FREE Commentary: Telco war shifts to prepaid fiber

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Fiber revenues of telcos

Fiber has been one of the key growth drivers for telcos in the past few years. However, the middle-to-high income segment is near or at saturation already given that most of legacy customers have already completed the switch
from broadband to fiber services. However, all the fiber offerings in the past had only been through postpaid. For this reason, telcos have introduced prepaid fiber to capture the relatively underpenetrated lower-income segments.

Prepaid fiber leads the way, for most

As of the 1st quarter (1Q) 2025, telcos’ prepaid fiber shows promising growth as it brings in more customers, which underpins the subscriber net adds. CNVRG saw the highest fiber net adds of 140k with prepaid fiber contributing 67.1% of total net adds. GLO came in second, as it saw 132k net adds with prepaid fiber being responsible for 93.0%. Lastly, TEL had 76k net adds with majority of which still comes from postpaid as management stated that they are focusing on primarily growing its postpaid segment since it delivers higher ARPU and lower churn.

Small but not terrible

Even though CNVRG is the smallest telco in terms of market cap, its ability to be efficient in generating revenues has led to its latent growth potential. Furthermore, the telco still has a low fiber port utilization of 34.4% out of its current 8.1-Mn ports with 400-500k fiber ports more in the pipeline. This means that the company still has plenty of runway for future growth.

Keeping this in mind, Converge ICT Solutions, Inc. (CNVRG) remains our sector top pick given its consistently better 1Q performance and ample headroom for subscriber growth.

Stock Recommendations

BUY: Converge ICT Solutions, Inc. (CNVRG) – Target Price: 24.58
BUY: Globe Telecom, Inc. (GLO) – Target Price: P2,435.40
BUY: PLDT, Inc. (TEL) – Target Price: P1,618.62

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