Converge cuts capex goals due to cable project delay

CONVERGE ICT Solutions Inc. is cutting its programmed capital expenditures (capex) for 2024 by almost a third due to delays in the completion of its international projects and payment milestones for its data center initiative.

During a press briefing, Converge Deputy CFO Christine Blabagno said the company is lowering its capex guidance for 2024 to between P12 billion and P14 billion from as much as P19 billion.

“We expect capex to be lower than initially planned, bringing it down to P12 billion to P14 billion for 2024. This is due to the delay in the completion of our subsea cable project and the agreed payment milestones with our data center partners,” she said.

Blabagno was referring to the Trans-pacific Bifrost Cable System. Initially, the international cable system was supposed to be scheduled for completion in the fourth quarter of 2024.

“The international subsea cable is pushed back to the first quarter of 2025. So, the P5 billion allotted for that will come in 2025,” Converge President Grace Uy noted.

Connecting Singapore, Indonesia, and the Philippines to the West Coast of North America, the Bifrost Cable System will span over 15,000 kilometers and will deliver capacity to “support the booming digital connectivity needs of the Asia-pacific region and provide a critical, direct link with North America.”

Due to permitting issues in Indonesia, the Singapore-to-the-philippines leg of the cable system is being pushed back by a quarter, Converge CEO Dennis Uy explained. However, he noted that the leg between the United States and the Philippines will likely be delivered on schedule.

Grace noted that the data center projects of Converge are on track.

“The data center, it’s progressing as scheduled. It’s just that the payment for them will come in 2025,” she said.

On Tuesday, Converge reported recording a 17-percent increase in net profits to P2.55 billion in the first three months of 2024 from P2.17 billion the year prior, as revenues rose by 10 percent to P9.54 billion from P8.64 billion.

Residential revenues continued to take the lion’s share in the company’s revenue mix, growing by 10 percent to P8.17 billion from P7.40 billion. The company’s enterprise business, meanwhile, rose by a faster 11 percent to P1.37 billion from P1.24 billion.

Converge ended March 2024 with a total of 2.25 million subscribers: 2.09 million postpaid and 160,948 prepaid subscribers.

Its flagship broadband service called Fiberx contributed 54,615 net adds out of the total 124,793 net adds—the highest quarterly net adds since the third quarter of 2021.

As of the first quarter, Grace said the company is treading on a growth path that is better than its 2024 revenue guidance of “mid-to-high single-digit growth.”