Converge ICT Solutions FY2023 Net Income Increased by 22.3% from FY2022 to Reach PHP 9.1 Billion

Converge Information and Communications Technology Solutions, Inc. (Converge), the Philippines' sole pure-play high-speed fixed broadband operator, had 2,128,052 subscribers at the end of 2023. This consists of 2,013,216 postpaid users and 114,836 prepaid subscribers. Net additional subscribers reached 79,766 in the fourth quarter of 2023, accounting for 31.8% of total FY2023 net additions.

FY2023 Key Highlights

• Converge registered consolidated revenues of P35.4Bn for FY2023, higher by 5% from FY2022,
• FY2023 Residential revenues grew to P30.3Bn with full-year net additional subscribers reaching 250,691 – 35% higher than net-adds in the same period last year
• Enterprise revenues reached P5.1Bn in FY2023, a growth of 20% YoY
• EBITDA grew 11.2% to P21.5Bn with margin ending at 60.9% for FY2023
• FY2023 net income after tax increased by 22.3% from FY2022 to reach P9.1 Bn representing net income margin of 25.7%
• Consolidated residential net additions for the quarter reached a total of 79,766 – with BIDA and S2S adds reaching all-time quarterly highs at 25,706 and 32,655, respectively
• Similarly, consolidated residential gross additions for the quarter reached 216,218 – 66.4% higher YoY versus the same period last year
• Demand for FiberX increased to 146,920 gross adds for 4Q2023 – 21.3% higher than the same period last year
• Maintained industry-leading ROIC at 16.3% for FY2023

​To expand and defend its base, Converge expects to launch a number of initiatives for its residential and enterprise sectors in 2024 and beyond. For residential, the company aims to expand its sales partner coverage across the country and raise brand recognition through omnichannel marketing. The company also formed a dedicated churn management team to drive long-term customer retention and reduce turnover. To ensure that clients have world-class connectivity, the company strives to provide best-in-class repair and servicing operations that reduce connection downtime.
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Enterprise faces a number of growth opportunities in 2024. The worldwide underwater cable system Bifrost is planned to be completed this year, adding to the company's wholesale sector. Converge also intends to join the data center industry in order to better serve its enterprise customers' diverse needs. Strategic collaborations are also being discussed with broadband sector giants. To provide enterprise clients with a consistent customer experience, the company plans to adopt a more proactive account management strategy and broaden its product offering by investigating non-connectivity solutions.

EBITDA maintained growth trajectory

​EBITDA increased by double digits, 11.2%, to P21.5 billion in FY2023, up from P19.4 billion the previous year. The consolidated EBITDA margin increased to 60.9% in FY2023.

Industry-Leading ROIC and Strong Balance Sheet

​The company maintained its industry-leading return on invested capital ("ROIC") of 16.3%. As the company expands its flanker brands, ROIC is expected to grow further as more ports are utilized. This accomplishment is the outcome of the company's focused capital deployment strategy to extend its fiber network and improve its overall offerings.

Net income after tax increased from P7.4 billion in FY2022 to P9.1 billion in FY2023, resulting in a net income margin of 25.7%, higher than the FY2022 net income margin.
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​Converge has been able to maintain a robust balance sheet and cash flows while maintaining enough liquidity and gearing within bank covenants. The company's net debt position (measured by total financial debt less cash and cash equivalents) fell from P23.1 billion as of September 30, 2023, to P21.5 billion as of December 31, 2023. The company repaid a portion of its financial debt, bringing the total to P35.2 billion as of December 31, 2023, down from P36.2 billion as of September 30, 2023. The company's debt service coverage ratio ("DSCR") was 2.4x and its net debt-to-total equity ratio was 0.5x, which were well within the financial covenants of its loan facilities. The weighted average cost of debt from borrowed facilities remained at 5.1% in December 2023.
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Total cash CAPEX as of FY2023 was P9.0 billion. The majority of spending was assigned to the outside plant, inside plant, and customer premises equipment. Furthermore, P3 billion of CAPEX was carried over to 2024 as a result of late bills from submarine cable contractors and construction delays for certain assets.

Converge reaps global awards on innovation, broadband connectivity, and operational excellence

​Converge continues to deliver best-in-class connections, as shown by recent awards for speed, dependability, and seamlessness. In November 2023, the company was named Broadband Telecom Company of the Year at the International Business Magazine (INTLBM) awards ceremony in Dubai. INTLBM acknowledged the company's efforts to grow and improve its digital infrastructure in order to better serve both residential and commercial clients.

Converge won the Ookla® Speedtest Awards™ in the second half of 2023, making it the fastest internet service provider in the Philippines. Based on Ookla's Speedtest Intelligence® data during the six-month period, Converge received major accolades in several categories, including Best Internet Gaming Experience, Best Internet Video Experience, and Top-Rated Internet in the Philippines. Ookla® is the global market leader in mobile and broadband network information, testing applications, and related technology. ​

Management Guidance

With an expanded sales network and a reinvigorated blue-ocean strategy, the company is better prepared than ever to fulfill the growing demand for fiber connectivity. The company expects to increase consolidated revenues by 7% to 8% in 2024, driven by 6% growth in residential and 12% growth in enterprise.

With different cost-cutting measures in place, EBITDA margins are likely to stabilize at 58% to 59%. Additionally, ROIC is predicted to reach 15% to 16% in FY2024. Due to anticipated international subsea cable payments, capital outlays for data centers, and delays in supplier invoices scheduled for 2023 payment, the company now expects to spend P17 to P19 billion in cash CAPEX in 2024.