Converge ICT to spend P1.5B for network expansion
TECHNOLOGY provider Converge ICT Solutions, Inc. is ramping up its investment for the rollout of additional fiber optic infrastructure in Luzon as it seeks to triple its customer base and grow its profits by end 2017, with the firm bullish on prospects of the broadband business in the country.
The privately held company has so far laid out 4,800 kilometers (kms.) of fiber optic reach and is targeting to spend around P1.5 billion this year to expand its broadband network to 6,000 kms. by year end to cover more areas in Luzon.
“We’re very bullish on [this business]. The penetration rate of broadband is still very low, and the mix of broadband, it’s still primarily low-speed DSL (digital subscriber line) so we think, especially with our pricing plan, that the market is still big even if there is already PLDT[,Inc.] and Globe [Telecom, Inc.]. We’re very bullish, that’s why our expansion is continuous,” Converge ICT COO Jesus C. Romero told reporters at the launch of the firm’s newest product offerings yesterday.
Converge ICT currently has over 100,000 customers for its consumer business and it provides Internet connection to about 2,800 corporate clients, including business process outsourcing firms and companies in the financial, education, and hospitality sectors. In terms of revenue, bulk or 60% is still supported by its consumer business.
Although the firm’s market share is “very small” compared to the country’s telecommunications giants, by the end of this year, Converge ICT aims to expand its network with added infrastructure investments in other key cities of the country although not yet in Visayas and Mindanao.
“Last year, we spent close to P1.5 billion -- that’s for the fiber access network, the backbone, because we’re modernizing it and our IT platform. This year, depending on how fast we can roll out, we’ll probably spend about the same,” Mr. Romero said when asked on their capital spending budget.
He said the firm’s subscriber base is seen growing by double digits this year, but from a small base.
“We’re growing at that pace of 40-50%... and of course we’re small, that’s why its easy to grow that much. Like this year, in Manila, we’ll probably triple our subscriber base,” he added without disclosing the current figure.
With access to the Internet growing steadily amid increasing digitization, Converge ICT sees its revenues surpassing the P3-billion mark this year, although it still expects to generate profits from some of its other businesses like provincial television operation, which is “still growing fast,” the official said.
“Mainly consumer and then enterprise [will drive] our growth, but this year we also started going after the SME (small and medium enterprises) market so this year we expect reasonable growth from that segment also.”
In a bid to further grow and expand its footprint nationwide, Converge ICT said it is open to possible acquisitions, should an opportunity present itself. “We’re still looking around... It’s one way to grow faster, so any opportunity, we’re interested -- whether it’s a cable company, a small telco, a mid-size telco that we can afford... As soon as there is an opportunity, we’re always open,” Mr. Romero said, noting that there are “ongoing discussions” for such a deal.
Meanwhile, for its expansion in the Visayas, the official said they are looking at the current plans of the government as the company seeks to maximize operations at the least cost.
President Rodrigo R. Duterte approved last March 6 the establishment of a national broadband system.
The Department of Information and Communications Technology favors that the government apply a “hybrid” system for the project, meaning it will put up a “working physical infrastructure” which it intends to use to reach parts the countryside or “missionary routes” not serviced by commercial telcos. -- Imee Charlee C. Delavin