Telco-to-tech provider Converge ICT Solutions Inc. is doubling down on its plan to spend up to ₱23 billion in capital expenditures (capex) this year to support network operations and capture more demand for connectivity, even as operating costs increase due to supply chain volatility.

Converge chief executive officer (CEO) Dennis Anthony Uy said the company has yet to see any reason to abandon its plan to raise its capex from last year’s total spend of ₱20.12 billion, given the stable demand for its services in the first quarter.

Converge saw its net income in the first three months of the year remain flat at ₱3.02 billion as the impact of the Middle East conflict on its business remained subdued.

In fact, the company’s revenues improved by nearly four percent to ₱11.19 billion from the previous year’s ₱10.80 billion, driven by the growth of its residential and enterprise units.

Residential revenues went up slightly from ₱9.11 billion to ₱9.23 billion, as the company expanded its subscriber base to 3.09 million by the end of March.

Converge increased its enterprise revenues by 16 percent to ₱1.96 billion from ₱1.69 billion a year ago, fueled by robust demand from small and medium enterprises.

Uy told reporters that demand among residential and enterprise customers is still on an upward trajectory, as more companies transition to remote work schemes amid higher fuel costs due to the ongoing war.

There are, however, signs of changing consumer behavior as some customers who were previously on postpaid bundles are now making the jump to prepaid, which Uy said reflects the worsening impact of accelerating inflation.

Capex for the first quarter amounted to ₱2.9 billion, or roughly 12 percent of its full-year guidance of up to ₱23 billion.

Uy said a huge chunk of the expenditure was spent on fiber components, in line with its commitment to build around 900,000 fiber ports for the year.

However, he said this year was more costly as the materials necessary for its fiber expansion are now two to three times more expensive compared to last year, as supply chains continue to be disrupted by the Middle East conflict.

“But you cannot stop,” he said on the sidelines of the reception for the Luzon Economic Corridor. “So we need to bite the bullet [because] we don't want to be delayed.”

As part of its capex guidance, Converge is keen on strengthening its fiber coverage this year to expand its reach in the Visayas and Mindanao, attracting more customers in the process.

It will also hike its investments in improving network resilience and reliability in order to maintain its recognition as the country’s fastest fixed network.

For the year, Converge is looking to grow its revenues by eight to 10 percent from last year’s total revenues of ₱44.77 billion.