Converge ICT Solutions (CNVRG) is considering selling a stake in its infrastructure platform to a minority partner in what could potentially be a USD 1 billion deal (PHP 56.44 billion). Proceeds of the sale would be used for investments across the group. This comes after the exit of private equity firm Warburg Pincus, who held a minority stake of 29% in CNVRG earlier this year. Since the news broke out, the share price of CNVRG rose to PHP 17.88 (+2.05%) last Friday.<\/p>\n\n\n\n
Our View:<\/strong> While CNVRG still maintains a healthy and manageable leverage position, with a Net Debt-to-Equity and Debt Service Coverage ratios of 0.8x and 5.5x as of 1H 2022, management has noted that future capex requirements to support its expansion program will be funded by debt. The sale of a stake in its network infrastructure should ease any future liquidity concerns as the company continues to expand.<\/p>\n\n\n\n We note, however, that in the last earnings update of Converge, management reduced capex guidance for the year from P26-28 billion to P21-23 billion, noting that the company currently has enough inventory of ports. While this move to reduce capex should save the company on interest expense, this could also be a sign that the company is taking a more cautious stance on expansion as the demand for fiber broadband services slows down.<\/p>\n","protected":false},"excerpt":{"rendered":" Here’s a commentary on an important issue or event affecting the stock market <\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-317108","post","type-post","status-publish","format-standard","hentry","category-special-reports","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/317108","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/comments?post=317108"}],"version-history":[{"count":3,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/317108\/revisions"}],"predecessor-version":[{"id":320491,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/317108\/revisions\/320491"}],"wp:attachment":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/media?parent=317108"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/categories?post=317108"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/tags?post=317108"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}