Converge allots P3 billion for infrastructure projects

MANILA, Philippines — Broadband provider Converge ICT Solutions Inc. has saved up a portion or P2.64 billion from the proceeds of a recent bond issuance that it can use to finance its menu of infrastructure projects for this year.

In a regulatory filing, Converge informed the Philippine Stock Exchange that it has disbursed 73 percent, or P7.21 billion, of the P9.85 billion in net proceeds it raised from the recent fund raising activity.

Converge spent P2.26 billion of the net proceeds in the second quarter of last year, P2.66 billion in the third quarter and P2.29 billion in the fourth quarter.

Broken down, Converge utilized P5.46 billion for capital expenditures and another P1.76 billion for general corporate purposes.

In 2022, Converge allocated up to P23 billion for capex as it moved to expand its network coverage nationwide.

All disbursements considered, Converge is left with a balance of P2.64 billion—P2.42 billion for capex and P213.48 million for general corporate purposes—from its bond issuance.

In an interview with The STAR, Converge founder and CEO Dennis Uy said that Converge seeks to accelerate its network expansion to cover at least 55 percent of households by 2023.

“Definitely, we are on track to reaching 55 percent of households by 2023, or two years ahead of the target we set during the [initial public offering. In 2023, we will continue our expansion prudently and make sure to tap key markets in new service areas. North Luzon and Visayas and Mindanao remain to be very strong contributors,” Uy said.

Before 2022 ended, Converge started servicing new areas in Mindanao, namely, Digos, Davao del Sur; Monkayo, Davao de Oro and Sarangani.

“We have frontloaded investments on our digital infrastructure and it is in place. Our backbone connecting all the major islands is laid out that we can expand into key provinces, municipalities and cities,” Uy said.

For 2023, Converge plans to cut its capex in line with industry trends, especially as it tries to maximize for the meantime the fiber ports it acquired in the past years.

As such, the internet provider plans to reduce its capex to below the 2022 guidance of P21 billion to P23 billion.

Last year, Converge succeeded in its maiden issuance of fixed-rate bonds, raising P10 billion from the domestic market due to strong investor demand.