Converge Eyes ₱28B of Capex for Network Expansion

This year, Converge Information and Communications Technology Solutions Inc. is looking to allocate between ₱26 and ₱28 billion from its capital expenditures in an effort “to deepen” its network and for the deployment of additional fiber, announced Converge President Maria Grace Uy.

The telecommunications and fiber optic operator had previously spent ₱25 in CapEx during the previous year to further expand its business and develop its national fiber backbone. Matthias Vukovich, Converge chief finance officer, added that they will focus their CapEx spending on the deployment of new ports, nodes, and core routers “to make our network even more resilience and faster.”

Additionally, the company also plans to utilize capital spending for the acquisition and deployment of customer premise equipment, investments in international sub-sea cables, and digital transformation initiatives. “It’s fully funded,” said Vukovich. “We still have about ₱25 billion of undrawn debt facilities and… cash in the balance sheet. And we’ll be raising bonds; another ₱10 billion in funding.”

All in all, Converge’s total funding capacity is “more than ₱50 billion, which is twice the CapEx that we’re looking at this year,” he affirmed. The telco’s move is maintained in its disclosure to the Philippine Stock Exchange (PSE), which noted that the allotment is geared towards the “deepening of our network infrastructure throughout the country, as well as deployment of additional FTTH [fiber-to-the-home] ports nationwide.”

In 2022, Converge’s net income was posted at nearly ₱7.2 billion which was accounted for more than double the increase from 2021 at ₱3.4 billion after tax. This was primarily due to the company’s robust residential business coupled with the recovery of its enterprise vertical. Within the same period, Converge likewise reported a revenue increase of 69.2% from ₱15.7 billion to ₱26.5 billion after ending the year with 1.7 million subscribers.

“In addition, with the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill signed into law with effectivity starting July 2020, our statutory corporate income tax rate was reduced from 30.0 percent to 25.0 percent with Converge’s effective tax rate dropping from 30.6 percent in FY2020 to 25.1 percent in FY2021,” the company furthered in its disclosure.

“Our entry into Visayas and Mindanao contributed to our aggressive port rollout and continued turn-in of subscribers in Luzon and existing markets pushed up our residential business revenues up by 83.2 percent,” added Converge CEO Dennis Uy. “Our network has now passed 10.9 million homes and we’re covering around 42.5 percent of Philippine households. We’re confident of meeting our accelerated goal of reaching 55 percent of all households by 2023.”

Converge has already deployed 2.4 million ports across the country, as well as 103,000 kilometers of fiber covering 495 cities and municipalities, as of end-December. The telco company hopes to end 2022 with a total of 2.4 million subscribers — which would require the addition of 700,000 subscribers — to drive a 50% increase in its revenues.

Source: BusinessMirror