The facility will be one of the largest long-term debts arranged and syndicated by a group of multinational banks for a Philippine corporation, and will come as welcome news to infrastructure players in the Philippines market.
Dito became the third MNO to enter the island nation in 2019, as the government sought to increase competition between incumbents Smart (PLDT) and Globe.
Despite a strong start whereby it met its regulator-mandated coverage targets and amassed 13 million subscribers by February of 2023, the China Telecom and local businessman Dennis Yu backed company ran into financial difficulties towards the end of last year.
“This is great news overall for the industry as it will revive a significant market player who has been very quiet this past 6 months, partially because of the government network audit which they have passed but mostly around shareholder misalignment,” Devid Gubiani, CEO of Philippines tower infrastructure company PhilTower.
The financing troubles means that investment in Dito's mobile infrastructure has slowed to a halt in 2023, even after China Telecom pumped as much capital as it could into the company without expanding its shareholding.
Dito said the proceeds will be used to extinguish short-term bridge loan facilities totaling US$1.3 billion and to pay contractors and fund the continuing rollout of its network.
“This will further improve the quality of access and user experience as well as accelerating the take up of its FWA 5G and mobile postpaid product offerings,” the company said in its disclosure.
“The strong take-up of their recent 5G FWA service is a good indicator that Dito's network is not too loaded so they can be aggressive against competing FTTH providers,” Gubiani said.
“This project finance facility represents strategic trust and confidence in the vision of the Company to be a major enabler of digital services in the Philippines,” Dito’s president Ernesto Alberto said.
Dito also proclaimed the signing of the agreement would help ensure future funding activities, in both debt and equity.
"This news was anticipated and welcome. We understand this is a refinancing with a primary element towards backpay and further rollout - relief of financial constraints hopefully will spur further sector growth," Hendrik Jan-Kroon, cheif strategy officer at the largest tower company in the country, Frontier Tower Associates Philippines, said.
"The infusion of funds to Dito clearly showcase the investor's faith in the local economy. This will not only trigger network expansion for Dito but will certainly revive the telecoms industry in general. Healthy competition is always great for the consumer, and as a common tower infra provider, MIDC is super excited to participate in improving the telecoms service to our fellow Filipinos," Helen Marquez, CEO of towerco MIDC added.
Despite the good news, Gubiani was keen to stress that the reality on the ground for infrastructure companies still remains challenging, specifically for companies like PhilTower that acquired the majority of their towers.
“Dito’s network is loaded with 8 million subs as of the latest SIM registration closing, and it has 7,500 sites. It won't require much capacity add-on immediately.”
