Converge stays highly profitable despite slower 2026 growth outlook

Insider Spotlight

• Converge is prioritizing profitability as it lowers its 2026 revenue growth outlook to 4 percent to 6 percent.
• First-half ebitda margin held at a high 59.1 percent despite inflation pressures and slower revenue growth.
• Converge retained P11.3 billion in cash at end-June, despite higher network spending and dividends. 

Converge Information and Communications Technology Solutions Inc. is expecting slower growth this year, but its broadband business continues to produce some of the strongest margins in the industry.

The fiber internet provider founded by tycoons Dennis Anthony Uy and Maria Grace Uy posted P5.5 billion in first-half net income after tax as revenue grew 3.1 percent to P22.4 billion, with faster growth from corporate customers helping offset a tougher consumer environment.

Earnings before interest, taxes, depreciation and amortization reached P13.3 billion, giving Converge a 59.1 percent margin, little changed from the 58 percent to 59 percent range it expects to maintain for the full year.

Slower growth, high margins

Converge said in a regulatory filing on Tuesday that it now expects 2026 revenue growth of 4 percent to 6 percent, down from its previous forecast of 8 percent to 10 percent as persistent inflation puts pressure on household spending.

The company ended June with 3.09 million residential subscribers, helping generate P18.5 billion in residential revenue during the first half.

Enterprise provided the faster growth, with revenue rising 15.1 percent to P3.9 billion as Converge added more business customers.

That leaves Converge growing more slowly than initially expected, but with profitability holding up: its 59.1 percent ebitda margin remained within its full-year target.

Cash provides flexibility

Converge ended June with P11.3 billion in cash, up from P7.7 billion at the start of the year, helped by P8.9 billion in operating cash flow and new borrowings.

The cash balance increased even after P5.7 billion in network spending and P3.5 billion in dividend payments, although it remained below the P13.3 billion held a year earlier.

Spending shifts with outlook

Converge is now targeting P17 billion to P20 billion in capital spending for 2026 as it adjusts investment to the slower revenue outlook.

Return on invested capital stood at 14.9 percent in the first half, against a full-year target of 15.5 percent to 16.5 percent, while net debt stood at P15.6 billion and net debt-to-equity at 0.2 times.

The company also reported better service-line and outage repair performance from the first quarter, an important operational measure as competition for broadband subscribers remains intense.

—Edited by Miguel R. Camus