Converge confident capex not wasted

Converge confident capex not wasted | Daily Tribune

Guided by a long-term digital transformation plan, fiber internet service provider Converge ICT Solutions Inc. plans to invest around P4 billion to P5 billion to increase its data center capacity in the next two to three years.

Converge chief executive officer and co-founder Dennis Anthony Uy told reporters that the company will boost its spending on digitizing its network so that it can better meet the changing needs of its customers.

“In terms of rollout or expansion, we just need to align whatever inventory we have to maximize our selling points. In terms of the capital expenditure side, or capex, we need to innovate on the digital side such as the data center, cloud and B2C platforms,” Uy said.

“We still have (room to grow) and the traction is there but we need to put capex on the digital side. For the data center alone, I think usually it would be P4 billion to P5 billion, not right away, but gradually in the next two to three years,” he added.

Converge earlier announced its plan to finish data centers in Pampanga, Quezon City and Cebu, which will supplement existing facilities in Clark and Pasig. Each data center will be built with 600 racks, which can be expanded to 1,000. A rack contains servers, networking devices, and other equipment.

Uy stated that Converge is currently “well-funded,” but he still wants to be prudent in spending capital to maintain its upward growth trajectory.

Efficient use of resources

“We need to control the capex now because revenue is at the point that when you put unnecessary spending, it will be a waste. We will only put capex with revenue return, that is the business we are looking at,” Uy explained.

This year, Converge only plans to allot P12 billion for capital spending, 29 percent lower than last year’s P17 billion.

“Our CAPEX this year is only at P12 billion. Rest assured that existing customers would still be happy, you cannot have new customers if the existing ones are not happy. We need transformation in customer care. We make sure our digital transformation is on track, the customer experience is so important for us,” Uy said.

Within the first nine months of 2023, Converge saw a 4.3 percent net income growth to P6.4 billion from P6.1 billion in the previous year on the back of a stronger subscriber uptake.

The company reported that its revenues from January to September 2023 also grew by 7.2 percent to P26.6 billion from P24.5 billion the year prior—owing to the boost in its residential and enterprise businesses.

Converge stated that residential business, which accounted for 85.6 percent of total revenue, increased by 5.2 percent to P22.5 billion from P21.4 billion.

Enterprise revenue also climbed by 21.1 percent during the period to P3.8 billion from P3.1 billion, driven by double-digit growth across all enterprise segments. The small and medium enterprise segment grew by as much as 37.9 percent from the same period last year.