Converge buying back P1.5-B shares to bolster stock value

INQUIRER FILE PHOTO

Converge ICT Solutions Inc. is planning to repurchase P1.5 billion worth of common shares in a bid to increase shareholder value.

The listed internet service provider, in a disclosure, said its board of directors had recently approved its share buyback program.

“Subject to necessary approvals and disclosures, shares acquired during the buyback may be reissued by the company for valid corporate purposes, such as for an employee stock plan, if any,” Converge said.

The transaction would not “adversely affect the company’s ability to fund any of its prospective and existing projects and/or investments,” it assured.China Bank Securities research director Rastine Mackie Mercado told the Inquirer the buyback program would support Converge’s stock price.

“The program shows the management’s confidence in achieving their operational prospects, which would send a positive signal to the investors. This is a way of showing that they value not only their operational standing but also their shareholders’ value,” Regina Capital Development Corp. head of sales Luis Limlingan added.

In May, Converge announced its plan to buy back up to P6.5 billion worth of shares from Coherent Cloud Investments, which owns a 10.25-percent stake in the listed company.

In the first half, Converge saw its net income rise by 22 percent to P3.95 billion, driven both by its residential and enterprise markets.

Top line figures of its residential business improved by 38 percent to P14.08 billion while enterprise revenues grew by 26 percent to P1.97 billion in the first half.

The internet service provider had 1.8 million residential subscribers during the period. Converge sees this growing to 2 million by the end of 2022.The company said it was on track with the opening of its new data center in Cebu in the third quarter of 2024. The Cebu facility, which will have about 300 racks, is seen to complement its existing Pasig and Clark data centers.