1Q2024 consolidated residential gross adds of 244,670 and net adds of 124,793 – highest in more than two years with monthly churn rates declining to less than 2%

By: Converge Admin | 14 May 2024




1Q2024 Key Highlights

  • Converge registered consolidated revenues of P9.5Bn for 1Q2024, higher by 10.4% from the same period last year
  • 1Q2024 Residential revenues grew to P8.2Bn or 10.4% YoY growth due to increased subscriber base – well above guidance
  • Enterprise revenues reached P1.4Bn in 1Q2024, a growth of 10.5% YoY
  • EBITDA grew 12.8% to P21.5Bn with margin ending at 61.1% for 1Q2024
  • 1Q2024 net income after tax increased by 17.5% from last year to reach almost P2.6 Bn representing net income margin of 26.7%
  • Consolidated residential net additions for the quarter reached a total of 124,793, with FiberX representing 54,615 – the highest net additions of the brand since 1Q2022
  • Monthly churn rates significantly declined to 1.82% during the quarter from 2.18% in 4Q2023
  • Maintained industry-leading ROIC at 17.4% for 1Q2024

MANILA, Philippines, May 14, 2024 – The Philippines’ only pure-play high-speed fixed broadband operator, Converge Information and Communications Technology Solutions, Inc. (PSE: CNVRG) (“Converge” or the “Company”) ended March 2024 with a total of 2,252,845 subscribers. This is comprised of 2,091,897 postpaid subscribers and 160,948 prepaid subscribers.

In 1Q2024, FiberX contributed 54,615 net additions out of the total consolidated net additions of 124,793 (considering the upselling of HFC customers), which was the highest quarterly net additions since 3Q2021. Similarly, gross additions during 1Q2024 of 244,670 was the highest since the same period.

Residential and Enterprise segments post solid performance, with residential business posting double-digit growth


Highest quarterly net additions in 10 quarters; Consolidated churn rate significantly declined
Consolidated revenues grew by 10.4% in 1Q2024 to P9.5Bn from P8.6Bn in 1Q2023 – reenforcing the Company’s position as the fastest-growing fixed broadband service provider in the Philippines.

Residential business grew to P8.2Bn during the same period. FiberX registered gross additions above the quarterly 2023 gross additions. With churn rates significantly reduced, net additions reached 54,615, the highest since 1Q2022. BIDA Fiber and Surf2Sawa continued to register all-time-high quarterly gross adds – a testament to the intact and growing demand for fiber broadband across all income segments.

Consolidated average monthly churn rates have also improved QoQ in 1Q2024, down to 1.82%. A dedicated churn management team was established to drive long-term strategic churn management initiatives in view of lowering churn further to more favorable levels. Consolidated subscriber base reached 2,252,845 with total net additions of 124,793 across all brands.

In 1Q2024, enterprise revenue grew by 10.5% year-on-year to P1.4Bn from P1.2Bn in 1Q2023. Small and medium enterprise (“SME”) continued to be the fastest growing subsegment with 31% revenue growth.

EBITDA levels and profitability margins well above guidance owing to prudent cost management approach and maintaining moderate levels of leverage

EBITDA growth trajectory
The Company’s EBITDA grew by double-digits at 12.8% to P5.8Bn in 1Q2024 from P5.2Bn in 1Q2023. Consolidated EBITDA margin improved to 61.1% in 1Q2024 compared to 59.9% during the same period last year.

Amortization of deferred contract costs (“DCC”) declined year-on-year by 17% due to lower churn during the quarter. This account included the advance recognition of the unamortized DCC of churned subscribers, which was higher during 1Q2023. Outside services also declined by 24%, which was due to savings from third party optimization. These were offset with higher repair and maintenance expenses, personnel costs, and promotions and marketing expenses.

Industry-Leading ROIC and Strong Balance Sheet
The Company improved its industry-leading Return on Invested Capital (“ROIC”) to 17.4% from 16.3% last quarter. The Company expects ROIC to further improve as more ports are utilized. This performance is a result of the Company’s disciplined approach in deploying capital to expand its fiber network and improve its overall services.

Net income after tax grew from P2.2Bn in 1Q2023 to P2.6Bn in 1Q2024, resulting in a net income margin of 26.7% for 1Q2024, higher than 1Q2023 net income margin of 25.1%. Finance costs have been well managed with decline in gross debt.

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 P21.5Bn as of December 31, 2023 to P20.1Bn as of March 31, 2024. The Company repaid a portion of its financial debt, reducing the balance to P34.2Bn as of March 31, 2024, which is P1Bn lower than December 31, 2023. The Company’s debt service coverage ratio (“DSCR”) was 3.4x and the net debt-to-total equity was at 0.4x, well within the required financial covenants from its debt facilities.

Total cash CAPEX as of 1Q2024 amounted to P3.0Bn.

Appointment of Robert Yu as Chief Financial Officer

On May 10, 2024, Robert Yu was appointed by the Board of Directors as the Chief Financial Officer (“CFO”) of Converge. Prior to joining Converge as CFO, Robert was part of Malaysia-headquartered private equity firm Creador which handles $2.3 billion in funds across South and Southeast Asia. He also served as a consultant at Converge from 2018 – 2019, putting in place a strategic and efficient capital structure plan for the company based on its performance and projected growth.

“We’re glad to welcome Robert back to Converge. We’re confident that his breadth of experience in corporate financial planning and strategizing will keep Converge in a solid financial footing and will be a strong addition to the leadership team,” said Converge President and Co-Founder Grace Y. Uy.

“The goal is to take Converge to the next phase of its evolution as a company, without taking any undue risks. The short-term plan is to make sure that all our upcoming investments are prudently funded, striking a balance of reinvesting internally generated cash flow and utilizing external sources of funds. Over the long-term term, Converge will be in a solid financial position that rewards all stakeholders,” said Yu.

Previously, Robert was an Investment Principal at Sierra Madre Advisers Inc., which makes equity investments in ambitious companies in the Philippines spanning a diverse range of sectors. He was one of 7 investment professionals in the company managing around $70 million of growth capital dedicated to lower middle market enterprises. Prior to that, he rose through the ranks at Morgan Stanley (Southeast Asia and Consumer Coverage), starting as an associate in 2015, and becoming a Vice President in 2017. Robert started his career in New York, focused on mergers, acquisitions and capital raising for Citigroup’s consumer-sector clients.

Memorandum of Agreement with Naver Cloud Corporation aimed at serving the expanding cloud market in the Philippines

Converge CEO and Co-Founder Dennis Anthony Uy and NAVER Cloud’s Chief Executive Officer Yuwon Kim were in attendance during the signing of the Memorandum of Understanding (“MOU”) at the Converge Headquarters in Pasig City last Thursday, May 9.

Through the said cooperative venture, both companies will collaborate to discuss and establish potential partnerships, leveraging NAVER Cloud’s expertise to deliver innovative cloud solutions for the specific needs of Filipino customers. The company also plans to promote all-round cooperation for the Digital Transformation projects in the Philippines by utilizing NAVER Cloud’s innovative technology capabilities related to smart cities and business capabilities such as Large Language Model (LLM), Sovereign Cloud, WORKS (B2B communication tool), and Whale (browser-based web service integration platform).

“Our continuous leap to digital calls for advanced solutions that would support a technology-enabled lifestyle in a robust digital environment. We look forward to working with NAVER Cloud to discover ways how we can empower more customers through cutting-edge cloud technologies,” Uy said.

“The Philippines is a high potential market for cloud and digital transformation business growth, and with the signing of the MOU, we expect to contribute to the digital transformation of the Philippines,” said Yuwon Kim, CEO of NAVER Cloud.

Converge 2023 Sustainability Report

Converge’s fourth annual Sustainability Report, published on April 15, 2024 as Exhibit 2 of the Philippines’ Securities and Exchange Commission (“SEC”) Form 17-A Annual Report, covers relevant discussions and disclosures on the positive and negative economic, environmental and social impacts of the Company and its subsidiaries’ performance from January 1 to December 31, 2023. The report details significant events and sustainability-related initiatives undertaken by Converge during the year. It highlights the Company’s contributions to support national development programs, such as the Philippine Development Plan 2023-2028 and AmBisyon Natin 2040. It also features our alignment and contributions to the global sustainability targets of the United Nations Sustainable Development Goals.

The report complies with Memorandum Circular No. 4, Series of 2019 (Sustainability Reporting Guidelines for Publicly-Listed Companies) and must be read in conjunction with the main Form 17-A filing.

Converge has reported in accordance with the Global Reporting Initiative (“GRI”) Standards 2021 for the period from January 1 to December 31, 2023. The report is also aligned with AA1000 AccountAbility Principles (2018) of Inclusivity, Materiality, Responsiveness and Impact, and includes disclosures recommended under the Telecommunications Sustainability Accounting Standard (Version 2023-06) of the Sustainability Accounting Standards Board (“SASB”). The Company has also reported information with reference to the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”). This year, we also referred to the recently released International Financial Reporting Standards Sustainability Disclosure Standards S1 and S2, disclosing relevant information where possible, in preparation for a full adoption next year. All indexes for our GRI, SASB and TCFD disclosures are included in the Data and Disclosures section of the Sustainability Report.

Interested stakeholders may download the Sustainability Report through the link: https://corporate.convergeict.com/wp-content/uploads/2023/03/2023-Sustainability-Report.pdf

This press release may contain forward looking statements and information that are, by their nature, subject to significant risks, uncertainties, and assumptions. Many factors could make or cause the actual results, performance or achievements to be materially different from those expressed or implied in this release. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein.

For questions, please contact:

Owen Kieffer Ocampo
Vice President – Head of Investor Relations
Email: investors.relations@convergeict.com

Jay-Anne Encarnado
Vice President – Head of Corporate Communications and Public Relations
Email: corpcomm@convergeict.com


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