By Denise A. Valdez, Reporter

CONVERGE ICT Solutions, Inc. is seen to become a “more formidable player” in the fixed broadband segment, after the company received fresh funds from a United States-based private equity firm, according to an economic research firm.

In a report released on Tuesday, Fitch Solutions Macro Research said Converge has the potential to grow its business as it recently secured $250.4 million in fresh funds from Warburg Pincus.

Fitch Solutions said Converge is expected to allocate the funds for the expansion of its fibre optic infrastructure. But it added Converge could also consider moving into reselling mobile services to revive its intention of becoming a major telecommunications player in the country.

“While fixed broadband will initially be the focus for Converge, the company could move into reselling mobile services,” Fitch Solutions said. “To become a more comprehensive competitor in the consumer space, Converge could look to launch mobile services through a mobile virtual network operator (MVNO) agreement with another operator.”

Converge had planned to participate in the government’s auction for a new major telecommunications player last year, joined by KT Corp. and Teltech Group, but eventually backed out due to the performance and financial conditions required from the bidders.

Fitch Solutions noted Converge is currently lagging behind incumbents PLDT, Inc. and Globe Telecom, Inc. in terms of broadband subscriber count, as it reported last year that its base was at 200,000, trailing both PLDT at 2 million and Globe at 1.6 million subscribers.

The research firm said it sees that Converge will eventually “seek to further monetize its fiber backbone further by leasing capacity to other operators.”

“Converge already offers ICT services for small-to-medium enterprises (SMEs) and larger corporates, providing wholesale, colocation and leased line services, among others,” it said.

But it noted the company’s expansion is hounded by the government’s “slow pace of regulatory reform,” suggesting legislative challenges in infrastructure rollout will be the biggest threat to Converge’s success.

“The process of deploying fiber optic cable requires several local government entities to issue up to 27 permits as part of a process which could take several months or years,” Fitch Solutions said.

“While government efforts…will be positive at simplifying the application process for telecoms companies seeking right of way to rollout their infrastructure…the unrushed pace at which new law is passed in the country will continue to be a hurdle.”

It noted while several initiatives are already in place to skirt around the bureaucracy and form “one-stop shops” for regulatory requirements, these are still yet to materialze, delaying further the growth potential of telecommunications companies.

“For one, the Open Access In Data Transmission Act which was introduced in the Senate in March 2018 to remove requirements for companies to enter the data transmission business has yet to be approved by lawmakers,” Fitch Solutions cited.

Converge is targeting to reach 7 million subscribers in four years with a five-year, $1.8-billion investment for its nationwide fiber rollout, together with partners KT Corp. from South Korea, Tyco Electronics Subsea Communications LLC (TE SubCom) from US and Filipino-Korean venture LSI-Fibernet Konstrukt Corp.