DITO acquires P58 billion in loans from Chinese banks

Dennis Uy of Davao’s DITO Telecommunity is betting big on China, not only for its foreign cash and supplies, but also for all of its debt.

DITO CME Holdings, which owns 54 percent of the third telecom provider, has acquired P58 billion in total loans in its first year of commercial operations, all from Chinese banks, according to its audited financial statement as of March 2022.

DITO’s creditors are:

  • China Minsheng Banking Corp. Ltd. Shanghai Pilot Free Trade Zone Branch (CMBC) P23.42 billion;
  • Bank of China (Hong Kong) Limited P22.14 billion;
  • Bank of China (Singapore branch) P10.14 billion; and
  • Bank of China Limited (Manila Branch) P2.317 billion.

DITO also has a $100 million (P5.2 billion) borrowing facility with China Bank Singapore that it has yet to use.

These loans are for one to two years and have a three-month LIBOR plus a 1.8 percent to 2.6 percent fixed margin.

DITO thinks that owning 40% of the third telco, China Telecom, provided it with easy access to cutting-edge technologies.

“Because China is the world leader in 5G technology, DITO Telecommunity can leverage China Telecom’s technological capabilities as well as its huge network of suppliers.” “China Telecom is one of the largest users of Chinese hardware providers (such as Huawei and ZTE), which are the world’s largest suppliers of telecom equipment,” according to DITO.

Since its commercial launch in March 2021, DITO has lost P25 billion, with over P3 billion in foreign exchange losses because to the peso’s depreciation versus the Chinese Yuan and the US dollar.

DITO has allayed investor concerns about the company’s growing cash and debt troubles by announcing that it plans to close a $3.9 billion project loan by the end of 2022. It also expects China Telecom to invest additional money in DITO as the company expands its network.

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