9M2024 CONSOLIDATED RESIDENTIAL NET ADDS REACHED 331,799; SURF2SAWA REACHED ITS HIGHEST QUARTERLY NET ADDS
SUSTAINED INDUSTRY-LEADING FINANCIAL TRIFECTA; CONSOLIDATED REVENUE GROWTH FOR 9M2024 AT 14.1% YOY; EBITDA MARGIN ENDED AT 61.0% AND ROIC AT 18.0%
9M2024 Key Highlights
MANILA, Philippines, November 13, 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 September 2024 with a total of 2,459,851 residential subscribers. This is comprised of 2,218,003 postpaid subscribers and 241,848 prepaid subscribers.
Consolidated gross adds reached 257,594 during the quarter
Consolidated revenues grew by 14.1% in 9M2024 to P29.9Bn from P26.2Bn in 9M2023 – reinforcing the Company’s position as the fastest-growing fixed broadband service provider in the Philippines.
Residential business grew to P25.4Bn during the same period, representing 13.2% year-over-year growth. This growth was largely attributed to the increase in the number of residential subscribers. FiberX gross adds during the third quarter was the highest of the last 10 quarters with churn rate maintained at around 2%. Surf2Sawa recorded its highest quarterly gross and net adds, showing the continuous demand from the broader underserved market.
In 9M2024, enterprise revenue grew by 19.0% year-on-year to P4.5Bn from P3.8Bn in the same period last year. This growth trajectory reflects the continued expansion of our Enterprise customer base, reaching over 60,000 customers as of September 30, 2024. Small and medium enterprise (“SME”) continued to be the fastest growing subsegment with 30.0% revenue growth with all subsegments maintaining their double-digit growth.
The Company’s EBITDA grew by 20.5% to P18.3Bn in 9M2024, representing an EBITDA margin of 61.0%, from P15.1Bn in 9M2023 or 57.9% EBITDA margin. Provision for impairment of trade and other receivables declined by 34.1% to 4.0% cost margin, from 6.8% in 9M2023, due to improved efficiency and effectivity in collection.
The Company maintained its industry-leading Return on Invested Capital (“ROIC”) at 18.0% from 17.3% last quarter. This 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 by 29.0% from P6.4Bn in 9M2023 to P8.2Bn in 9M2024, resulting in a net income margin of 27.4% for 9M2024, higher than 9M2023 net income margin of 24.3%.
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 P15.8Bn as of June 30, 2024 to P14.1Bn as of September 30, 2024. The Company repaid a portion of its financial debt, reducing the balance to P30.9Bn. The Company’s debt service coverage ratio (“DSCR”) was 3.4x, the net debt-to-total equity was at 0.4x, and gross debt-total equity was at 0.6x – well within the required financial covenants from its debt facilities.
Total cash CAPEX as of 9M2024 amounted to P7.5Bn.
Residential
With a focus on providing better and more reliable internet experience, Converge launched Boost Mode for all existing and new residential subscribers. This is a free automatic speed boost of an additional 100 Mbps for all FiberX plans plus Wi-Fi 6 capabilities to FiberX plans starting from P1,699.
“At Converge, our vision has always centered on giving amazing digital experiences. With our subscriber base exceeding 2 million this year, we want to continue providing customers with substantial speed increases.” Converge EVP & Chief Commercial Officer Benjamin B. Azada adds, “for Year 5, we’ve decided to give it a name; Boost Mode is only the most recent step in Converge’s vision of bridging the gap with the best in the world.”
Converge also recently announced a new collaboration with Netflix, the world’s largest streaming service in terms of subscriber base. This new collaboration will be headlined by the new Converge Netflix Bundle, where new and existing FiberX customers will be able to have both an internet and Netflix plan, all in one. This offering aims to provide countless entertainment options and a better streaming experience for FiberX users.
This Converge Netflix Bundle is offered with the abovementioned Boost Mode, a new WiFi-6 Next Gen Modem, and a Converge Xperience Box with Freemium Channels. The Converge Xperience Box is a Google-certified Android TV box that allows the customer to download apps such as YouTube, Spotify, and streaming apps like Netflix.
Enterprise
Converge Sky+++ integrates world-class cutting-edge technology with the Company’s renowned high-speed broadband internet to create a comprehensive hospitality solution. This innovative all-in-one smart tv solution promises to streamline hotel operations and to elevate guests’ experiences, marking a new era in hospitality technology.
“In today’s competitive hospitality landscape, providing a personalized, tech-forward experience is no longer a luxury—it’s a necessity,” noted Mr. Azada. “Converge Sky+++ offers hotels the tools they need to meet and exceed guest expectations while optimizing their operations. This product represents our vision for the future of hospitality that will set a new standard for guests’ satisfaction and operational efficiency in hotels across the country.”
In September, Converge’s Board of Directors has approved its dividend policy aimed at maintaining a dividend payment ratio for all outstanding common shares of the Company of approximately 25% to 30% of its net income based on the latest audited net income.
Converge will share part of its profits with the Company’s common equity shareholders — adhering to one of the pillars of the G20/OECD Principles of Corporate Governance 2023’s rights and equitable treatment of shareholders.
“We are really thankful to all shareholders who have believed in our mission to provide world-class connectivity services to the Filipino people. We are committed to ensuring that we deliver value to our shareholders as we continue to improve our performance,” said Converge CEO and Co-Founder Dennis Anthony Uy.
Under its dividend policy, the Company’s Board has sole discretion to determine the amount, type, and date of payment of the dividends to the shareholders, taking into account various factors, including, but not limited to:
The Company’s Board may, at any time, modify this dividend policy, including the dividend payout ratio.
“With the continued strength of the earnings growth and operating cash flow generation at Converge, we remain well positioned to support the dividend policy going forward. The approval of this dividend policy reflects the Company’s commitment to delivering value to shareholders while investing in the continued growth of the business,” said President and Co-Founder Maria Grace Uy.
Following its robust performance in the first half of the year and having considered future cash requirements for expansion and growth, Converge also declared a special cash dividend amounting to P1.31 billion or P0.18 per share to all outstanding common shareholders on record as of September 24, 2024, ahead of its 2025 target dividend declaration announced during its initial public offering (IPO) in October 2020.
Converge sustained its outstanding corporate governance practice, receiving the Three Golden Arrow Award at the 2024 Golden Arrow Awards. Presented by the Institute of Corporate Directors (ICD) annually, the Golden Arrow Awards range from 1-Arrow Recognition up to Five-Arrow recognition and are based on the company’s rating on the Asean Corporate Governance Scorecard (ACGS).
The ACGS measures companies’ corporate governance performance in the areas of facilitating the rights and the equitable treatment of shareholders, how they relate to their different stakeholders, ensuring transparency and accountability through timely disclosure of material information, and how the board guides the company strategically, monitors the management, and ensures the board’s accountability to the company and the shareholders.
“We continue to strive to improve our Corporate Governance rating in all areas of governance, allowing Converge to steadily underscore matters that we can improve on, amid the policy and business environment we have today,” said Atty. Laurice Esteban-Tuason, Converge SVP and Corporate Compliance and Data Protection Officer.
In the period under review, Converge made strides to strengthen its corporate governance policies and practices; the company reported zero incidents of customer data breaches for 2023, exhibiting the robust oversight and control of its Data Privacy and Corporate Governance teams.
Converge has become the first Filipino company to join the private sector-led ASEAN Circular Economy Business Alliance (ACEBA) that seeks to promote business action towards the adoption of circular economy strategies and practices in the southeast Asian region.
Facilitated by country leads in participating members states of the Association of Southeast Asian Nations (ASEAN) and supported through the ASEAN Responsible And Inclusive Business Alliance (ARAIBA), ACEBA seeks to provide visibility for its members and to serve as a voice to its participating companies to ASEAN, its entities and government and business sectors in ASEAN members.
Converge is committed to creating policies and implementing more programs that will help address the resource gaps that will continue to promote a circular economy.
The ASEAN Business Advisory Council and the ASEAN Corporate Social Responsibility Network conceptualized the ACEBA as an ASEAN-centric initiative of and for businesses to catalyze leadership and action for the regional Circular Economy transition in Southeast Asia.
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