CONVERGE ICT Solutions, Inc. announced on Wednesday that it will enjoy tax incentives from the government for deploying fiber internet services in unserved and underserved areas.
The company has “secured the approval of the Fiscal Incentives Review Board (FIRB) to avail of tax incentives for its multi-phased establishment of connectivity facilities for high-speed broadband services targeting undeveloped and underdeveloped areas nationwide until 2026,” Converge said in an e-mailed statement.
“Under the approved incentives, Converge will receive four years of income tax holiday followed by five years of enhanced deductions or special corporate income tax as laid out in the CREATE Law (Corporate Recovery and Tax Incentives for Enterprises law), as well as 11 years of duty- free importation of capital equipment, raw materials, spare parts or accessories starting from the Registration Date,” it added.
The company believes the FIRB approval was a recognition of the “missionary nature” of its project, which is expected to “bring connectivity to marginalized areas of the Philippines.”
“Broadband connectivity is one of the priority sectors that have a direct impact on AmBisyon Natin 2040, the government’s long-term vision for the nation,” it said.
Converge, which saw its attributable net income increase by 27% to P1.97 billion in first quarter, targets to roll out fiber-to-the-home infrastructure to cover more than 1,200 unserved and underserved towns nationwide.
“The digital infrastructure will make use of the latest technologies that allow higher capacity and faster data transmission,” it said.
The first phase of the company’s nationwide fiber internet rollout started in November last year.
Citing 2021 data from the Media Partners Asia, Converge said the fiber penetration in the country is only 17% of households, lagging far behind some Southeast Asian countries whose penetration rates have breached 40% and even reached 80% in Vietnam.
“The target of the Broadband Commission for Sustainable Development is for middle income countries including the Philippines to reach 65% broadband internet penetration by 2025,” it added.
The company’s revenues increased by 40% to P7.75 billion from P5.55 billion in the same period in 2021, its first-quarter report showed.
Revenues from the company’s residential business increased by 42% to P6.81 billion during the period from P4.80 billion previously, driven by a 52.5% year-on-year growth in its subscriber base. It ended the quarter with 1,802,202 residential subscribers.
Enterprise revenues increased by 25% to P935 million in the first three months of the year from P750 million in the same period in 2021. The increase was fueled by robust growth in the small and medium enterprise (SME) segment. Its SME customers surged by 200%, reaching 25,810 as of March 31.
Converge ICT shares closed 0.54% lower at P28 apiece on Wednesday. — Arjay L. Balinbin