Converge gets tax incentives

·3 min read

FIBER broadband provider Converge ICT Solutions Inc. told the local bourse Wednesday, May 18, 2022, that it has secured the approval of the Fiscal Incentives Review Board (FIRB) to avail of tax incentives for its multi-phased establishment of connectivity facilities for high-speed broadband services targeting undeveloped and underdeveloped areas nationwide until 2026.

The project will see the rollout of Fiber-to-the-Home infrastructure — including the terrestrial backbone, distribution networks, ports and routers — to more than 1,200 unserved and underserved municipalities nationwide, subject to the approval of the expansion of the coverage areas in its certificate of public convenience and necessity.

The digital infrastructure will make use of the latest technologies that allow higher capacity and faster data transmission.

The Converge nationwide fiber broadband rollout, the first phase of which began in November 2021 (registration date) is classified as a strategic service in the telecommunications sector in the 2020 Investments Priorities Plan.

Approved incentives

Under the approved incentives, Converge will receive four years of income tax holiday followed by five years of enhanced deductions or special corporate income tax as laid out in the Create Law, as well as 11 years of duty-free importation of capital equipment, raw materials, spare parts or accessories starting from the registration date.

The FIRB approval was given in recognition of the missionary nature of the project — bringing connectivity to marginalized areas of the Philippines — as well as for the innovative technology used in the fiber network.

“We’re glad that the government appreciates the cutting-edge technology we will be using to bring broadband connection to underdeveloped areas. We’ve always believed that connectivity is a right, not a privilege of a few. With this investment in the network, we will be allowing more Filipinos to exercise this right,” said Dennis Anthony Uy, Converge chief executive officer and co-founder said in a statement.

The multi-year project is also seen to generate direct and indirect jobs.

“There is no shortage of talent among Filipinos and we look forward to the opportunities that this project will open up for our countrymen, especially in the rural areas,” Uy added.

The project is a step towards narrowing the digital divide in the country, as access to fiber broadband remains dismally low in the country.

According to Media Partners Asia, in December 2021, the fiber penetration in the Philippines is just 17 percent of households, way behind several Association of Southeast Asian Nations neighbors whose penetration rate has breached 40 percent, even reaching 80 percent for Vietnam.

The target of the Broadband Commission for Sustainable Development is for middle income countries including the Philippines to reach 65 percent broadband internet penetration by 2025.

Q1 earnings

Moreover, during the company’s first quarter results media briefing on Monday, March 16, 2022, the company pledged to set up infrastructure in more unserved markets.

The firm’s expansion areas in the second quarter this year include Abra (115,000 households), Aklan (134,000 households), Negros Oriental (310,000 households), South Cotabato (217,000 households), Ifugao (43,000 households) and Davao del Norte (233,000 households).

Meanwhile, the firm has already soft-launched in Negros Occidental (572,000 households), Kalinga (42,000 households), Leyte (405,000 households) and Bohol (288,000 households).

Amid its aggressive expansion in the past two years, the subscriber base of Converge has been steadily growing from 529,629 subscribers as of end-2019 to 1.8 million subscribers at the end of March 2022.

The firm deployed 643,528 new fiber-to-the-home ports during the first three months of this year.

Converge ended the first quarter with consolidated revenues of P7,748 million up 39.7 percent from P5,547 million during the same period in 2021.

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