Special Report: After disrupting oil industry, Dennis Uy now wants to disrupt telco

MANILA, Philippines — Sometime this year, a convoy of sleek and shiny dark vehicles entered the gates of Malacañang.

Inside the heavily-tinted vehicles were officials of a foreign telecommunications company. They were going to pay a courtesy call to President Duterte because they wanted to vie for the third telco slot.

The meeting happened and the officials got all excited. They had the track record, the financial muscle and the capability.

All they needed was the right local partner.

Months after the meeting, the grapevine started buzzing with talks that Chinese telco giant China Telecom was also vying for the third telco slot with Davao-based businessman Dennis Uy, a known supporter of Duterte, as its local partner.

In the end, the foreign telco aspirant didn’t join the bidding. Their advisers told them that they didn’t stand a chance against Uy and China Telecom.

On Wednesday, the Department of Information and Communications Technology (DICT) named Uy and China Telecom’s venture as the provisional third telco player.

The results of the much awaited third telco bidding have again put the spotlight on the fast pace of growth of Uy’s empire.

From oil to telco

After disrupting the oil industry with his Phoenix Petroleum – said to be the number one independent oil company in the country – Uy now wants to disrupt the telco industry.

Whether or not he will succeed is still anybody’s guess. As of this writing, there are calls for a rebidding from disqualified players.

A look at how he disrupted the oil industry may provide an indication if he can indeed break the existing telco duopoly.

He was exposed to business at an early age, coming from an entrepreneurial family of Chinese descent.

While in college – he obtained a Bachelor of Science in Business Management at the De La Salle University in Manila in 1993 – he started trading in the stockmarket.

He then decided to venture into his own business, using the money earned from stock market trading.

He and friends, including former special assistant to the president Bong Go, started Dencio’s, a food business in Davao.

The rise of the Phoenix

Upon the encouragement of friends, he then ventured into the downstream oil business, starting with a terminal for existing players. He started trading existing fuel products.

When he learned the ropes of the trade, he thought of having his own brand.

He thought that to be able to penetrate the industry, he needed a catchy name.

Thus, Phoenix Petroleum was born on Dec. 8, 2005, a blessed day, he said. It was the Feast of the Immaculate Conception.

He sought huge deals to penetrate the market. The Gokongwei-owned Cebu Pacific was among those that gave Phoenix a break by patronizing Phoenix’s jet fuel.

The rest, as they say, is history.

Today, Phoenix has successfully disrupted the oil industry long dominated by multinational giants. In some areas across the nation, it takes the second, third, or fourth spot. Its price is lower in some areas.

Timing

Asked about his secrets to success, Uy said timing is everything.

“Timing, timing lang,” Uy told The STAR over the weekend.

Those in his circle, including one of his advisers, said Uy is naturally business-savvy.

But persistent murmurs among the business community say that Uy’s deal-making and buying-spree have accelerated with Duterte’s rise to power. In a society that loves gossips, there are a lot of conspiracy theories about Uy’s wealth.

Uy shrugs this off and maintains that many of his acquisitions and business deals started long before Duterte even became president.

But it is no secret Duterte and Uy are pals. Duterte appointed him as his special adviser for sports. Uy also contributed P30 million to Duterte’s campaign and during his stint as mayor of Davao City, Uy constantly supported him.

Duterte openly admits knowing the businessman and marvels at the growth of Uy’s Phoenix from a single filling station in Davao to become a major energy company.

On July 11 last year, Duterte graced the 10th listing anniversary of Phoenix at the Philippine Stock Exchange. It’s the first time in recent history that Duterte, a sitting president, visited the stock exchange to attend the listing anniversary of a publicly listed company.

Fair bidding

But presidential spokesperson Salvador Panelo said whether Uy and Duterte are indeed friends or not, it had nothing to do with Uy’s selection as the country’s provisional third telco player. Panelo said Duterte did not meddle in the bidding process.

Uy, for his part, said the third telco consortium should be given a chance.

“We are all consumers and we hope to be given a chance to provide better service,” Uy told The STAR.

One thing is clear. With Uy now in telco, his empire has definitely grown to a size he himself may not have imagined.

Udenna Corp

Uy’s holding company Udenna Corp. was incorporated in 2002. Its registered office is in Davao City.

As of end-2017, Udenna has investments in around 55 companies from less than half as of end-2015.

These companies are in a wide array of industries – infrastructure, shipping, construction, trading, waterworks, maritime, logistics, gaming and hotels. There are foreign firms, too, and at least two Cayman Islands companies.

Of the 55, at least 10 were incorporated or commenced operations in 2017.

Udenna’s net income grew to a whopping P4.3 billion last year from just P780 million in 2016 – more than five times.

Debt

The growth is backed by a buying spree that is supported by interest-bearing loans of P85.8 billion as of end-2017, up 200 percent from just P28.4 billion a year ago.

Is the debt manageable? One source said his companies may end up in the hands of lenders including the Sy-owned BDO, if he is unable to pay off his debts.

But Uy said the debt is definitely manageable. “Yes, we can manage. We have plans to raise more equity and we are in discussions for future partnerships in our businesses.”

Indeed, with 55 companies and a net income that grew more than five times last year, Uy’s Udenna is no doubt shining at a time when some companies are facing challenges.

Its sheen is unlikely to fade anytime soon, especially with its third telco play.

Uy could not have been luckier. His pal in Malacañang really wanted to break the duopoly. He grabbed the opportunity and submitted a bid. It was after all a rare chance that may never come again.

The businessman from Davao is right – timing indeed is everything.