Converge Information and Communications Technology (ICT) Solutions Inc., the telecom firm led by Pampanga businessman Dennis Anthony H. Uy, is going public to raise as much as P35.9 billion, mostly from international investors.
According to the registration statement it filed with the Securities and Exchange Commission last week, the company said it will sell a total of 1.49 billion common shares, 1.3 billion of which are its primary and secondary offerings and the rest are its overallotment option.
The shares will be listed on the Philippine Stock Exchange (PSE). Up to 70 percent of the offer shares will be sold overseas, and the rest will be for the domestic market. The company expects to have a final price for the offering in early October and list the shares at the PSE by October 26.
Morgan Stanley Asia (Singapore) Pte. and UBS AG Singapore Branch were picked as the joint global coordinators and joint bookrunners, while BPI Capital Corp. and BDO Capital and Investment Corp. were chosen as the local underwriters and bookrunners.
The company said about 90 percent of the net proceeds will be used to fund its capital expenditures to accelerate its nationwide fiber network rollout, such as investments in outside plant equipment, including its proprietary end-to-end fiber network, comprising of the domestic backbone, distribution networks, last mile loops and access to international connectivity networks.
“We expect that the net proceeds from the sale of the primary shares, our cash flows from operations, our available cash P8.1 billion as of June 26, our existing credit facilities P32.7 billion which are mostly in seven to 10-year term loans and our significant leverage headroom [net debt to Ebitda ratio of only 0.4x as of December 31, 2019] will enable us to fund our planned nationwide fiber network expansion,” the company said.
The remaining 10 percent will be used for general corporate purposes.
The company claims to be the largest high-speed fixed broadband operator in the Philippines, in terms of high-speed residential fixed broadband subscriptions, with a 54-percent market share as of March 31.
The company said Converge ICT has over 30,000 kilometers of fiber as of end-March, and its network is among the most extensive in the country. It network is comprised of a fiber backbone that stretches from the northernmost tip of Luzon Island to its southernmost end, as well as a fiber distribution and last-mile network that covers over 200 cities and municipalities across Luzon, reaching 4.1 million homes.
“Furthermore, we are the only major pure-play high-speed fixed broadband provider, with an exclusive focus on serving the Philippine fixed broadband market.” In May, the company said it acquired approximately 50,000 new residential subscribers, the highest monthly gross adds on record, compared to monthly new residential subscriptions of approximately 33,000 in each of January and February.
In June, the company added approximately 60,000 new residential subscribers, exceeding the May record by 20 percent. “Demand for fixed broadband in the Philippines has accelerated with the onset of the coronavirus pandemic, as work-from-home arrangements and social distancing became the new normal.”