MANILA, Philippines — Davao-based businessman Dennis Uy may have to give up majority control of his telco venture Dito CME Holdings Corp. under a proposed infusion of fresh funds from a foreign investor.
In a disclosure to the Philippine Stock Exchange, Dito CME said it has signed a subscription framework agreement for new investments to be infused by Summit Telco Corp. Pte. Ltd.
Dito CME appointed its chairman Dennis Uy and president Donald Patrick Lim to negotiate the final terms of the transaction, including the amount, timing and tranches.
Summit Telco will subscribe to up to nine billion primary common shares in Dito CME, subject to closing conditions and regulatory approvals.
In the process, Udenna Corp. may have to relinquish majority control of Dito CME to Summit Telco.
As of end-September, Uy’s Udenna holds a 54.77 percent stake in Dito CME while Summit Telco owns 25.03 percent. The remaining 20.15 percent in the company is owned by public investors.
Once the new shares are issued to Summit Telco, it will end up as the majority owner of the parent of Dito Telecommunity Corp., the youngest player in Philippine telco.
“The implementation of Summit Telco’s potential investment under the subscription framework agreement, along with other equity raising efforts, forms part of the company’s business plan to improve its equity position as previously disclosed,” Dito CME said.
“The investment is subject to compliance with the Philippines’ regulatory requirements, such as requirements of the Securities and Exchange Commission and the Philippine Stock Exchange,” it added.
Dito CME is struggling to keep its finances abreast, as Dito burns cash for business expansion. It sustained a net loss of P12.05 billion in the six months to June, eight times bigger than the P1.44 billion a year ago.
Dito CME grew its revenue by half to P7.66 billion, but expenses also jumped by more than a fifth to P14.14 billion. Dito CME is also stuck with a capital deficiency of P62.57 billion, and is compelled to undertake fundraising activities to keep up with its financial targets.
Dito CME wants to break even by 2025 and swing to profit by 2028, and it plans to secure new investments from private placements to fund its commercial and network expansion.
The STAR in July broke the story that Dennis Uy and Udenna may be giving up majority share in Dito CME to Summit Telco as part of efforts to raise fresh capital for the company.