Converge expansion gets boost from Facebook-backed subsea cables

MANILA, Philippines — Broadband service provider Converge ICT Solutions Inc. would have access to a new subsea cable system across the Pacific Ocean that would help the company increase internet speeds and expand its network. 

In a disclosure to the stock exchange on Wednesday, Converge announced the signing of a "binding term sheet" with a subsidiary of Keppel Telecommunications & Transportation, which is developing the upcoming Bifrost Cable System together with Facebook and Telekomunikasi Indonesia.

The deal would give Converge an indefeasible right of use (IRU) for one fibre pair on the main trunk of Bifrost, a 15,000-km high-speed transmission cable that would directly connect Singapore, Philippines and Indonesia to the west coast of North America once completed in 2024. In addition, Converge and Keppel would also jointly develop a branch on Bifrost that will land in Davao City, a mega project that would cost P5 billion.

"Our investment into one full fibre pair, connecting us to Singapore and the west coast of North America, will allow us to independently activate at will up to 15Tbps of capacity to either country using the latest technology.," Dennis Anthony Uy, chief executive officer, said in a statement.

The move bodes well for Converge's ambitions. With its services currently limited to the main island of Luzon, Converge is constructing a "national backbone" to cover the entire archipelago. That massive infrastructure will, in turn, allow Converge to distribute the additional bandwidth from Bifrost to any point in the Philippines from Davao, Uy explained.

The project was also necessary after the pandemic triggered an unprecedented spike in demand for broadband services from people working and studying at home, which made Converge one of the rare pandemic winners last year after its net income sizzled 74% year-on-year to P3.4 billion in 2020. This is on the back of a 96% annual bump in household subscribers to 1 million.

The ultimate goal is to cover 55% of households nationwide by 2025 and to do this, Converge would spend P20 billion this year in areas in Visayas and Mindanao where it is not currently present. 

Once completed, Converge’s services in these places should become available commercially by the second half of 2021 and overall customer base is seen to expand to 1.6-1.7 million by yearend.

"This is an important milestone not just for Converge but also for the Philippines as we expect to experience faster internet speeds and greater resiliency within our fast-growing fibre network with the completion of this project," Uy said.