earnings reports

Converge profits up 27% to almost P2 billion in Q1 2022

Aika Rey
Converge profits up 27% to almost P2 billion in Q1 2022

CONVERGE. Converge ICT Solutions opens a new business center in Calapan, Oriental Mindoro.

Converge ICT Solutions

Converge ICT Solutions sees its PBA foray as an 'excellent' expense

MANILA, Philippines – Converge ICT Solutions started 2022 sustaining momentum from 2021, with its net income growing 27% to P1.97 billion from January to March.

Consolidated revenues went up to P7.75 billion, jumping 40% from P5.55 billion in the same quarter in 2021.

The fiber company’s residential business continued to be the largest contributor to revenues, rising 42% year-on-year to P6.8 billion. 

As of March, Converge had 1.8 million subscribers, a 52.5% increase from last year. It also reached more than 12.2 million homes by the end of the first quarter, equivalent to 47.3% household coverage, which it said was on track to reach the target of 55% Philippine coverage by 2023.

Revenues from its enterprise segment, meanwhile, grew 25% to P935 million in the first quarter. Converge said revenues from small and micro enterprises more than doubled at 118.2%, as subscribers grew thrice to 25,810 new customers by the end of March.

While the segment has a lot of catching up to do, Converge chief operations officer Jesus Romero said on Monday, May 16, that the fiber company has been onboarding new customers from micro, small, and medium enterprises (MSMEs), as well as small offices and home offices (SOHOs), with its nationwide expansion.

“What we are seeing in this segment of MSME and SOHO, there are a lot of customers we are onboarding looking similar to our consumer mix – first time on fiber. Again, they were basically using what was available at the time, whether DSL, fixed broadband wireless, or mobile data,” Romero said. 

“That is still a very large segment that is untapped.… I think there is a lot of optimism given the reopening of the economy,” he added.

Matthias Vukovich, Converge chief financial office adviser, added that while enterprise is still a small segment, the company is “very hopeful with the acceleration of the growth.”

“The guidance for the full year was 20% and we’re optimistic that we’re well on track to meet that,” Vukovich said.

Converge is also part of an effort to construct an undersea cable system in Asia, the South East Asia Hainan-Hong Kong Express (SEA-H2X) cable system, which is set to be operational in 2024. It partnered with China Mobile International Limited, China Unicom Global, and PPTEL SEA H2X Sdn for the effort.

The cable will connect Hong Kong, Hainan in China, the Philippines, Thailand, east Malaysia, and Singapore, with options to extend to Vietnam, Cambodia, west Malaysia, and Indonesia. It will have a design capacity of 160 terabits per second aimed at meeting the growing bandwidth requirement in the region, and will be part of the preparations for the 5G era.

“This will serve as a crucial infrastructure to add diversity and redundancy to our international network. We are truly diversifying our international capacity portfolio as transpacific demand will be served by the Bifrost and now trans-Asia demand will be served by SEA-H2X,” Converge chief executive officer Dennis Anthony Uy said.

PBA foray

Recently, Converge took over the Alaska franchise in the Philippine Basketball Association (PBA).

The Converge FiberXers will play in the opening game of the 47th season of the PBA, according to team governor Chito Salud on Monday.

“I’m very happy that the response of the fans to Converge is so high. The PBA has scheduled our team to play in the opening game of the 47th season that’s rarely done to a new team like us,” Salud said.

“Usually, the opening of the season of the PBA was only one game. They are going to play two games and we will play in the first game. We still don’t know who our opponent is but this, definitely, is a first for the PBA.”

Converge chief strategy officer Benjamin Azada said the company spent an initial investment of P105 million for the team. It expects annual operating expenses of P200 million, but Azada said Converge believes it is an “excellent” expense.

“The reason why we felt that it is an excellent expense for Converge is because of the reach of PBA in terms of viewership and following and of course the in-person audience who go to MOA Arena to watch,” Azada said.

“We believe, based on our analysis, it is expected to generate an ROI (return-on-investment), with a projected annual earned media value of P2 billion to P4 billion given the amount of exposure we can expect to obtain.” – Rappler.com

Aika Rey

Aika Rey is a business reporter for Rappler. She covered the Senate of the Philippines before fully diving into numbers and companies. Got tips? Find her on Twitter at @reyaika or shoot her an email at aika.rey@rappler.com.