C OV ER SH E ET SEC Registration Number C S 2 0 0 7 1 6 0 9 4 Company Name C O N V E R G E I N F O R M A T I O N A N D C O M M U N I C A T I O N S T E C H N O L O G Y S O L U T I O N S , I N C . Principal Office (No./Street/Barangay/City/Town/Province) N E W S T R E E T B U I L D I N G M C A R T H U R H I G H W A Y B A L I B A G O A N G E L E S C I T Y P A M P A N G A Form Type Department requiring the report Secondary License Type, If Applicable 1 7 - A C O M P A N Y I N F O R M A T I O N Company's Email Address Company's Telephone Number/s Mobile Number converge [email protected] - 09175774586 Annual Meeting Fiscal Year Month/Day Month/Day Last Friday of May of Each Year Dec -31 C O N T A C T P E R S O N I N F O R M A T I O N The designated contact person MUST be an Officer of the Corporation Name of Contact Person Email Address Telephone Number/s Mobile Number OWEN OCAMPO okdocam po @converge ict.com - 09 328912603 CONTACT PERSON's ADDRESS Reliance IT Center Bldg., Annex 1, No. 99, E. Rodriguez Jr. Ave., Brgy. Ugong, Pasig City NOTE : In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated. SEC Form 17A –2020 1 SECURITIES AND EXCHANGE COMMISSION SEC FORM 17-A ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SECTION 141 OF THE CORPORATION CODE OF THE PHILIPPINES 1. For the fiscal year ended December 31, 2020 2. SEC Identification number CS200716094 3. BIR Tax Identification No. 006-895-049 4. Converge Information and Communications Technology Solutions, Inc. Exact name of issuer as specified in its charter 5. Republic of the Philippines Province, country or other jurisdiction of incorporation or organization 6. Industry Classification Code: (SEC Use Only) 7. New Street Bldg., Mc Arthur Highway, Balibago, Angeles City, Pampanga 2009 Address of registrant's principal office Postal Code 8. (02) 8667-0888 Registrant's telephone number, including area code 9. Not applicable Former name, former address and former fiscal year, if changed since last report 10. Securities registered pursuant to Sections 8 and 12 of the Code, or Sections 4 and 8 of the RSA Title of Each Class No. of Shares of Common Stock Issued & Outstanding Common Stock, P0.25 par value 7,526,294,461 Shares 11. Are any or all of the securities listed on the Philippine Stock Exchange? Yes [✓] No [ ] 12. Check whether the issuer: (a) has filed all reports required to be filed by Section 17 of the Code and SRC Rule 17.1 thereunder or Sections 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of the Corporation Code of the Philippines, during the preceding twelve (12) months (or for such shorter period the registrant was required to file such reports) Yes [✓] No [ ] (b) has been subject to such filing requirements for the past ninety (90) days Yes [✓] No [ ] 13. State the aggregate market value of the voting stock held by non-affiliates of the registrant. P26.9 billion (1.5 billion shares at P17.50 (as of February 28, 2021)) SEC Form 17A –2020 2 TABLE OF CONTENTS I. Business and General Information 1. Business…………………………………………………………………………………………………..….4 2. Properties……………………………………………………………………………………………….…..32 3. Legal Proceedings………………………………………………………………………………………....33 4. Submission of Matters to a Vote of Security Holders…………………………………………………33 II. Operational and Financial Information 5. Market for Issuer's Common Equity and Related Stockholder Matters……………………………..34 6. Management's Discussion and Analysis or Plan of Operation………………………………………35 7. Financial Statements…………………….………………………………………………………………...54 8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure…..55 III. Control and Compensation Information 9. Directors and Executive Officers of the Issuer………………………………………………………...56 10. Executive Compensation…………………………………………………………………………………61 11. Security Ownership of Certain Beneficial Owners and Management……………………………….62 12. Certain Relationships and Related Transactions………...……………………………………………63 IV. Corporate Governance 13. Corporate Governance………………………………………………………………………………..…..66 V. Exhibits and Schedules 14. Exhibits and Reports on SEC Form 17-C……………………………………………………………….68 SEC Form 17A –2020 3 PART I – BUSINESS AND GENERAL INFORMATION Item 1. BUSINESS Overview Converge Information and Communications Technology Solutions, Inc. (“Converge” or the “Company”) is the fastest-growing high-speed fixed broadband operator in the Philippines. We are the only pure-play high-speed fixed broadband provider, with an exclusive focus on serving the Philippines with industry leading optical fiber- based connectivity services. This singular focus on highspeed fixed broadband services is deeply ingrained in our organization, which permeates all aspects of our operations, including our network rollout, product and service offerings, sales and customer service. During the full year of 2020 and based on publicly available information, Converge captured 54% market share of fixed broadband net adds amongst the three largest broadband operators in the Philippines, representing an increase in fixed broadband market share from 17% in December 2019 to 26% in December 2020. Since 2018, our strategy has been to focus on Fiber-to-the-Home (“FTTH”) expansion, as FTTH technology allows us to offer higher quality connectivity and generate higher ARPU. As a result of our singular focus on the FTTH segment in the fixed broadband market, Converge increased its residential FTTH market share from 15% in December 2019 to 28% in December 2020, according to Media Partners Asia (“MPA”). We breached our 2020 total subscriber base target of one million subscribers by the end of November and ended the last fiscal year with approximately 1,038,000 residential subscribers. We own and operate the fastest-growing, end-to-end fiber network in the Philippines, which is also one of the newest in the country. With over 55,000 kilometers of fiber as of December 31, 2020, our network is among the most extensive in the country. Our network is comprised of a fiber backbone that stretches from the northernmost tip of Luzon Island to its southernmost end, as well as a fiber distribution and last-mile network that covers more than 300 cities and municipalities across Luzon (including Metro Manila), as of December 31, 2020. Our network reached more than 6.1 million homes by the end of 2020, covering approximately 43% of households in Luzon and 25% of households nationwide. As of December 31, 2020 we operate in the following regions: Region 1 – Ilocos; Region 3 – Central Luzon; the National Capital Region; Region 4A – Calabarzon; the Cordillera Administrative Region; Region 5 – Bicol; and a soft launch in Region 7 – Central Visayas. Our network consists of 100% high-speed technologies, by enabling fixed broadband connections utilizing fiber-to-the-home (“FTTH”) and hybrid fibercoaxial (“HFC”) technologies. We plan to substantially complete our domestic backbone from Luzon to Visayas and Mindanao within 1H2021, allowing us to fully commercially launch our services in these new regions by 2H2021. Converge was listed on the Philippine Stock Exchange (“PSE”) on October 26, 2020 under the ticker symbol CNVRG, marking another historic milestone for the Company in 2020. With an offering size of PHP25 billion, our Initial Public Offering was the largest IPO on the PSE at that time since 2016. As a publicly listed company, Converge has also started to disclose information on our environmental, social, and governance impacts for the year ending December 31, 2020 in Exhibit 2 of this Report. With our commitment to providing quality services to our subscribers, we are mindful of our impact to the environment and the communities we operate in and of our compliance to best governance practices. In 2020, a new normal has emerged due to COVID-19, driving a permanent paradigm shift in connectivity requirements. As the Philippines continues to adapt to the challenges posed by the pandemic, our mission of connecting the underserved and unserved areas of the country with high quality fiber broadband connectivity services has become even more critical. By providing reliable and affordable broadband services that can support work-from-home (“WFH”), online-learning or tele-medicine arrangements, we are committed to support the lives of people and the connectivity requirements of businesses in these challenging times. “The shifts we experienced this year have been pivotal to the growth of the fixed broadband market in the SEC Form 17A –2020 4 Philippines. With Converge ICT’s expertise, we are in a prime position to help the community adapt to the digital lifestyle by serving their at-home needs.” said Dennis Anthony Uy, founder and chief executive officer of Converge ICT. Business Development and Historical Background In 2007, Mr. Dennis Anthony H. Uy and Ms. Maria Grace Y. Uy (collectively referred to as “Founders”) incorporated Converge in Pampanga, a province in Luzon, with the primary purpose of providing broadband internet and other connectivity services to residential and enterprise customers nationwide. Converge remained dormant until 2012 as it awaited the requisite licenses and approvals to operate. In 2009, Republic Act No. 9707 granted Converge its franchise from the Philippine Congress to construct, install, establish, operate, and maintain telecommunications systems throughout the Philippine for a term of 25 years.