Market Issue

American tech billionaire Elon Musk’s Space Exploration Technologies Corp. (SpaceX) is in talks to bring broadband satellite services to the Philippines through a partnership with fiber internet tycoon Dennis Anthony H. Uy of Pampanga.

Opinion

With satellite broadband technology, CNVRG will be able to minimize CAPEX when tapping huge unserved market in the rural and remote areas and therefore accelerating expansion plans. This should rival PLDT’s satellite broadband venture with Cignal TV, Inc which is dependent on Hughes Jupiter System. Using low earth orbit satellites (200-400 miles from earth), Starlink-based broadband services will be much faster compared to Hughes’ geostationary satellite (20,000 miles from earth). As declared, Starlink can offer speeds of 50 to 150 Mbps vs. Hughes’ maximum of 25Mbps.

Our 5-year Target Price for CNVRG is at P21.5/share and assuming it hits its goal of 5 million subscribers by 2025, our blue-sky Target Price is at P25/share. But these are under a pure fiber-only scenario as we expect further upside over those estimates when taking Starlink’s disruptive technology into consideration

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