Dennis Uy, the Philippine businessman behind mobile challenger Dito Telecommunity, might sell down his stake to pay off debt.

Uy has disposed of stakes in a casino company and his shipping business in the last 12 months and might be willing to offload the "crown jewels" of his business empire, Bloomberg reports.

Udenna, Uy's holding company, says it's been in discussions over asset sales which it expects to close in the coming months.

Figure 1: Dito revenue was just 3 billion Philippine pesos (US$53.3 million) and current liabilities now exceed assets by PHP149.9 billion ($2.66 billion).
(Source: Timon Schneider /Alamy Stock Photo)

Udenna's holding in Dito, a joint venture with China Telecom, is one of those crown jewels that may go on the sale block.

Dito CME president Ernesto Alberto said the company may sell down its 53% stake in Dito Telecom and was already looking for an "ideal private equity placement partner."

However, he said a preferred option would be to raise more debt in order to increase stake in Dito Telecom, which it expects will be worth much more in two or three years.

As Bloomberg described it, Udenna's likely asset sales follow "years of credit-fueled expansion" into areas such as property, casinos, a gas platform and a culinary school, as well as the Dito mobile business.

Widening net loss

Dito CME's Q2 numbers, posted earlier this month, revealed its net loss had widened to 8.6 billion Philippine pesos (US$153 million), out from PHP2.2 billion ($39.1 million) a year ago, thanks to soaring operating costs. It also incurred a PHP7.3 billion ($129.7 million) foreign exchange loss as a result of a deteriorating currency.

Revenue was just PHP3 billion ($53.3 million) and current liabilities now exceed assets by PHP149.9 billion ($2.66 billion). The company repeated its Q1 warning about its ability to continue as a going concern (see Dito issues warning as losses mount).

On the plus side, while its balance sheet is a sea of red ink, Dito is hitting operational targets and has disrupted the stodgy duopoly that had long dominated the Philippines market.

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It has just passed its year-end goal of 12 million subs and its mandatory target of 70% population coverage.

An Ookla analysis in June concluded that Dito's entry into the market, along with regulatory changes, had "resulted in more network investment and an overall improvement in 4G coverage and performance across all operators."

Ookla praised Dito for competing on user experience rather than starting a price war against big incumbents.

"Rather, the goal is to win consumers' mindshare by delivering faster speeds, differentiated customer experience and simpler products," it said.

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— Robert Clark, contributing editor, special to Light Reading