DITO may lose its franchise due to cancellation of P8-B SRO

February 8, 2022 People's Tonight 362 views

DITO Telecommunity Corp. may find it hard to meet its remaining rollout to the government by 2024 due to weak demand from institutional investors.

Due to the lack of investor confidence, the P8 billion stock rights offering (SRO) of DITO CME Holdings Corp, the majority stockholder of DITO Telecommunity, has been cancelled — sending DITO CME to run to foreign lenders for help.

This developed amid a snowball of complaints on DITO’s poor services particularly weak or total lack of signal, slow or no internet connection, malfunctioning app, SIM cards not compatible with other phones, promotions which netizens can’t avail of, and poor customer service.

The P8-billion SRO cancellation has cast a serious doubt on DITO Telecommunity’s claims that it can give the public the kind of service that Globe Telecom and PLDT Inc. have supposedly failed.

DITO CME’s assurance that it has secured long-term debt arrangements with foreign lenders has raised suspicion that the latter are based in or have links to China.

This is considering that state-owned China Telecom Corp. is DITO Telecommunity’s technical partner and second biggest stockholder.

Industry sources said the entry of foreign lenders into the DITO Telecommunity picture gives the impression that securing credit facilities from local banks would not be feasible because either it is already highly leveraged or it may breach the “single borrower’s limit” rule that banks are obliged to strictly observe.

The cancellation has pulled the rug from under the feet of DITO Telecommunity, its stockholders, underwriters and the Philippine Stock Exchange (PSE),

The PSE had to content itself with suspending (and later restoring) the trading of DITO CME’s stocks while the stockholders had been left to fend for themselves in recovering their placements under such terms and conditions that DITO CME may decide to impose for that purpose.

Sources said the pressure is on DITO CME to secure additional funding for DITO Telecommunity as soon as possible.

“Failure to meet its rollout commitment on time means it would lose its franchise and, worse, forfeit its multibillion peso performance bond,” the sources added.

Dito has so far five million subscribers since launching commercially last March 2021 and it intends to grow its subscriber count to 12 million this year by building more cell sites in new locations.

As of December 2021, Dito has already rolled out its services in over 500 areas nationwide. It said that it has laid out more than 22,000 kilometers of fiber cable and constructed over 4,100 towers.