You Can’t Go It Alone, President Duterte

For what it’s worth, Dito has had a lot of support from powerful entities.

Debuted by local business tycoon Dennis Uy, Dito enjoys support of the current presidency—Uy was one of the top five donors to President Rodrigo Duterte’s election campaign and he owns the conglomerate Udenna Group. It’s also backed by a powerful foreign telco—state-owned titan China Telecommunications, which apparently contributes much of Dito’s high-end tech and infrastructure

It actually won a bid for Philippines’ third telco license in 2018. Duterte had a point to prove in breaking the duopoly, and Dito and China Telecom bagged the licence

Dito and Uy’s reliance on government support looked almost like a Faustian bargain: Cover of 51% of the population in two years, or… say goodbye to the operating license frequencies, and the Php 25.7 billion (US$500.8 million) performance bond.

Still, the Philippines administration had to lay out all the conditions required to bring Dito about, smoothen road bumps, and wave away regulatory troubles for the telco.

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Dito needed this support to make its mark. After all, it was up against two telco giants who have swallowed up or annihilated all competition since the early 90s—when they set up their mobile phone services.

But the support didn’t stop there. As recently as last month, Dito got away with just a one-day share suspension after it suddenly called off its attempt at raising Php 8 billion (US$155.6 million) through a stock rights offering.

And yet—and here’s the unexpected bit you’ve been waiting for—not only is Dito’s predicament less Faustian and more a great bargain, the company can now do without the Duterte association.

First, let’s look at its numbers. The telco has over 6 million subscribers in less than a year: that’s 5% of the entire population. And get this: Dito is eyeing 30% market share by 2026. As per CTO Santiago, the telco plans to spend more than Php 50 billion (nearly US$1 billion) in 2022.

Also, come May 2022, Duterte will step down as President as his six-year term comes to an end. There will be fresh elections to elect a new president. But Duterte’s departure won’t be a problem, the company’s Chief Administrative Officer Adel Tamano confirmed.

If anything, it’s probably welcome news for Dito as it attempts to position itself as a people’s telco, divorced from Duterte’s politics. A president lobbing death threats, taking down large-scale companies that draw his ire, and removing anything that inconveniences his allies could harm Dito’s reputation, too.

It also secured a network fund of Php 50 billion in February

It’s also got more, and arguably better weapons in its expansion arsenal. Dito confirmed that it’s secured over US$4 billion in loans from Chinese lenders, but declined to name them. All thanks to a law changed mid-February, foreign entities can now have full ownership of corporations in the Philippine telecom sector. China Telecom, which has complied with the maximum 40% stake allowed by previous laws, can now boost its presence in Dito, or even go so far as to set up subsidiaries to aid Dito’s rollout.

DITO started out as Mindanao Islamic Telephone Company, Inc. in 1998. Prior to winning the national bidding and becoming DITO, the regional telco failed to launch, forcing the government to withdraw its concession in 2003.

Even though it once looked like Dito needed Duterte—and it did—Duterte needed Dito, too. Duopolies are known for being one of the toughest structures to crack, and Duterte wanted to break the one holding Philippine telecom.