Internet services provider(ISP) Converge ICT Solutions filed for P35.92-billion IPO with the Securities and Exchange Commission (SEC) on Friday, July 3, 2020. The company is planning to set the offer period from Oct. 13 to 19 and listing on Oct. 26, 2020, and selling 1.496 billion shares for P24.00 apiece, Bloomberg said that based on its record, the Converge ICT IPO would be the biggest ever for the Philippines.
I received a ton of questions about the Converge ICT IPO so I made a review on the coming IPO. With the IPO performance of Injap Sia’s MerryMart, all eyes now on Converge ICT Solutions Inc. with this massive IPO offering.
The Owner
Pampanga-based businessman Engineer Dennis Anthony H. Uy started from the ground of the business pyramid. In hopes of a better future at 11 years old, Dennis had to leave an impoverished China to live in Angeles Pampanga. He first worked as a maintenance boy tinkering and cleaning the refrigerators and freezers of his uncle’s retail store business.
(Chief Executive Officer, CONVERGE ICT SOLUTIONS, INC.)
“From this experience, I learned one of the most important lessons in business; control is the key. Without it, a business will be very hard to grow,” “This is my dream,” said Dennis Uy in a statement in 2016 when Converge ICT internet service was offered to the public.
While in college, he started his first business venture: Videotape rentals, selling and renting out Betamax VHS tapes to his classmates. After school, he would board a bus going to Manila where he would proceed to Greenhills to buy all the new movies, videos, Attari games in VHS tapes.
In the early ’90s, Dennis wondered at the many channels that a television set can carry more than what was available and found out the presence of cable TV. He studied the cable TV business then launched Angeles City Cable Television Network after getting an NTC approval in 1992 but Mt. Pinatubo unleashed its power that buried most of Pampanga under a thick layer of cement-like ashfalls.
“In every crisis, there are opportunities,” he said that the idea of him pulling out of Pampanga was not a good one because he had already built good relationships with the local government units in Angeles.
With is company ComClark Network and Technology Corporation, Dennis was the first to provide Internet to Clark residents and the first to go into fiber optic technology. To date, Dennis has acquired more than 40 cable TV firms because licenses were awarded per town. This allowed him to cover the whole of central Luzon, Metro Manila and Batangas.
“I don’t feel am big, but technology is my passion and hobby so I am happy with what I am doing, everything I do I am happy otherwise I won’t last in this business for the last 20 years,” says Uy. Read more: More than an aspiring tale.
The Company
Converge ICT’s residential business captured over 50 percent of the market for new subscriptions from January 1, 2018, to March 31, 2020, according to the prospectus. The company’s fiber network is still limited to Luzon, but at the height of ECQ in May, the company registered a record-high of 50,000 new gross residential subscribers.
The company is expanding its domestic internet backbone to include Visayas and Mindanao in hopes to achieve nationwide coverage by 2021. Last year, it received $250.4 million in equity funding from United States-based private equity firm Warburg Pincus to develop its operations.
“Demand for fixed broadband in the Philippines has accelerated with the onset of COVID-19, as work from home arrangements and social distancing became the ‘new normal,’” Converge ICT said.
“Since the implementation of the ECQ, we have entered into multiple contracts with leading BPO customers to provide connectivity to the homes of their employees in order to address permanent or long-term WFH status,” it added.
About 90% of the proceeds from the offering will be used for capital expenditures, while the excess would go to general corporate purposes. About 70 percent of the firm shares will be offered for sale to foreign investors.
Morgan Stanley and UBS AG are the joint global coordinators and joint bookrunners, while BPI Capital is the sole local coordinator, joint local underwriter and joint bookrunner. BDO Capital is a joint local underwriter and book runner.
The Playing Field
The reign of the country’s two largest telecommunication firms Globe Telecom and Philippine Long Distance Co (PLDT) might be over soon as more telco and ISPs are expanding their coverage. In 2012, both claimed to be No. 1 in the postpaid segment – PLDT by a number of subscribers and Globe by revenue per subscriber in the first quarter of the year.
Last year, the telco giants’ total number of subscribers grow substantially, with Globe posting a 22% growth and PLDT with a 4% increase. In conclusion, Globe Telecom is now the undisputed leader in the country in terms of subscriber count, both for postpaid and prepaid.
In 2016, the Australian telco called Telstra was having talks with San Miguel Corp(SMC) to enter the Philippine market as the third player. However, Telstra did not push through. The Australian company did not give any explicit reason for its repudiation. However, some analysts would assume that Telstra was turned off with the pricing battle caused by the duopoly.
In 2018, The Department of Information and Communication Technology (DICT) said that companies which are led by Converge ICT Solutions Incorporated, Now Corporation, and Philippine Telegraph & Telephone Corporation (PT&T) are competing to be the 3rd telco slot in the country in partnership with a China telco in a government-sanctioned bidding, but the slot fell into the hands of the businessman from Davao Dennis Uy and his company Mislatel which is then changed its name to Dito Telecommunity.
With Dito telecommunity and Converge ICT expanding on very a fast phase to cater the demand for better connectivity, this could greatly improve the overall internet connectivity in the country. With the rise of coronaconomy, the demand for internet services is at an all-time high.
Converge ICT is more focused on providing internet services all over the country being an ISP, and Dito telecommunity is looking to get his hands on voice, data, and internet services.
And now the telco-serye continues.
How to get shares
The owner Stockbytes is a licensed stockbroker you can message us to open an account, we can reserve shares for you given you have a broker-assisted or online account with us.
If you wish to get shares from your broker you can directly message them, please note that shares will only available only on the offer period October 13-19, 2020. Or thru Local Small Investor (LSI) thru PSE Easy which has a limit of P100,000 worth of shares only. Top online brokers like COL financial given the number of their clients sometimes raffle IPO shares, so some clients only get small allocations per account. It is easier to get IPO allocations via Broker-assisted trading.
Read More about IPOs: Complete IPO Guide ; Converge ICT IPO Review Part 2;
Where can I read the prospectus
Prospectus is available from the company website: Converge ICT Preliminary Prospectus
-Stockbytes PH, July 4 2020
Related: MerryMart VS Savemore ; Emerging Markets VS Coronaconomy ; The Coronaconomy Battle ; Coronaconony Winners
*The owner of StockBytes PH is a licensed stock broker, contact us if you want to a open a broker-assisted or online account.
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