Fiber internet provider Converge ICT Solutions, Inc. (CNVRG) led the index gainers yesterday after the company disclosed that its wholly-owned subsidiary, Converge ICT Singapore Pte. Ltd. (Converge SG), has obtained a license to provide international connectivity services in Singapore from its Infocomm Media Development Authority (IMDA). <\/p>\n\n\n\n
IMDA, a statutory board under the Singapore Ministry of Communications and Information, has granted a Facilities-Based Operations (FBO) license to Converge SG which will allow the company to start deploying telecommunication infrastructure and provide connectivity services and fiber optic cable capacity to wholesale and enterprise customers in Singapore.<\/p>\n\n\n\n
The FBO license would give Converge SG the right to provide international connectivity services in Singapore, which includes Ethernet-International Private Line (E-IPL) service, Dedicated Internet Access (DIA) service, Carrier Ethernet Network service, Internet Protocol Virtual Private Network (IP-VPN) services using Multiprotocol Label Switching (MPLS), and sale\/resale of submarine cable capacities.<\/p>\n\n\n\n
CNVRG is moving to bolster its enterprise business through international expansion as domestic residential growth slows down.\u00a0To be clear, the Singapore license is not targeted towards consumers. <\/p>\n\n\n\n
An FBO license allows CNVRG to sell its international cable capacity to carriers, internet service providers, and telcos operating in Singapore. It does not allow CNVRG to market its own fiber and cable products directly to Singapore consumers. As such,\u00a0Converge SG\u2019s business would fall under the Wholesale and Enterprise segment of CNVRG.<\/p>\n\n\n\n
CNVRG is currently a participant in the EAC-C2C submarine cable system which connects the Philippines with Singapore, Hong Kong, Taiwan, South Korea, and Japan. It is also a participant in the Bifrost Cable System, a trans-Pacific cable system connecting the Philippines, Singapore, and Indonesia with Guam, California (USA), and Mexico, and the SEA-H2X express cable system connecting the Philippines, Hong Kong, Hainan (China), Thailand, Borneo (Malaysia), and Singapore. Both the Bifrost and SEA-H2X systems are expected to be operational in 2024. CNVRG\u2019s allocation in these cable systems, as well as its points-of-presence in Singapore, Hong Kong, Taiwan, Japan, and USA is the commodity that the company can then offer to its partners in Singapore.<\/p>\n\n\n\n
Based on its Q3 earnings report, CNVRG\u2019s Residential Business Segment, which represents 87%\u00a0of its 9-months (9M) 2022 revenues, grew by 31% on a year-to-date basis. However, Q3 2022 growth of the segment has slowed significantly to 18% from 30% in the previous quarter. <\/p>\n\n\n\n
In contrast, growth in the smaller Enterprise segment accelerated from 25.5% in Q2 2022 to 27.0% in Q3 2022. The Wholesale sub-segment under Enterprise, where the SG business would be classified, grew by 52% in Q2 2022\u00a0and 57% in Q3 2022. This (currently) tiny subset of CNVRG\u2019s business is the space to watch following this latest\u00a0development. As the saying goes, from tiny acorns grow mighty oaks.<\/p>\n\n\n\n