CHRISTMAS came early for subscribers of Converge Information and Communications Technology Solutions Inc. (Converge) after the listed company announced Thursday, Nov. 10, 2022, that it will upgrade the speed of residential base plans for free, after posting positive gains from January to September.
The upgrade will take effect permanently on Friday, Nov. 11 with a base plan of 200Mbps.
Subscribers with FiberX Plan 1500 will have an internet speed of up to 200Mbps, double of its current capacity. Similarly, existing and potential subscribers of higher-priced plans will also experience speed boost, the company said.
A new FiberX Plan 2000 will be introduced to offer 400Mbps; FiberX Plan 2500’s speed will also double from 300Mbps to 600Mbps; FiberX Plan 3500 will maintain its 800Mbps speed; and finally, a 1Gbps plan will be introduced as FiberX Plan 7499.
“As Converge has designed its network with significant built-in capacity, the announced speed increases come without any need for incremental capital expenditures (capex) for the company,” the listed firm owned by Dennis Anthony Uy said.
Converge ended the first nine months of the year with a growth in consolidated revenue by 30 percent year-on-year, hitting more than P24 billion, according to Grace Uy, Converge’s president and co-founder. Earnings before interest, taxes, depreciation, and amortization reached 59 percent, and a return on invested capital at 16.6 percent.
The company’s net income after tax grew by 17 percent to more than P6 billion, leading to a net income after tax margin of 25 percent.
Revenue from the residential business increased by 31 percent from January to September. Grace said this was driven by the growth in the subscriber base. Converge’s end-of-period residential subscriber count reached almost 1.84 million as of September 2022, 16 percent higher year on year.
The enterprise business, on the other hand, continued to show upward momentum with enterprise revenues increasing by 27 percent from the first nine months of last year. Grace said the small and medium enterprises and wholesale businesses have been large contributors to this growth.
“As you all know, external pressures persisted in the third quarter, weakening the peso, and pushing prices up. We are fortunate in a sense since we completed our domestic submarine cable network last year, shielding us from the higher cost of imported materials due to the strong dollar this year,” said Dennis, in a video message during the company’s third quarter and nine-month financial virtual briefing on Thursday.
But despite the headwinds, Dennis said Converge already has 14.3 million homes passed or 53 percent of total Philippine households as of the end of September, making, the company well on track to achieve its accelerated target of covering 55 percent Filipino homes by 2023.
“Amid these challenges, we remained focused on our mission to reach the unserved and underserved areas in the country. Thus, we continued to pursue our expansion strategy, with our extensive infrastructure network now reaching 600,000 fiber kilometers as of September 2022,” he said.
Converge rolled out more than 400,000 fiber ports during the third quarter alone, resulting in 7.6 million total ports.
“We are doing this because we believe that the Philippine market continues to be underserved. Even as more people go back to their offices, and classes are slowly going face-to-face, high-speed internet connectivity remains a vital need by Filipinos at home. At the same time, we are seeing the recovery of businesses and we are supporting this rebound with our innovative products and solutions that are powered by our pure fiber technology,” said Dennis.
Trimmed capex for 2023
Given the current market situation, Matthias Vukovich, chief financial advisor of Converge, said they project a trimmed capex for 2023 and a P21-23 billion spending to settle this year. The company initially pegged a P25 billion spending this year and it already spent P15.3 billion in the first nine months of the year.
“We revised the capex guidance for this year... We expect capex for next year to be lower but that doesn’t mean that we are slowing down our expansion. We have 6.7 million fiber ports with just 1.8 million subscribers so basically, we have about five million inactive ports of inventory that we can sell out to further support our growth,” said Vukovich, adding that the company has been in an investing mode in the recent past, frontloading a lot of capex to facilitate business expansions across the country.
The 2023 capex, he added, will be used to fund investments in the company’s core business, such as in the expansion of ports, strengthening of the backbone and investments in adjacent businesses such as submarine cables and data centers. Vukovich also said the company will also be prudent in its spending given the current market conditions.
“As you all know the economy of the Philippines is facing challenging times with the peso being under pressure, interest rates spiking, and inflation that continues to be on an elevated scale. These factors can be very challenging, especially for a capex-heavy infrastructure company like us where we rely on dollar-denominated procurements. But, in this very challenging environment, Converge has been able to maintain a rock-solid balance sheet,” Vukovich. (KOC)