Converge may fall short of its P18 billion full-year 2026 capital expenditure (capex) target due to construction and network rollout delays, according to management. This follows cuts to both capex (from P18 billion-P23 billion to P17 billion-P20 billion) and revenue growth (from 8-10% to 4-6%) guidance earlier this year. The company has spent P6.9 billion in the first half of 2026.
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The potential capex shortfall is not necessarily negative for near-term earnings and cash flow, and may also reflect prudent spending amid a challenging macro backdrop. However, rollout delays put execution under scrutiny, particularly as Converge pushes into Visayas and Mindanao. With ample unutilized ports, the key question is whether subscriber demand can fill the capacity already built.
Catalyst
Converge reports third-quarter 2026 results on November 9. Our main watchpoints are subscriber additions, capex execution and updates on expansion plans, particularly in Visayas and Mindanao.
Action
While the stock screens cheap at 5.5 times its estimated 2027 price-to-earnings ratio, we remain cautious on near-term growth delivery. Its existing fiber network provides recurring revenue, but we would look for a recovery in subscriber additions and clearer execution on expansion plans before turning more constructive.