Converge ICT increases capex by 25% to P20B

By Arjay L. Balinbin, Senior Reporter

LISTED fiber internet provider Converge ICT Solutions, Inc. expects to spend P20 billion on its expansion efforts this year, as it targets to cover approximately 35% of the country’s households by December, a company official said.

“We invested P16 billion in 2020, and we plan to invest P20 billion or more this year,” Converge Chief Financial Office Advisor Matthias Vukovich said at a virtual press briefing on Thursday, referring to the capital expenditure (capex) budget for the year.

He said the budget will be used for the expansion of Converge’s backbone and the deployment of additional fiber-to-the-home (FTTH) ports.

“The budget for the backbone is approximately 30% of the P20 billion, which are primarily for Mindanao and the Visayas,” Mr. Vukovich added, noting that 50% of the budget will be used for its network in Luzon.

The remaining 20% of the capex will go to digitization initiatives.

Converge saw its net income for 2020 surge 78% to P3.39 billion from P1.91 billion in 2019.

Total revenues increased 71% to P15.65 billion from P9.14 billion.

Broken down, the company’s residential business contributed P12.63 billion to the total revenues, or 99% higher than P6.35 billion earned in 2019, while the enterprise segment’s contribution grew 9% to P3.02 billion from P2.79 billion.

The company’s EBITDA (earnings before interest, taxes, depreciation, and amortization) grew 76% to P8.22 billion from P4.67 billion, booking a margin of 52.5% from 51% in 2019.

Converge officials said the company is on track to achieve its target to cover about 55% of households in the country by 2025, noting that it deployed 1.5 million new FTTH ports last year, “more than 1.75 times the number of FTTH ports deployed in 2019.”

The company also reported that its residential subscriber base doubled last year, reaching about 1,038,000 subscribers by December from 530,000 by the end of 2019.

“As the home became both office and classroom amid the global pandemic, we further accelerated our fiber network rollout to deliver high-speed broadband connectivity to more Filipinos, reaching underserved and unserved areas in the country,” Converge Chief Executive Officer and Co-Founder Dennis Anthony H. Uy said.

The company expects sustained growth in its residential user base to 1.6-1.7 million by December this year, owing to high demand for broadband amid a pandemic crisis.

“Demand from enterprise customers is projected to accelerate in 2021, notably driven by an expected recovery of the SME (small and mid-size enterprise) segment, resulting in total expected consolidated year-on-year revenue growth of approximately 10% in 2021, subject to market recovery from COVID pandemic impact,” it added.

Converge ICT Solutions shares closed 1.83% lower at P17.18 apiece on Thursday.