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Converge to spend P29 billion over 18 months for network expansion

Converge ICT Solutions will be spending P29 billion ($600 million) over the next 18 months to roll out its network nationwide, the company's chief financial officer said in a briefing on Monday, October 26.

Converge CFO Matthias Vukovich said the amount, raised from its massive initial public offering (IPO), would help the company realize its goal of reaching 55% of Filipino households by 2025.

Vukovich said that as of the 1st half of the year, Converge delivered 65% revenue growth and 51% margins on its earnings before interest, taxes, depreciation, and amortization, or EBITDA.

Converge is currently the fastest-growing pure fixed broadband operator in the Philippines. It has around 750,000 customers, mostly from Metro Manila.

The Philippines is among the most underpenetrated markets in Asia, with only 9% of subscriber fiber penetration, even though it is the biggest internet user in the world.

Converge chief executive officer Dennis Anthony Uy said the large demand and supply gap presents opportunities for the company.

According to Uy, they have grown their subscriber base 10 times since 2016.

Converge president Grace Uy added that 82% of new subscribers in the 1st half of 2020 were first-time users.

"This once again highlights the huge blue ocean market opportunity with massive pent-up demand," Uy said.

Converge stocks closed at P15.22 on Monday, 9.4% lower than its IPO price, as investors deemed it to be too pricey. Analysts earlier noted that it would have to significantly increase its revenues to match its stock price. – Rappler.com

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.

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