Philippines blue chip firm Converge ICT said to be mulling stake sale

Mandaluyong, Philippines. Photo by Eugenio Pastoral on Unsplash

Converge ICT Solutions, a listed fibre-optic broadband service provider in the Philippines, is reportedly considering selling a stake in its infrastructure platform to a minority partner in what could be a $1 billion deal.

According to a Bloomberg report, the company plans to use the proceeds of the sale to invest across the group. The report also followed the exit of private equity firm Warburg Pincus, which held a minority stake in Converge until earlier this year.

Sources interviewed by Bloomberg, however, said no final decisions have been made and the company could still decide against pursuing a deal.

Converge, launched in 2007 by Chinese immigrant businessman Dennis Anthony Uy, was an upstart in a market dominated by PLDT and Globe, legacy communications companies founded in 1928 and 1935, respectively.

As of March 31, 2022, Converge had already managed to cover over 47% of households, or more than 12.2 million homes, according to its financial disclosures. The company estimates that the majority of its new customers are first-time fixed broadband users.

It is also part of a consortium including China Mobile International, to build and operate a 5,000-kilometre submarine cable system connecting China and Hong Kong to countries in Southeast Asia, to be operational in 2024.

For the year ended December 2021, Converge recorded revenues of nearly 26.5 billion pesos ($467 million), or nearly 70% up from the year before. Net profit rose from 4 billion pesos in 2020, to 7.2 billion pesos in 2021.

The company listed on the Philippine Stock Exchange in August 2020, in what was the country’s second-largest IPO, raising $600 million. Warburg Pincus sold a portion of its holdings in the IPO to help meet the minimum free float.

Last year, Converge disclosed exploring a possible satellite technologies venture with various firms, including Elon Musk’s Space Exploration Technologies Corp (SpaceX).

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