Dito issues warning as losses mount

The losses are mounting for Dito CME, the parent of the Philippines' newest operator, as it struggles to find a foothold against two powerful incumbents.

Dito reported a 6.8 billion peso ($130.0 million) deficit on just 1.3 billion pesos in revenue ($24.8 million) in the first quarter, deteriorating from a 1.6 billion peso ($30.6 million) loss on 7.81 million pesos ($149,000) in revenue just after it began operations a year ago.

The company, controlled by entrepreneur Dennis Uy, warned in its Q1 filing Friday that current liabilities exceeded current assets by 126.4 billion peros ($2.4 billion) on March 31, 2022.

Figure 1: Dito CME, the parent of the Philippines' newest operator, struggles to find a foothold against two powerful incumbents.
(Source: Fiona Graham / WorldRemit on Flickr CC2.0)

This material uncertainty "may cast significant doubt on the group’s ability to continue as [a] going concern," it added.

But Dito said it had already fully funded its plans to invest more than 50 billion pesos ($955.5 million) in its network this year, with a $4.1 billion (209.1 billion peso) project finance loan and a $200 million (10.5 billion pesos) bridge loan.

It also said shareholders, including Udenna, another Uy-controlled company, and China Telecom, were committed under an investment agreement to "infuse additional capital" into the company, although Dito did not say when.

Pass the hat

Dito CME owns 53.7% of Dito Telecommunity, with China Telecom holding a 40% share.

Dito says it reached 7 million mobile subscribers in March, compared to Globe's 87 million and Smart Communications' 70 million.

Dito CME's efforts to raise funds through a rights offering collapsed in January. It said it had pulled the plug on the planned 8 billion peso ($153 million) offering because of "less than ideal market conditions" as a result of the omicron outbreak and the prospect of higher US interest rates.

The company said it was "studying several alternative financing proposals."

It did not spell out a business or financial strategy to repair its balance sheet, other than stating its ambition to carry out "targeted subscriber acquisitions" and to efficiently roll out its network.

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The paltry level of disclosure attracted the ire of a local financial commentator, who complained about "a general lack of metrics that we can use to compare DITOTEL’s progress, as a telecommunications business, against the performance and progress of the other two major telecommunications businesses."

There was no data on cell towers, rollout progress, ARPU or segment revenue, and no discussion of its business plans, columnist Merkado Barkada said on philstar.com.

"Why does Dito seem like it’s still trying to talk as little as possible about the actual business of running a telecommunications company?" Barkada asked.

Dito CME stock is down 8.9% in the past five days and 50.3% in the past 12 months.

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— Robert Clark, contributing editor, special to Light Reading