Converge raises Q1 earnings three times as remote work boost persists

MANILA, Philippines (Updated 7:30 p.m.) — Converge ICT Solutions Inc. posted another impressive earnings growth in the first quarter, catching on the tailwind provided by high demand for broadband services from people working and studying at home amid the prolonged pandemic.

Net income was still on a roll in the first 3 months of the year, up nearly threefold to P1.5 billion compared to year-ago level, the company told the stock exchange on Monday. Earnings before interest, taxes, depreciation and amortization (EBITDA) — another gauge of financial health — grew 101.6% on an annual basis to P3 billion.

Investors welcomed Converge’s strong results. On Monday, the company’s shares climbed 1.51% to close at P18.78 each, outperforming the main index’s 0.23% gain.

Converge is opening yet another pandemic year with a bang. The company closed the previous quarter with 7.1 million homes under its network, up 92% year-on-year and putting Converge on-track to meet its ambition of covering around 55% of households in the Philippines by 2025.

About 95% of Converge’s new residential customers were first time fixed broadband users, reflecting high demand for connectivity at a time people are working and taking online classes at home. That pushed up consolidated revenues by 83.6% on-year to P5.5 billion last quarter, with the residential segment contributing P4.8 billion.

On the flip side, business closures and empty offices due to lockdowns resulted into measly 2.2% year-on-year growth in enterprise revenues to P750 million, figures showed.

“Finance costs were lower in 1Q2021 due to repayment of outstanding loans. In addition, with the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill signed into law, our effective corporate income tax rate was reduced to 21% during 1Q2021,” the company said.

Converge’s ultimate goal is to put the entire archipelago under its network. To do this, the company braved market volatility last year and raised around P13 billion during a closely-watched initial public offering.

Capital raised funded the company’s expansion beyond its Luzon base. Almost 9,600 kilometers of fiber optic cable were added during the first quarter of the year, Converge said, expanding the company’s backbone and distribution network to more than 64,600 kilometers as of end-March.

So far, the company had its “soft launch” in Cebu and Davao City.