Dito Telecommunity signs $3.9-B loan
DITO CME [DITO 2.18 up 9.6%; 315% avgVol] [link], the parent company of Dito Telecommunity (Dito Tel), announced that Dito Tel had signed a “15-year long-term financing facility” worth $3.9 billion (~P222 billion) with a “group of international banks”. The proceeds of the loan will be used by Dito Tel to “extinguish” $1.3 billion in short-term bridge loan liabilities, with the “balance” used to pay contractors and fund the continued roll-out of the telco’s infrastructure to meet the terms of its concession. DITO said that the loan “epitomizes a resounding vote of trust and confidence in the Company’s vision.”
MB bottom-line: A win is a win, and getting access to a long-term facility like this will help DITO pay the bills to keep the lights on. At the same time, though, if “more debt” was the simple solution to “too much debt”, then businesses wouldn’t fail and we wouldn’t have a need for bankruptcy law or any of that fun stuff. The issue facing DITO, and the issue that has always been facing DITO, is one of profitability. As for whether this loan is the “epitome” of a vote of trust, I’d like to take a look at the actual terms of the loan and the specific banks involved before I get too swept away by the language of this press release. Is it a vote of confidence when Cashalo lends a kasambahay P5,000 at a 100% annual interest rate to fly to the province to visit a dying relative? Nope. That’s just (predatory) business. It’s (almost) always possible to get a loan; the terms of the loan are what really tell the tale.
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