Dennis A. Uy-led Dito CME not worried over Duterte exit

Dito CME Holdings Corp. executives assured investors of business continuity in the post 2022 election era while its flagship unit, Dito Telecommunity, is in final negotiations to secure up to $4 billion in loans from foreign banks to finance its rollout.

Concerns over the telco’s future continue to weigh on publicly traded Dito CME, controlled by Davao-based tycoon Dennis A. Uy, a prominent campaign donor of outgoing President Duterte.

The company’s share price has plummeted over 70 percent from a record high of P19 in February last year while stocks of telco rivals PLDT Inc. and Globe Telecom surged higher due to booming demand for internet.

Apolitical

During a virtual forum on Wednesday that was hosted by brokerage firm COL Financial Group, Dito CME president Ernesto “Eric” Alberto said Dito Telecommunity would continue no matter who wins the elections.

“Business should be apolitical and I have faith that the proposition [DITO Telecommunity] brings to the country by providing an alternative and competition to a duopoly, a two-player market, is most beneficial and eventually redounds to the benefit of Filipino consumers,” he said.

“There ought to be no change to the business of the third telco,” he added.

Since its March 8, 2021, commercial launch, Dito Telecommunity has reached 5 million subscribers and a mobile network that spans over 4,000 cell sites with a population coverage of about 55-57 percent, Alberto said.

He said the company was building more towers and was expected to pass a National Telecommunications Commission-supervised audit in July showing it had reached a population coverage of about 70 percent.

Loan deal

One of the prevailing worries was the ability of Dito Telecommunity, a venture between Uy and state-run China Telecom, to finance its $5-billion budget to complete its nationwide network.

But Dito CME chief finance officer Joseph John Ong said Dito Telecommunity was close to sealing a long-term loan deal with a consortium of Chinese and other foreign banks.

Ong, who declined to name the banks, said the loan commitments were in excess of $4 billion but added the company was not expected to borrow the entire amount.

“That’s already in place and, as we speak, we are finalizing the execution documents of the signing,” he said. Before this, Ong said Dito Telecommunity had borrowed over $1 billion from two of the banks from the consortium, with the debt to be refinanced by the new loan deal. The Dito CME officials also addressed speculation that Uy’s group may cut all or part of his stake in the holding company.

Ong said the proposed amendment to the Public Service Act lifting the 40-percent foreign ownership cap in key sectors such as telecommunications and transport would “open up options” for foreign funds.

The bill, recently approved by the Senate, still puts restrictions on foreign state-owned enterprises, meaning China Telecom cannot increase its 40-percent stake in Dito Telecommunity.

For his part, Alberto said it was too early to talk about selling out. “It doesn’t make sense to sell, particularly with the prospects for this sector in an industry that is not very crowded [and] with still a huge lot of upside.”