Dito borrows $4 billion for infrastructure rollout, debt payment

MANILA, Philippines — Davao-based businessman Dennis Uy’s telco, Dito Telecommunity Corp., has secured a whopping $3.9 billion in loans from a group of international banks to finance its network expansion and pay outstanding debts.

In a regulatory filing, Dito Telecommunity’s parent, Dito CME Holdings Corp., said it availed of a $3.9 billion loan facility from a consortium of overseas banks.

As signed, the loan must be paid within a period of 15 years, giving Dito Telecommunity enough time to settle the amount, as it projects profitability by 2028.

According to Dito CME,  the proceeds of the $3.9-billion loan would be allocated for debt payments, mainly to wipe out $1.3 billion in obligations that are due and payable. The firm will spend the balance of the loan availments for infrastructure buildup, as Dito Telecommunity tries to catch up with its telco rivals.

Specifically, Dito Telecommunity will invest a portion of the loans to boost the quality and speed of its broadband and mobile services. The third player in the telco race will also allocate funds for the expansion of its products, particularly fixed wireless access and postpaid.

Dito CME said the loan acquired by Dito Telecommunity is one of the largest borrowings prepared by foreign banks for a Philippine enterprise.

“The (loan) facility will be one of the largest long-term debts arranged and syndicated by a group of multinational banks for a Philippine corporation,” Dito CME said.

Dito CME president Eric Alberto said the fresh loan taken by Dito Telecommunity signifies that investors trust its growth prospects in the future.

Dito Telecommunity took up the additional debt after passing its fourth technical audit led by the government. For this round, Dito was mandated to cover 80 percent of the population and register an average download speed of 55 Mbps.

Dito Telecommunity exceeded its commitments in the audit, as it reached 80.65 percent of the maket and turned up internet speeds of 74.97 Mbps for 4G and 639.32 Mbps for 5G. Dito only has to undergo one last audit next year, which requires the third telco firm to cover 84 percent of the Philippine market by then.

Dito Telecommunity was granted a certificate of public convenience and necessity to operate as the third telco player on the condition that it invests at least P257 billion for capital expenditures between 2020 and 2024. However, this mandate is causing Dito Telecommunity’s parent to bleed heavily, posting a net loss of P1.44 billion in the first semester of this year.