Converge posts record P3.4-B income in 2020 as rise in home subs offsets dip in biz users

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During its first quarterly briefing on Thursday, March 11, fiber broadband operator Converge reported record results as it doubled its subscriber base in 2020 and reached approximately 1,038,000 residential subscribers by the end of December 2020.

Converge founder and CEO Dennis Anthony Uy

Revenues from its residential business doubled from P6,354 million in 2019 to P12,628 million in 2020. Overall, net income after tax increased from P1,942 million in 2019 to P3,388 million in 2020.

As of December 30, 2020, Converge said its nationwide network reached more than 6.1 million homes, on track to reach the company’s target to cover approximately 55% of households in the Philippines by 2025.

In the last quarter, the company added a total of 176,944 new residential subscribers (gross adds), representing a 120% increase compared to the total gross subscriber additions in the fourth quarter of 2019. In the fourth quarter of 2020, more than 95% of these newly connected subscribers continue to be first time fixed broadband users, highlighting the unserved and underserved state of the broadband market in the Philippines.

The massive growth in home subscribers compensated the dip in the enterprise connectivity market, as business revenues grew by only 9% YoY, from P2,786 million to P3,024 million. However, it said enterprise revenues stabilized in the third and fourth quarters, as Converge saw a pick-up in demand from SME clients and recorded new wholesale contracts with government clients and large international global carriers.

Converge CEO Mr. Dennis Anthony Uy noted that, “As the home became both office and classroom amid the global pandemic, we further accelerated our fiber network rollout to deliver high-speed broadband connectivity to more Filipinos, reaching underserved and unserved areas in the country.”

While its residential base outpaced its business clients, the company said its enterprise business continued to grow with a net addition of 1,007 customers during FY2020, which represented an increase of 10%.

Converge’s monthly residential churn rate was approximately 1.35% during the last three months of 2020, down from 1.63% in the third quarter of the same year.

In the fourth quarter of 2020, Converge said it picked up new contract wins, which included a large government contract to enhance connectivity in underserved low-income regions and a corporate wholesale project with a large global carrier for the use of the company’s domestic backbone.

The company also soft launched four new products, one of which was the “Dedicated Internet Access Time-of-Day” which offers more capacity at certain pre-set periods of the day. This new enterprise product has been well received and was officially launched in February 2021.

The broadband firm continued to accelerate the nationwide rollout of its fiber network throughout 2020. More than 28,300 kilometers of fiber optic cables were added during the year, expanding its backbone and distribution network by 106% from about 26,700 kilometers laid down at the end of 2019 to approximately 55,000 kilometers at the end of 2020.

“We started 2020 covering 167 cities and municipalities. With our network expansion, we were able to extend our coverage to additional 149 cities and municipalities by end of the year, reaching more areas in Rizal, La Union, San Juan, Pangasinan, Nueva Ecija, and many more,” it said.

Converge said it was able to install its highest number of ports in a year during 2020, with almost 1.5 million ports installed, 97% of which being FTTH (fiber-to-the-home) ports.

“With our total 3.5 million deployed ports, our network coverage reached 25% of nationwide households. The company continues to be on track to achieve its target of reaching approximately 55% of total households in the country by 2025,” it said.

This year, Converge said it is expanding to the Visayas and Mindanao regions where it plans to fully commercially launch services by the second half of 2021.

“As of March 2021, we were able to secure approximately 80% of the necessary Environmental Compliance Certificates for the landing stations of our planned nationwide submarine cable network that will connect the main islands of the Philippine archipelago,” it said.

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