CONVERGE ICT Solutions, Inc. has revised its revenue growth forecast for 2024 to between 12% and 14%, up from the earlier estimate of 7-8%, driven by market optimism after stronger second-quarter (Q2) earnings.
For the second quarter, Converge registered an attributable net income of P2.74 billion, up 29.8% from the P2.11 billion in the same period last year, the company’s financial statement showed.
Despite posting increased gross expenses for the April-to-June period at P6.18 billion, 15.1% higher than the P5.37 billion previously, the company managed to register higher earnings on elevated revenues.
Converge posted a P9.98 billion gross revenue for the second quarter, climbing by 14.4% from last year’s P8.72 billion.
“As you know, we have performed very well for the first half; we are off to a strong start. But generally speaking, the Philippines is still a very under-penetrated broadband market, and we do believe we have the right products for all households in the country,” Converge Chief Finance Officer Robert A. Yu said during a briefing.
Broken down, its residential business revenues grew by 13.3% to P8.47 million, accounting for 84.9% of its revenue for the period, while its enterprise business registered a P1.51-billion revenue during the period.
For the first semester, Converge’s attributable net income climbed to P5.29 billion, marking an increase of 23.6% from the P4.28 billion in the same period last year.
Its gross revenues increased to P19.52 billion, higher by 12.4% from the P17.37 billion in the same period last year.
For the January-to-June period, the company’s residential business continued to drive its revenue growth after soaring by 11.8% to P16.64 billion, accounting again for the majority of its revenue share for the first half, while its enterprise business registered a revenue of P2.88 billion, higher by 16% from the P2.49 billion a year ago.
As of the end of June, Converge said it had a total of 2.35 million subscribers, comprising 2.16 million postpaid subscribers and 192,519 prepaid subscribers.
“What we’re seeing is a changing of the guard in the industry, and this comes as no surprise given our hard-earned investments into our fiber network,” Converge President and Chief Resources Officer Maria Grace Y. Uy said.
Converge is now allocating up to P12 billion for its capital expenditure (capex) to be spent in the latter half of 2024, Mr. Yu said.
He noted that the company spent around P4.7 billion on capex during the first half of the year, citing heightened sales requirements.
“This is slightly higher than our initial guidance due to the heightened sales requirements, necessitating some level of augmentation on our part,” he said.
Converge has said that its 2024 cash capex is expected to settle at P15 billion-17 billion.
The company also said that its capex would be allocated to the additional strategic deployment of ports anticipated in the second half of the year due to the increasing demand for residential products, as well as to cover the remaining international subsea cable payments.
Meanwhile, Converge Chief Executive Officer Dennis Anthony H. Uy said the company is moving forward with its data center business.
“By the end of the year, we have one three megawatts (MW) that we are going to fire up. So, next year, hopefully by the second quarter, the big one in Pampanga will have 10 MW,” he said.
In June, Converge announced a partnership with US-based Super Micro Computer, Inc. to develop energy-efficient data centers aimed at reducing costs and environmental impact.
Converge announced in January its plan to allocate up to P5 billion over the next three years to build data centers that will host its planned digital platforms and store applications and information. The company intends to construct data centers in Pampanga, Laguna, and Caloocan.
At the local bourse on Wednesday, shares in the company closed 24 centavos or 1.98% higher to end at P12.34 apiece. — Ashley Erika O. Jose
