Converge boosting 2024 capex up to P15B

MANILA  -After trimming its capital expenditures (capex) this year, Converge ICT Solutions Inc. is set to allocate a bigger budget for 2024 to fund its international subsea cable projects.

Christine Blabagno, deputy chief finance officer of the listed company, said in a virtual briefing on Thursday that capex guidance was seen within P15 billion to P17 billion next year, up from P12 billion to P15 billion earmarked for 2023.

She explained that P7 billion to P8 billion of the 2024 budget would go to the Indefeasible Rights of Use (IRU) payments for the Bifrost Cable System and the South-East Asia Hainan-Hong Kong Express Cable System (SEA-H2X), both of which are expected to go live next year.

IRU grants service providers access to the capacity of a fiber system, which can be backed by multiple members sharing the infrastructure. In Converge’s case, both the subsea cables are operated alongside various companies.

The 15,000-kilometer Bifrost project will connect the Philippines to Singapore, Indonesia, Guam and the west coast of North America. It has a design capacity of up to 15 terabits per second (Tbps).

The 5,000-km SEA-H2X project, which has a design capacity of 160 Tbps, covers the Philippines, Hong Kong, China, Thailand, East Malaysia and Singapore.

The balance of the capex would be earmarked for other digitalization initiatives, Blabagno said. She added the capex would be funded internally.

“In 2025, we expect cash capex to be even less than the 2023 levels, assuming no opportunities are taken up,” she said.

This year, Converge cut its spending from P22 billion in 2022 after spending upfront for investments in infrastructure, including fiber ports, which it said have yet to be fully utilized.

—Tyrone Jasper C. Piad