Converge Information and Communications Technology Solutions, Inc. posted P17.4 billion revenues, up 8.1 percent, and P4.3 billion earnings, up 8.5 percent, in the first half of this year versus the same period in 2022 as it hauled in a total of 1,969,663 subscribers by mid-year.

Converge deepened its presence in new areas, particularly in North Luzon, Visayas, and Mindanao, and its new products catered to low income households in the broader segment of the market.

Hence, "We sustained our growth," Converge CEO and Co-Founder Dennis Anthony Uy announced in Thursday's (August 10) virtual press briefing.

"Our revenues are steadily improving, on a  low double digit but very stable, and we'll continue growing in the next two years." 

Converge's almost two million subscriber base is composed of 1,915,502 postpaid subscribers and 54,161 prepaid subscribers. 

Net additional subscribers reached 92,302 in the first half  with its low-priced, prepaid, fiber-to-the-home plan, Surf2Sawa, almost doubling its subscriber base since March 2023.

Company revenues from itd residential business grew from P14.084 billion to P14,875 billion.

On the other hand, enterprise revenues grew from P1.969 billion to P2.486 billion during the same period, due to the strong overall revenue growth of all subsegments – small and medium enterprises (SMEs), large enterprises, corporates, and wholesale.

Across the board, enterprise subsegments continued to deliver outstanding growth.

The SME segment continued to lead growth with YoY revenues increasing by 41.5 percent followed by wholesale segment increasing by 28.6 percent in the same period. 

Revenues from large enterprise customers, making up the largest subsegment, grew by 18.5 percent YoY.

Converge's EBITDA margin expanded 57.9 percent, driven by growing scale, proactive cost management and change in accounting recognition

The company's EBITDA grew P10.056 billion, an increase of 9.5 percent from the previous year. 

As a result, Converge was able to improve its consolidated EBITDA margin to 57.9 percent.

Compared with 1H2022, network materials and supplies costs decreased by 92.4 percent. 

This is due to an improved capability to properly segregate costs of network materials and supplies according to usage. 

As such, network materials and supplies used in 1H2023 for last mile connections were deferred and amortized over the contract period with the subscriber. 

This partly contributed to the increase in EBITDA margin for the quarter.

Also, for the first time after its Initial Public Offering (IPO), the company registered positive free cash flows to firm (FCFF) at P2,866 million. 

This 2023 is the first year that Converge expects to be full-year FCFF positive, given the stable growth in operating cash flows with the lower capital expenditures for the year.

The company expects to spend around P12 billion in capex for 2023 although it plans to spend P15 to P17 billion next year, investing around P8 billion in its cable systems, the balance of which will go to its backbone and digital infrastructure.

Overall, its Return on Invested Capital (ROIC) improved to 15.4 percent with capital expenditures mostly attributable to the 800,000 new fiber ports deployed. 

This is a result of the company’s disciplined approach in deploying capital to expand its fiber network and improve its overall services.

Depreciation and amortization slightly decreased from P2.968 billion to P2.878 billion.

Net income after tax grew to P4.285 billion from P3.951 billion,  resulting in a net income margin of 24.7 percent.

Converge has been able to maintain its strong balance sheet and cash flows with ample liquidity and gearing comfortably within bank covenants. 

The Company’s net debt position (as measured by total financial debt less cash and cash equivalents) decreased from P26.602 billion as of March 31, 2023, to P26.271 billion as of June 30, 2023. 

The company repaid a portion of its debt, reducing the balance to P37.531 billion as of June 30, 2023, from P38.162 billion on March 31, 2023.