Converge cuts back capex after aggressive growth

Converge ICT Solutions Inc. is cutting back on its capital expenditures (capex) this year after spending upfront costs to widen its network as it projects double-digit growth in revenues anew, driven by residential and enterprise segments.

Maria Grace Uy, Converge co-founder and president, said in a press briefing on Thursday their capex guidance for the year was P12 billion to P15 billion, lower than the P22 billion it spent in 2022.

“We have rolled forward our capex in the previous years, reducing our requirements for capex in a high interest rate environment,” she said.

The bulk of the amount will be spent on roll out of ports and routers while other allocation includes investments in subsea cables and digitalization efforts, Converge deputy chief finance officer Christine Blabagno said.

Converge chief operating officer Jesus Romero identified Bohol, Zamboanga, Palawan and Aklan as the company’s growth areas for the year.

It currently has 56-percent household coverage—exceeding its 55-percent target—as it has already deployed 8 million ports across the country.

Blabagno assured the capex budget was “amply funded” by internal resources, but she said that credit lines could be tapped if  additional financing would be required.

Meanwhile, Uy said the revenue growth projection for the year was pegged within 10 percent to 15 percent, with the residential business as the “largest contributor.”

Residential revenues are estimated to increase by 10 percent while the enterprise segment is seen to register 25-percent revenue growth this year.

Last year, the internet service provider saw its bottom line  improve by 4 percent to P7.44 billion, supported by total revenues soaring by 27 percent to P33.7 billion for the period.

Thanks to 11-percent subscriber base growth, residential revenues in 2022 climbed by 27 percent to P29.5 billion. Enterprise revenues, meanwhile, surged by 26 percent to P4.2 billion.

Converge also launched Surf2Sawa, a prepaid fiber product that offers internet connectivity at sachet-sized offerings to make them more affordable at a time when consumer prices are high.

“[We] want to provide our people with the internet that they don’t just deserve but they can afford as well. In this digital age, we want to make sure that no one will be left behind,” Converge co-founder and CEO Dennis Anthony Uy said.

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