Converge ICT sets 2022 capex at up to P28 billion

LISTED fiber internet provider Converge ICT Solutions, Inc. on Thursday said it expects to spend around P26-28 billion for capital expenditure (capex) projects this year, higher than last year’s P25 billion, mainly to continue its expansion.

“Last year, we spent P25 billion. For this year, we plan to spend P26-28 billion. Capex will be for the backbone expansion,” said Matthias Vukovich, Converge chief financial office advisor, during a virtual press briefing.

The company’s capex initiatives for the year will also include selected investments into international subsea cables and enhancement of its information technology systems.

In a statement, Converge said its net income more than doubled to P7.16 billion in 2021 from P3.39 billion in 2020.

The company’s revenues increased by 69% to P26.48 billion in 2021 from P15.65 billion previously. Broken down, its residential revenue surged by 83% to P23.13 billion from P12.63 billion in 2020, while enterprise revenue grew by 11% to P3.35 billion from P3.02 billion a year earlier.

The increase in residential revenue was driven by significant net subscriber growth, especially in the fourth quarter of 2021, with gross additions of 163,000 and nearly 115,000 net subscriber additions, bringing the total number of residential subscribers to 1.7 million.

Converge saw its earnings before interest, taxes, depreciation and amortization (EBITDA) margins expand to 55.9% last year from 52.5% in 2020.

“Converge is on track to reach its adjusted goal of approximately 55% nationwide household coverage by 2023, two years earlier than promised during the initial public offering,” the company said.

“We expect that strong demand for reliable high-speed broadband will result in continuous growth of our residential subscriber base to approximately 2.4 million by the end of 2022,” it added.

At the same time, the company expects that demand from enterprise customers, including small-medium enterprises, will accelerate this year, with the lowering of mobility restrictions to Alert Level 1.

“Revenue from enterprise business is expected to grow by 20% year on year, resulting in a consolidated revenue growth of 50% for 2022.”

The company hopes to maintain its EBITDA margins of 55%.

Converge ICT shares closed 9.49% higher at P25.95 apiece on Thursday. — Arjay L. Balinbin