Tale of two Dennis Uys: Rivals in rare tie-up to challenge bigger foes

MANILA, Philippines  —Filipino internet tycoons Dennis Anthony H. Uy and Dennis Ang Uy set aside their previous rivalry and joined forces to share critical infrastructure assets, creating an unlikely but formidable alliance to challenge dominant telecommunications players PLDT Inc. and Globe Telecom.

Dennis Anthony Uy’s fiber internet giant Converge ICT Solutions and Dennis Ang Uy’s 5G-focused telecommunications group DITO Telecommunity signed a master facilities provisioning agreement to share select land-based and undersea fiber optic cable assets.

Converge controls a nationwide network of fiber internet lines, which are garden hose-sized cables that allow households and business to access ultrafast internet speeds for streaming movies and downloading files.

READ: Converge boosting 2024 capex up to P15B

Because they can carry large amounts of data more efficiently, fiber lines are crucial for mobile companies when it comes to linking their 5G cell sites. This will allow DITO to address blind spots ahead of its final network audit in 2024 given its commitment to reach an 84-percent nationwide coverage.

“This is purely commerce. It’s just business,” the cofounder and CEO of Converge told the Inquirer in an interview on Friday.

He said Converge would open up its network and facilities for DITO to lease.

“Whatever they need, we can provide,” Uy said.

Revenue-sharing

He was also open to other deals with DITO, including a revenue-sharing deal on the latter’s mobile business, but was not keen on investing directly in the company.

Such a partnership between the two Uys was deemed far-fetched even a few years ago partly due to their different business styles.

Converge’s Uy keeps a low-profile and is known for a laserlike focus on expanding the fiber side of the business. DITO’s Uy made his mark launching several large, debt-fueled acquisitions that continue to hang over his group years after these were made during the term of President Duterte, whom the former supported in the 2016 elections.

More than business philosophy, a critical point in their rivalry emerged in 2018 when a swath of coveted radio frequencies was awarded to DITO, which became the country’s third major telco.

Converge was the original partner of China Telecom before powerful forces intervened and married Uy’s group to the Chinese telecommunications group instead, sources with direct knowledge of the matter told the Inquirer.

This forced Converge to pursue a partnership with South Korea’s KT Group before the two firms eventually decided to back away from the third telco auction due to concern over the viability of the sector.

Growth challenges

Market observers said a partnership between Converge and DITO would be beneficial since the companies face growth challenges in their respective businesses, while PLDT and Globe are raising investments to compete. Moreover, such a tie-up was not expected to violate any antitrust regulations.

The immediate benefit would come in the form of savings since this would cut the capital expenditure (capex) burden for both companies.

READ: More investors expected to come in to support DITO

“[Converge] is eyeing lower capex this year as they shift their focus to asset maximization,” said Stephen Oliveros, analyst at China Bank Securities.

“Moreover, we believe that developments that reinforce prospects of a sustained positive free cash flow for [Converge] could buoy investor appetite for the stock as this could strengthen the case for a potential dividend declaration this year,” he added.

“For DITO, we think this agreement would help hasten their customer acquisition efforts and further widen their network coverage,” Oliveros said.

DITO shares jumped over 8.33 percent to P2.60 each following the announcement while Converge added 1.74 percent to P9.36 per share.