By Ashley Erika O. Jose, Reporter
DITO CME Holdings Corp. announced its plan to raise up to P26.53 billion by yearend to ramp up the operations of its telecommunications unit DITO Telecommunity Corp.
In a disclosure to the stock exchange on Tuesday, DITO CME said it plans to convert the existing shareholder advances of Udenna Corp. and China Telecommunications Corp. in DITO Telecommunity into equity.
“This approach could help the company mitigate immediate liquidity pressures and facilitate its ongoing network expansion. By leveraging equity instead of accruing more debt, DITO could reduce its interest burden and improve financial sustainability,” Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in a Viber message.
However, this strategy comes with potential downside, Mr. Arce said, adding that share conversion might dilute existing shareholders’ equity, which could erode investor confidence and market valuation in the short term.
DITO CME also said it is targeting to raise an additional P28.83 billion over the next five years through private placements.
As of end-2023, the company had raised P1.59 billion through private placements made by third-party investors such as Xterra Ventures Pte. Ltd., Summit Telco Corp. Pte. Ltd., and Summit Telco Holdings Corp.
To recall, in 2024, DITO CME’s board of directors approved a potential investment from Summit Telco Corp. Pte. Ltd.
“The success of this plan hinges on DITO’s ability to convert these funds into tangible growth — expanding its user base and enhancing its service offerings to compete effectively in a highly saturated telecommunications market dominated by incumbents like Globe and PLDT,” Mr. Arce said.
For the first quarter, DITO CME Holdings, operator of DITO Telecommunity, reduced its attributable net loss to P1.66 billion from P4.11 billion a year earlier.
According to the company’s regulatory filing, DITO CME incurred a total comprehensive loss of P41 billion in 2024, resulting in a capital deficiency of P73.39 billion as of December 2024. The company’s capital deficiency increased to P78.04 billion as of March this year, DITO CME said.
The company attributed its losses to the pre-operating and start-up costs associated with the rollout of its telecommunications network, adding that DITO Telecommunity must fulfill its investment commitment of approximately P256.54 billion for the first five years of its rollout.
“Moreover, DITO Tel’s operating at a loss at the beginning of its operations due to large initial capital expenditures is part and parcel of the telecommunications industry… DITO Tel will still have to make continuous capital expenditures in its network in order to maintain its current network dominance,” it said.
Based on its internal projections, DITO Telecommunity expects to generate positive earnings before interest, taxes, depreciation, and amortization (EBITDA) within this year.
To recall, DITO CME has executed several financial strategies, including a follow-on offering that raised up to P2.05 billion and private placements that generated up to P14.5 billion in capital.
“In the long run, if executed efficiently, this plan could strengthen DITO’s position and profitability by fostering infrastructure development, reducing financial risk, and supporting operational stability,” Globalinks Securities’ Mr. Arce said.
At the stock exchange on Tuesday, shares in the company closed 10.74% lower at P1.08 apiece.
