Converge since its IPO has been aggressively expanding. In 2020 it spent 15 billion on capital expenditure and in 2021 19.8 billion.
With cash flows from operations just half of the capital expenditures, CNVRG has been aggressively borrowing money from banks to fund capital expenditures. As of the end of Q1 2022, CNVRG had a total loans payable of 24.3 billion.
With its debt-financed capital expenditures, CNVRG is now looking like TEL (PLDT). The difference is that TEL is setting aside cash for dividends to stockholders.
CNVRG does not intend to distribute any dividends in the short to medium term. It intends to retain future earnings to finance the continued nationwide expansion of its end-to-end fiber network.
At the end of Q1 2022, CNVRG had a cash balance of 8 billion. But by May 2022, CNVRG used 6.5 billion of that cash to buy-back the shares of Coherent Cloud.
CNVRG does not want to return capital to shareholders through dividends but is willing to spend precious capital to buy back the shares of its significant shareholder, Coherent Cloud. Coherent Cloud is exiting from CNVRG.
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