Poe opposes Dito’s move to use its telco franchise as loan collateral

Published January 3, 2021, 5:52 PM

by Hannah Torregoza 

Senator Grace Poe has taken to task the Dito Telecommunity for applying for a renewal of franchise allegedly without knowing how much they need to fund their telecom venture.

Senator Grace Poe
(Senate of the Philippines / FILE PHOTO / MANILA BULLETIN)

Poe, who chairs the Senate Committee on Public Services, had earlier deplored Dito for failing to anticipate how much it needed to venture into the country’s telecommunication’s industry. She also objected to the use of Dito’s franchise which will expire in 2023 as collateral to obtain more funding.

The senator cited the study of Asia-Pacific Consulting firm CreatorTech, which showed Dito’s potential inability to raise enough capital. According to CreatorTech, for Dito to meet its commitments of $3-billion spending in its first year, it would further need $2.5-billion in addition to the $500-million already drawn from its Bank of China credit facility.

“Given the current Balance Sheet, this $2.5 million would not come from equity. The only other source is debt. The sole lender is the Bank of China. Commercially, it is unlikely that the Bank of China on its own would extend the total amount,” CreatorTech said in its report.

“Funding would therefore appear to be a risk for Dito, and funding from China is seen as being extended for political reasons,” the report further said of Dito, which is 40 percent owned by the China Telecommunications Corp.

Adel Tamano, Dito Chief Administrative officer, had earlier admitted that the company has a 70-30 debt-to-equity ratio, with P20-billion in equity and P15-billion worth of debt and shareholder advances for its initial rollout this year but also confirmed that the deferral of its franchise renewal would make it more difficult for the Dito to obtain more loans.

Poe, however, insisted that the committee is amenable to consider Dito’s application for franchise renewal provided that they are able to honor their commitments this January 2021.

“After they show that they can honor their commitments then that would be basis for us to determine if they are really eligible for another 25 years. I think that’s fair,” Poe said.

The senator said that, so far, senators are only hearing how the National Telecommunications Commission (NTC) and Dito Telecommunity are claiming that they are on track and would be able to meet their commitments.

“But we haven’t really heard from an independent company assessment yet. So that’s one of the reports that we are going to be receiving in January and then hopefully by March we’ll be able to roll out,” Poe said in a recent interview over ANC Headstart.

“What happened is this: supposedly they have already spent a P150-billion, in capital expenditure  in the past year to be able to build their infrastructure. The total commitment is about more than P250-billion. But right now the capitalization is only P20-billion. So we are asking them, (since) they said most of it would be sourced from loans from different banks, (that) they will be submitting to us what those banks are,” she added.

“So as of now, the tone that they have is that the initial deliverables would be met. By January, now, let’s see if that will happen. If they give it in January, that would be a good indication that the franchise would be approved,” the lawmaker said.

Poe said there is enough time to tackle Dito’s franchise since it has yet to expire in 2023.

“You know, they have until 2023, technically. So that would be enough (time) for their investors to know that they have the capability, but only if they would be able to do their submission by January,” she further said.

 
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