After frontloading most of the capital expenditures (capex) that it needed to expand its network within the last three years, Converge ICT Solutions Inc. said it decided to cut its outlays by as much as 45 percent.
Converge officials said the lower capital outlays for 2023 stem from the company’s accelerated investments in its backbone and access segments during the pandemic.
This accelerated spend enabled the company to reach its 2023 target of covering 55 percent of Filipino households with fiber connectivity in 2022.
“We built our infrastructure so fast. There is no operator in this country that produces two million ports every year. We were able to build ahead of time and cushion the effect of inflation and exchange rate differences,” Converge CEO Dennis Anthony Uy said.
Converge will slow down on massive capital investments this year, according to Converge President Grace Uy. “We have to slow down a bit and focus on those that have been rolled out to improve on the utilization of those ports,” she said.
Currently, Converge has 7.9 million ports in the country with 14.9 million homes passed or a 56.2-percent nationwide household coverage.
As such, Converge will be spending between 30 percent to 45 percent less than the actual capital spend in 2022 of P21.9 billion.
Majority of the capital spend this year will be used for the deployment of additional ports and routers for subscribers, while a fourth of it will be spent to support the growth of its Visayas and Mindanao businesses. The remainder will be used to invest in other subsea cable networks and digitalization efforts.
This year, Converge plans to expand in new cities in Bohol, Zamboanga, Palawan, and Aklan, among other areas this year. Aside from its residential business, it plans to beef up its enterprise segment and complement it with its data center business.
During the same press briefing, Converge unveiled its latest service offering called Surf2Sawa, a prepaid service that targets mainly the C, D, and E markets.
The prepaid service requires an upfront payment for the modem installation, while prepaid buckets range between P50 for a day of unlimited fiber internet and P700 for 30 days of unlimited fiber internet.
Converge ended 2022 with a 4-percent growth in profits to P7.43 billion from P7.16 billion on the back of a 27.3-percent jump in revenues to P33.7 billion from 26.48 billion.
The company aims to grow its top line by “10 percent to 15 percent,” a slower rate versus the year prior.
Converge COO Jesus Romero said the company now has a bigger revenue base compared to 2022, hence the slowdown in the growth rate, but a higher absolute figure nonetheless.
“Once you’re big, the percentage growth rates will be lower. The focus is the absolute number,” he said.