Converge lowers capex guidance to P21-23 billion

CONVERGE ICT Solutions, Inc. has revised its capital expenditure (capex) guidance for the year, lowering it to P21-23 billion from P26-28 billion previously.

“With weak peso like today, capex is expensive,” Matthias Vukovich, Converge chief financial office advisor, said during a press briefing on Thursday.

“We can activate… new subscribers without needing more capex,” he noted. “This will also reduce the need for Converge to draw further debt during this high interest rate environment.”

Converge accelerated its network rollout by deploying 1.2 million new fiber-to-the-home ports nationwide in the first half of 2022.

Despite external challenges, the company remains bullish on its growth in the second half of the year “because there are still a lot of areas where we don’t operate,” Converge Chief Operations Officer Jesus C. Romero said.

The company expects that strong demand for high-speed broadband will result in the continuous growth of its residential subscriber base to approximately two million by the end of 2022, lower than its initial guidance of approximately 2.4 million, “due to higher than expected churn in the first half.”

Converge also said that it is on track to deliver enterprise revenue growth of 20% year on year, in line with its initial guidance.

“The revised outlook for our residential business results in a consolidated year-on-year revenue growth guidance of 25-30% for 2022,” it said in a statement.

SECOND-QUARTER PROFITThe company saw its profit after income tax for the second quarter of the year rise 16% to P1.98 billion from P1.70 billion in the same period a year ago.

Revenues for the period increased 33% to P8.31 billion from P6.24 billion previously.

For the first six months of the year, the company’s profit grew 21% to P3.95 billion from P3.25 billion a year earlier.

Revenues for the first semester rose 36% to P16.05 billion from P11.78 billion in 2021.

“We will continue to expand as we aim to serve the connectivity needs of our people which we hope will also help aid the country’s economic recovery amid the continued threat of COVID-19 (coronavirus disease 2019) and inflationary pressures due to the unstable external environment,” Converge Chief Executive Officer Dennis Anthony H. Uy said.

Converge ICT shares closed 3.20% higher at P20.95 apiece on Thursday. — Arjay L. Balinbin