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ANGELES CITY—While the coronavirus outbreak has adversely affected most industries around the globe, the demand for fixed broadband service has tremendously risen, as the work-from-home (WFH) scheme and social distancing became an integral part and practice in the age of the “new normal.”
In what could be the largest public listing in the Philippines this year, Converge Information and Communications Technology Solutions Inc. (Converge ICT) is eyeing to raise as much as P35.9 billion from its planned initial public offering (IPO) this October.
It was reported that the Securities and Exchange Commission (SEC) has acknowledged that it has received the firm’s registration papers last week and that the planned IPO would facilitate the listing of fiber-optic internet and other consumer-centric digital services providers on the main board of the Philippine Stock Exchange (PSE).
The potential net proceeds of 90 percent from the sale of its primary shares would be used to fund the capital expenditure requirements to accelerate its nationwide fiber-optic network rollout, while 10 percent would be used for general corporate purposes, including working capital requirements.
It was also reported that the offer period is set from October 13 to 19, while the expected listing date is on October 26.
Converge ICT tapped Morgan Stanley Asia (Singapore) Pte. and UBS AG Singapore to be the joint global coordinators and joint bookrunners of the transaction.
BPI Capital Corp. will be the sole local coordinator, joint local underwriter and joint bookrunners, while BDO Capital & Investment Corp. will be the joint local underwriter and joint bookrunner.
From Betamax biz to ICT
Founded in 2015 by businessman Dennis Anthony H. Uy (not the Dennis Uy of Udenna fame), its current chief executive officer, Converge ICT is described as the largest high-speed fixed broadband operator in the Philippines with a 54-percent market share of high-speed residential fixed broadband subscription as of March 2020.
A self-made man who started out as a trader of Betamax tapes back in the early ’80s, Uy is now in the cutting edge of the ICT that would soon connect the Philippines to the world.
With this in place, the cost of internet in the Philippines would be greatly reduced and its speed will become faster, making Uy’s consortium a formidable third (or even fourth) player in the ever-improving multibillion- peso ICT industry.
Converge ICT Solutions Group of Companies, which leads a consortium of foreign companies, is now undertaking the construction of thousands of kilometers of subsea fiber-optic cables from Hong Kong to the Philippines and on to Guam for an international gateway facility (IGF).
Uy said in time, his consortium would have completed the $120-million infrastructure project that would connect the Philippines to the rest of the world.
The contractor is NEC Corp., which will lay out the subsea fiber-optic cables between Hong Kong and the Philippines for some 1,100 kilometers and between the Philippines and Guam for another 2,560 kilometers, said Uy.
The capacity of the IGF backbone will be seven terabytes per second, he added.
Uy started out when he was only in high school. During his first year at the Chevalier School here, he would often go to Greenhills in San Juan, Metro Manila, to buy Betamax and VHS tapes to be rented out in their store, Jack’s Video, operated by his eldest brother Jack.
During his senior year in high school, Uy was already selling the first Apple computers to big businessmen in this city and nearby San Fernando.
“I still remember during my high-school days at 3 p.m. after our classes, I still have to go to Greenhills via Pantranco bus to get the computers,” he recalled.
“Only the rich people could afford to buy computers at that time because they cost around P60,000 each,” he added.
He ventured into all sorts of brands like Commodore and Atari and learned how to repair them. “I learned how to repair the machines because I follow the transition in technology,” he said.
At that point, he said, he realized the speed in which technology was evolving and this inspired him to keep up and learn more.
“Imagine nag-umpisa kami [we started out with] Betamax, VHS, CD, LD and now flash disk, flash drives and the cloud,” he said.
Uy started attending international trade shows and technology conferences abroad to keep up with the pace.
Soon it became apparent that he has nobody to sell to any more in Pampanga.
“So, when I realized that a lot of people are now into selling computers, I went into a higher level which is networking products, installing servers for niche markets using Sun Microsystems servers for banking, government usage and multinational companies. I tried to avoid competition,” he said.
“I was the first Philippine distributor of Sun Microsystems,” he said.
The pioneering spirit in him again inspired him to venture into cable television just a year after the eruption of Mount Pinatubo in 1991.
“When we started the cable company, it was just in our house in Villa Gloria Subdivision [Angeles City] in 1992,” he narrated.
It was there that the Angeles City Cable Television Network (ACCTN) was born with only a few hundred subscribers. Uy said back then, it cost about P3,500 to have an analog cable TV installed in your house.
But now, with the advent of digital technology, ACCTN is using underground fiber-optic cables piping in high-definition (HD) channels to households at a lower cost.
“Ing eganagana [All of my]backbone from La Union to Clark is now underground up to Metro Manila,” Uy said.
At present, Uy is working to bring cable television to the masses via prepaid cards for as low as P100 a month.
“I understand that for these people, cable TV is not a necessity, it is a luxury to them but if I can bring cable like P100 to the masses, no boxes no everything with just a certain number of channels. So, no need for the aerial antenna,” he said. “I have 35 cable companies all over Central Luzon already,” he added.
In 1996 ACCTN went into providing cable TV for the Mimosa Leisure Estate inside the Clark Freeport. The Clark venture has sparked another bright idea for the visionary businessman who anticipated the boom of the ICT industry.
ComClark, a company he founded, started laying out the fiber-optic cables in the business center.
Rise of the BPO industry in Clark
Shortly after the groundwork was laid out in Clark, the boom of the business-process outsourcing (BPO) industry had began and Uy and his companies were ready.
“I laid out the fiber optics for the whole Clark in anticipation of the future,” he said.
“Tinarget ke nung nukarin la reng mangaragul locator; inabang ku nala [I targeted where the big locators were. I readied the connections],” he narrated.
“Maswelu ya ing Clark uling meg boom ya ing [Clark is fortunate with the rise of the] BPO industry because the fundamental fiber optics is laid out already,” Uy said. “Sasalpak nalamu anyapin miparanun ya meg boom ing BPO industry [They just link the connections, that is why Clark has blossomed early as compared to Subic in the BPO industry],” he added.
“How come Subic has no BPO? Because the infrastructure system is not ready,” Uy explained.
Uy said they are the trendsetter when it comes to equipment. “I invest in technology. We have boring machines which can bore or dig without much compromise. It only needs a meter of space to start boring from one side of the road to the other. No need to demolish or break the concrete and block the road,” he explained.
Uy said in other circumstances, only two inches of the concrete is cut where the fiber-optic cable is inserted with no disturbance to traffic.
Slow internet in PHL
“The internet is slow because of the cost. Among the Asian countries, we have the most expensive internet because our backbone subsea landing … to other points of termination is owned by only two companies and they charge 500 percent higher than other countries,” he revealed.
“I will put a landing station in La Union,” he said. “The IGF is intended to enhance all the traffic in applications such as Facebook, Viber, Facetime and the other social-media applications. The content all pass through the subsea cable in and out of the Philippines,” Uy explained.
“But there are only two companies that have this. So, we need a third player so that it will bring down the cost,” he reasoned.
“The cellular phone will become obsolete because the future is internet protocol (IP). No one will pay just to send SMS, or call someone, when they can do that for free using social-media applications which will be the king in the future,” Uy predicted.
“That’s how the Philippines can communicate to the world via IP,” he said. “This is the link. This is the network,” he declared.
Image credits: Junpinzon | Dreamstime.com