Converge eyes possible partnership with South Korean telco firm

MANILA, Philippines — Converge ICT Solutions announced on Tuesday it struck a potential partnership with South Korean telco firm KT Corp, a move that analysts expect will boost the company’s market share.

In a disclosure sent to the Philippine Stock Exchange on Tuesday, the fiber internet company expects this collaboration will support domestic businesses undergoing digitalization. 

Converge noted that the partnership with the Korean company will introduce a cloud-based video surveillance system, Video Surveillance as Service, and a transportation management tech, Mobility as a Service, into the country. 

Luis Limlingan, head of sales at local brokerage Regina Capital, said this move will enable the company to expand its market share in the Philippines. 

“Recently CNVRG has announced that they would be offering a much cheaper plan for more price-sensitive customers. It would likely lead to an expansion to its subscriber base. Meanwhile, a partnership with KT Corp. should expand its ability to accommodate and improve the quality of its clients,” he said in a Viber message. 

Converge and KT Corp., formerly Korea Telecom, signed a memorandum of understanding yesterday at the sidelines of the Mobile World Congress in Spain. 

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Stephen Oliveros, research analyst at China Bank Securities, highlighted Converge’s recent moves to expand the reach of its enterprise segment. 

“We think that this development, taken in conjunction with its plans to provide interconnectivity services in Singapore, underscores CNVRG's proactive strategy to enhance the revenue contribution from its enterprise business to help offset the growth slowdown in the residential business,” he said in an emailed commentary. 

READ: Converge unit gets the green light to provide connectivity services in Singapore

Analysts noted that Converge’s recent moves did not color the downtrend experienced by its domestic rivals, such as PLDT Inc. and Globe Telecom Inc., in the local bourse.

Oliveros and Limlingan attributed the anemic market performance to inflation pressures, among others. Hernan Segovia, trader at Summit Securities, explained why the two telco giants struggled in recent days. 

“Globe was deleted in the Morgan Stanley Composite Index Global Standard together with ACEN. Today is the last day of rebalancing positioning as end of day it will take effect,” he said. 

The trader pointed out that shares at Converge traded down owing to gloomy market sentiment. 

“Overall, having KT Corp as a partner in their planned endeavor is a positive step for the company,” Segovia added.