGE

305-3

Other indirect (Scope 3) GHG emissions

Greening Globe

73

305-5

Reduction of GHG emissions

Greening Globe

73

306-2

Waste by type and disposal method

Greening Globe

73

SOCIAL 401-1

New employee hires and employee turnover

People Make the Difference

77

401-2

Benefits provided to full-time employees that are not provided to temporary or part-time employees

People Make the Difference

77

403-1

Workers representation in formal joint management-worker health and safety committees

People Make the Difference

77

403-2

Types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities

People Make the Difference

77

403-4

Health and safety topics covered in formal agreements with trade unions

Occupational Health and Safety

80

404-1

Average hours of training per year per employee

Talent and Development

80

404-2

Programs for upgrading employee skills and transition assistance programs

Talent and Development

78

Diversity and Equal Opportunity

405-1

New employee hires and employee turnover

People Make the Difference

76

Local Communities

413-1

Operations with local community engagement, impact assessments, and development programs

Customer Health and Safety People Make the Difference Building a Digital Nation

74 77 38

Customer Health and Safety

416-1

Assessments of the health and safety impacts of product and service categories

418-1

Substantiate complaints concerning breaches of customer privacy and losses of customer date

Employment

Occupation Health and Safety

Training and Education

Customer Privacy

Customer Health and Safety

Customer Health and Safety

2016 ANNUAL REPORT

74

74

95

GOVERNANCE

96

GLOBE TELECOM

2016 ANNUAL REPORT

97

GOVERNANCE GRI 102-5

In 2016, Globe Telecom’s intense Corporate

Asia’s Best Companies for the year, Globe garnered

Governance (CG) campaigns and initiatives were not

“Most Committed to Corporate Governance”, “Best

without recognition. Globe was one of the Awardees

in Investor Relations” and “Best CEO: Ernest Cu”.

at the first Institutional Investors’ Governance Awards

We were also among the candidates in the Ethics

held on October 6 at the Manila Polo Club. We also

and Governance category at the ASEAN Corporate

rose to the top in Best Disclosure and Transparency

Sustainability Summit 2016 Awards.

for the Philippines and placed 4th in Best Overall Corporate Governance for the Philippines in the 2016

In addition to the CG awards and recognition, we

Asiamoney Corporate Governance Poll. The Asset

realize our strategic influence in the capital market

Corporate Awards also recognized us with a Platinum

and, thus, remain determined to further improve and

Award for Excellence in Governance, CSR, and

intensify our governance standards and practices to

Investor Relations. Among FinanceAsia’s awards for

sustain quality service and value for our subscribers

98

GLOBE TELECOM

and stakeholders. We proactively adopt policies and

Corporate Governance Scorecard (ACGS) to raise

practices that are beyond minimum requirements

CG standards and practices. We restructured our

of applicable laws and regulations, and persevere to

corporate website to enhance investor-friendliness

sustain good governance standards embedded in our

and the convenient access of information relevant

corporate culture and business conduct. We always

to shareholders and our various stakeholders. Other

strive to attain a balance between our aggressive

than business, products and services, we created

business environment and upholding a culture of

CG, IR and Sustainability pages in our website to

good governance.

cater to all our stakeholders. These pages contain disclosures and reports, corporate governance

The impact of global conditions and challenges

scorecard and report, press releases and an archive

further underscores the need to uphold Globe

thereof, as well as our corporate policies, charters

Telecom’s high standards of CG to strengthen

and manuals, vision, mission, core values, investor

our structures and processes. The thrust for a CG-

relations program, sustainability and corporate social

proactive business culture emanates from the top.

responsibility activities, among others. We ensure

As strong advocates of fairness, accountability,

that all information included in our company website

transparency and integrity in all aspects of the

are accurate, relevant and up-to-date.

business, our Board of Directors, the management, the officers, and all our employees commit to the

Our Articles of Incorporation and By-Laws maintain

principles and best practices of governance in the

the basic structure of CG while the MCG, charters,

attainment of corporate goals aligned with Globe

policies and Code of Conduct and Ethics act as

Telecom’s strategic direction.

supplements. These legal documents outline the core of our operational framework including the

Our CG practices are principally contained in our

principal duties of the members of the Board with

Articles of Incorporation and By-Laws, complemented

emphasis on the governance structure, composition,

by the Manual of Corporate Governance (MCG),

and diversity in the Board, ensuring that duties and

company policies, Committee charters, and our

responsibilities are performed in a manner that

Code of Conduct and Ethics. We are likewise in

safeguards the interests of the company and protects

full compliance with the Securities and Exchange

our stakeholders amidst an increasingly competitive

Commission’s (SEC) Code of Corporate Governance,

environment.

all listing rules of the Philippine Stock Exchange (PSE), and regulations issued by the SEC for

We revised our MCG and submitted it to the SEC

which an annual Certification of Compliance is

in May 2015 to comply with the SEC-mandated

issued and signed by our Compliance Officer and

provisions that highlight the protection of

countersigned by our President and CEO. This

stakeholders’ interests, among other CG principles.

Certification of Compliance is also posted on our

The same also reflected our strong adherence to best

company website’s CG page and included in this

CG standards and practices espoused in the ACGS.

Report (page 159). We also adopted the ASEAN

2016 ANNUAL REPORT

99

Our MCG will undergo further revisions and updates

We also continued to reach out to our internal

in 2017 to align with the provisions identified in SEC

stakeholders to promote awareness and share

Memorandum Circular No. 19, Series of 2016 or the

internal expertise through our Attorney At Iba Pa

Code of Corporate Governance for Publicly-Listed

(AttyATBP) in November. The CLSG held its second

Companies.

AttyATBP at The Globe Tower office activity area, an initiative that extends corporate and legal services

We understand that governance is beyond regulatory

out of the day-to-day contracts, court hearings and

compliance, reports, and disclosures. We believe that

reports into contributing to the practical needs of

CG’s relevance is most evident when its standards

employees. AttyATBP was a whole-day event that

and practices are embedded in business culture and

brought the services of various government agencies

that having governance integrated in our business

to all Globe employees. There were also plenary

operations is a journey that we chose to invest time

discussions and actual legal consultation open to all

and effort in. We recognize that good governance

Globe employees. Through these kinds of activities,

standards must be present and experienced outside

Globe Telecom is able to extend accountability,

and inside the company such that the principles

sustainability and care to its employees and

of fairness, transparency, integrity, sustainability

communities that surround it. We will continue to

and accountability should also be experienced

sustain these initiatives.

among employees. As such, internal campaigns to bolster awareness and appreciation for CG were

BOARD OF DIRECTORS

developed by collaborations of our Compliance and

GRI 102-18, 102-19, 102-20, 102-21, 102-22, 102-23,102-24,

Governance team, under the Corporate and Legal

102-26, 102-27, 102-28, 102-35, 102-36, 102-37, 102-38, 102-39

Services Group (CLSG), with the Internal Audit, Investor Relations and Corporate Communications

KEY ROLES AND RESPONSIBILITIES

groups in 2016. These collaborations came to fruition through several videos that highlighted the various

Our Board of Directors is our highest governance

elements of CG – stakeholder engagement, investor

body. It establishes our company’s vision, mission,

relations, transparency, sustainability, accountability

and strategic direction, as well as monitor the

and integrity, among others. These videos were

implementation of the corporate strategy and the

disseminated and shown through the monitors of

overall corporate performance of the company to

our office’s public lounges and sent to all employees

ensure transparency, accountability, integrity and

through our internal corporate communication

fairness, and to protect the long-term interests of

channels to encourage understanding and a better

our stakeholders. The Board, through its various

sense of appreciation for CG. Some of the videos are

committees, also oversees and conducts a review

also available in our company website and official

of our overall risk management systems, and our

social media channels.

material controls, covering operational, financial, and compliance areas. Finally, it approves operating expenses and capital budgets, major acquisitions and

100

GLOBE TELECOM

disposal of assets, major investments, and changes

As part of our CG best practices and in

in authority and approval limits. In 2016, we updated

implementation of our board diversity policy in the

our mission, vision, and values as well as reviewed

workplace, we have at least one female independent

our business strategies to reinforce our commitment

director in the Board. None of our independent

to our purpose as a sustainable business for our

directors serve in more than five boards of publicly

customers and stakeholders.

listed companies and have served the company in the same capacity for more than nine years1. Our

The thrust for a CG proactive business culture

executive director does not serve any other publicly-

emanates from the top. The Board of Directors,

listed company’s board.

as part of its functions and responsibilities, leads, develops and reviews Globe strategic direction

The board members are highly qualified and have

and business strategies regularly. The Committees

the ability to thoroughly examine issues and matters

created to support Board functions serve as venues

that affect the company. Prior to election, the

to discuss business strategies and Globe strategic

Nomination Committee, chaired by an independent

direction, among other business matters, in relation

director, reviews the qualification of each member.

to the specific responsibilities of each Committee.

As necessary, we may use professional search firms

Management is entrusted with implementation

or other external sources of candidates (such as

and close monitoring of Board-approved business

director databases set-up by director or shareholder

strategies, and is likewise tasked to conduct Globe

bodies) when searching for candidates to the Board

business with the highest CG standards and conduct.

of Directors. Furthermore, as stated in our Board diversity policy, no director or candidate for director

BOARD COMPOSITION

shall be discriminated upon by reason of gender, age, disability, ethnicity, nationality or political,

Eleven board members are elected and hold

religious, or cultural backgrounds. As such, we have

office for the ensuing year until the next annual

a very diverse mix of directors from different ethnic

stockholders’ meeting (ASM). The President and CEO

backgrounds and nationalities with professional

is elected as the sole executive director while the

backgrounds and experience in various industries

other members as non-executive directors who are

other than the telco industry such as accounting

not involved in the day-to-day management of business.

and audit, sales and marketing, network operations,

Among the board members are three independent

IT solutions, customer and services management,

non-executive directors. Our independent directors,

corporate governance and strategic planning,

as defined in our MCG, are independent of the company, from management and major/substantial shareholders and are free from any business or relationship that could materially interfere in their exercise of independent judgment in carrying out their responsibilities as directors.

1 SEC Memorandum Circular No. 9, Series of 2011 sets the term limit for independent directors, effective January 2, 2012. This is followed by SEC Memorandum Circular No. 19, Series of 2016. As such, all of Globe Telecom’s independent directors remain qualified to serve the company in the same capacity.

2016 ANNUAL REPORT

101

as well as educational backgrounds that include

as directors. Meanwhile, our executive director

biochemistry, business administration, marketing and

does not receive per diem remuneration in addition

finance, metallurgical engineering, and mathematical

to his remuneration as part of the Globe Senior

sciences, among others. Our directors’ profiles are

Management in his role as the President and CEO.

included in this report as well.

The following non-executive directors of the Board

BOARD REMUNERATION

received gross per diem remuneration for attending

GRI 102-35, 102-36, 102-37, 102-38, 102-39

board and committee meetings in 2016:

The Board’s remuneration is set at an optimum

DIRECTOR

level to attract and retain high caliber directors

GROSS PER DIEM REMUNERATION (IN P)

Jaime Augusto Zobel de Ayala

2,400,000.00

Mark Chong Chin Kok

2,700,000.00

Fernando Zobel de Ayala

2,600,000.00

Delfin A. Lazaro

1,800,000.00

Samba Natarajan

3,500,000.00

Jose Teodoro K. Limcaoco*

1,700,000.00

Romeo L. Bernardo

2,400,000.00

Globe Telecom’s directors receive P200,000 per

Rex Ma. A. Mendoza

2,300,000.00

diem remuneration for every board meeting and

Manuel A. Pacis

2,000,000.00

stockholders’ meeting attended. This rate was based

Saw Phaik Hwa

2,000,000.00

on a benchmark study against industry rates as well

Gerardo C. Ablaza Jr.*

who continuously and effectively deliver services.

In accordance with the company’s By-Laws, the Board shall receive, pursuant to a resolution of the stockholders, fees and other compensation for their services as directors and members of committees of the Board of Directors.

as a previous study in 2010 to standardize the pay of Board of Directors across the Ayala Companies.

Total

23,600,000.00

Mr. Ablaza was a Director until April 13, 2016, while Mr. Limcaoco was elected as Director on April 13, 2016. *

The per diem remuneration of directors remains at P100,000 for every committee meeting attended or such meetings other than those mentioned above. Our stockholders ratified this resolution at our regular ASM in April 2014. Our directors, including the independent non-executive directors, do not receive options, performance shares or bonuses other than their per diem remuneration

102

200,000.00

GLOBE TELECOM

Globe Telecom Board of Directors DIRECTOR

POSITION

NATURE OF APPOINTMENT

Jaime Augusto Zobel de Ayala

Chairman

Non-Executive

Fernando Zobel de Ayala

Co-Vice Chairman

Non-Executive

Mark Chong Chin Kok

Co-Vice Chairman

Non-Executive

Ernest L. Cu

Director, President and CEO

Executive

Delfin L. Lazaro

Director

Non-Executive

Samba Natarajan

Director

Non-Executive

Romeo L. Bernardo

Director

Non-Executive

Jose Teodoro K. Limcaoco

Director

Non-Executive

Manuel A. Pacis

Independent Director

Non-Executive

Rex Ma. A. Mendoza

Independent Director

Non-Executive

Saw Phaik Hwa

Independent Director

Non-Executive

Globe Telecom Key Officers NAME

POSITION

Ernest L. Cu*

President and CEO

Alberto M. de Larrazabal

Chief Commercial Officer (CCO)

Rosemarie Maniego-Eala

Chief Finance Officer (CFO), Treasurer and Chief Risk Officer (CRO)

Carmina J. Herbosa

Chief Audit Executive (CAE)

Gil B. Genio

Chief Technology and Information Officer (CTIO), and Chief Strategy Officer (CSO)

Maria Aurora Sy-Manalang

Chief Information Officer (CIO)

Rebecca V. Eclipse

Chief Customer Experience Officer (CCEO)

Renato M. Jiao

Chief Human Resource Officer (CHRO)

Vicente Froilan M. Castelo

General Counsel

Bernard P. Llamzon

Executive Vice President of Consumer Sales

Solomon M. Hermosura

Corporate Secretary

Marisalve Ciocson-Co

Compliance Officer, Assistant Corporate Secretary, and Vice President of Law and Compliance

Globe Telecom Consultants** NAME

POSITION

Daniel James Horan***

Senior Advisor for Consumer Business

Robert Tan

Chief Technical Advisor

Member, Board of Directors Atty. Rodolfo A. Salalima ceased to be our Chief Legal Counsel and Senior Advisor effective June 30, 2016.

Mr. Horan will cease to be our Senior Advisor for Consumer Business effective June 01, 2017.

*

**

***

2016 ANNUAL REPORT

103

BOARD MEETINGS AND ATTENDANCE

The average attendance rate of members of the Board was 96 percent, which is more than compliant

The Board receives board documents containing

with the SEC’s minimum attendance requirement

reports on the company’s strategic, operational,

of 50 percent. All of our independent directors were

and financial performance, and other regulatory

present in all board meetings in 2016.

and relevant matters, at least seven business days in advance of the board meetings. The Board has access to the Corporate Secretary who acts as adviser to directors regarding their responsibilities and obligations, and oversees the flow of information prior to meetings. Discussions with independent views during meetings are encouraged, given due consideration and properly documented through the minutes of meetings.

Board meetings are scheduled before the start of the financial year and the schedule is posted on our company website. The non-executive directors also meet separately at least once during the year without any executives present. In 2016, our Board of Directors had a total of seven board meetings.

Attendance of each director in board meetings held in 2016 is enumerated below:

Globe Telecom Board of Directors 2016 Board Member

Meetings Attended

Meetings held

Percent Present

Jaime Augusto Zobel de Ayala

7

7

100%

Mark Chong Chin Kok

7

7

100%

Fernando Zobel de Ayala

7

7

100%

Ernest L. Cu

7

7

100%

Romeo L. Bernardo

6

7

86%

Samba Natarajan

7

7

100%

Delfin L. Lazaro

5

7

71%

Jose Teodoro K. Limcaoco*

5

5

100%

Manuel A. Pacis

7

7

100%

Rex Ma. A. Mendoza

7

7

100%

Saw Phaik Hwa

7

7

100%

Mr. Limcaoco was elected as Director on April 13, 2016.

*

104

GLOBE TELECOM

BOARD COMMITTEES

All the Committees have their own charters that are aligned with the objectives and responsibilities of

The Board may create committees as it deems

each Committee. Risk management is a responsibility

necessary, in accordance with the company By-Laws

shared by all Board Committees. Therefore, each

and MCG, to support it in the performance of its

Committee is responsible for identifying and

functions and to aid in CG. Currently, there are five

addressing risk areas and factors that are relevant to

Board Committees.

the duties, functions and objectives of the respective Committee.

BOARD COMMITTEE

Executive

ROLE

MEMBERS

Provides guidance to management in (a) formulating the basic strategies for achieving targets set by the Board; (b) putting in place the infrastructure for control and operational risk management systems that assess risks on an integrated cross-functional approach, and review and assess the adequacy of Globe Telecom’s operational risk management process, specifically on strategic, technology, and operational risk, jointly with Management.

This function shall include receiving from Senior Management periodic information on risk exposures and risk management activities; (c) considering and/or completing mergers, acquisitions and strategic investments; and (d) undertaking strategic projects and significant transformation initiatives that include corporate governance campaign and sustainability programs.

Audit

Provide assistance to the Board of Directors in fulfilling its oversight responsibility to the shareholders relating to: • the integrity of the financial statements and the financial reporting process and principles; • internal controls; • the qualifications, independence, remuneration, and performance of the independent auditors; • staffing, focus, scope, performance, and effectiveness of the internal audit function; • risk management; and compliance with legal, regulatory, and corporate governance requirements • functions as separate level risk committee

Compensation and Remuneration

Assists the Board of Directors in governance matters relating to compensation and benefits of Directors, Key Officers, and personnel of the Corporation.

Chairman: Jaime Augusto Zobel de Ayala Members: Mark Chong Chin Kok, Jose Teodoro K. Limcaoco*, Ernest L. Cu and Samba Natarajan

Chairman (Independent Director): Manuel A. Pacis Members (Independent Directors): Saw Phaik Hwa and Rex Ma. A. Mendoza

Chairman (Independent Director): Rex Ma. A. Mendoza Members: Fernando Zobel de Ayala, Romeo L. Bernardo and Mark Chong Chin Kok

Mr. Limcaoco was elected Director on April 13, 2016.

*

2016 ANNUAL REPORT

105

The Committee shall have the following functions: (a) It shall be responsible for installing and maintaining a process to ensure that all directors to be nominated for election at the next Annual General Stockholders’ Meeting have the qualifications and none of the disqualifications for directors stated in the Company’s By-Laws, Manual of Corporate Governance and in relevant laws, rules and regulations. (b) It shall encourage the selection of a mix of competent directors, each of whom can add value and create independent judgment as to the formulation of sound corporate strategies and policies. (c) It shall preview and evaluate the qualifications of all persons nominated to positions in the corporation, which require appointment by the Board.

Nomination

Oversees the Corporation’s financial policy and strategy, including capital structure, dividend policy, acquisitions and divestments, treasury activities, tax strategy and compliance, retirement fund contributions, and financing proposals brought to the Board for approval.

Finance

Chairman (Independent Director): Rex Ma. A. Mendoza Members (Independent Directors): Manuel A. Pacis and Saw Phaik Hwa

Chairman: Delfin L. Lazaro Members: Fernando Zobel de Ayala, Romeo L. Bernardo and Samba Natarajan

The attendance of the board members in their respective Committee meetings is enumerated below: TOTAL MEETINGS

10

BOARD COMMITTEE

Executive

5

Audit

2

Compensation and Remuneration

2

11

Nomination Committee

Finance Committee

MEMBERS

PRESENT

ABSENT

Jaime Augusto Zobel de Ayala Mark Chong Chin Kok Jose Teodoro K. Limcaoco* Ernest L. Cu Samba Natarajan Gerardo C. Ablaza, Jr.**

10 10 7 10 10 1

2

Manuel A. Pacis Saw Phaik Hwa Rex Ma. A. Mendoza

5 5 5

-

Rex Ma. A. Mendoza Fernando Zobel de Ayala Mark Chong Chin Kok Romeo L. Bemardo

2 2 2 1

1

Rex Ma. A. Mendoza Manuel A. Pacis*** Saw Phaik Hwa*** Mark Chong Chin Kok*** Romeo L. Bernardo*** Gerardo C. Ablaza, Jr.**

2 1 1 1 1 1

-

Delfin L. Lazaro Romeo L. Bernardo Fernando Zobel de Ayala Samba Natarajan

8 10 10 11

3 1 1 -

Mr. Limcaoco was elected Director on April 13, 2016.

Mr. Ablaza was a Director until April 13, 2016.

Mr. Chong Chin Kok and Mr. Bernardo were members of the Nomination Committee until April 13, 2016. Mr. Pacis and Ms. Saw became members of the Nomination Committee on April 13, 2016.

*

**

***

106

GLOBE TELECOM

BOARD PERFORMANCE

In 2016, the non-executive directors met, without our executive director and management, to discuss key

Our Board of Directors, together with management,

issues facing the company.

fully understand that the corporate governance proactive culture begins with leaders of the company.

TRAINING AND CONTINUING EDUCATION PROGRAM

Apart from compliance with internal policies and procedures, the Board of Directors performs an

To execute their roles well, training on CG is given

annual self-assessment exercise to assess their

to directors prior to assuming office. This is also

individual and collective performance as well as their

institutionalized in our MCG. The Board, together

co-directors’ and management’s. The self-assessment

with the key officers, also actively attend training

exercise is done through a self-assessment

programs annually to keep abreast of updates in

questionnaire given to each director to ensure the

CG standards and relevant discussions to support

effectiveness of their governance, to reflect on the

their leadership roles in Globe Telecom. On

performance of top management including the

March 8, members of the Board and key officers

President and CEO, to highlight specific strengths,

participated in the CG Summit conducted by the

and to identify areas of improvement. It also provides

Ayala Group in collaboration with the Institute of

a venue for the board members to identify priorities

Corporate Directors (ICD) in compliance with the

for the Board and the company for the succeeding

SEC directive for all key officers and members of

year. The assessment is comprised of appraisal of the

the Board of publicly-listed companies to attend a

Board, of individual directors, of the different Board

program on CG. Other directors attended various

Committees, as well as of the management. The

CG seminars conducted by SEC-accredited CG

questionnaire covers a thorough evaluation criteria

training providers later during the year, including

focusing on structure, efficiency, and effectiveness

an in-house CG seminar conducted by Risks,

of the Board, participation and engagement of

Opportunities, Assessment and Management

each Board member, contribution of each Board

(ROAM) last December 5. Discussions on topics

member to their respective Committees as well

during these seminars included the SEC Annual

as the performance of management. The criteria

Corporate Governance Report (ACGR), updates on

also reflect the specific duties, responsibilities, and

the ACGS, and the new SEC 2016 Code of Corporate

accountabilities of each Board member assessed

Governance, among others. These seminars also

according to our strategic direction and business

provide a venue for directors and key officers to learn

strategies as provided in the company By-Laws,

about other CG cases relevant to Globe Telecom’s

Manuals, Charters and governing policies. The self-

business.

assessment exercise is facilitated by our Compliance Officer. An annual executive session also takes place dedicated to evaluating and discussing matters concerning the Board, including evaluating the company’s performance and an independent review of its management team.

2016 ANNUAL REPORT

107

The attendance of our Board and key officers to the

approved in accordance with the company’s limits

CG training programs and seminars are properly and

of authority and by the CEO prior to endorsement to

timely disclosed to the SEC, PSE, PDEx, and posted

the Board for approval. Our Consultants also provide

on our company website.

inputs to the Senior Management as required. They all meet at least once a week.

There is likewise an annual strategy workshop held at at the beginning of the year to discuss the strategic

Management is mandated to provide complete and

direction of the company for the entire year.

accurate information on the operations and affairs of the company in a timely manner. Management

MANAGEMENT

is also required to prepare financial statements for each preceding financial year in accordance with

GRI 102-32, 102-33, 102-34

Philippine Financial Reporting Standards (PFRS).

The President and CEO is accountable to the Board

Management’s statement of responsibility with

for the development and recommendation of

regard to the company’s financial statements is

strategies, and the execution of the defined strategic

included in this annual report.

imperatives. The President and CEO is assisted by the Senior Management.

To monitor and report on the environmental, sustainability and social impacts of the business

The Office of Strategy Management (OSM) reports to

operations, our Chief Sustainability Officer (CSO),

the President and CEO and oversees the company’s

Ms. Ma. Yolanda C. Crisanto, was appointed in

strategy management processes from strategy

2015. Concurrently, our CSO is also the Senior Vice

formulation to execution and performance tracking

President of our Corporate Communications Group

linked to the company’s rewards system.

who reports directly to the President and CEO and is part of senior management. Meanwhile, our

We review and formulate our strategic priorities

Data Privacy Officer (DPO), Mr. Anton Reynaldo M.

annually, which then guide the formulation of the key

Bonifacio, reports directly to our CTIO to uphold

business strategies and goals for the year. Using the

responsibilities aligned with the Data Privacy Act

balanced scorecard framework, each business group

or Republic Act No. 10173. Apart from economic

identifies financial and non-financial objectives,

aspects, environmental and social aspects are

and sets targets and initiatives to achieve them as

reviewed by our CSO yearly as well. Our CSO

reflected in the groups’ Terms of Reference (TOR).

communicates sustainability concerns and initiatives

To ensure line of sight, the group TORs are cascaded

from the management to our Board through the

to all employees, making sure that everyone

President and CEO, who empowers our advocacy

understands and appreciates their contribution to

for sustainability and CG. Our sustainability report,

the group goals.

included in this Annual Report, discusses these aspects, concerns and initiatives.

Key programs, projects, and major organizational initiatives are taken up by our Senior Management, composed of the President and CEO, and the heads of each major business units and support groups.

All budgets and major capital expenditures must be

108

GLOBE TELECOM

CORPORATE OBJECTIVES

REMUNERATION OF EXECUTIVE DIRECTOR AND SENIOR MANAGEMENT

Globe disrupted the telco arena through transformative customer experiences, from

Our remuneration philosophy, policy and framework

enhancement in our self-service channels to

are designed to attract, retain and engage talents.

expansion of the Globe GEN3 stores that delivered

These are developed to support the business

relevant value in previous years. Our GEN3 stores

strategies and enhance value of the organization.

changed the seemingly transactional mobile retail

Our policy specifies the relationship between

landscape into a hub that not only features the

remuneration and performance, including but not

latest Globe offerings, but also an interactive space

limited to, specific financial and non-financial metrics.

for customers to be fully immersed in the different facets of digital lifestyle and introduce retail

•

We encourage and nurture a strong

transformation. We will continue developing and

performance-oriented culture; recognize and

launching more of these stores nationwide in 2017.

reward talents who demonstrate and create

Our customers and stakeholders can also expect

value for the organization

us to use these stores to continue enhancing our

•

We position ourselves as a preferred employer in

brand, through our apparel, digital connectors and

providing compelling total rewards experience

our digital lifestyle products with our robust cadre of

encompassing continuous learning and

content partners.

development; competitive and market-driven compensation; pay for performance; and core

We continue to envision a strong business by further

and innovative benefits to meet personal and

strengthening digital lifestyle products and services

family needs.

as we anticipate continued growth of consumers in the mobile space. To create a wonderful world

In order to support our rewards philosophy, our

for our people, business, and nation, we will also

targeted reward strategies are as follows:

continue to collaborate with partners in developing e-governance and develop infrastructure to optimize

•

Adopt a total rewards approach, using both the

the quality of our services and enhance the coverage

tangible and intangible aspects of rewards to

of our network. Our announcement last March

drive the Globe employment experience;

reiterated our goal to deploy fiber optic cables in

•

20,000 barangays in the Philippines to provide faster and more reliable internet access in about

Market driven to attract and retain top talent in the business;

•

Operate on a single-platform-differentiated-

2 million homes nationwide. This infrastructure build

application approach to accommodate different

is expected to take 5 years and will extend network

talent segments;

coverage to more areas that currently require stable

•

connectivity services. We look forward to launching new product and service in 2017, building more cell sites and establishing fiber-optic technology that

Promote relevant reward programs that will be sensitive to employee lifecycles and experiences;

•

Practice transparency, clarity, and consistency in our reward delivery.

supports this thrust towards enabling public wireless

Annual remuneration reviews are conducted

connectivity as well as quality connection in more

considering the company, business unit and

Filipino households.

individual performance. It is also reviewed visà-vis market rates and our financial capability is

2016 ANNUAL REPORT

109

considered for any incentive payout. Performance

executive brings into the company. The Year-on-Year

evaluations for Senior Management are made

increases determined by individual performances,

according to these considerations.

prevailing market rates on annual salary increases, pay positioning, economic indicators, and Globe

Current remuneration initiatives allow for certain

Telecom’s financial capabilities

incentives to be withheld in any year should an executive fail to meet performance requirements

Benefits

or be involved in any misconduct and are given a disciplinary action resulting to suspension or

We provide benefits that are consistent with

demotion. The implementation of this policy is

local market practice and that are relevant to

subject to certain terms and conditions that include,

meet the personal and family needs of the Senior

but are not limited to, the findings from internal

Management. Included here are medical benefits

investigations and assesments on the misconduct

for in-patient and out-patient care, life insurance,

or violation against comapany policies or applicable

retirement benefits, club membership, and car and

laws and timing of the misconduct or investigations

car-related expenses.

within the year.

Short -Term Incentives (Performance Bonus) REMUNERATION COMPONENTS The short term incentive plan is Globe Telecom’s The remuneration structure of the Senior

Variable Pay Program for non-sales, non-unionized

Management is composed of four main components

employees. The incentive is determined by the

– Fixed Remuneration, Benefits, Short Term

achievement of performance targets that are set at

Incentives (Performance Bonus), and Long Term

the beginning of the performance year. It considers

Incentives. The structure is designed such that the

delivery of corporate, business unit, and individual

variable component increases as the executive

performance targets that are defined annually. This

moves up in our corporate ladder. This only applies to

is usually paid out to employees within the second

our employees as our Board of Directors receive per

quarter of the year following the confirmation of all

diem remuneration approved by our shareholders.

performance targets and individual performance.

Fixed Remuneration

Corporate and Business unit targets are financial/ operational targets set in order to support the

The fixed remuneration is composed of the base

overall business goals and thereby increasing our

salary and is reflective of the value of the role in the

value as a company. This incentive plan drives us

prevailing market and the value of the role compared

to work together towards achieving common goals

to the other roles in Globe Telecom. Other factors

and encourages performance in the company. The

that come into play in the base salary are individual

award size for this incentive is differentiated by the

performance, qualifications, experience that the

employee’s level such that higher incentive multiple is at stake as the Senior Management moves up the organization.

110

GLOBE TELECOM

Long Term Incentive Plan

ACCOUNTABILITY AND AUDIT

The new Long Term Incentive Plan was created

It is the policy of Globe to constitute and maintain

to replace the Employee Stock Option which was

an Audit Committee that shall provide assistance

last awarded in 2009. The new plan’s primary

to the Board of Directors in fulfilling their oversight

objective is to drive long term performance in a

responsibility to the shareholders relating to: a) the

highly competitive market by aligning management

integrity of the financial statements and the financial

interest with the shareholders’ interest. It also aims

reporting process and principles; b) internal controls;

to motivate participants to sustain high levels of

c) the qualifications, independence, remuneration,

contribution. Furthermore, it is designed to attract

and performance of the independent auditors; d)

and retain key executives whose contributions

staffing, focus, scope, performance, and effectiveness

are essential to Globe Telecom’s growth and

of the internal audit function; e) risk management;

profitability through a rewards scheme that fosters

and f) compliance with legal, regulatory, and

a sense of genuine loyalty among employees and

corporate governance requirements. The Audit

belongingness within the Globe community thereby

Committee Charter approved by the Board defines

retaining these talents even after payouts are given

clearly the roles and responsibilities of the Audit

out. Lastly, the plan should propel shareholder value

Committee. Management, however, has primary

through superior business performance driven by

responsibility for financial statements and reporting

happy and satisfied employees.

process, internal controls, legal and regulatory compliance, and risk management.

The incentive is delivered through a performance share-based plan where it awards executives with

The Audit Committee is composed of three

company shares contingent upon the achievement

independent and non-executive directors, all of whom

of specified long-term goals over a specified

are appointed by the Board. As such, an independent

performance period.

director also chairs the Audit Committee.

The Plan allows for overlapping performance periods

The Audit Committee meets at least four times

to support rolling multi-year business plans and

during the year and invites the President and CEO,

employee retention. It has a 3-year performance

CFO and concurrently the Treasurer and CRO,

period to support business planning cycle covering

independent auditors, internal auditors, and other

January 1, 2014 to January 1, 2016.

members of management, as needed based on the meeting agenda. During these meetings:

To ensure alignment of Senior Management’s

•

The Committee reviews the financial

interest to that of the company, the plan includes

statements and all related disclosures and

a stock ownership requirement where the Senior

reports prepared and presented by the CFO

Management are required to maintain shares

and released to the public and/or submitted

equivalent to 75 percent to 100 percent of their

to the SEC for compliance with both the

annual base salary.

internal financial management handbook and pertinent accounting standards, including

2016 ANNUAL REPORT

111

regulatory requirements. The Committee,

audit services performed by the independent

after its review of the quarterly unaudited

auditors; and the corresponding audit fees vs.

and annual audited consolidated financial

non-audit fees paid to the independent auditors,

statements of Globe Telecom and Subsidiaries,

in relation to the SEC regulation on “permitted”

including key audit matters, endorses these to

vs. “not permitted” services to be rendered by

the Board for approval. The Board of Directors,

independent auditors and the significance of

in turn, reviews, approves and affirms the true

the fees to the total service revenues of the

and fair representation of the annual audited

independent audit firm and the company’s total

consolidated financial statements and presents

consultancy expenses, respectively.

the same in the ASM. • •

The Committee reviews Globe Internal Audit’s

The Audit Committee also approves the work

activities, staffing, organizational structure and

plan of Globe Internal Audit (IA), as well as the

changes in their work plan, and assesses the

overall scope and work plan of the independent

effectiveness of the internal audit function.

auditors. The Committee meets with the internal auditors and independent auditors to

•

The Committee reviews the results of

discuss the results of their audits, ensuring that

management’s annual risk assessments based on

management is taking appropriate corrective

reports provided by CRO covering information on

actions on internal control issues and areas for

risk exposures and risk management activities,

improvement in a timely manner.

and as supported by results of internal audit reviews.

•

The Committee ensures tenders for independent audit services are conducted on a regular basis. The

•

The Committee reviews and discusses with the

Audit Committee recommends the appointment,

management, the internal auditors and the

retention or discharge of the independent

independent auditors; and reports to the Board

auditors, reviews and recommends audit fees or

of Directors, on an annual basis, the adequacy

the remuneration of the independent auditors

and effectiveness of the company’s internal

to the full Board. The Board, in turn, submits the

controls system and risk management systems,

appointment of the independent auditors and

in all material respects.

audit fees for approval of the stockholders at the ASM. The amount of audit fees is disclosed in this

The collective responsibility over our risk

Annual Report.

management oversight rests with the Board of Directors. To delineate the scope of such

•

112

On an annual basis, the Committee reviews the

responsibility, the various Board Committees are

independent auditors’ performance and assesses

designated with oversight function on specific risks.

the independent auditor’s qualifications, skills,

The Executive Committee has oversight on corporate

resources, effectiveness, and independence.

strategic risks, technology, and operational risk

To limit the possible risk of conflict of interest,

management, putting in place the infrastructure for

the Committee also reviews and approves in

risk management systems that assess risks on an

advance, the proportion of audit services vs. non-

integrated cross-functional approach; reviews and

GLOBE TELECOM

assesses the adequacy of our strategic, technology,

also reviews and assesses the adequacy of its

and operational risk management processes, jointly

Charter annually, seeking Board approval for any

with Management. The Finance Committee oversees

amendments. The most recent Charter review was

our financial risk management, including risks related

done during the 2016 year-end Audit Committee

to capital structure, acquisitions and divestments,

meeting and the Audit Committee approved the

treasury activities, tax strategy and compliance.

retention of the existing Audit Committee Charter

The Audit Committee provides oversight of the

(as amended and approved by the Board on February

financial reporting and operational risks specifically

4, 2015) until the next scheduled review in Q2 2017

on financial statement and reporting, internal

in compliance with the new SEC Code of Corporate

controls, legal or regulatory compliance, corporate

Governance.

governance, risk management and fraud risks. The CRO provides the Audit Committee with periodic

In compliance with our MCG, SEC Memo Circular No.

reports on risk exposures and risk management

4 (Series of 2012), and aligned with the ACGS and

activities by management, while Globe Internal Audit

the SEC Revised Code of Corporate Governance, the

provides assurance on the effectiveness of the risk

Committee conducts an annual assessment of its

management system and processes.

performance to benchmark its practices against the expectations set out in the approved Charter. The

The Board designated the Audit Committee as

results of the self-assessment and any ensuing action

the overall risks aggregator for all of the Board

plans to ensure that the Committee will continue

Committees enabling an integrated approach to

to meet Board’s, management’s, and shareholders’

an enterprise-wide risk management oversight at

expectations are reported to the Board.

Board level and a coordinated view of risks across the enterprise. The Audit Committee reports regularly

On annual basis, our President and CEO, CFO, and

to the Board of Directors on our risk management

CAE provide a written certification to the Audit

efforts providing the Board with a more collaborative

Committee confirming the reliability of financial

and effective review of risks across the company and

statements for the year; full compliance with

assurance over our overall risk management, that

financial and corporate governance regulatory

aids the Board in making strategic decisions for the

requirements and reporting; and attesting that the

company.

company has sound internal controls and compliance system in place.

With guidance provided by the Board, management remains primarily responsible for the development of

INTERNAL AUDIT

the design and implementation of risk management plans and frameworks, policies and systems intended

An Internal Audit function is established as a

to address the identified risks.

fundamental part of Globe Telecom’s CG practices.

The Audit Committee reports after each meeting and

An Internal Audit Charter, adopted by the Audit

provides a copy of the minutes of its meetings to the

Committee/Board, establishes the purpose, authority,

Board.

responsibility, organizational structure, and reporting relationships of the internal audit function.

To ensure compliance with regulatory requirements and assess the appropriateness of the existing Charter for enabling good CG, the Committee

2016 ANNUAL REPORT

113

Internal Audit is a service, providing an independent,

continuously improves the internal audit operating

objective assurance and consulting function within

process and standards and ensures strict compliance

Globe, and sharing our common goal of adding value

with International Standards for the Professional

for our stakeholders through a systematic approach

Practice of Internal Auditing (the Standards) and

in evaluating the effectiveness of governance, risk

global best practices. Additional responsibilities

management, control processes after consideration

include, among others, strengthening leadership and

of objectives, strategies and risks. Globe Internal

talent bench, uplifting performance management

Audit provides reasonable assurance to the

and managing internal costs.

Board, management and the stockholders on the integrity of the financial statements and financial

Globe IA maintains, reviews, and assesses the adequacy

reporting processes and principles against material

of its Charter annually to ensure conformance with

misstatements; effectiveness and appropriateness

the Standards and appropriateness for enabling good

of internal controls on the safeguarding of assets,

CG. The result of the periodic assessment and any

operations, and information systems; and compliance

arising revisions are communicated and approved by

with laws, rules and regulations.

the Audit Committee.

Globe IA also assists and supports management in

Globe IA governs its internal audit activities in

continuously instilling and nurturing Control Self-

conformance with the Institute of Internal Auditor’s

Assessment (CSA) environment at Globe through

Code of Ethics, and our Code of Conduct. The

facilitation of self-assessment activities among

CAE is responsible for overall conformance with

various business groups. The Audit Committee

the Standards. The CAE develops, maintains, and

regards its relationship with Internal Audit as having

communicates an appropriate and effective quality

a vital role in supporting the Audit Committee in

assurance and improvement program (QAIP) that

the effective discharge of its oversight role and

covers all aspects of internal audit reviews and

responsibilities.

activities. The Audit Committee also receives periodic reports on the status of internal audit activities,

Globe IA performs its auditing functions faithfully by

achievement of key performance indicators, and

maintaining independence from management and

QAIP. To ensure consistent conformance with the

controlling shareholders as it reports functionally

Standards, Globe IA periodically undergoes an

to the Board, through the Audit Committee and

independent external Quality Assurance Review

administratively, to the President and CEO. The

(QAR). In the most recent external QAR in 2013,

Committee, having appointed our CAE, also concurs

Globe IA achieved the highest rating, “Generally

in his/her replacement, reassignment, or dismissal.

Conforms”, that can be achieved in the QAR process.

The CAE works closely with the Audit Committee in maintaining an effective internal audit function

Globe IA adopts a risk-based audit approach in

by managing the entire operations, and strongly

developing its annual work plan ensuring that all risks,

supports the attainment of corporate objectives

mapped to eTOM (enhanced telecommunications

through coverage of most critical processes in the

operations map) based processes, with integrated

conduct of risk-based assurance reviews. The CAE

risk assessments for processes across the enterprise,

ensures risks/issues are timely called-out, escalated,

are captured in the audit universe. Globe IA’s annual

and monitored while management remains primarily

work plan is reassessed quarterly to consider

responsible for resolving the risks/issues. The CAE

emerging risks and the changing dynamics of the

114

GLOBE TELECOM

telecommunications business, thereby allowing

performance appraisal. From the results, the Audit

maximum and timely coverage of key/critical risk

Committee evaluates and proposes to the Board

areas. The Audit Committee reviews and approves

for endorsement and approval of the stockholders,

the annual work plan and all deviations. The Audit

the appointment of the independent auditors. The

Committee also ensures that audit resources are

endorsement is presented to the stockholders for

adequately allocated and focused on the areas of

approval at the ASM. The representatives of the

highest risk.

independent auditors are expected to be present at the ASM to have the opportunity to make a

To instill excellence, Globe IA provides for continuing

statement on the company’s financial statements

professional and personal development for all

and results of operations if they desire to do so and

internal auditors to equip them in the conduct of

be available to respond to appropriate questions

reviews, with focus on acquiring expertise on our

during the meeting.

business processes, network and IT systems, internal controls, new accounting and auditing standards

In the meeting last 13 April 2016, the shareholders

and regulatory updates. The audit team is composed

appointed the accounting firm of Navarro Amper

of professionally certified accountants, internal

& Co./Deloitte Philippines (NA/DP), an affiliate

auditors, IT and information security auditors, control

of Deloitte Southeast Asia Ltd. (a member firm

self-assessors, and licensed engineers, among others.

of Deloitte Touche Tohmatsu Limited) as the

In addition, Globe IA has been actively participating

independent auditor of Globe Telecom, Inc. and

in Ayala Group and Singtel Internal Audit Networks

Subsidiaries (Globe Group) for the calendar year 2016.

to benchmark and share knowledge on leading

NA/DP has been the independent auditor of Globe

global best practices including information on

Group since 2015. In accordance with regulations

methodology, process improvement and audit tools

issued by the SEC, the audit partner principally

to develop a network of world class, multi-skilled,

handling the company’s account shall be rotated

internal audit professionals.

every five years or sooner.

EXTERNAL AUDIT

There were no disagreements with NA/DP, on any matter of accounting principles or practices,

The company engages the services of independent

financial statement disclosures, or auditing scope or

auditors to conduct an audit and obtain reasonable

procedures.

assurance on whether the financial statements and relevant disclosures are free from material

Fees approved in connection with the audit and

misstatements. The independent auditors are directly

audit-related services rendered by NA/DP pursuant

responsible to the Audit Committee in helping

to the regulatory and statutory requirements for the

ensure the integrity of the company’s financial

years ended 31 December 2016 and 2015 amounts

statements and reporting process.

to P16.96 million and P15.36 million, respectively,

It is the practice of the company every three years or

inclusive of 7.5% out-of-pocket expenses (OPE). In

sooner to tender bid for the external audit services

addition to performing the audit of Globe Group’s

of independent auditors. The last tender bid process

financial statements, NA/DP was selected in

was conducted in Q4/2014. The company also

accordance with established procurement policies to

conducts on an annual basis an independent auditors’

provide non-audit services in 2016.

2016 ANNUAL REPORT

115

The Audit Committee has an existing policy to review

Tax Fees. The company has not engaged NA/DP for

and to pre-approve the audit and non-audit services

any tax-related services for fiscal years 2016 and

rendered by Globe Group’s independent auditors.

2015, respectively. There were no tax fees incurred

It does not allow the Globe Group to engage

for the said years.

the independent auditors for certain non-audit services expressly prohibited by SEC regulations

Non-Audit Fees for 2016 pertains to services

to be performed by independent auditors for its

rendered by NA/DP on the transfer of knowledge

audit clients. This is to ensure that the independent

through a series of trainings and supervised

auditors maintain the highest level of independence

workshops to enable Globe to assess its current

from the company, both in fact and appearance.

state and transition to Philippine Financial Reporting

The Audit committee has reviewed and approved

Standards (PFRS) 15: Revenue from Contracts

in advance the nature of all non-audit services

with Customers and will not involve design and

rendered in 2016 by NA/DP and the corresponding

implementation of an accounting system. Non-Audit

fee, and concluded that these do not impair their

fees in 2016 do not outweigh fees for audit and

independence. For 2016, NA/DP has confirmed to the

audit-related services. NA/DP was not engaged to

Audit Committee that the non-audit services reflect

perform non-audit services for 2015.

permissible services for an audit client.

The fees presented above include out-of-pocket The aggregate fees billed by NA/DP are shown

expenses incidental to the independent auditors’

below:

services.

ETHICS AND INTEGRITY

(Amount in millions of Pesos) 2016 Audit and Audit-Related Fees* Non-Audit Fees Total

2015

P16.96

P15.36

5.49

-

P22.45

P15.36

*Excludes 2016 audit fees for GTI HK of P540K (P687K for 2015) performed by Deloitte HK; P224K in 2016 (P308K in 2015) for GT EU; and P158K in 2016 (P215K for 2015) for GT SG performed by Ardent.

GRI 102-15, 102-17, 205-2

We respect the rights of our stakeholders. We have adopted a Code of Conduct, and promulgated policies governing the following matters: (i) Conflict of Interest, (ii) Whistleblowers, (iii) Insider Trading, (iv) Related Party Transactions and (v) Health, Safety

Audit and Audit-Related Fees represent audit of Globe

and Welfare of Employees. We also have existing

Group’s annual financial statements and review of

formal policies concerning unethical, corrupt, and

quarterly financial statements in connection with the

other prohibited practices covering our employees,

statutory and regulatory filings or engagements for

members of the Board, subsidiaries, and affiliates.

the years ended 2016 and 2015. These also include

These policies serve as guide to matters involving

assurance and related services that are reasonably

work performance, dealings with employees,

related to the Globe Group’s 2016 financial

customers and suppliers, handling of assets,

statements pursuant to the regulatory requirements.

records and information, avoidance of conflict of

NA/DP was not engaged to perform audit-related

interest situations and corrupt practices, as well

services for 2016 and 2015.

as the reporting and handling of complaints from whistleblowers. These documents are the key to the balance of control and governance in Globe Telecom.

116

GLOBE TELECOM

These policies, together with the Anti-Corruption

•

Train and motivate our employees to work in

Policy, Policy on Related Party Transactions,

a safe manner and encourage our business

and others, are also on the company website for

partners to adopt these principles;

investors and other stakeholders to refer to at their

•

convenience. We also include our Code of Conduct at our on-boarding program discussions for newly-

Report our occupational safety and health performance to our stakeholders;

•

Conduct a regular review of our management

hired employees, including Board and management,

system to ensure that the commitments of this

and include a statement for employees to sign

policy are being delivered; and that we strive for

upon assuming employment in Globe Telecom.

continual improvement.

Our internal HR Portal also contains this document and we are currently planning to conduct refresher

REWARDS OR COMPENSATION POLICY

courses for continued education on our Code of Conduct, good CG and business ethics among our

We attract, retain and engage our talents to support

employees.

our business strategies and enhance value of the organization through our remuneration philosophy

CUSTOMER WELFARE

and framework.

We put our customers first. We truly make a

VENDOR AUDIT

difference through superior, end-to-end customer

GRI 102-9, 102-10

experience brought to life by a genuine culture of service and caring. We embed service into our Globe

We follow socially responsible procurement practices

culture, as well as to our vendor partner, sustaining

for vendors. The team maximizes value through

the momentum of our Circle of Happiness where our

commodity management, selection of best-in-

happy employees create happy customers.

class suppliers, and pursuit of process excellence in procurement and supply chain management. Vendor

EMPLOYEE WELFARE

partners undergo a comprehensive accreditation process which includes assessment of their legal,

We are committed to providing the best protection

technical, and financial capability from business

for the overall welfare, health and safety of our

continuity to conflict of interest, safety, health, and

employees. We do the same to the communities

environmental policies. Grounded on the practice

surrounding our operations. It is the management’s

of fair, ethical and governance policies, opportunity

primary objective and the employee’s individual and

is equitably provided to the appropriate suppliers

collective responsibility to meet this commitment. To

through competitive bidding and auctions. Proposals

this end, we shall:

are evaluated on the basis of best-value including a consideration of their environmental and social

•

•

Continuously assess all health and safety hazards

policies and practices. Given equivalent proposals,

in the workplace and provide programs towards

preference for purchase award is given to local

its eliminations;

suppliers.

Comply to all occupational safety and health news applicable to our telecommunication business;

2016 ANNUAL REPORT

117

Relationships with suppliers are also highly valued,

operations to the environment and we shall achieve

with each considered a business partner. We

this together with the help of our employees,

continue to recognize and foster strong business

business partners, and clients. We have robust

relations with our partners through the Business

systems in place to manage our environmental

Partner Awards. Vendors also provide learning

impact and integrate these into our corporate social

opportunity through plant visits and technology

responsibility management.

briefings. Conversely, Vendor Clinics are initiated for selected vendors to help improve their performance

COMMUNITY INTERACTION

and competitiveness.

Through Globe Bridging Communities, the Corporate As strong advocates of fairness, accountability,

Social Responsibility platform of Globe, and our

transparency, and integrity in all aspects of the

subsidiaries, we aim to transform underserved

business, Globe commits to the principles and best

communities nationwide through relevant and

practices of corporate governance and responsibility

innovative solutions that harness the power of

in the attainment of our corporate goals and

collaboration and inclusivity through information

strategic direction.

and communications technology. The objective is to ensure sustainability by creating shared value across

Furthermore, we recognize the importance of

our employees, customers, and our stakeholders in

institutionalizing sustainability practices in the

areas where we operate. As our business continues

pursuit of its goals. The Globe Telecom Supplier

to grow, we contribute to nation-building and

Code of Ethics establishes standards of quality and

shareholder value with an engaged and empowered

business integrity to ensure that working conditions

work force committed to do a Globe of Good.

are safe, workers are treated with respect and dignity and that business operations are environmentally

We adopt best practices of ISO 26000 Social

responsible and conducted ethically.

Responsibility enabling us to operate in a socially responsible way across the organization and seek

The Supplier Code of Ethics shall be applicable to all

continuous innovative solutions in creating a

vendors of the Globe Group of companies.

wonderful world. ISO 26000 helps businesses and

Globe expects its vendors to acknowledge and

organizations translate principles into effective

actively support the Code and to continually seek to

actions and shares best practices relating to social

conform to the standards contained therein.

responsibility, globally.

Globe expects that the principles apply to vendors,

CONFLICT OF INTEREST

their parent entities and subsidiaries or affiliate entities, and with other entities with whom they do business including employees, suppliers,

Globe is above board and, at all times, exercises

subcontractors, and other parties.

discretion, prudence, and mature judgement when entering transactions for the company. In carrying

ENVIRONMENTAL SUSTAINABILITY POLICY

out their duties with integrity and in the interest of the company, it is the duty of board members to withdraw themselves from discussions that put them

We are committed to promote environmental

in a conflicted situation. It is the obligation of every

sustainability by reducing the impact of our business

regular employee, officers and directors of Globe and our subsidiaries, including consultants/project hires

118

GLOBE TELECOM

seconded to or engaged on a full-time basis by Globe,

Employees are reminded through internal

to declare and divulge in writing to the company

communications channel to fill out gift disclosures

his own involvement in any conflict of interest with

especially during national festivities. The form is then

the company. Our Code of Conduct provides for

submitted to employees’ respective group heads

the definition, guidelines and procedures, including

who will decide whether the gift shall be returned or

the reportorial of any such circumstance, involving

kept by the employee or be surrendered to Human

conflict of interest.

Resources Group for possible use during company events.

In general, conflict of interest will be deemed to exist where an employee has or may possibly have

We conduct periodic lectures and seminars on anti-

a financial or personal interest divergent with or

corruption initiatives by Human Resources Group to

in conflict with his professional obligations, or

all employees.

where financial or other personal considerations

WHISTLE-BLOWING

may compromise, or have the appearance of compromising the employee’s judgment in the administration, management, decision-making, and

We are committed to compliance with laws and

discharge of his official functions. Personal interest

regulations to which we are subject and conduct

is not confined to the personal involvement of the

our business in accordance with ethical standards.

employee himself — it may also arise from the

All officers and employees of the company, and all

employee’s family or close personal relationship with

suppliers and business partners of the company, are

a contractor, sub-contractor, customer, competitor,

thus required to observe and practice high standards

creditor, or any other entity that does business with

of business and personal ethics in the conduct of

the company.

their duties and responsibilities.

At the start of the year, Globe Human Resource

Through various channels which includes a hotline

Group requires all employees to submit the Related

(0917-8189934), portal, an email address

Party Disclosure Form, regardless if an employee has

(gt_whistleblower@globe.com.ph) as well as specific

any declaration or none.

group under the HR Employee Relations department, we provide a mechanism that allows employees

ANTI-CORRUPTION

and even third parties to report suspected violations of company policies by an employees,

The employee, by virtue of his employment, is bound

officers, directors, and partners, on unethical and

not to betray that trust by seeking to gain any undue

corrupt practices, misappropriation of company

personal or pecuniary advantage (other than the

assets, fraudulent reporting practices, and other

rightful proceeds of employment) from his dealings

violations of the company Code of Conduct, Stock

with or for and in behalf of Globe.

Transaction Policy, Code of Corporate Governance, and Securities Regulation Code. Disclosures — in

Our employees maintain the highest standards of

whatever form, including verbal — made in good

honesty and professional conduct. Seeking undue

faith will be investigated according to the protocols

financial and material advantage from transactions

established in this policy and protected by keeping

with Globe is a breach of trust between the employee

the information confidential. The identity and

and the company.

source of the information are likewise protected to the extent required by law.These are by no means 2016 ANNUAL REPORT

119

the only channels by which disclosures may be

Audit Committee, and Legal for possible criminal

received. Persons or units within the organization

case/action. The Whistleblower will also receive an

who receive disclosures shall, however, forward

update if no merits were found on the complaint

or relay the disclosures through the company’s

filed.

different whistleblower channels. Upon receipt of the complaints raised, HR Employee Relations will review

INSIDER TRADING

and evaluate the details of the report provided. If a whistleblower involves a third party, the report is

We restrict trading of securities (buying or selling)

endorsed to Security for investigation. If the report

by covered persons considered to have knowledge

involves employees, HR Employee Relations will

of material information, during the blackout period,

conduct the investigation. HR Employee Relations

except in accordance with this policy.

is also in charge of administering the different whistleblower channels, and receiving, collating,

We also prohibit key officers and employees with

and submitting all disclosures to the Disclosure

access to the quarterly results in the course of its

Committee (DC), who is composed of the company’s

review, from trading in company shares 10 trading

Corporate Secretary, HR, Internal Audit, ERM and

days before and three trading days after any

Legal Services. If and when disclosure involves a

structured report/disclosure, and three trading days

member of the Board or ERM or the complaint

before and three trading days after an unstructured

administrator, the disclosure shall be transmitted

report/disclosure.

directly to the Corporate Secretary for handling.

RELATED PARTY TRANSACTIONS (RPTS)

Meanwhile, if disclosure involves the Disclosure Committee, the disclosure will then be endorsed to the Board.

We disclose, review, and approve related party transactions, in accordance with the principles of

Once disclosure is submitted, the Whistleblower

transparency and fairness, to ensure that they are at

shall receive a notice that the complaint has been

arm’s length, the terms are fair, and they will inure to

received and that it shall be processed in accordance

the best interest of Globe Telecom, its subsidiaries or

with the policy. Disclosures will then be investigated

affiliates and all shareholders.

by Security and HR Employee Relations. If with financial and reputation risk, Security will forward

The RPTs are disclosed in our financial statement

the report to DC for proper endorsement to the

(page 244), annual reports, and other applicable

Office of the President, Audit Committee and Legal

filings in accordance with the relevant rules and

for possible criminal case/action. Meanwhile, for

issuance of the SEC and other applicable regulatory

employee related activities, HR Employee Relations

bodies. The disclosure includes, but is not limited

will implement appropriate disciplinary proceedings

to, the name of the related party, relationship with

in accordance with due process. If with financial

the corporation for each RPT, the nature and value

(P1 million and up) and reputation risk, HR Employee

for each RPT. Such disclosure is also made publicly

Relations will do the same and forward to DC for

available by the corporation, for the benefit of all

proper endorsement to the Office of the President,

shareholders and other stakeholders, through our website and such other media channels as applicable.

120

GLOBE TELECOM

Under our RPT policy, shareholders, including

Statements, Certificate of No Default, and CFO

minority shareholders, and other stakeholders are

Certification on compliance with financial ratios

provided with proper guidelines and procedures

ensure the Creditors of the company’s financial

for right of action and remedies that are readily

soundness.

accessible in order to redress corporate conduct in case of any abuse on such transactions (e.g. email

We provide prompt and accurate reports of our

account and hotline numbers), as necessary. The

financial standing to creditors by providing them our

policy contains this whistle-blowing mechanism,

financial and operating results, Management and

provides for the creation of a dedicated committee

Discussion Analysis and Financial Statements on a

for the review of RPTs and also identifies materiality

periodic basis that allow the creditors to continuously

thresholds of such transactions.

evaluate and monitor our performance and credit standing.

The independent directors form the independent committee that is tasked to review and monitor

Moreover, we adopted an expanded corporate

material RPTs, among others, to ensure our best

governance approach in managing business risks.

interest, our shareholders’, and all other stakeholders’,

A Revised Enterprise Risk Management Policy was

and that the RPTs are executed with fair and

developed to provide a better understanding of the

transparent terms prior to endorsement to our Board

different risks that could threaten the achievement of

for approval.

our vision, mission, strategies, and goals. The policy also highlights the vital role that each individual

Non-compliance with any of the provisions of the

plays in the organization from Senior Management

policy on RPT shall result in the nullification of any

to staff in managing risks and in ensuring that the

agreement or contract involved in the execution

company’s business objectives are attained. With

of the RPT. A director, officer, employee, or Related

this, it assures the creditors that we are proactive

Party is subject to the corresponding procedures and

in managing our risks and are committed to

penalties under our Code of Conduct and relevant

sustaining the growth of the company. As part of the

laws, as applicable.

implementation, we regularly submit our quarterly financial results to the PSE and SEC.

Our independent directors met in 2016 to review and discuss RPTs stated in this report.

The loan agreements with banks and other financial institutions provide for certain restrictions and

CREDITORS’ RIGHTS

requirements with respect to, among others, maintenance of financial ratios and percentage of

It is our policy to protect the rights of our creditors

ownership of specific shareholders, incurrence of

by maintaining, at all times, our good credit

additional long-term indebtedness or guarantees and

standing. We thus strictly observe contractual

property encumbrances.

obligations, and regard fair and truthful disclosure and transparency of financial records and dealings

BOARD DIVERSITY POLICY

of utmost importance to assure creditors of our continued credit worthiness. Our periodic reports

In addition to the qualifications, disqualifications, and

to our creditors such as our latest certified Financial

other criteria set forth in our corporate documents

2016 ANNUAL REPORT

121

and relevant law in relation to the nomination and

(ISDP), which is a fully operationalized, separate and

election of members of the Board, we are committed

independent group that focuses on Globe Telecom’s

to promote and observe diverse membership among

privacy and cybersecurity matters.

our directors.

We respect customer and stakeholder privacy and The Board of Directors, led by the Chairman,

intellectual property. As such, we secure and protect

encourages our shareholders to nominate

Customer Data with proper safeguards to ensure

candidates who will diversify membership in the

confidentiality and privacy; prevent loss, theft, or

Board. Therefore, as company policy, no director or

use for unauthorized purposes; and comply with

candidate for directorship shall be discriminated

the requirements of the law. We use international

upon by reason of gender, age, disability, ethnicity,

and global frameworks as a reference for our

nationality or political, religious or cultural

control environment and utilize the latest tools

backgrounds. Our MCG reiterates this policy and

and technologies that allows us to prevent, detect,

further states that our Board must be composed of

investigate, and respond to the various threats in

at least three independent directors, one of whom

our environment. We have a Security Operations

shall be a female, at all times. Directors must also

Center (SOC) that monitors our technology

have understanding of the telecommunications

infrastructure and environment, operates 24x7,

industry or sufficient professional experience and

and manned by a dedicated team. All systems and

competence in other relevant industries, which

processes in the organization go through extensive

further encourages a diversified collaboration of

assessments and reviews, targeting information

views and skillset within our Board.

collection, storage, and processing practices, to guard against unauthorized access, alteration, disclosure,

DATA PRIVACY AND INTELLECTUAL PROPERTY RIGHTS

or destruction. The status of all our privacy and cybersecurity programs and operations are presented to and reviewed by the Audit Committee

Our Privacy Policy outlines our policy in relation to

of the Board on a quarterly basis.

the collection, use, and protection of Customer Data to provide customers and other stakeholders with a

Among other safeguards, we keep our records

wonderful experience. We notify all customers and

as accurate as possible. If customer personal

relevant stakeholders with any update on our Privacy

information is wrong, we give ways to update it.

Policy by posting it on our website for easy reference.

Registered customers may access account details,

We also initiate internal campaigns on data privacy

correct personal information and report abuse of

and cybersecurity to ensure our internal stakeholders

privacy or intellectual property rights by contacting

are also fully aware of their rights and responsibilities

the Globe Customer Care (+632 7301000 or 211

in relation to the use of the products and services

using your mobile phone) or his/her designated

that the digital lifestyle offers. The appointment

relationship manager, as may be applicable; or by

of our DPO, Mr. Anton Reynaldo M. Bonifacio,

visiting any Globe Store or our website at www.globe.

establishes further, Globe Telecom’s adherence to

com.ph. Contact details of our Data Privacy Officer

the country’s Data Privacy Act of 2012 (Republic

are likewise publicly available through our website

Act 10173). Unlike most organizations, we have

and effective procedures are in place in case of a

our Information Security and Data Privacy Division

122

GLOBE TELECOM

report or complaint on data privacy or intellectual

year-end, in compliance with the ACGS standard that

property. Rest assured, we do our utmost to comply

is earlier than the local regulatory deadline. These

with relevant rules and laws on data privacy and

reports are made available to the analysts after

intellectual property rights.

disclosure, as well as released through various media channels, on our company website.

DISCLOSURE AND TRANSPARENCY

In case of mergers, acquisitions and/or takeovers requiring shareholders’ approval, the board of directors of the offeree company shall appoint an

GRI 102-17, 102-21,102-32

independent party to evaluate the fairness of the Our management is continuously committed to

transaction price. Such shall be disclosed in our

high standards of disclosure, transparency, and

financial statement and relevant reports. We shall

accountability. The management established the

also ensure our compliance with applicable law,

sustainability policy and reviews its adequacy at the

rules, and regulations prescribed by the SEC and

highest level periodically and allocated resources

the PSE. Any market-sensitive information such as

to ensure effective implementation. The practice of

dividend declaration is also disclosed to the SEC and

sustainability reporting was implemented as a means

PSE and then released through various modes of

to provide fair, accurate, and meaningful assessment

communication.

of its overall performance on triple bottom line (Economic, Environment, and Social) responsibility to

In accordance with our strong advocacy for CG, we

our stakeholders including investors.

recognize the importance of regular communication with our investors, and are committed to high

As a listed company in the PSE and PDEx, with

standards of disclosure, transparency, and

reportorial requirements, rules and applicable laws

accountability through our Investor Relations (IR)

as well as regulations of relevant regulatory agencies,

program. Our IR Program is geared towards fulfilling

we aim to provide a fair, accurate, complete and

our commitment to a transparent disclosure regime

meaningful assessment of our company’s financial

and accessibility for all stakeholders.

performance and prospects through the annual report, quarterly financial reports, and analyst

In addition to the ASM, we extend various venues

presentations. We practice regular disclosure of

for stakeholders to communicate effectively with

our financial results. Quarterly financial results

us through the conduct of analysts’ briefings, ad-

are immediately disclosed after the approval by

hoc briefings, investor conferences, media briefings,

the Board to PSE and SEC. Quarterly and year-end

one-on-one or small group meetings, and investor

financial statements and detailed management’s

days that are organized by our IR Department and/or

discussion and analysis are filed within 45 and 105

Corporate Communications Group or in partnership

calendar days, respectively from the end of the

with our shareholders, broker or other partner

financial period. Our financial reporting disclosures

institutions. Other than keeping the company

are in compliance with the PSE and SEC requisites.

website up-to-date, these venues provide another

Beginning last year, we have driven management

means for us to discuss our quarterly financial

and respective departments to release our audited financial statements within 60 days from financial

2016 ANNUAL REPORT

123

results, announcements, material disclosures and

FINANCIAL PERFORMANCE INDICATOR

other relevant information with stakeholders. In the past years, we have been further streamlining

We are committed to efficiently managing our

communication efforts and opening-up several

resources and enhancing shareholder value. We

new customer touch points, enabling them to

regularly review our performance against our

interact with us at their convenience. Among other

operating and financial plans and strategies, and use

enhancements, we utilized email, live chat, SMS,

key performance indicators to monitor our progress.

website, and social media channels (e.g., Facebook,

Except for net income, our financial performance

Twitter, Instagram) to provide our customers with

indicators are not measurements in accordance with

real-time information and quicker responses to

Philippine Financial Reporting Standards (PFRS) and

concerns. A conference call facility is setup during

should not be considered as an alternative to net

analysts’ briefings and meetings to enable wider

income or any other measure of performance which

participation among shareholders and other

are in accordance with PFRS.

stakeholders. We also participate in both local and international investor conferences, which host various shareholders and other stakeholders. Details

NON-FINANCIAL PERFORMANCE INDICATOR

and information on these conferences are published on our corporate website. We have sustained this

We also use a non-financial performance indicator to

convenient and accessible line of communication

measure the success of the business and emphasize

through our IR Program in the last financial year and

our commitment to sustainability. These include:

will continue to enhance this in the succeeding years.

(1) employee engagement score; (2) customer

We fully understand that the changes and progress

satisfaction; (3) environmental and social impacts;

in digital lifestyle include the fast-paced character

among others. These indicators are disclosed in our

of our customers, shareholders and different

Financial and Sustainability Report, aligned with the

stakeholders. Because of this, our company website

Global Reporting Initiative (GRI).

must also be an effective channel of information and a manifestation of CG advocacy. Among other

DIVIDEND POLICY

information, we keep our website up-to-date with corporate announcements, reports and disclosures

We declare dividends to our common stockholders

that are accessible to all stakeholders.

on a regular basis as may be determined by the Board of Directors. We return to our shareholders,

Our website is regularly reviewed and maintained.

dividends equivalent to 75 percent-90 percent of the

Thus, we encourage our subscribers and stakeholders

prior year’s core net income. Dividends declared on

to explore the CG and IR pages of our website to

our stocks are payable in cash or in additional shares

learn more about our wonderful corporate culture

of stock. As a policy and as much as practicable, we

apart from our products and services.

observe a 30-day period for the payment of dividends to shareholders from the declaration date of such dividends.

124

GLOBE TELECOM

DEALINGS IN SECURITIES

The Board regularly reviews our dividend policy, including the frequency of its distribution, taking into account our operating results, cash flows, debt

We have adopted strict policies and guidelines for

covenants, capital expenditure levels, and liquidity.

trades involving the company’s shares made by

The payment of dividends in the future will depend

directors and key officers and those with access to

upon our earnings, cash flow, and financial condition.

material non-public information. Directors and key officers and those with access to the quarterly results

OWNERSHIP STRUCTURE

in the course of its review are prohibited from trading

102-5, 102-24, 102-26, 102-27

Globe shares starting from the time when quarterly results are internally reviewed until after we publicly

We regularly disclose the top 100 shareholders

disclose its results. Notices of trading blackouts are

of our common and preferred equity. Disclosure

regularly issued to the directors and key officers

is also made of the security ownership of certain

concerned and to those with access to such material

record and beneficial owners who hold more than

non-public information.

5% of our common and preferred shares. Finally, the shareholdings and percentage ownership

All directors and key officers are required, within

of the directors and key officers are disclosed in

three trading days upon change in their ownership

the Definitive Information Statement sent to the

of securities, to submit the statement of changes of

shareholders prior to the ASM.

ownership in securities (SEC Form 23-B) in relation to their trades to the Compliance Officer for immediate submission and disclosure to the SEC and the PSE. Once submission and disclosure to pertinent regulatory agencies are completed, the same is reflected in our relevant reports and the company website under PSE/SEC Disclosures of our IR webpage.

DECLARATION DATE

PER SHARE (IN P)

February 5, 2016

22.00

May 4, 2016

AMOUNT (IN P MILLION)

RECORD DATE

PAYABLE DATE

2,920

February 22, 2016

March 4, 2016

22.00

2,921

May 19, 2016

June 3, 2016

August 2, 2016

22.00

2,921

August 16, 2016

September 1, 2016

November 4, 2016

22.00

2,921

November 18, 2016

December 2, 2016

2016 ANNUAL REPORT

125

NONVOTING PREFERRED

% OF NONVOTING PREFERRED

COMMON

Ayala Corp

41,164,276

31.01%

-

0.00%

-

-

41,164,276

13.22%

Singtel

62,646,487

47.19%

-

0.00%

-

-

62,646,487

20.13%

-

-

158,515,016

100.00%

-

0.00%

158,515,016

50.92%

161,910

0.12%

5

0.00%

47,500

0.24%

209,415

0.07%

Public

28,785,915

21.68%

-

0.00%

19,952,500

99.76%

48,738,415

15.66%

Total

132,758,588

100.00%

158,515,021

100.00%

20,000,000

100.00%

311,273,609

100.00%

STOCKHOLDERS

Asiacom Directors, Officers, ESOP

VOTING PREFERRED

% OF VOTING PREFERRED

% OF COMMON

TOTAL OUTSTANDING

% OF TOTAL OUTSTANDING

GLOBE TELECOM BOARD OF DIRECTORS TITLE OF CLASS AND NATURE OF OWNERSHIP

Jaime Augusto Zobel de Ayala Mark Chong Chin Kok

Ernest L. Cu

2016 BEGINNING BALANCE IN COMPANY SHARES 2

-

2

Common (indirect)

1

-

1

Common (indirect)

2

-

2

Common (direct)

65,255

-

65,255

Common (indirect)

1,000

1,000 (A) January 8, 2016: 1,000 (A) January 12, 2016; 1,000 (A) January 14, 2016

4,000

Voting Preferred (direct)

Delfin L. Lazaro

END BALANCE IN COMPANY SHARES AS OF 31 DECEMBER 2016

Common (direct)

Non-voting Preferred (indirect) Romeo L. Bernardo

2016 CHANGE/S IN SHAREHOLDINGS

Common (indirect)

1

-

1

16,700

-

16,700

500

-

500

1

-

1

Voting Preferred (indirect) Common (direct) Non-voting Preferred (indirect)

1

-

1

2,800

-

2,800

Jose Teodoro K. Limcaoco

Common (direct)

1

-

1

Fernando Zobel de Ayala

Common (indirect)

1

-

1

Samba Natarajan

Common (direct)

2

-

2

Rex Ma. A. Mendoza

Voting Preferred (direct)

1

-

1

Saw Phaik Hwa

Voting Preferred (direct)

1

-

1

100

-

100

1

-

1

Manuel A. Pacis

126

Common (direct) Voting Prefered (indirect)

GLOBE TELECOM

GLOBE TELECOM KEY OFFICERS TITLE OF CLASS AND NATURE OF OWNERSHIP Common (direct)

Alberto M. de Larrazabal

2016 BEGINNING BALANCE IN COMPANY SHARES

2016 CHANGE/S IN SHAREHOLDINGS

END BALANCE IN COMPANY SHARES AS OF 31 DECEMBER 2016

4,322

-

4,322

1,000 (A) January 6, 2016;

Common (indirect)

-

Non-voting Preferred (direct)

2,000

-

2,000

Common (indirect)

51,838

6,800 (A) January 14, November 142016 , 2016

58,638

Non-voting Preferred (direct)

20,000

-

20,000

Common (direct)

-

130 (A) January 6, 2016

130

Common (indirect)

-

285 (A) March 7, 2016

285

Common (indirect)

18,915

-

18,915

Non-voting Preferred (direct)

4,000

-

4,000

Common (direct)

814

-

814

Common (indirect)

-

700 (A) November 21, 2016

700

Non-voting Preferred (direct)

2,000

-

2,000

-

-

-

-

Common (direct)

20

-

20

Common (indirect)

-

1,000 (A) November 17, 2016

1,000

Marisalve Ciocson-Co

Common (direct)

1,539

-

1,539

Rosemarie Maniego-Eala

Common (indirect)

3

3,000 (A) November 11, 2016

3,003

Common (direct)

179

-

179

Common (indirect)

-

500 (A) November 23, 2016

500

Gil B. Genio

Renato M. Jiao

Rebecca V. Eclipse Vicente Froilan M. Castelo

Carmina J. Herbosa

Bernard P. Llamzon

Solomon M. Hermosura

Maria Aurora Sy-Manalang

1,000 (A) January 12, 2016;

2,000

(A) Acquired (D) Disposed of

None of the members of our Board of Directors and management owns 2% or more of the outstanding capital stock of Globe.

2016 ANNUAL REPORT

127

BOARD OF DIRECTORS

128

GLOBE TELECOM

JAIME AUGUSTO ZOBEL DE AYALA CHAIRMAN, NON-EXECUTIVE DIRECTOR • Globe Director since March 1989 and last re-elected on April 13, 2016 • Globe Board Committee membership: - Executive Committee (Chairman) • Number of directorships in other publicly-listed companies: 5 Mr. Zobel, 57, Filipino, has served as Chairman of our Board since December 1996 and as a Director since March 1989.

He is also the Chairman and CEO of Ayala Corporation and holds various positions in other companies: Chairman of Bank of the Philippine Islands, and Integrated MicroElectronics, Inc.; Vice-Chairman of Ayala Land, Inc. and Manila Water Company, Inc. He is also the Co-Chairman of Ayala Foundation, Inc.; Chairman of Harvard Business School Asia Pacific Advisory Board; Vice-Chairman of the Makati Business Club; and member of the Harvard Global Advisory Council, Mitsubishi Corporation International Advisory Committee, JP Morgan International Council, and Endeavor Philippines.

He was the Philippine Representative to the Asia-Pacific Economic Cooperation (APEC) Business Advisory Council from 2010 to December 2015. 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.

Mr. Zobel holds directorship in Ayala Corporation; Bank of the Philippine Islands; Integrated Micro-Electronics, Inc.; Manila Water Company, Inc.; and Ayala Land, Inc. All of which are publicly-listed companies on the Philippine Stock Exchange.

2016 ANNUAL REPORT

129

MARK CHONG CHIN KOK CO VICE-CHAIRMAN, NON-EXECUTIVE DIRECTOR • Globe Director since October 2009 and last re-elected on April 13, 2016 • Globe Board Committee memberships: - Executive Committee - Compensation and Remuneration Committee • Number of directorships in other publicly-listed companies: 1 Mr. Chong, 53, Singaporean, previously served as a Director for one year, from October 6, 2009 to October 8, 2010.

He was elected again as Director at the ASM on April 16, 2013 and has since been re-elected to the Globe Telecom Board. Mr. Chong was appointed CEO of International, Group Consumer, of Singtel on January 14, 2013 to oversee the growth of Singtel Group’s international affiliates, strengthen its relationship with overseas partners, and drive regional initiatives for scale and synergies. He is also a Director of Bharti Infratel Limited.

Prior to this appointment, he was Chief Operating Officer of Advanced Info Service Plc (AIS), the Group’s associate in Thailand. He has also held senior executive roles in the Consumer, Enterprise and Network groups in Singtel.

Mr. Chong graduated with a Bachelor of Electronics Engineering and Master in Research in Electronic Systems from ENSERG, Grenoble, France and obtained his Master of Business Administration from the National University of Singapore. He is also a senior fellow with the Singapore Computer Society.

Mr. Chong also holds directorship in is Bharti Infratel Limited, a publicly-listed company on the National Stock Exchange of India and Bombay Stock Exchange.

130

GLOBE TELECOM

FERNANDO ZOBEL DE AYALA CO VICE-CHAIRMAN, NON-EXECUTIVE DIRECTOR • Globe Director since October 1995 and last re-elected on April 13, 2016 • Globe Board Committee memberships: - Compensation and Remuneration Committee - Finance Committee • Number of directorships in other publicly-listed companies: 4 Mr. Zobel, 56, Filipino, is the President and Chief Operating Officer of Ayala Corporation, one of the Philippines’ largest conglomerates involved in real estate, financial services, telecommunications, water, electronics, automotive, power, transport, education, and healthcare. He is Board Chairman of Ayala Land and Manila Water Company and sits on the board of various companies in the Ayala group, including the Bank of the Philippine Islands, and the Ayala Foundation. Mr. Zobel de Ayala is a member of the INSEAD East Asia Council, and the World Presidents’ Organization.

He is a board member of Habitat for Humanity International and chairs the steering committee of its Asia Pacific Capital Campaign. He also serves on the board of the Asia Society and is a member of the Asia Philanthropy Circle. In the Philippines, he is a board member of the Philippine National Museum, Caritas Manila, Pilipinas Shell Corporation, and Pilipinas Shell Foundation.

Mr. Zobel de Ayala holds a liberal arts degree from Harvard College and a CIM from INSEAD, France.

The other publicly-listed companies he holds directorship in include Ayala Corporation; Ayala Land, Inc.; Manila Water Company, Inc.; and Bank of the Philippine Islands. All of which are publicly-listed companies on the Philippine Stock Exchange.

2016 ANNUAL REPORT

131

ERNEST L. CU EXECUTIVE DIRECTOR, PRESIDENT AND CEO • Globe Director since April 2009 and last re-elected on April 13, 2016 • Globe Board Committee membership: - Executive Committee • Number of directorships in other publicly-listed companies: none Mr. Cu, 56, Filipino, has served as Director since April 2009. He is currently our President and CEO. Mr. Cu joined Globe in October 2008 as Deputy CEO, and was officially appointed as our President and CEO on April 2, 2009. Since then, Mr. Cu has been passionately driving a sweeping transformation across the company, including modernizing its network and IT infrastructure, creating a strong collaborative and service-oriented culture, and product innovations in its core business segments.

Under Mr. Cu’s visionary leadership, Globe embarked on a purpose-led transformation to create a more sustainable organization with its renewed mission, vision, and core values, collectively embodied in the Globe Purpose, where the company sees itself as a catalyst in driving forward the nation’s progress. In 2016, Mr. Cu was named Best CEO by Finance Asia for the third time, since 2010. For the third year in a row, he was cited among the 100 most influential telecom leaders worldwide by Londonbased Global Telecoms Business Magazine Power 100.

Mr. Cu was also recognized among the Overall Best CEO category for Telecommunications and Sellside Best CEO category by Institutional Investor Magazine’s 2016 AllAsia Executive Team. In 2014, Mr. Cu was honored as the Telecommunications Executive of the Year by the International Business Awards (Stevies). He also earned international accolade in 2012 as CEO of the Year by Frost & Sullivan Asia Pacific.

Prior to Globe, Mr. Cu was President and CEO of SPi Technologies from 1997 to 2008. At the cusp of the new millennium, Mr. Cu spurred the beginning of the BPO business model for the Philippines, earning him the recognition as one of the founding fathers of BPO in the country. Lauding his pioneering spirit and drawing great highlight to his career then was a recognition from Ernst & Young in 2003 as the ICT Entrepreneur of the Year.

Mr. Cu has a Bachelor of Science Degree in Industrial Management Engineering from De La Salle University in Manila, and an M.B.A. from the J.L. Kellogg Graduate School of Management, Northwestern University.

Mr. Cu is not a director in any other publicly-listed company.

132

GLOBE TELECOM

DELFIN L. LAZARO NON-EXECUTIVE DIRECTOR • Globe Director since January 1997 and last re-elected on April 13, 2016 • Globe Board Committee membership: - Finance Committee • Number of directorships in other publicly-listed companies: 4 Mr. Lazaro, 70, Filipino, has served as Director since January 1997. His other significant positions include: Chairman of Atlas Fertilizer & Chemicals Inc.; Vice- Chairman and President of Asiacom Philippines, Inc.; Director of AC Energy, Holdings, Inc.; A.C.S.T. Business Holdings, Inc.; AC International Finance; Ayala International Holdings, Inc.; AYC Holdings, Inc.; Bestfull Holdings, Inc.; Philwater Holdings. Co., Inc.; Purefoods International, Ltd.; Ayala Infrastructure; and Ayala Industrial. He is also Director of Ayala Corporation, Ayala Land, Inc., Integrated MicroElectronics, Inc., Manila Water Company, Inc., Probe Productions, Inc. 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 successive high growth levels up to the Asian crisis in 1997.

Mr. Lazaro earned his Bachelor of Science in Metallurgical Engineering from the University of the Philippines, and his Masters of Business Administration (with distinction) from the Harvard Graduate School of Business.

The other companies he holds directorship in include Ayala Corporation; Ayala Land, Inc.; Integrated MicroElectronics, Inc.; and Manila Water Company, Inc. All of which are publicly-listed companies on the Philippine Stock Exchange.

2016 ANNUAL REPORT

133

SAMBA NATARAJAN NON-EXECUTIVE DIRECTOR • Globe Director since April 7, 2015 and last re-elected on April 13, 2016 • Globe Board Committee memberships: - Executive Committee - Finance Committee • Number of directorships in other publicly-listed companies: none Mr. Natarajan, 51, US citizen, is the CEO of Group Digital Life, Singtel, effective April 2015. Group Digital is the digital innovation business for the Singtel group and is currently focused on capturing opportunities in three main areas: Digital Marketing, Over-the-top Video and Data analytics while also managing the corporate venture fund, Innov8, that invests in cutting edge technologies. He joined Singtel in May 2014 as Managing Director of Digital Enterprise leading a team focused on identifying, executing, and operationalizing enterprise growth opportunities from emerging technology trends.

He brings more than 25 years of corporate and consulting experience across a wide range of senior roles in the areas of strategy, business development and finance. He worked for Citibank from 1988 to 1997 and McKinsey & Company since 1999. In his last role with McKinsey, he was the Leader of Southeast Asia TMT practice, consulting with C-level executives in the areas of growth, transformation, corporate finance and commercial operations. Mr. Natarajan sits on the board of several digital subsidiaries of the Singtel group, including Amobee, HOOQ and Trustwave. He also sits on the advisory board of the McKinsey Digital Campus and on the Board of Governors of the Singapore American School.

Mr. Natarajan holds a Bachelor of Engineering degree in Electrical Engineering with distinction from the Birla Institute of Technology and Science in Pilani, India; a Post Graduate Diploma in Management from the Indian Institute of Management in Ahmedabad, India where he was an industrial scholar and an MBA from the Wharton School, University of Pennsylvania, USA, where he was a Hope Fellow, Ford Fellow and Palmer Scholar. He was profiled in “Leaders for the Global Markets”, Wharton School, 1999–2000.

Mr. Natarajan is not a director in any other publicly-listed company.

134

GLOBE TELECOM

ROMEO L. BERNARDO NON-EXECUTIVE DIRECTOR • Globe Director since September 2001 and last re-elected on April 13, 2016 • Globe Board Committee memberships: - Compensation and Remuneration Committee - Finance Committee • Number of directorships in other publicly-listed companies: 4 Mr. Bernardo, 62, Filipino, is Managing Director of Lazaro Bernardo Tiu and Associates (LBT), a financial advisory firm based in Manila. He is also a GlobalSource economist in the Philippines. He is Chairman of ALFM Family of Funds and Philippine Stock Index Fund. He is likewise a director of several companies and organizations including Aboitiz Power, Bank of the Philippine Islands, RFM Corporation, Philippine Investment Management (PHINMA), Inc., BPIPhilam Life Assurance Corporation, National Reinsurance Corporation of the Philippines (NRCP) and Institute for Development and Econometric Analysis. He is a member of the Philippine World Bank Advisory Group and a member of the Panel of Conciliators of the International Centre for Settlement of Investment Disputes.

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.).

Mr. Bernardo holds a degree in Bachelor of Science in Business Economics from the University of the Philippines (magna cum laude) and a Master’s Degree in Development Economics at Williams College from Williams College in Williamstown, Massachusetts.

The other companies he holds directorship in include Aboitiz Power; Bank of the Philippine Islands; RFM Corporation; and National Reinsurance Corporation of the Philippines. All of which are publicly-listed companies on the Philippine Stock Exchange.

2016 ANNUAL REPORT

135

JOSE TEODORO K. LIMCAOCO NON-EXECUTIVE DIRECTOR • Globe Director and first elected on April 13, 2016 • Globe Board Committee membership: - Executive Committee • Number of directorships in other publicly-listed companies: 2 Mr. Limcaoco, 54, Filipino, is currently the Chief Finance Officer and Finance Group Head of Ayala Corporation. He is a director of Integrated Micro-Electronics, Inc. and an independent director of SSI Group, Inc. He is the Chairman of Darong Agricultural and Development Corporation and Zapfam Inc. He is the Chairman, President and CEO of Water Capital Works, Inc. He is the President of Liontide Holdings, Inc. and of Philwater Holdings Company, Inc. He is a Director of Ayala Hotels, Inc.; AC Energy Holdings, Inc.; Ayala Healthcare Holdings, Inc.; Ayala Aviation Corporation; Ayala Education, Inc.; Asiacom Philippines, Inc.; AG Counselors Corporation; Michigan Holdings, Inc.; AC Industrial Technology Holdings, Inc. (formerly Ayala Automotive Holdings Corporation); LICA Management Inc. and Just For Kids, Inc. He joined Ayala Corporation as a Managing Director in 1998.

Prior to his appointment as CFO in April 2015, he held various responsibilities including President of BPI Family Savings Bank, President of BPI Capital Corporation, Officer-in-Charge for Ayala Life Assurance, Inc. and Ayala Plans, Inc., Trustee and Treasurer of Ayala Foundation, Inc., President of myAyala.com, and CFO of Azalea Technology Investments, Inc. He served as the President of the Chamber of Thrift Banks from 2013-2015. He has held prior positions with JP Morgan & Co. and with BZW Asia.

He graduated from Stanford University with a BS Mathematical Sciences (Honors Program) in 1984 and from the Wharton School of the University of Pennsylvania with an MBA (Finance and Investment Management) in 1988.

The other companies he holds directorship in include Integrated Micro-Electronics, Inc. and SSI Group, Inc. Both are publicly-listed companies on the Philippine Stock Exchange.

136

GLOBE TELECOM

Mr. Mendoza, 54, Filipino, is the Founder and Managing Director of Rampver Financials, a dynamic niche player in financial services specializing in investments, and one of the biggest non-bank distributors of mutual funds in the Philippines. He was previously Senior Adviser to the AIA Group CEO for Marketing and Distribution. AIA is the leading pan-Asian insurance company and is the parent firm of the Philippine American Life and General Insurance Company (Philam Life).

Prior to this role, he was the President and CEO of Philam Life, one of the country’s most trusted financial services conglomerates. He was responsible for bringing Philam Life back on its strong growth track. From being last among 17 countries in terms of business performance in 2011, Philam Life won the coveted Overall Gold Cup, and was the number one country operation of AIA in 2013. He also sits as a director of Prime Orion Philippines, Inc. (formerly Prime Orion Properties, Inc.); FLT Prime Insurance, Esquire Financing, Inc.; the Cullinan Group; TechnoMarine Philippines; Seven Tall Trees Events Company, Inc.; The Freeport Area of Bataan and is a Trustee of the Bataan Peninsula State College. Mr. Mendoza is also a member of Bro. Bo Sanchez’s Mastermind Group, and is cited by many as one of the best leadership and business speakers in the country. Prior to his return to Philam Life, he was previously Senior Vice President and Chief Marketing and Sales Officer of Ayala Land, Inc. He was also Chairman of Ayala Land International Sales, Inc.; President of Ayala Land Sales, Inc.; and Avida Sales Corporation. He was also President and CEO of Philam Asset Management, Inc. (PAMI) and is considered as one of the pioneers behind the resurgence of the Philippines’ mutual fund industry.

REX MA. A. MENDOZA NON-EXECUTIVE AND INDEPENDENT DIRECTOR • Globe Director since April 8, 2014 and re-elected on April 13, 2016 • Globe Board Committee membership: - Nomination Committee (Chairman) - Compensation and Remuneration Committee (Chairman) - Audit Committee • Number of directorships in other publicly-listed companies: 1

He was a professor of Marketing and Computational Finance at the De La Salle University Graduate School of Business. He taught strategic marketing, services marketing and services strategy. He has served as Chairman of the Marketing Department and was awarded as one of the University’s most outstanding professors.

He has a Master’s Degree in Business Management with distinction from the Asian Institute of Management and was one of the 10 Outstanding Graduates of his batch at the University of the Philippines where he obtained a BSBA degree with a double major in marketing and finance. Mr. Mendoza was awarded Most Distinguished Alumnus of the UP Cesar Virata School Business. He is also a Fellow with Distinction at the Life Management Institute of Atlanta, Georgia, USA, a Registered Financial Planner (RFP) and a four-time member of the Million Dollar Round Table.

Mr. Mendoza also holds directorship in Prime Orion Philippines, Inc., a publicly-listed company on the Philippine Stock Exchange.

2016 ANNUAL REPORT

137

MANUEL A. PACIS NON-EXECUTIVE AND INDEPENDENT DIRECTOR • Globe Director since April 2011 and re-elected on April 13, 2016 • Globe Board Committee memberships: - Nomination Committee - Audit Committee (Chairman) • Number of directorships in other publicly-listed companies: none Mr. Pacis, 72, Filipino, was formerly a Vice President for Finance of the Procter & 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, and 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/information technology, mergers and acquisitions, joint ventures, and finance and accounting.

Mr. Pacis graduated with a Bachelor of Business Administration (magna cum laude) from the University of the East in 1963.

Mr. Pacis is not a Director in any other publicly-listed company.

1 SEC Memorandum Circular No. 19, Series of 2016 updated the term limit for independent directors with reckoning year from 2012 in connection with SEC Memorandum Circular No. 9, Series of 2011. Therefore, Mr. Pacis remains qualified to serve the Company as an Independent Director.

138

GLOBE TELECOM

SAW PHAIK HWA NON-EXECUTIVE AND INDEPENDENT DIRECTOR • Globe Director since April 7, 2015 and re- elected on April 13, 2016 • Globe Board Committee memberships: - Nomination Committee - Audit Committee • Number of directorships in other publicly-listed companies: 1 Ms. Saw, 62, Singaporean, was the Group CEO of Auric Pacific Group, listed on the Mainboard of the Singapore Exchange, which has diverse business interests ranging from distribution of fast moving consumer food, food manufacturing and retailing, management of restaurant and food court operations to other strategic investments including fund investment. The Group operates in various countries throughout Asia including Singapore, Malaysia, Indonesia, Hong Kong and China. Ms. Saw retired as its CEO on May 1, 2015.

Prior to this, Ms. Saw was the President and CEO of SMRT Corporation Ltd from December 2002 to January 2012, Singapore’s first multi-modal public transport service provider. During her tenure, she enhanced the public travel experience in Singapore by introducing commuter-centric initiatives and adding lifestyle conveniences at stations to make public transport a choice mode of travel for all. She was also instrumental in broadening SMRT’s geographical footprint as well as establishing SMRT’s presence overseas with the opening of offices in the Middle East and China which serve as springboards to opportunities in those regions. From 1984 to 2002, Ms. Saw was the Regional President in charge of businesses in Singapore, Indonesia, and Malaysia for DFS Venture Singapore.

Ms. Saw holds a Second Upper Class Honours in Biochemistry from the University of Singapore and has attended the Advanced Management Programme in the University of Hawaii.

Ms. Saw also holds directorship in Hour Glass Limited, a publicly-listed company on the Singapore Stock Exchange.

2016 ANNUAL REPORT

139

RISK MANAGEMENT

140

GLOBE TELECOM

2016 ANNUAL REPORT

141

RISK MANAGEMENT GRI 102-11, 102-15, 102-29, 102-30, 102-31,

Globe Telecom believes that effective Risk Management (RM) practices are crucial to sustaining its profitability and resiliency as a company. Hence, we ensure that RM remains a core capability and an integral part of how decisions are made in the organization to deliver value to our shareholders.

We live out our RM philosophy via three key pillars - Structure, Process and Culture.

STRUCTURE We strive to cultivate an organizational structure that supports strong corporate

PROCESS

CULTURE We strive to nurture a risk aware culture by setting the appropriate tone at the

governance, clearly defines risk taking responsibility and authority, facilitates ownership and accountability for risk

We strive to sustain sound processes that facilitate the identification, assessment, quantification, mitigation, management, monitoring and communication of risks at the enterprise and operational level. We

taking, and ensures proper segregation of duties.

also regularly review our RM processes and policies on a continuing basis and stay

adjusted decisions, recognizing appropriate risk-taking attitudes, and embedding the right risk skills across the organization.

abreast of current developments to ensure that we remain robust and relevant, through benchmarking against industry and global

top, defining clear accountability for risks, espousing transparency and timeliness in sharing risk information, enabling risk-

best practices.

ROLES AND RESPONSIBILITIES

Given the overlapping oversight functions of the various committees, and to enable an integrated

BOARD OF DIRECTORS

and holistic approach to RM oversight at the Board, the Audit Committee was designated as the overall

The Board of Directors oversees and conducts an

consolidator of risks for all the committees. The Audit

annual review of our material controls, covering

Committee regularly reports to the Board of Directors

operational, financial and compliance areas and

on our RM efforts, thus, providing the Board with a

overall RM systems. The overall responsibility for

more coordinated and effective review of risks across

our RM oversight rests with the Board. To enable

the company and assurance over our overall RM.

the Board to effectively discharge our RM function,

To that effect, the Audit Committee functions as a

various Board committees have been designated to

separate level risk committee.

provide RM oversight for specific risk areas.

142

GLOBE TELECOM

BOARD RISK MANAGEMENT OVERSIGHT EXECUTIVE COMMITTEE

AUDIT COMMITTEE

• Provides oversight on corporate

• Provides oversight on financial reporting

strategic risks, technology, and operational risks • Provides guidance in setting up integrated and cross-functional risk management systems and controls

risks • Provides oversight on operational risks, specifically on financial statements and reporting, internal controls, legal or regulatory compliance, corporate

infrastrusture • Reviews, jointly with management, the adequacy of risk management processes for strategic, operational, and technology risks

governance, risk management, and fraud • Consolidates risks for all committees for Board review

MANAGEMENT

FINANCE COMMITTE • Provides oversight on the company’s financial risk management including risks related to capital structure, acquisitions, divestments, treasury activities, tax strategy, and compliance

• Reviews the continuing effectiveness and relevance of the RM framework, processes,

With guidance provided by the Board, our

organization and tolerances, as assisted by

management is fully responsible for decision-making

the Chief Risk Officer; and

over the day-to-day affairs of Globe including the design, development and implementation of the RM

• Ensures that RM activities are linked to the Risk Owners’ Key Result Areas.

strategies, policies and systems intended to address the identified risks.

CHIEF RISK OFFICER

CHIEF RISK EXECUTIVE

The Chief Finance Officer (CFO) and concurrent Chief Risk Officer (CRO) supports the CRE at the

The President and Chief Executive Officer (CEO)

management level. The CRO ensures that:

acting as the Chief Risk Executive (CRE) is ultimately responsible for RM priorities, including strategies,

• There is adequate supervision and guidance over

tolerances and policies which he recommends to the

the development, implementation,

Board for approval. The CRE:

maintenance and continuous improvement of RM policies, processes and documentation;

• Acts as the final enforcer of the RM process; • Establishes organizational structure, assigns authority and designates management of key

• Risk Management processes and activities are embedded within the organization’s policies, business cycles and operational decisions;

risks to Risk Owners to ensure that the RM activities are carried out effectively;

2016 ANNUAL REPORT

143

• Responsibilities for managing specific risks by Senior Management are clear;

ENTERPRISE RISK MANAGEMENT SERVICES DIVISION

• The level of risk accepted by the company is appropriate;

The Enterprise Risk Management Services Division

• An effective control environment exists for the company as a whole; and

(ERMSD), headed by a Risk Management Program Officer, supports the CRO in undertaking her role.

• In collaboration with the CEO/CRE and Senior

Key functions of the ERMSD include:

Management, the Audit Committee, the Board, and other Stakeholders are provided periodic

•

Facilitating Management Team’s annual risk

information on the results of the annual

assessment exercise and reporting the results

risk assessment exercise and updates on the

thereof;

status of top risks, key risk mitigation activities,

•

Coordinating with Risk owners to gather updates

key risk and performance indicators and

on the status of risks and Risk Management/

emerging risks that could impact the attainment

mitigation activities;

of our objectives.

•

The CRO reports quarterly to the Board through the Audit Committee regarding our critical risks, control issues and key mitigation plans and provides insights on the following:

Facilitating the execution of Line Management’s risk and controls assessment exercise; and

•

Developing and implementing programs to embed RM discipline and drive sustained risk awareness across the organization.

INTERNAL AUDIT

• Risk management processes are working as intended; • Risk measures and mitigation plans are reported

The Internal Audit Team provides assurance on the

and continuously reviewed by risk owners for

effectiveness of RM systems and processes. Internal

effectiveness; and

Audit’s examinations cover a regular evaluation of

• Established risk policies and procedures are being complied with.

adequacy and effectiveness of RM and control processes 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.

144

GLOBE TELECOM

RISK OWNER

Heads. The Management Team monitors enterprise level risks such as strategic risks, major program

The Risk owner has overall accountability for the

risks, and regulatory risks while the business team

assigned risk/s and is granted authority to enable

and group heads monitor the operational, legal, and

effective management of a particular risk. The Risk

project risks. Our key RM activities include:

owner’s function also includes: • Identification of top enterprise risks including • Understanding the risk/s and determining its drivers;

(but not limited to) those that relate to economic, environmental, social and governance, that can

• Planning for and executing appropriate RM strategies and mitigation plans for key risks identified;

impact the achievement of the company’s key objectives; • Prioritization of risks based on the degree of

• Securing required resources needed to effectively manage the risks;

impact to business objectives and the likelihood of occurrence based on pre-defined risk

• Monitoring and reviewing the level of risk

categories and parameters

exposures and continuing relevance of RM

• Scenario and mitigation planning

strategies and plans; and

• Business continuity planning

• Providing timely updates on the status of RM activities to concerned stakeholders.

• Crisis planning and management • Program risk management

RISK MANAGEMENT APPROACH

• Monitoring and reporting on the status of risks and corresponding RM plans • Establishing a risk register with clearly defined,

The ISO 31000 framework for Risk Management is used as the basis for our RM process. The established framework also ensure that compliance processes and procedures are effectively guided by the RM policy.

prioritized and residual risks • Identification, assessment and management of operational risks by line management • Establishment of operational risk thresholds for monitoring • As necessary, contract independent reviews by

Globe has institutionalized a process to closely

3rd party consultants to assess/identify risk

monitor the RM plans and actions being taken to

exposures and the verify soundness of

address critical risks, including the establishment of

controls.

key risk indicators and key performance indicators to ensure that critical risks are appropriately managed. This process includes a review made by the Management Team, Business Team and Group

2016 ANNUAL REPORT

145

An enterprise-wide assessment of risks is performed

GLOBE PRINCIPAL RISKS

by the Management and Business Team as part of our annual planning and budgeting process,

The achievement of our key business objectives can

results of which are reported to and reviewed by

be affected by a wide array of risk factors. Some of

the Board. This assessment focuses on identifying

these risk factors are universal while some are unique

the key risks that threaten the achievement of our

to the telecommunications industry. The risks vary

business objectives at corporate and business unit

widely in occurrence and severity, some of which

level, as well as the assignment of risk owner/s and

are beyond our control. There may also be risks

development of plans in managing such risks. The

that are either presently unknown or not currently

established strategies and plans to address the risks

assessed as significant, which may later prove to be

are continuously developed, updated, improved, and

material. At Globe, we aim to mitigate the exposures

reviewed for effectiveness. On a regular basis, the

through appropriate RM strategies, strong internal

Management Team discusses the current risk levels

controls and capabilities, close monitoring of risks

and status of implementation of mitigation plans.

and mitigation plans. The section below sets out the principal risk types, listed in no particular order of

We also established a coordinated end-to-end

significance:

operational risk assessment program to identify, assess, treat, monitor and report risks for effective

POLITICAL AND SOCIO-ECONOMIC RISKS

and informed business decisions. Management believes that this program is an essential foundation

Our growth and profitability may be influenced by

for a strong ERM process as it reinforces the lines of

the overall political and economic situation of the

defense against key operational risks, while providing

Philippines. Any political instability in the Philippines

relevant insights to some of the top enterprise risks.

could negatively affect the country’s general

The Management Team is apprised of the results of

economic conditions which, in turn, could adversely

the assessments, particularly, the most significant

affect our business, financial condition or results

risks for inputs on strategies and action plans and

of operations, including the ability to enhance the

guidance on issues needing further review.

growth of its customer base, improve its revenue base and implement its business strategies.

When necessary, we seek external technical support from 3rd party experts to aid our Management Team and Board in the performance of their duties and responsibilities including RM.

146

GLOBE TELECOM

The newly-elected administration is seen to bring

There are no assurances that declines in the

potential changes that can positively or negatively

value of the peso will not occur in the future or

affect the telecommunications industry. These

that the availability of foreign exchange will

include:

not be limited. Recurrence of these conditions may adversely affect our financial condition and

• Pressure to improve network performance (i.e.,

results of operations.

network connectivity) • Possible pressure on pricing

b) Interest Rate Risk

• Potential entry of foreign telecom players

In order to fund our major expenditures, Globe

• Potential improved LGU support

has entered in various short and long-term debt

• Promise of increased infrastructure spend

obligations, which exposes us to the risk of changes in interest rates.

A regular environmental scanning exercise is performed to ensure the identification of any

Our exposure to interest rate risk and currency risk

uncertainties arising from political and socio-

are being managed by:

economic factors. Management is closely monitoring the shift in policies to anticipate the potential impact

• Using a mix of fixed and variable rate debt that

to the business plans as well as maintaining open

are meant to achieve a balance between cost and

communication lines with the various government

volatility.

sectors.

• Entering into interest rate swaps, in which we agree to exchange, at specified intervals, the

FINANCIAL MARKETS RISK

difference between fixed and variable interest amounts calculated by reference to an agreed-

a) Foreign Exchange Risk

upon notional principal amount.

Exposure to foreign exchange risks remains a

• Using a combination of natural hedges and

risk to Globe. Our foreign exchange risk

derivative hedging to manage its foreign

results primarily from movements of the

exchange exposure.

Philippine peso against the US dollar (USD) with respect to our USD-denominated financial assets,

We also regularly evaluate our projected and actual

liabilities, revenues and expenditures.

cash flows and continuously assess conditions in the financial markets for opportunities to pursue fund raising activities, in case any requirements arise.

2016 ANNUAL REPORT

147

COMPETITION RISK

We continue to assert our market position through the offering of personalized plans and attractive

a) Traditional Competition

product/device bundles, and launching innovative

Competition remains intense in the Philippine

products and services that are relevant and

telecommunications industry amidst a maturing

responsive to the needs of the customers and

mobile market and high growth data business,

focusing on superior customer experience. We

as current operators seek to increase market

also partner with leading providers of content,

share with aggressive offerings while potential

mobile messaging, social media and other popular

new entrants continue to further heighten the

applications in order to provide products and

competitive dynamics amidst a maturing

services that anticipate and cater to shifting

mobile market. The Philippine

customer preferences.

telecommunications industry continues to be a two-player market following the withdrawal of

REGULATORY RISK

a new player in 2016, as such, the PLDT Group (composed of PLDT, Smart, and Digitel)

We are regulated by the National

continues to be our principal competitor.

Telecommunications Commission (NTC), an attached agency of the Department of Information

b) Alternative Competition

and Communications Technology (DICT), for our

The competitiveness of the industry is further

telecommunications business, and by the Securities

underlined by cheap alternatives to

and Exchange Commission (SEC) and the Bangko

communication such as instant messaging,

Sentral ng Pilipinas (BSP) for other aspects of our

social network services and voice over

business. On the other hand, the newly-formed

internet protocol. These alternatives are also

Philippine Competition Commission (PCC) has

driven by the proliferation of affordable

oversight on our mergers, acquisitions, and other

smartphones and internet-capable mobile devices.

similar transactions as it is tasked to effectively level the playing field among businesses and penalize

The continued growth and development of the

anti-competitive agreements and abuse of market

telecommunications industry will depend on many

dominance.

factors. Any significant economic, technological, or regulatory development could result in either a

The introduction of, changes in, or the inconsistent

slowdown or growth in demand for mobile services

application of laws or regulations from time to time,

and may impact our business, revenues, and net

may materially affect our operations, and ultimately

income.

our earnings which could impair our ability to service

148

GLOBE TELECOM

debt. There is no assurance that the regulatory

Our data network is continuously being enhanced

environment will support any increase in our

by deploying new mobile and data technologies,

business and financial activity.

increasing our network capacities and coverage and modernizing the fixed line data infrastructure.

We manage our regulatory risks through regular monitoring of regulatory rulings especially those that

CHANGE PROGRAM RISK

could negatively impact our businesses and proactive engagement with the regulators.

Globe is in the process of transforming our businesses and such changes permeate into our

CUSTOMER PREFERENCE AND TECHNOLOGY SHIFT RISK

Network and IT systems and supporting processes.

Crucial changes in our network infrastructure are being pursued mainly to improve network quality,

Our ability to recognize and quickly respond to

anticipate the surge in voice and data traffic,

changes in customer preferences by upgrading our

decrease total cost of ownership and make the

existing infrastructure and systems may impact our

network robust enough to meet future needs. IT

competitiveness in the marketplace.

transformation programs are set to re-engineer our IT systems and key processes to enhance our

Mobile data applications and the rising popularity

ability to deliver superior customer experience and

of smartphones and mobile and connected devices

understand what our customers value, while being

are key contributors to the explosion of data traffic.

able to roll out products to the market in a more

This phenomenon is placing a strain on our network

efficient and effective manner.

capacity as well as the supporting back end systems, negatively impacting customer experience.

Should our ambitious and complex transformation programs fail to achieve the desired outcomes, we

Our business, product and technical teams continue

could ultimately lose market share thus impacting

to keep abreast of the latest innovations and trends

our financial results.

in telecommunications technologies, devices and gadgets. The information and insights gathered

We have institutionalized the appropriate program

are considered in the roadmap of future products

governance organizations with Management Team

and services and our network and IT infrastructure

oversight and accountability to ensure program

evolution. Proper timing of investments in

risks are properly considered and managed aimed

technology and infrastructure always consider its

at achieving key program objectives and improving

strategic implications, velocity of technology cycles

customer experience. We ensure that a competent

and customer adoption.

program office and project organization is in place for major change programs. Supporting processes

2016 ANNUAL REPORT

149

have been established to closely monitor and provide

Various people-related programs designed to engage

a venue for regular progress updates, alignment of

and motivate employees are being implemented

efforts, discussion of critical implementation issues

in order to retain and attract key talents. Globe

and challenges and help ensure successful execution

University was formally organized to address the

of our change programs.

growing competency and development needs of Globe. With the need to develop key talent

ORGANIZATIONAL AGILITY RISK

imperatives, it is a significant move towards achieving key improvements in workforce capabilities and

Leading the digital lifestyle for our customers and

performance.

diversification of our business portfolio is critical

REPUTATIONAL RISK

to maintain our market competitiveness. Failure to drive the entire organization to quickly adapt work practices and make the right shift in skills and

We are recognized as one of the Philippines’ top

competencies necessary for us to lead in the digital

companies providing innovative services and

space and forge into adjacent spaces may lead to

delivering superior customer experience while

missed business opportunities.

maintaining a socially responsible business. We are exposed to reputational risks which may result from

We have initiated cultural change programs that

our actions or that of our competitors; indirectly

focus on customer centricity and innovation.

due to the actions of an employee; or consequently

Opportunistic hiring of talents required for

through actions of outsourced partners, suppliers or

innovation and new investment areas are also

joint venture partners.

carefully considered. Further, through Kickstart Ventures we invested in building to scale the

Damage to our reputation and erosion of brand

technical foundation of digital and technology

equity could also be triggered by the inability to

start-up businesses operating in the Philippines. We

swiftly and adequately handle negative social media

continue to build the right leadership structures and

sentiments on our products and services triggered

system team that will support an agile, future-ready

by various factors such unfavorable customer

and customer-centric organization.

experience, among others.

HUMAN CAPITAL RISKS

Regular process effectiveness and efficiency reviews on existing customer impacting processes are

We are exposed to risks in staffing our critical

being conducted to identify and address existing

functions with competent management and

gaps, thus minimizing exposure to reputational

technical expertise. Our greatest asset is our people

risks arising from problem areas. Front line staff are

and our success is largely dependent on our ability

regularly trained to enable them to effectively handle

to attract highly skilled personnel and to retain and

customer cases. On the other hand, close monitoring

motivate our best employees. Our people is the

of customers’ online sentiments is being performed

glue that brings everything together which is why it

to quickly detect customer issues being surfaced in

is crucial to ensure that we are able to acquire the

social media and be able to manage them early on.

right people and enhance their exceptional abilities further.

150

GLOBE TELECOM

COMPLIANCE RISKS

b) Data Privacy

a) Cyber Threats

In the course of regular business, we acquire

The cyber security landscape is rapidly

personal information of our customers and

evolving and users are heavily relying on

retain the same either electronically or

digitized information and sharing vast amounts

via hard copies. Existing laws require that

of data across complex and inherently vulnerable

these information be adequately protected

networks. This exposes us to various forms of

against unauthorized access and or/disclosure.

cyber-attacks which could result in disruption of

The risk of data leakage is high with the level

business operations, damage to reputation, legal

of empowerment granted to in-house and

and regulatory fines and customer claims.

outsourced employees handling sales and after

New technologies and systems being installed in

sales support transactions to enable the efficient

the name of advanced capabilities and

discharge of their functions.

processing efficiencies may introduce new risks which could outpace the organization’s ability

Employee awareness on data protection

to properly identify, assess and address such

and loss prevention is reinforced through

risks. Further, new business models that rely

regular corporate dissemination channels.

heavily on global digitization, use of cloud,

Further, employees are made accountable for

big data, mobile and social media exposes the

maintaining the confidentiality of data handled,

organization to even more cyber-attacks.

including disclosures and information shared in various social media platforms. Controls over

We continue to strengthen and enhance our

processes that require handling of customer’s

existing security detection, vulnerability

personal information are being tightened,

and patch management, configuration

coupled with enhancements in existing security

management, identity access management,

capabilities to prevent compromise of customer

events monitoring, data loss prevention and

data.

network/end-user perimeter capabilities to ensure that cyber threats are effectively managed.

Management recently announced the appointment of the Chief Information

As part of our mission to promote the intelligent

Security Officer and concurrent Data Protection

and judicious use of the internet, we also educate

Officer to strengthen management of risks

the youth to better understand the impact of

relating to the confidentiality and integrity of

their online behavior so they can be responsible

customer information while ensuring

digital citizens, thereby lessening cyber threats to

compliance with Data Privacy Act of 2012

Globe. This cyber wellness advocacy takes the

(Republic Act 10173).

form of the award-winning Digital Thumbprint Program (DTP), held in partnership with Optus and Singapore Telecommunications Ltd. (Singtel).

2016 ANNUAL REPORT

151

c) Business Disruptions

d) Revenue Leakage

The quality and continued delivery of our

The telecommunications industry is inherently

services are highly dependent on our

vulnerable to revenue leakage, with the

network and IT infrastructure which are

dynamic changes in networks and IT

vulnerable to damages caused by extreme

systems and the multitude of its service/

weather disturbances, natural calamities, fire,

bundle/plan offerings. Given the pace at which

acts of terrorism, intentional damage, malicious

new offers are launched in the market and the

acts and other similar events which could

speed of technological innovations being adopted

negatively impact the attainment of revenue

by Globe to support such offers, the need to

targets and our reputation.

identify and plug revenue leakages becomes an even more important capability in maximizing

We are continuously enhancing our incident

revenues and returns.

and crisis management plans and capabilities and have incorporated disaster

We strengthen our capabilities through the

risk reduction and response objectives in our

identification and embedding of

business continuity planning. Part of our Business

appropriate revenue assurance controls into

Continuity Management Program initiatives

new products, services, and new systems as

include:

well as the implementation of sound controls on existing products and services.

• Partnering with the Metropolitan Manila

We continuously improve our control

Development Authority (MMDA) and the

effectiveness, efficiency, and coverage through

Philippine Disaster Recovery Foundation (PDRF),

periodic controls review exercises, controls

to create a network of support during disasters.

discovery, and controls automation initiatives.

• Sponsored the development of hazard maps for 54 out of 81 Philippine provinces, which will

e) Fraud

be used by Phivolcs to assist the provinces in

We run the risk of falling victim to fraud

their disaster management plans.

perpetrated by unscrupulous persons or

• Reinforced Ayala ASSIST, an app that enables

syndicates either to avail of “free”

our Ka-Globe and other Ayala employees to

services, to take advantage of device

easily seek assistance during disasters.

offers or defraud our customers. With the

• Re-certification in Business Continuity on an enterprise-wide scale

increased complexity of technologies, network elements and IT infrastructure, new types of fraud that are more difficult to detect or

152

GLOBE TELECOM

combat could also arise. This risk also involves

• Provide hazard identification and risk assessment

irregularities in transactions or activities

for Globe Telecom’s operations, activities, events,

executed by employees for personal gain.

and infrastructure;

We remain committed in preventing and

• Facilitate implementation of risk control and

detecting fraud by institutionalizing processes

mitigation measures for safety and environmental

and building capabilities that enable the

management, in collaboration with operational

early detection, investigation, resolution and

and business groups;

enforcement of sanctions and legal options,

• Provide and facilitate risk transfer and business

close monitoring and timely reporting of various

protection solutions through insurance or

instances of fraudulent activities. We have

contractor liability agreements;

initiated various programs to equip our

• Establish an effective framework of business

customers with the right information so that

continuity management for the organization

they do not fall victims to fraudsters. Moreover,

to effectively respond to threats such as natural

we closely coordinate with law enforcement

disasters, equipment failure, data breaches and,

agencies to help protect our customers as well as

in effect, protect its business interests.

from the activities meant to defraud them.

OPERATIONAL RISKS Realizing the need to protect the business from losses arising from failures in internal processes, people and systems or external events, which, is an integral part of our RM responsibility, an Operational Risk Management and Business Protection (ORB) department was established. ORB’s primary objective is to provide end-to-end support for all activities under risk management, overseeing safety, environment, infrastructure hazard management, insurance, as well as enterprise business continuity management. ORB reports to the Head of Logistics and Administrative Services who directly reports to the CFO/CRO. The department is mandated to do the following:

2016 ANNUAL REPORT

153

MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL HIGHLIGHTS: RESULTS OF OPERATIONS Globe Telecom, Inc. registered another record year, 2016

20151

YoY CHANGE

119,969

5%

service revenues of close to P120.0, 6% higher

NET OPERATING REVENUES 126,184

than the previous record level of P113.7 billion in 2015. The sustained revenue momentum, despite the competitive intensity during the second half of

SERVICE REVENUES 119,990

as we posted our highest full-year consolidated

113,679

6%

91,243

1%

2016, was driven by the solid growth in data related products across all segments.

MOBILE2 91,887

Mobile revenues slightly grew year-on-year, at P91.9 billion in 2016 from the P91.2 billion reported a

HOME BROADBAND3 14,460

11,320

year ago, driven by the continued shift from core

28%

voice and SMS in favor of data as more of our customers adopt the digital lifestyle. TM, our mass-

CORPORATE DATA4 9,873

7,698

market brand, registered 3% revenue growth from

28%

last year, while Globe Postpaid revenues posted a

FIXED LINE VOICE4 3,780

slight 1% improvement from 2015, partly offset 3,418

11%

by Globe Prepaid revenues, which posted a yearon-year decline of 1%. At the end of December

NON-SERVICE REVENUES 6,194

6,290

2016, our mobile subscriber base reached 62.8

-2%

million, up a robust 12% from the 56.2 million subscribers reported in 2015, driven by the record-

1 2015 service revenues have been restated to reflect the change in the presentation of fully mobile broadband to be part of mobile business (which was reported under broadband previously) 2 Includes mobile voice, sms, data revenues and fully mobile broadband services.

3 Includes revenues from wired and fixed wireless, 4 Includes international and domestic data services, corporate internet access, and data center solutions.

5 Includes revenues from landline and DUO services.

154

level prepaid gross acquisitions during the year despite the increase in blended churn rates. On a product perspective, mobile data is now the biggest contributor to our total mobile revenues (38%), outpacing voice (37%), despite the industry

GLOBE TELECOM

aggression in data pricing in the second half of the

regional media powerhouse Astro, Filipino gaming

year. Mobile data service revenues reached P34.6

fans can now have access to eGG Network or Every

billion in 2016, 25% higher than the P27.7 billion

Good Game, Southeast Asia’s first dedicated 24/7

reported a year ago.

ESports network. In addition, the popular singing application Sing! by Smule allows our subscribers

Our home broadband business likewise sustained

to record video duets with their favorite artists

its growth momentum at P14.5 billion in 2016,

and share it with a global audience. Meanwhile,

increasing revenues by 28% year-on-year, with

Tribe currently offers live and on-demand content

total subscriber base now reaching 1.13 million.

with a wide selection of Korean entertainment

The impressive growth in revenues was driven by

shows. Through our partnership with Disney, we

the continued subscriber expansion in our fixed

also introduced in 2016 the Globe myStarter Plan

wireless (+23%) solutions, given the favorable

bundled with the latest Disney Mobile smartphones.

customer response to our home broadband’s latest

Globe is the first telco in Southeast Asia to offer

plans, which not only incorporate fully-upgraded

Disney Mobile smartphones.

speeds and data allocation, but also comes bundled with their choice of premium content, and the

As part of our commitment to address the growing

most cutting-edge devices for a full on-demand

customer demand for constant connectivity, we

entertainment experience.

launched in the third quarter of 2016 GoWiFi, a premium open national WiFi network open to

Despite the intense industry competition and the

any customer with a WiFi-enabled device. Both

shift towards digital services, our continued efforts

Globe and non-Globe customers can enjoy the free

to innovate and create partnerships with global

premium 30 minutes access by simply registering

content providers kept us a step ahead of the

their mobile number. Globe GoWiFi hotspots include

competition. For content, we forged new strategic

the major airports and bus terminals, Manila Metro

partnerships with world-class leaders in their

Rail Transit System (MRT) stations, Ayala Malls,

respective categories to complement our HOOQ,

Starbucks coffeehouse chain, select convenience

Disney and NBA partnerships namely, Netflix, Turner,

stores and fast food chains. Globe is also the

Sports Illustrated, Astro, Smule, and Tribe. We also

country’s first telecommunications company to

expanded ourcontent offerings to include Turner-

provide free Wi-Fi services in all 20 LRT and all 13

owned applications, such as Cartoon Network.

MRT stations along EDSA.

Through Sports Illustrated, our subscribers can access in-depth exclusive sports news coverage of

Complementing the growth of our mobile and home

American sports programming including basketball,

broadband segments, our corporate data business

the NFL, NHL, and ESports, among others. With

likewise improved year-on-year at P9.9 billion as of

2016 ANNUAL REPORT

155

end 2016 or 28% higher from the P7.7 billion posted

acquisition of Vega Telecom, Inc. (“VTI”), including

in 2015, as demand for data connectivity continues

our share in net losses of joint venture, spectrum

to surge, impacting our customer expansion, circuit

amortization and interest expenses related to the

count increase and higher usage. The strong

additional debt incurred from the VTI transaction. In

demand for internet and domestic leased lines, as

comparison, Globe recorded one-time gains in 2015

well as cloud computing solutions, contributed to

coming from the sale of a 51% equity stake in Yondu,

the revenue growth of our corporate data business.

Inc. (“Yondu”) and the acquisition of a 98.6% stake

The growth was likewise aided by the revenue

in Bayan. Normalized income for 2016, excluding

contribution from Bayan’s corporate data revenues.

the impact of the strategic transactions mentioned

Our traditional fixed line voice revenues, also posted

above, would have been 12% higher year-on-year

an 11% increase year-on-year at P3.8 billion as

from P15.0 billion in 2015 to P16.9 billion in 2016.

of end 2016 due to the continued popularity of

Our core net income, which excludes the impact of

our new home broadband bundled plans. In the

non-recurring charges, and foreign exchange and

fourth quarter of 2016, Globe signed a separate

mark-to-market charges, likewise grew by 6% year-

memorandum of confirmation with Huawei and

on-year to reach P16 billion from P15.1 billion in

Nokia relating to a capacity expansion program for

2015.

our corporate data network. The fixed line network modernization project will improve the quality of

Our consolidated Return on Average Equity (ROE)

our corporate network with capabilities, capacities,

registered at 26% as of end-December 2016,

features, and functionalities that will be constantly

compared to 29% in 2015 using net income and

responsive to our business and enterprise customer

based on average equity balances for the year ended.

requirements.

Using our annualized core net income excluding the effects of non-recurring expenses, foreign exchange

We posted another record-level consolidated

loss, one-time gains on net income, return on average

EBITDA, ending the year with close to P50 billion,

equity for the year just ended was at 26% compared

up a robust 9% from a year ago. Our total operating

to 27% of 2015.

expenses and subsidy grew in step with revenues, or higher by 3% year-on-year to P70.0 billion from

Our consolidated basic earnings per common share

P67.7 billion last year, as we continued to re-invest

were P115.45 and P120.11, while consolidated

our gains to support the growing subscriber base

diluted earnings per common share were P115.27

and the aggressive expansion of our data network.

and P119.92 as of end-December 2016 and

EBITDA margin was at 42%, higher than the previous

2015, respectively.

year’s margin of 40%.

Our balance sheet and cash flows remain strong with Despite the strong growth in EBITDA, the increase

ample liquidity and gearing comfortably within bank

in our non-operating expenses as well as higher

covenants. We ended the year with gross debt to

depreciation expenses recognized during the year

equity ratio on a consolidated basis at 1.67:1 from

led to Globe posting a 4% decline in net income at

1.22:1 in 2015, while our net debt to equity was at

P15.9 billion, as against the P16.5 billion reported

1.53:1 as of end 2016 from 1.02:1 last year.

in 2015. Note that this year’s non-operating expenses included P1.1 billion of costs related to our

156

GLOBE TELECOM

Our consolidated assets as of 31 December 2016

of Brightshare Holdings Corporation (“BHC”). The

amounted to P250.0 billion compared to P195.7

remaining 50% equity stake in VTI, BAHC and BHC

billion in 2015. Consolidated cash, cash equivalents

was acquired by Philippine Long Distance Telephone

and short term investments (including investments

Company (“PLDT”). The total enterprise valuation of

in assets available for sale and held to maturity

VTI, BAHC and BHC was P70.0 billion, including total

investments) was at P8.6 billion as of end December

liabilities of P17.2 billion. In a bid to expeditiously

of 2016 compared to P11.8 billion as of end

harness the benefits of the company’s new spectrum

December 2015.

assets, we began the deployment of LTE sites using the 700 MHz band in June of 2016 following the

Our net cash flows provided by operating activities

50% acquisition of San Miguel’s telecommunication

for the year just ended were at P37.5 billion, grew

assets, which also included spectrum resources in the

by 4% year on year.

1800 MHz, 2300 MHz, and 2600 MHz.

Meanwhile, net cash used in investing activities

Consistent with our commitment to improve the

amounting to P57.7 billion, was 77% higher than last

internet service in the country, we already hit our

year. Consolidated cash capital expenditures as of

target of deploying 500 LTE sites using the 700

end of December 2016 amounted to P36.7 billion, up

megahertz band (L700). Majority of the our L700

by 14% from last year’s P32.1 billion

sites were deployed mostly in Metro Manila and other highly-populated areas, where majority of

Consolidated net cash provided by financing

customers using LTE-based handsets are located.

activities amounted to nearly P17.0 billion in 2016

We had set aside an additional network investment

versus last year’s net cash used of P8.4 billion for

of $300 million in October, bringing the our total

financing activities in 2015. This year’s increase was

capital expenditure for 2016 to $1 billion. We plan

mainly due to additional borrowings. Consolidated

to deploy more LTE sites in 2017 using the additional

total debt, likewise, increased by 46% from P72.2

spectrum assets to further accelerate our network

billion at the end of 2015 to reach P105.7 billion at

build and enable us to stay ahead of the growing

the end of December 2016.

consumer demands. We also plan to deploy fiber optics in 20,000 barangays by 2020 that will provide

Our total cash capital expenditures stood at about

ultra-fast internet access to around 2 million homes

P36.7 billion (approximately $772 million), 14%

nationwide. Our completed deployment of fiber

higher than last year’s level of P32.1 billion.

broadband technology was done in selected areas

On May 30, 2016, our Board of Directors through

of Metro Manila, North and South Luzon, Cebu and

our Executive Committee, approved last May 30,

Davao.

2016, the acquisition and signing of a sale and share purchase agreement and other related definitive

Lastly, we paid out P11.7 billion in common cash

agreements for the following entities from San

dividends in 2016, representing 77% of 2015 core

Miguel Corporation (“SMC”): 50% of the issued

net income. This was in line with our dividend policy

and outstanding capital stock of Vega Telecom, Inc.

of distributing 75% to 90% of prior year’s core net

(“VTI”); 50% of the issued and outstanding capital

income.

stock of Bow Arken Holdings Company Inc. (“BAHC”); and, 50% of the issued and outstanding capital stock

2016 ANNUAL REPORT

157

158

GLOBE TELECOM

2016 ANNUAL REPORT

159

160

GLOBE TELECOM

Independent assurance statement Scope and approach Globe Telecom, Inc. commissioned DNV GL AS Philippines Branch (“DNV GL”) to undertake independent assurance of the 2016 Financial and Sustainability Report (the “Report”) for the year ended 31 December 2016.

We performed our work using DNV GL’s assurance methodology VeriSustainTM1, which is based on our professional experience, international assurance best practice including International Standard on Assurance Engagements 3000 (ISAE 3000). We evaluated the performance data using the reliability principle together with available collated data. The performance data in scope included economic, environmental and social data.

Financial information from the annual report was excluded as these had been independently audited by a 3rd party accountant, the following sections were also excluded from the scope of assurance - Management Discussion and Analysis, as this was a summary of the 20-IS figure submitted to regulatory authorities (Philippines Stock Exchange – Securities and Exchange Commission).

We understand that the reported financial data and information are based on data from Globe Telecom, Inc.’s Audited Financial Statements [posted February 28, 2017], which are subject to a separate independent audit process. The review of financial data taken from the Audited Financial Statements is not within the scope of our work.

We planned and performed our work to obtain the evidence we considered necessary to provide a basis for our assurance opinion. We are providing a ‘limited level’ of assurance. The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement; and consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. DNV GL conducted the assurance based on GRI reporting principles.

The scope of assurance carried out by DNV GL’s multi-disciplinary team of sustainability and assurance specialists covered operations of Globe Telecom, Inc. Globe Fintech Innovations, Inc., Kickstart Ventures, Inc., Innove Communications, and G-Xchange, Inc. in the Philippines.

Responsibilities of the Directors of Globe Telecom, Inc. and of the assurance providers The Directors of Globe Telecom, Inc. have sole responsibility for the preparation of the Report. In performing our assurance work, our responsibility is to the management of Globe Telecom, Inc.; however our statement represents our independent opinion and is intended to inform all of Globe Telecom, Inc. stakeholders. DNV GL was not involved in the preparation of any statements or data included in the Report except for this Assurance Statement.

We have no other contract with Globe Telecom, Inc. and this is the second year that we have provided assurance. DNV GL’s assurance engagements are based on the assumption that the data and information provided by the client to us as part of our review have been provided in good faith. DNV GL expressly disclaims any liability or co-responsibility for any decision a person or an entity may make based on this Assurance Statement.

1

The VeriSustain protocol is available upon request from DNV GL Website (www.dnvgl.com)

Page 1 of 3

2016 ANNUAL REPORT

161

Basis of our opinion We undertook the following activities as part of the assurance process • •

• •

• •

•

Review of the current sustainability issues that could affect Globe Telecom, Inc. and are of interest to stakeholders; Review of Globe Telecom, Inc. approach to stakeholder engagement and recent outputs of a stakeholder engagement process conducted through a third party that included the vendors, government, parent companies and affiliates, and media and disaster respondents. Stakeholder engagement with employees and customers was carried out directly by Globe Telecom, Inc.; Review of information provided to us by Globe Telecom, Inc. on its reporting and management processes; Interviews with selected Directors and senior managers responsible for management of sustainability issues and review of selected evidence to support issues discussed. DNV GL was free to choose personnel from various functions for the interview so as to ensure adequate coverage of the report. Functions interviewed included uman Resources, Enterprise Risk Management, Corporate Communications, Property Management, and Corporate Social Responsibility; Site visits to Globe Telecom, Inc. , Kickstart Ventures, Inc., Globe niversity and MK2 Data Centre were carried out for review of process and systems. Kickstart Ventures and Globe niversity both contributed stories for the Report; Review of supporting evidence for key claims and data in the report. ur checking processes were prioritised according to materiality and we based our prioritisation on the materiality of issues at a consolidated corporate level; Review of the processes for gathering and consolidating the data.

pinion n the basis of the work undertaken, nothing came to our attention to suggest that the Report does not properly describe Globe Telecom, Inc.’s adherence to the Principles for defining Report Content in GRI Standards. DNV GL believes that the report is in line with the In accordance ‘Core’ option of reporting requirements of the GRI Standards. Further conclusions and observations on the adoption of reporting principles are made below.

Limitations The engagement excludes the sustainability management, performance and reporting practices of Globe Telecom, Inc. associated companies, suppliers, contractors and any third-parties mentioned in the Report. The company position statements and key addresses are excluded from the scope of our work. DNV GL did not interview external stakeholders as part of this Assurance Engagement. Economic performances based on the financial data were cross-checked with internal documents and the audited consolidated financial statements.

Limited depth of evidence gathering including inquiry and analytical procedures and limited sampling at lower levels in the organi ation were applied. The baseline data for Environmental and Social performance are not verified, while the aggregated data at the corporate level are used for the verification.

bservations Without affecting our assurance opinion we also provide the following observations The verification team has observed that there is general awareness of sustainability context across all different levels of the organi ation. The stakeholder engagement process is established and involves processes for identification of stakeholders and planned engagement with key stakeholders to identify significant sustainability concerns. The disclosures related to sustainability issues and performances are fairly reported in a neutral tone, in terms of content and presentation. Further opinions with regards to the adherence to the following Principles are made below;

Page 2 of 3

162

GLOBE TELECOM

aterialit Globe Telecom, Inc. has identified four focus areas such as Care for the Environment, Care for our People, Positive Societal Impact, and a Digital Nation based on internal consultation with project and operating teams, media research on the recurring themes, and customer surveys. The corresponding GRI performance indicators with the four focus areas are addressed in the Report. A comprehensive materiality assessment was completed in late 201 and material issues identified are explained in this Report. Globe Telecom., Inc. could, in the future, also consider conducting regular review of material issues internally as well as emerging stakeholder concerns and issues related to the telecommunications sector. ompleteness The Report has covered the sustainability strategy, management approach and sustainability performances of Globe Telecom, Inc. The current reporting boundaries are dependent on subsidiaries that Globe Telecom, Inc., has ownership of, and not where it may exercise management control. Globe Telecom, Inc. could consider including in its boundaries all entities that generate significant sustainability impacts and those over which it exercises significant influence.

Accurac and Reliabilit The document allows the reader to examine both the positive and the negative trend of Globe Telecom, Inc. performance in 2016. Globe Telecom, Inc. has selected, compiled and reported information in a relatively consistent manner. The data used for reporting of the sustainability performance presented in the Report is collected from the subsidiaries by a centrally, dedicated function in Globe Telecom, Inc. headquarters and consolidated for reporting. Any errors or misstatements identified during the assurance engagement were communicated for correction prior to the Report being published. Data owners were able to demonstrate the origin and interpretation of the data in a reliable manner. The data was identifiable and traceable.

pportunities for Improvement With regards to the reporting principles of GRI standard, we noted that Globe Telecom, Inc. is working on alignment of the Disclosure on Management Approach (DMA) to identified material issues. Globe Telecom, Inc. could consider in the future, to have commitments, goals and targets identified for short, medium and long term, and reporting on performance against these material issues in its DMA.

or and on behalf of DNV GL AS Philippines Branch arch

Grace Cheah Lead Verifier DNV GL – usiness Assurance

Nandkumar Vadakepatth Assurance Reviewer DNV GL – usiness Assurance

------------------------------------------------------------------------------------------------DNV GL usiness Assurance is part of DNV GL Group and a global provider of certification, verification, assessment and training services, helping customers to build sustainable business performance. www.dnvgl.com

Page 3 of 3

2016 ANNUAL REPORT

163

164

GLOBE TELECOM

2016 ANNUAL REPORT

165

166

GLOBE TELECOM

2016 ANNUAL REPORT

167

168

GLOBE TELECOM

2016 ANNUAL REPORT

169

(In Thousand Pesos)

See accompanying Notes to Consolidated Financial Statements.

170

GLOBE TELECOM

(In Thousand Pesos, Except Per Share Figures)

(Forward)

2016 ANNUAL REPORT

171

(In Thousand Pesos, Except Per Share Figures)

See accompanying Notes to Consolidated Financial Statements.

172

GLOBE TELECOM

2016 ANNUAL REPORT

173

(Forward)

(In Thousand Pesos)

174

GLOBE TELECOM

See accompanying Notes to Consolidated Financial Statements.

(In Thousand Pesos)

(In Thousand Pesos)

(In Thousand Pesos)

(Forward)

2016 ANNUAL REPORT

175

(In Thousand Pesos)

See accompanying Notes to Consolidated Financial Statements.

176

GLOBE TELECOM

2016 ANNUAL REPORT

177

178

GLOBE TELECOM

2016 ANNUAL REPORT

179

180

GLOBE TELECOM

*Deconsolidated in 2016. **Ceased operations in 2016. *** Accounted for as Investment in Associate in 2015 (refer to Note 9.2)

2016 ANNUAL REPORT

181

182

GLOBE TELECOM

.

Amendments to PFRS 7: Financial Instruments: Disclosures

Amendment to PAS 19: Employee Benefits

Amendment to PAS 34: Interim Financial Reporting

2016 ANNUAL REPORT

183

.

184

GLOBE TELECOM

Revenue from Contracts with Customers

2016 ANNUAL REPORT

185

186

GLOBE TELECOM

Amendments to PFRS 1 - First-time Adoption of International Financial Reporting Standards

2016 ANNUAL REPORT

187

Amendments to PFRS 12 - Disclosure of Interests in Other Entities

Amendments to PAS 28 - Investments in Associates and Joint Ventures

188

GLOBE TELECOM

Application of PFRS 15 "Revenue from Contracts with Customers" on Sale of Residential Properties under Pre-completion Contracts

Revenue Recognition

2016 ANNUAL REPORT

189

Service Revenue 2.6.1.1.1

190

Subscribers

GLOBE TELECOM

2.6.1.1.2

Traffic

2.6.1.1.3 GCash

2.6.1.1.4

Fuse Revenue

Nonservice Revenues

Others

2016 ANNUAL REPORT

191

Subscriber Acquisition and Retention Costs

Cash and Cash Equivalents

Financial Instruments General 2.6.4.1.1 Initial Recognition and Measurement

192

GLOBE TELECOM

2.6.4.1.2 Financial Assets or Financial Liabilities at FVPL

2016 ANNUAL REPORT

193

2.6.4.1.3 HTM Investments

2.6.4.1.4 Loans and Receivables

194

GLOBE TELECOM

2.6.4.1.5 AFS Investments

2.6.4.1.6 Other Financial Liabilities

2.6.4.1.7 Derivative Instruments General

2016 ANNUAL REPORT

195

Recognition and Measurement

Types of Hedges

Fair Value Hedges

196

GLOBE TELECOM

Cash Flow Hedges

Other Derivative Instruments Not Accounted for as Accounting Hedges

2016 ANNUAL REPORT

197

Offsetting

Impairment of Financial Assets

2.6.4.2.1 Assets Carried at Amortized Cost

2.6.4.2.1.1 Subscribers

198

GLOBE TELECOM

2.6.4.2.1.2 Traffic

2016 ANNUAL REPORT

199

2.6.4.2.1.3 Other receivables

2.6.4.2.2 AFS Investments Carried at Cost

2.6.4.2.3 AFS Investments Carried at Fair Value

Derecognition of Financial Instruments 2.6.4.3.1 Financial Asset

200

GLOBE TELECOM

2.6.4.3.2 Financial Liability

Fair Value Measurement

2016 ANNUAL REPORT

201

Inventories and Supplies

Prepayments

Value Added Tax (VAT)

Property and Equipment

202

GLOBE TELECOM

ARO

Intangible Assets

2016 ANNUAL REPORT

203

Business Combinations and Goodwill

204

GLOBE TELECOM

Investments in Associate and Joint Venture

2016 ANNUAL REPORT

205

Related Party Transactions

Impairment of Nonfinancial Assets

206

GLOBE TELECOM

Unearned Revenues

Income Tax Current Income Tax

Deferred Income Tax

2016 ANNUAL REPORT

207

Provisions

Share-based Payment Transactions

208

GLOBE TELECOM

Capital Stock

Additional Paid-in Capital

Treasury Stock

Other Comprehensive Income

Retained Earnings

Pension Cost

2016 ANNUAL REPORT

209

Borrowing Costs

Leases

210

GLOBE TELECOM

Globe Group as Lessee

Globe Group as Lessor

General, Selling and Administrative Expenses

Foreign Currency Transactions

2016 ANNUAL REPORT

211

Fair Value of Financial Instruments

EPS

Operating Segment

Contingencies

Events after the Reporting Period

212

GLOBE TELECOM

Leases Operating Lease Commitments as Lessor

Operating Lease Commitments as Lessee

Finance Lease

Financial Assets not Quoted in an Active Market

2016 ANNUAL REPORT

213

Allocation of Goodwill to Cash-Generating Units

Determination of Whether the Globe Group is Acting as a Principal or an Agent

Provisions and Contingencies

214

GLOBE TELECOM

Assessment of Investment in Automated Fare Payments Inc. (AFPI) [formerly Automated Fare Collection Services (AFCS))]

Assessment of Investment in Yondu

Assessment of Investment in GTHI

Assessment of Investment in TechGlobal

2016 ANNUAL REPORT

215

Assessment of Investment in VTI, BAHC and BHC

Revenue Recognition

Customer Loyalty Programmes

Allowance for Impairment Losses on Receivables

Obsolescence and Market Decline

216

GLOBE TELECOM

ARO

EUL of Property and Equipment, Investment Properties and Intangible Assets

2016 ANNUAL REPORT

217

Asset Impairment Impairment of Nonfinancial Assets Other Than Goodwill

218

GLOBE TELECOM

Impairment of Goodwill

Deferred Income Tax Assets

Financial Assets and Financial Liabilities

2016 ANNUAL REPORT

219

Pension and Other Employee Benefits

Provision for Restructuring Costs

220

GLOBE TELECOM

(In Thousand Pesos)

2016 ANNUAL REPORT

221

(In Thousand Pesos)

(In Thousand Pesos)

222

GLOBE TELECOM

(In Thousand Pesos)

2016 ANNUAL REPORT

223

224

GLOBE TELECOM

(In Thousand Pesos)

(In Thousand Pesos)

2016 ANNUAL REPORT

225

226

GLOBE TELECOM

*Goodwill solely related to Yondu acquisition.

2016 ANNUAL REPORT

227

228

GLOBE TELECOM

(In Thousand Pesos)

2016 ANNUAL REPORT

229

(In Thousand Pesos)

230

GLOBE TELECOM

(In Thousand Pesos)

2016 ANNUAL REPORT

231

(In Thousand Pesos)

232

GLOBE TELECOM

(In Thousand Pesos)

2016 ANNUAL REPORT

233

Investment in Associates

234

GLOBE TELECOM

(In Thousand Pesos)

2016 ANNUAL REPORT

235

Investment in Joint Ventures

(In Thousand Pesos)

236

GLOBE TELECOM

(In Thousand Pesos)

2016 ANNUAL REPORT

237

(In Thousand Pesos)

(In Thousand Pesos)

238

GLOBE TELECOM

2016 ANNUAL REPORT

239

240

GLOBE TELECOM

2016 ANNUAL REPORT

241

(In Thousand Pesos)

(In Thousand Pesos)

242

GLOBE TELECOM

(In Thousand Pesos)

Provisions, Contingent Liabilities and Contingent Assets

2016 ANNUAL REPORT

243

(In Thousand Pesos)

244

GLOBE TELECOM

Composed of notes payable, long term debt and net derivative liabilities.

2016 ANNUAL REPORT

245

(In Thousand Pesos)

(In Thousand Pesos)

246

GLOBE TELECOM

(In Thousand Pesos)

(In Thousand Pesos)

2016 ANNUAL REPORT

247

(In Thousand Pesos)

(In Thousand Pesos)

(In Thousand Pesos)

248

GLOBE TELECOM

2016 ANNUAL REPORT

249

250

GLOBE TELECOM

(In Thousand Pesos)

(In Thousand Pesos)

(In Thousand Pesos)

2016 ANNUAL REPORT

251

252

GLOBE TELECOM

2016 ANNUAL REPORT

253

(In Thousand Pesos and Number of Shares)

(In Thousand Pesos and Number of Shares)

(In Thousands, Except for Issue/Offer price)

*Initial number of registered shares only

Non-Voting Preferred Stock

254

GLOBE TELECOM

Voting Preferred Stock

2016 ANNUAL REPORT

255

(In Thousand Pesos and Number of Shares)

(In Thousand Pesos, Except Per Share Figures)

256

GLOBE TELECOM

Other Reserves

2016 ANNUAL REPORT

257

(In Thousand Pesos)

(In Thousand Pesos)

258

GLOBE TELECOM

Executive Stock Option Plan

(In Thousand Number of Shares Except per Share Figures)

2016 ANNUAL REPORT

259

Long-Term Incentive Plan

260

GLOBE TELECOM

(In Thousand Pesos)

(In Thousand Pesos)

Present value of defined benefit obligation

(In Thousand Pesos)

2016 ANNUAL REPORT

261

Fair value of plan assets

(In Thousand Pesos)

(In Thousand Pesos)

262

GLOBE TELECOM

2016 ANNUAL REPORT

263

(In Thousand Pesos)

(In Thousand Pesos)

264

GLOBE TELECOM

(In Thousand Pesos)

(In Thousand Pesos)

2016 ANNUAL REPORT

265

(In Thousand Pesos)

*This account is net of the amount capitalized borrowing costs (see Note 7).

(In Thousand Pesos)

(In Thousand Pesos)

266

GLOBE TELECOM

(a) (b)

Sum-of-the-years digit method Straight-line method

2016 ANNUAL REPORT

267

(a) (b)

268

Sum-of-the-years digit method Straight-line method

GLOBE TELECOM

(In Thousand Pesos) *2016 consist of Innove, GXI, BTI and Asticom *2015 consist of Globe Telecom, Innove, GXI, BTI and Asticom

(In Thousand Pesos)

(In Thousand Pesos)

(In Thousand Pesos)

2016 ANNUAL REPORT

269

(In Thousand Pesos)

in thousands

270

GLOBE TELECOM

Operating lease commitments

(In Thousand Pesos)

25.1.2

Finance lease commitments

2016 ANNUAL REPORT

271

(In Thousand Pesos)

272

GLOBE TELECOM

2016 ANNUAL REPORT

273

274

GLOBE TELECOM

2016 ANNUAL REPORT

275

276

GLOBE TELECOM

2016 ANNUAL REPORT

277

278

GLOBE TELECOM

2016 ANNUAL REPORT

279

280

GLOBE TELECOM

(In Thousand Pesos and Number of Shares Except per Share Figures)

2016 ANNUAL REPORT

281

Market Risk

282

GLOBE TELECOM

Interest Rate Risk

(In Thousand Pesos)

2016 ANNUAL REPORT

283

Foreign Exchange Risk

(In Thousand Pesos)

(In Thousand Pesos)

284

GLOBE TELECOM

Credit Risk

2016 ANNUAL REPORT

285

286

GLOBE TELECOM

(In Thousand Pesos)

(In Thousand Pesos)

2016 ANNUAL REPORT

287

(In Thousand Pesos) Â

288

GLOBE TELECOM

(In Thousand Pesos)

Liquidity Risk

2016 ANNUAL REPORT

289

290

GLOBE TELECOM

*Used month-end USD LIBOR and Philippine Dealing and Exchange Corporation (PDEX) rates. * Using ₱49.769 - USD exchange rate as of December 31, 2016.

2016 ANNUAL REPORT

291

*Used month-end USD LIBOR and Philippine Dealing and Exchange Corporation (PDEX) rates. * Using ₱47.118 - USD exchange rate as of December 31, 2015.

292

GLOBE TELECOM

*Projected principal exchanges represent commitments to purchase USD for payment of USD debts with the same maturities. **Deliverable and non-deliverable

*Excludes taxes payable which is not a financial instrument.

2016 ANNUAL REPORT

293

*Excludes taxes payable which is not a financial instrument.

Hedging Objectives and Policies

(In Thousands) Cash flow hedges

Freestanding Embedded

*The embedded currency forwards are at a net buy position.

(In Thousands) Cash flow hedges

Embedded

*The embedded currency forwards are at a net buy position.

294

GLOBE TELECOM

2016 ANNUAL REPORT

295

Currency Swaps and Cross Currency Swaps

Interest Rate Swaps

Deliverable and Nondeliverable Forwards

296

GLOBE TELECOM

Interest Rate Swaps

Deliverable and Non-deliverable Forwards

Embedded Currency Forwards

2016 ANNUAL REPORT

297

(In Thousand Pesos)

(In Thousand Pesos)

*This consists of cash and cash equivalents, short-term investments and long-term 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 (including current portion) and other long-term liabilities (including current portion).

298

GLOBE TELECOM

2016 ANNUAL REPORT

299

(In Thousand Pesos)

Non-Derivative Financial Instrument

Derivative Instrument

300

GLOBE TELECOM

Fair Value Hierarchy

(In Thousand Pesos)

2016 ANNUAL REPORT

301

Operating Segments

(In Thousand Pesos)

(Forward)

302

GLOBE TELECOM

(In Thousand Pesos)

1 2

Computed as non-service revenues less cost of sales Net of final tax

(In Thousand Pesos)

1

Computed as non-service revenues less cost of sales Net of final tax Starting June 2016, Globe Group presented equity in net losses as a non-operating income and expense below EBITDA, previously under other income above EBITDA. This change resulted to retroactive adjustments of 2015 and 2014 reported figures.

2 3

2016 ANNUAL REPORT

303

(In Thousand Pesos)

1

Computed as non-service revenues less cost of sales Net of final tax Starting June 2016, Globe Group presented equity in net losses as a non-operating income and expense below EBITDA, previously under other income above EBITDA. This change resulted to retroactive adjustments of 2015 and 2014 reported figures.

2 3

304

GLOBE TELECOM

(In Thousand Pesos)

(In Thousand Pesos)

(In Thousand Pesos)

Net of taxes

2016 ANNUAL REPORT

305

Mobile communication voice net service revenues include the following:

Mobile SMS service revenues

Mobile communication data net service revenues

Wireline voice service revenues

306

GLOBE TELECOM

Wireline data service revenues

Broadband service revenues

Consumers

2016 ANNUAL REPORT

307

Corporate/SME clients full

(In Thousand Pesos)

(In Thousand Pesos)

308

GLOBE TELECOM

2016 ANNUAL REPORT

309

310

GLOBE TELECOM

SCHEDULE OF ALL THE EFFECTIVE STANDARDS AND INTERPRETATIONS UNDER THE PHILIPPINE FINANCIAL REPORTING STANDARDS (PFRS) DECEMBER 31, 2016

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS

Adopted

Not Not Adopted Applicable

Framework for the Preparation and Presentation of Financial Statements Conceptual Framework Phase A: Objectives and qualitative characteristics PFRSs Practice Statement Management Commentary Philippine Financial Reporting Standards PFRS 1 (Revised)

First-time Adoption of Philippine Financial Reporting Standards Amendments to PFRS 1 and PAS 27: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate Amendments to PFRS 1: Additional Exemptions for First-time Adopters Amendment to PFRS 1: Limited Exemption from Comparative PFRS 7 Disclosures for First-time Adopters Amendments to PFRS 1: Severe Hyperinflation and Removal of Fixed Date for First-time Adopters Amendments to PFRS 1: Government Loans Annual Improvements to PFRSs 2009-2011 Cycle Amendments to PFRS 1: First-Time Adoption of PFRS Annual Improvements to PFRSs 2011-2013 Cycle Amendments to PFRS 1: First-time Adoption of International Financial Reporting Standards (Changes to the Basis for Conclusions only)

PFRS 2

Share-based Payment Amendments to PFRS 2: Vesting Conditions and Cancellations Amendments to PFRS 2: Group Cash-settled Sharebased Payment Transactions Annual Improvements to PFRSs 2010-2012 Cycle Amendments to PFRS 2:Definition of Vesting Condition

2016 ANNUAL REPORT

311

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Amendments to PFRS 2: Classification and Measurement of Share-based Payment Transactions* PFRS 3 (Revised)

Business Combinations Annual Improvements to PFRSs 2010-2012 Cycle Amendments to PFRS 3: Accounting for Contingent Consideration) Annual Improvements to PFRSs 2011-2013 Cycle Amendments to PFRS 3: Scope of Exception for Joint Ventures

PFRS 4

Insurance Contracts Amendments to PAS 39 and PFRS 4: Financial Guarantee Contracts

PFRS 5

Non-current Assets Held for Sale and Discontinued Operations Annual Improvements to PFRSs 2012-2014 Cycle Amendments to PFRS 5: Changes in methods of disposal

PFRS 6

Exploration for and Evaluation of Mineral Resources

PFRS 7

Financial Instruments: Disclosures Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets - Effective Date and Transition Amendments to PFRS 7: Improving Disclosures about Financial Instruments Amendments to PFRS 7: Disclosures - Transfers of Financial Assets Amendments to PFRS 7: Disclosures – Offsetting Financial Assets and Financial Liabilities Amendments to PFRS 7: Mandatory Effective Date of PFRS 9 and Transition Disclosures Amendments to PFRS 7: Hedge Accounting Disclosures Annual Improvements to PFRSs 2012-2014 Cycle Amendments to PFRS 7: Servicing contracts and Applicability of the amendments to PFRS 7 to condensed interim financial statements

312

GLOBE TELECOM

Adopted

Not Not Adopted Applicable

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS PFRS 8

Adopted

Not Not Adopted Applicable

Operating Segments Annual Improvements to PFRSs 2010-2012 Cycle Amendments to PFRS 8: Aggregation of Segments and Reconciliation of Segment Assets

PFRS 9

Financial Instruments (2014)*

PFRS 10

Consolidated Financial Statements Amendments to PFRS 10: Consolidated Financial Statement: Transition Guidance Amendments to PFRS 10:Transition Guidance and Investment Entities Amendments to PFRS 10: Sales or contributions of assets between an investor and its associate/joint venture* Amendments to PFRS 10: Investment Entities: Applying the Consolidation Exception

PFRS 11

Joint Arrangements Amendments to PFRS 1: Joint Arrangements: Transition Guidance Amendments to PFRS 11: Accounting for Acquisitions of Interests in Joint Operations

PFRS 12

Disclosure of Interests in Other Entities Amendments to PFRS 12: Disclosure of Interests in Other Entities: Transition Guidance Amendments to PFRS 12: Transition Guidance and Investment Entities Amendments to PFRS 12: Investment Entities: Applying the Consolidation Exception

PFRS 13

Fair Value Measurement Annual Improvements to PFRSs 2010-2012 Cycle Amendments to PFRS 13: Fair Value Measurement (Amendments to the Basis of Conclusions Only, with Consequential Amendments to the Bases of Conclusions of Other Standards) Annual Improvements to PFRSs 2011-2013 Cycle Amendments to PFRS 13: Portfolio Exception

PFRS 14

Regulatory Deferral Accounts

PFRS 16

Leases *

2016 ANNUAL REPORT

313

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Philippine Accounting Standards PAS 1 (Revised)

Presentation of Financial Statements Amendment to PAS 1: Capital Disclosures Amendments to PAS 32 and PAS 1: Puttable Financial Instruments and Obligations Arising on Liquidation Amendments to PAS 1: Presentation of Items of Other Comprehensive Income Annual Improvements to PFRSs 2009-2011 Cycle Amendments to PAS 1: Comparative Information Amendments to PAS 1: Disclosure Initiative

PAS 2

Inventories

PAS 7

Statement of Cash Flows Amendments to PAS 7: Disclosure Initiative

PAS 8

Accounting Policies, Changes in Accounting Estimates and Errors

PAS 10

Events after the Reporting Period

PAS 11

Construction Contracts

PAS 12

Income Taxes Amendment to PAS 12: Deferred Tax: Recovery of Underlying Assets Amendment to PAS 12: Recognition of Deferred Tax Assets for Unrealized Losses*

PAS 16

Property, Plant and Equipment Annual Improvements to PFRSs 2009-2011 Cycle Amendments to PAS 16, Servicing Equipment Annual Improvements to PFRSs 2010-2012 Cycle Amendments to PAS 16: Revaluation Method Proportionate Restatement of Accumulated Depreciation Amendments to PAS 16: Clarification of Acceptable Methods of Depreciation Amendments to PAS 16: Agriculture: Bearer Plants

314

PAS 17

Leases

PAS 18

Revenue

GLOBE TELECOM

Adopted

Not Not Adopted Applicable

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS

Adopted

Not Not Adopted Applicable

PAS 19 Employee Benefits (2011) (Amended) Amendments to PAS 19: Defined Benefit Plans: Employee Contributions Annual Improvements to PFRSs 2012-2014 Cycle Amendments to PAS 19: Discount rate: regional market issue PAS 20

Accounting for Government Grants and Disclosure of Government Assistance

PAS 21

The Effects of Changes in Foreign Exchange Rates Amendment to PAS 21: Net Investment in a Foreign Operation

PAS 23 (Revised)

Borrowing Costs

PAS 24 (Revised)

Related Party Disclosures

PAS 26

Accounting and Reporting by Retirement Benefit Plans

Annual Improvements to PFRSs 2010-2012 Cycle Amendments to PAS 24: Key Management Personnel

PAS 27 Separate Financial Statements (Amended) Amendments to PAS 27: Transition Guidance and Investment Entities Amendments to PAS 27: Equity Method in Separate Financial Statements PAS 28 Investments in Associates and Joint Ventures (Amended) Amendments to PAS 28: Sales or contributions of assets between an investor and its associate/joint venture* Amendments to PAS 28: Investment Entities: Applying the Consolidation Exception PAS 29

Financial Reporting in Hyperinflationary Economies

PAS 32

Financial Instruments: Disclosure and Presentation Amendments to PAS 32 and PAS 1: Puttable Financial Instruments and Obligations Arising on Liquidation Amendment to PAS 32: Classification of Rights Issues

2016 ANNUAL REPORT

315

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Annual Improvements to PFRSs 2009-2011 Cycle Amendments to PAS 32: Tax Effect of Equity Distributions Amendments to PAS 32: Offsetting Financial Assets and Financial Liabilities PAS 33

Earnings per Share

PAS 34

Interim Financial Reporting Annual Improvements to PFRSs 2009-2011 Cycle Amendments to PAS 34: Interim Reporting of Segment Assets Annual Improvements to PFRSs 2012-2014 Cycle Amendments to PAS 34: Disclosure of information 'elsewhere in the interim financial report'

PAS 36

Impairment of Assets Amendments to PAS 36: Recoverable Amount Disclosures for Non-Financial Assets

PAS 37

Provisions, Contingent Liabilities and Contingent Assets

PAS 38

Intangible Assets Annual Improvements to PFRSs 2010-2012 Cycle Amendments to PAS 38: Revaluation Method Proportionate Restatement of Accumulated Amortization Amendments to PAS 38: Clarification of Acceptable Methods of Amortization

PAS 39

Financial Instruments: Recognition and Measurement Amendments to PAS 39: Transition and Initial Recognition of Financial Assets and Financial Liabilities Amendments to PAS 39: Cash Flow Hedge Accounting of Forecast Intragroup Transactions Amendments to PAS 39: The Fair Value Option Amendments to PAS 39 and PFRS 4: Financial Guarantee Contracts Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets

316

GLOBE TELECOM

Adopted

Not Not Adopted Applicable

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS

Adopted

Not Not Adopted Applicable

Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets – Effective Date and Transition Amendments to Philippine Interpretation IFRIC–9 and PAS 39: Embedded Derivatives Amendment to PAS 39: Eligible Hedged Items Amendment to PAS 39: Novation of Derivatives and Continuation of Hedge Accounting Amendment to PAS 39: Hedge Accounting Application PAS 40

Investment Property Annual Improvements to PFRSs 2011-2013 Cycle Amendments to PAS 40: Clarifying the Interrelationship of IFRS 3 and IAS 40 When Classifying Property as Investment Property or OwnerOccupied Property

PAS 41

Agriculture Amendments to PAS 41: Agriculture: Bearer Plants

Philippine Interpretations IFRIC 1

Changes in Existing Decommissioning, Restoration and Similar Liabilities

IFRIC 2

Members' Share in Co-operative Entities and Similar Instruments

IFRIC 4

Determining Whether an Arrangement Contains a Lease

IFRIC 5

Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds

IFRIC 6

Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment

IFRIC 7

Applying the Restatement Approach under PAS 29 Financial Reporting in Hyperinflationary Economies

IFRIC 8

Scope of PFRS 2

IFRIC 9

Reassessment of Embedded Derivatives Amendments to Philippine Interpretation IFRIC–9 and PAS 39: Embedded Derivatives

IFRIC 10

Interim Financial Reporting and Impairment

IFRIC 11

PFRS 2- Group and Treasury Share Transactions

IFRIC 12

Service Concession Arrangements

2016 ANNUAL REPORT

317

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS IFRIC 13

Customer Loyalty Programmes

IFRIC 14

The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction Amendments to Philippine Interpretations IFRIC- 14, Prepayments of a Minimum Funding Requirement

IFRIC 16

Hedges of a Net Investment in a Foreign Operation

IFRIC 17

Distributions of Non-cash Assets to Owners

IFRIC 18

Transfers of Assets from Customers

IFRIC 19

Extinguishing Financial Liabilities with Equity Instruments

IFRIC 20

Stripping Costs in the Production Phase of a Surface Mine

IFRIC 21

Levies

SIC-7

Introduction of the Euro

SIC-10

Government Assistance - No Specific Relation to Operating Activities

SIC-15

Operating Leases - Incentives

SIC-21

Income Taxes- Recovery of Revalued Non-depreciable Assets

SIC-25

Income Taxes - Changes in the Tax Status of an Entity or its Shareholders

SIC-27

Evaluating the Substance of Transactions Involving the Legal Form of a Lease

SIC-29

Service Concession Arrangements: Disclosures

SIC-31

Revenue - Barter Transactions Involving Advertising Services

SIC-32

Intangible Assets - Web Site Costs

PIC Q&A Revenue Recognition for Sales of Property Units Under No. 2006-01 Pre-Completion Contracts PIC Q&A No. 200602

Clarification of Criteria for Exemption from Presenting Consolidated Financial Statements

PIC Q&A No. 200703

Valuation of Bank Real and Other Properties Acquired (ROPA)

PIC Q&A Rate Used in Discounting Post-employment Benefit No. 2008-01 Obligations

318

GLOBE TELECOM

Adopted

Not Not Adopted Applicable

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS PIC Q&A No. 200802

Adopted

Not Not Adopted Applicable

Accounting for Government Loans with Low Interest Rates under the Amendments to PAS 20

PIC Q&A Financial Statements Prepared on a Basis Other than No. 2009-01 Going Concern PIC Q&A Rate Used in Determining the Fair Value of No. 2010-01 Government Securities in the Philippines PIC Q&A Basis of Preparation of Financial Statements No. 2010-02 PIC Q&A Current/non-current Classification of a Callable Term No. 2010-03 Loan PIC Q&A Common Control Business Combinations No. 2011-02 PIC Q&A Accounting for Inter-company Loans No. 2011-03 PIC Q&A Costs of Public Offering of Shares No. 2011-04 PIC Q&A Fair Value or Revaluation as Deemed Cost No. 2011-05 PIC Q&A Acquisition of Investment Properties – Asset Acquisition No. 2011-06 or Business Combination?

PIC Q&A Application of the Pooling of Interests Method for No. 2012-01 Business Combinations of Entities under Common Control in Consolidated Financial Statements PIC Q&A Cost of a New Building Constructed on Site of a No. 2012-02 Previous Building PIC Q&A Accounting for Employee Benefits under a Defined No. 2013-03 Contribution Plan Subject to Requirement of Republic (Revised) Act (RA) 7641: The Philippine Retirement Law PIC Q&A Conforming Changes to PIC Q&As - Cycle 2015 No. 2015-01 *These are the new and revised accounting standards and interpretations that are effective for annual period beginning on or after the reporting period ended December 31, 2016

2016 ANNUAL REPORT

319

Â

320

GLOBE TELECOM

2016 ANNUAL REPORT

321

322

GLOBE TELECOM

2016 ANNUAL REPORT

323

324

GLOBE TELECOM

2016 ANNUAL REPORT

325

326

GLOBE TELECOM

2016 ANNUAL REPORT

327

328

GLOBE TELECOM

(In Thousand Pesos)

2016 ANNUAL REPORT

329

330

GLOBE TELECOM

2016 ANNUAL REPORT

331

332

GLOBE TELECOM

PROJECT LEAD Ma. Yolanda Crisanto, APR

CORPORATE INFORMATION

PROJECT MANAGERS

HEAD OFFICE

EJ Francisco Monday Gonzalez

PROJECT ASSISTANTS Kristel Or-Tan Apple Evangelista

COLLABORATORS Aaron Paul Panis Ada Hernandez Alberto Arago Allan Alicer Angel Padua Apple Evangelista Benjo Garcia Bernadette Jimenez Bianca Wong Carmina Herbosa Cecille Fernandez Charles Diu Chris Manguera Clarita Magsino Cloyd Masaudling Dada Dyquiangco Danilo Jose Yarcia Darleen Celesta Gabriel Earl Concina-Fetalvero Ellison Chua Elroy Shawn Sy Emily San Gabriel Enrique Tumang Erika Gatmaitan Fernando Esguerra Gaby Santos Imeric Dumaual John Borlaza John Rubio Jose Mari Fajardo Joshua Dimaculangan Joven Cabingao Julie Estrella-Diño Lyn Sebial

The Globe Tower 32nd Street corner 7th Avenue Bonifacio Global City, Taguig Trunkline: (02) 730-2000 Website: www.globe.com.ph

OFFICE OF CORPORATE SECRETARY Lynn Cano Marc Arthur Garcia

28th Floor, The Globe Tower 32nd Street corner 7th Avenue

Maridol Ylanan Maria Virginia Tolentino-Uy Atty. Marisalve Ciocson-Co May Santos – Genove Michi Mariano

Bonifacio Global City, Taguig Email: corporatesecretary@globe.com.ph

Miguel Bermundo Mike Andrade De Guzman

32nd Street corner 7th Avenue Bonifacio Global City, Taguig

Minette Navarrete Missy Castillo

Email: ir@globe.com.ph

INVESTOR RELATIONS 10th Floor, The Globe Tower

Nadja Ava Romano Nature Calderon

CORPORATE COMMUNICATIONS

Nino Guardino Pc Magnaye Peterson Fernandez

32nd Street corner 7th Avenue Bonifacio Global City, Taguig Email: gtcorpcomm@globe.com.ph

Pia Bernal Rasia Winnie Tan

STOCK TRADING INFORMATION

Raul Macatangay Raul Taroy Raymond Martin Aguilar

Globe Telecom is listed on the Philippine Stock Exchange.

Ticker symbol: GLO

Rhea Carlos Rizza Salvino Robert Gonzales Rofil Magto Rolando Fabros Ronald Testa Roy Dela Cruz Shiela Sawit Thomafaith Kalingking Vercheer Dela Cruz Vinchi Syquia Winny Ko

PHOTOGRAPHY Cyrus Panganiban Jilson Tiu

CONCEPT Publicis JimenezBasic

WRITING Writer’s Edge

DESIGN AND LAYOUT Medium3

Globe Telecom, Inc.

26th Floor, The Globe Tower

SUBSIDIARIES

SHAREHOLDER SERVICES

INNOVE COMMUNICATIONS, INC. The Globe Tower-Cebu

For inquiries regarding dividend payments, change of address, account status, and lost/damaged stock certificates, please contact our stock transfer agent:

Samar Loop corner Panay Road Cebu Business Park 6000 Cebu City Trunkline: (032) 415-8822 / (032) 730-2000

BANK OF THE PHILIPPINE ISLANDS (BPI) 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

G-XCHANGE, INC. 32nd Floor, Trade and Financial Tower 32nd Street corner 7th Avenue Bonifacio Global City, Taguig Website: www.globe.com.ph/gcash

KICKSTART VENTURES, INC. 55 Paseo de Roxas Avenue Makati City Trunkline: (02) 625-8723 Website: www.kickstart.ph

ASTICOM TECHNOLOGY, INC. 4th Floor, Globe Telecom Plaza 1 Pioneer Street corner Madison Street Mandaluyong City

AFFILIATE YONDU 7th Floor, Panorama Tower 34th Street corner Lane A Bonifacio Global City, Taguig City Trunkline: (02) 847-2732 locals 133, 134 and 135 Website: http:// www.yondu.com/

For further information regarding the annual report, please contact:

MA. YOLANDA C. CRISANTO, APR Senior Vice President, Corporate Communications Email: gtcorpcomm@globe.com.ph

2016 ANNUAL REPORT

335

2016 ANNUAL REPORT

336