Debt-saddled Sky wins big in Converge deal, says analyst
Through its partnership with Converge ICT Solutions Inc., Sky Cable Corp. may be able to expand its reach across the country without having to spend so much money, a welcome development for ABS-CBN Corp.’s loss-generating subsidiary. The companies announced on Monday a commercial agreement enabling Sky to leverage Converge’s fiber network stretching over 700,000 kilometers across the country connecting 16 million homes.
“Through the arrangement with Converge, we expect Sky and its subscribers to benefit from the world-class fiber network that Converge has built over the last few years,” Sky president and chief operations officer Claudia Suarez said in a statement. For Converge, the deal will allow it to maximize its network and increase utilization of its over 8 million ports.
“This will be a revenue boost for Converge consistent with similar arrangements with other players as we are able to continue to monetize further our excess network capacity,” Converge president and cofounder Maria Grace Uy added.
China Bank Capital Corp. managing director Juan Paolo Colet said the collaboration could “put Sky in a better position to compete in the market through better service quality and wider reach.”
“It also practically relieves Sky from the heavy capital expenditures that would otherwise be needed to upgrade and expand its own broadband network,” he added.
This is seen to bode well for Sky which has P4.5-billion debts, with nearly half due within one year. It also racked up losses amounting to P7.08 billion last year, markedly higher than P391 million in 2022, given the “decline in pay TV customers,” ABS-CBN previously reported. ABS-CBN president and CEO Carlo Katigbak, who is also a director at Sky, said this deal was the “best way to move forward and stay focused on delivering superior customer experience.”
Earlier this year, Sky was about to sell its broadband business and related assets to PLDT Inc. under a P6.75-billion deal. Both parties eventually decided to terminate the contract without providing specific reasons. The aborted deal, which already secured regulatory approval from the Philippine Competition Commission, would have meant P4 billion in gross proceeds for the media company. ABS-CBN previously said the cash inflow would be used to extinguish financial obligations and fund content creation.
Last week, Pampanga-based businessman Dennis Uy’s Comclark Network and Technology Corp.—the controlling shareholder of Converge—signed a memorandum of agreement with Data Lake Inc. to boost satellite connectivity in the country. Data Lake is the country’s reseller and integrator of Starlink, the internet satellite service provider owned by tech mogul Elon Musk. — INQ
