By Ashley Erika O. Jose, Reporter
THE PARTNERSHIP between Sky Cable Corp. and Converge ICT Solutions, Inc. could evolve into a more significant transaction, especially in light of the canceled deal with PLDT Inc., according to some analysts.
“If Sky is able to right itself on the back of this deal as well as other initiatives, it may become a more suitable candidate for a sale,” Chinabank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.
“Since Converge already has its foot in the door, it might be seen as the preferred buyer if a sale occurs,” he added.
On Monday, Sky Cable and Converge announced a commercial agreement to upgrade Sky Cable’s network and services.
Under the partnership, Sky Cable will use Converge’s network to enhance its offerings.
“The recent partnership between Converge and Sky Cable could pave the way for a potential acquisition by Converge,” said Seedbox Securities, Inc. equity trader Jayniel Carl S. Manuel.
However, the viability of an acquisition would depend highly on the success of Sky Cable’s operations, he added.
“While the partnership’s specifics will play a crucial role in determining the likelihood of an acquisition, Converge has consistently expressed a strong desire to expand its market presence,” Mr. Manuel said.
For any possible takeover, the decision of PLDT to cancel its plan to acquire Sky Cable is also worth noting due to Sky Cable’s liabilities and financial losses.
“PLDT was unwilling to absorb such substantial debts given Sky Cable’s financial condition. If Converge finds these liabilities manageable, the possibility of an acquisition remains viable,” Mr. Manuel said.
Meanwhile, Mr. Colet urged the two companies to disclose specifics on the partnership, particularly the amount involved in the deal.
“So that public investors can better assess its impact,” Mr. Colet said.
“We think the agreement could provide Converge with opportunities to improve revenues and possibly enhance cost dynamics as it looks to monetize its excess capacity,” China Bank Securities Corp. Research Associate Stephen Gabriel Y. Oliveros said in an e-mail.
“For ABS-CBN, the upside is a potential sale of Sky Cable down the road to Converge,” Mr. Colet said.
In February, ABS-CBN and PLDT decided to cancel the sale of Sky Cable to PLDT.
The sale was intended to help pay off ABS-CBN’s loans.
As of May, Sky Cable had a loan balance of P4.5 billion, with P2.05 billion due within one year.
“This (partnership) will provide a revenue boost for Converge, consistent with similar arrangements with other players, as we are able to continue to monetize our excess network capacity,” Converge President Maria Grace Y. Uy said in a statement.
Converge has the largest fiber-to-the-home network in the country, with more than eight million ports and a fiber footprint of over 700,000 kilometers.
The company serves 2.3 million residential broadband subscribers in the Philippines.
“By sharing network assets, Converge can quickly scale its operations and offer improved connectivity to a broader customer base, reinforcing its position in the competitive internet service provider market,” Mr. Manuel said.
At the stock exchange on Monday, shares in Converge closed eight centavos or 0.71% lower at P11.12 apiece, while shares in ABS-CBN gained three centavos or 0.6% to end at P5 each.