The continued growth in residential subscribers as well as the increasing demand from enterprise clients sustained the growth in the revenues of fiber broadband provider Converge ICT Solutions, Inc. in the first quarter of 2022. The company generated revenues amounting to PhP7.75-billion in the first three months of 2022, reflecting a 39.64% improvement from the PhP5.55-billion raked in for the same period in 2021.
Revenues from residential business, which represented 87.87% of the total revenues in the first quarter of 2022, reached PhP6.81-billion, from PhP 4.80-billion for the same period in 2021. Earnings from enterprise segment grew by 25.33% from PhP0.75-billion to PhP0.94-billion for the first quarter this year, mostly from the strong growth in the operations with small and medium enterprises (SMEs). Revenues from SME customers grew by 118.2% due to the growing customer base which reached 25,810 as of March 31, 2022.
During the quarter in review, the company registered residential subscriber additions of 187,594, representing a 14.94% growth from the 163,215 additions in the fourth quarter of 2021, bringing residential subscriber count to over 1.8-million. This was achieved despite the adverse impact of typhoon Odette in certain cities in Visayas and Mindanao, where aggressive expansion was halted due to the repair of affected equipment. The uptick in subscription base was attributed to the company’s efforts in aligning market strategies of waiving installation fees in some of its operating areas.
Converge estimated that 95% of its new subscribers nationwide in the 1Q2022 continue to be first time fixed broadband users, which reflects the high unserved demand for fixed broadband connectivity services in the Philippines.
The company’s implementation of various controls and measures managed to improve its churn rate, from 1.16% in 1Q2021 to 1.47% in 1Q 2022, resulting in quarterly net adds of 110,652. These controls and measures include stricter onboarding requirements in selected areas with high churn blacklisting of previously delinquent subscribers, and implementing a payment reminder pop-up on browsers of subscribers with overdue bills.
Converge achieved an EBITDA of PhP4.56-billion in 1Q2022, 49.4% higher than the EBITDA registered for the same period in 2021.
Resulting from the substantial hike in revenues, the company’s net income after tax rose 27.10%, from PhP1.55-billion in 1Q2022 to PhP1.97-billion in 1Q2022. Other factors that contributed to the expansion in net profit include the decline in network materials and supplies cost, and drop in bandwidth and leased line costs.
“We are seeing a solid growth of our financials in the first quarter of 2022 and we expect to hit our full-year targets as we remain aggressive in our network rollout and marketing activities both in the residential and enterprise segments,” notes Converge CEO and Co-Founder Dennis Anthony Uy.
However, due to slower net income increase compared with capital expansion and increase in financial liabilities, return on invested capital (ROIC) dropped to 17.3% in 1Q2022 but continues to be at industry-leading level as a result of Converge’s disciplined approach in deploying capital to expand its fiber network and tracking key capital efficiency indicators such as its port utilization ratios.
Meanwhile, Converge augments its international network capacity with investment in the South East Asia Hainan-Hong Kong Express Cable System (SEA-H2X), a new submarine cable system that will connect Hong Kong SAR China, Hainan, China, Philippines, Thailand, East Malaysia and Singapore, with options to extend to Vietnam, Cambodia, West Malaysia and Indonesia. This submarine cable employs state-of-the art optical submarine transmission equipment which will provide the needed additional bandwidth within the region and network diversity.
Apart from this, Converge continued its efforts to reconnect existing subscribers who are affected by typhoon Odette, mostly in the Visayas and Mindanao regions, to their rightful broadband capacity. As of April 30, 2022, only less than 5% of affected subscribers are still disconnected.
In March 22, 2022, Converge officially announced its investment in a basketball team franchise in the Philippine Basketball Association (PBA) for its nationwide marketing initiative. Converge acquired the franchise of the Alaska Aces, the PBA team with second-most number of championships.
As the number of residential customers grows, Converge continues to strengthen its presence across the country to make its services more accessible and visible with its partnerships with ExpressPay, Inc., MicroGold Pawn Shops, PETNET and Sta. Monica Pawnshop, Inc. as Converge Partner Outlets or CPO, to amplify the company’s presence and accessibility among different areas. With this, Converge now has over 1,000 partner outlets nationwide.
This development allows customers to conveniently pay their bills or apply for a new line through the CPOs that are scattered among main strategic areas so customers and even potential subscribers will have greater access to better pure fiber internet service for an improved customer experience.
“Here in Converge, we always innovate ways to give our customers the best experience they deserve. With the help of our CPOs, we can make our services more accessible to the public so they can start or continue their journey with us through convenient transactions,” said Converge chief operations officer Jesus Romero.