Narrative
Full Description
Project narrative
In 2018, Dito Holdings Corporation and China Telecommunications Corporation created a special purpose vehicle and joint venture called Mindanao Islamic Telephone Company (Mislatel). They each hold 60% and 40% ownership stakes in the joint venture, respectively. Mislatel was later renamed Dito Telecommunity Corporation (also known as Dito Telecommunity), which became the third largest telecommunications service provider company in the Philippines through a public tender. It received its operating license in June 2019. Then, on July 8, 2019, Dito Telecommunity was granted a Certificate of Public Convenience and Necessity by the Government of the Philippines, authorizing it to begin building telecommunications infrastructure and offering telecommunications services nationwide. Between December 2019 and October 2021, Dito Tel signed multiple loan agreements totaling USD 1.3 billion: - One loan with Bank of China (BOC) Manila in two tranches: one tranche for USD 30 million (Record ID#108845) and one tranche for CNY 144.2 million (Record ID#108846); - Two loans with BOC Hong Kong: one USD 250 million loan (Record ID#96069) and another USD 200 million loan (Record ID#108844); - Two loans with BOC Singapore: one USD 200 million loan (Record ID#96037) and one USD 100 million loan (Record ID#96036); - One loan with China Minsheng Banking Corp. Ltd. Shanghai Pilot Free Trade Zone Branch (CMBC) (a private bank) for USD 500 million. According to Dito Tel, all drawdowns on these loans were used as payment for the cost of the EPC services and roll-out of 4G/5G ready telecommunication network. On December 26, 2019, Dito Tel signed a two year loan agreement with BOC Singapore for a US$200.0 million loan facility with an interest payment based on three month LIBOR plus fixed margin of 2.2% per annum. On October 12, 2021, the agreement was amended to extend the maturity of the loan to August 20, 2022. Also on the same day, the Dito Tel signed a one year loan agreement with BOC Singapore for a US$100.0 million loan facility with an interest payment based on three month LIBOR plus fixed margin of 2.2% per annum. On August 19, 2022 and May 26, 2023, Dito Tel signed a second and third amendments to extend the maturity of the loan to May 26, 2023 and July 10, 2023, respectively. On July 10, 2023, Dito Tel signed a Request and Consent Letter which extends the maturity of the loan to November 15, 2023. As of June 30, 2023 and December 31, 2022, Dito Tel has drawn US$199.7 million (P10,140.8 million) from the loan facility. The carrying value of the loan as of June 30, 2023 and December 31, 2022 amounted to P11,056.4 million and P11,207.8 million, respectively. ZTE Corporation, China Railway 25th Bureau, Huawei Technologies Co., Ltd., and Nokia were all involved in Phase 1 implementation. Construction began in October 2019. China Railway 25th Bureau installed the first telecommunication tower — including the construction of a base station, communications equipment installation, and fiber-optic cable laying — on June 5, 2020. Phase 1 was originally scheduled for completion (its commercial operations date) in March 2021 and Dito Telecommunity began its commercial operations — in 15 selected areas in Visayas and Mindanao, particularly in Metro Cebu and Metro Davao — on March 8, 2021. However, Phase 1 was not completed until December 2021. The Philippine Government declined to grant Dito Telecommunity special extensions to its rollout commitments despite the ongoing COVID-19 crisis. If Dito Telecommunity failed to meet its commitments, the Philippine Government was able to seize its $490 million performance bond and recall its assigned radio frequencies. Then, on April 16, 2021, Dito Telecommunity expanded its services to select areas in Luzon provinces, initially in five provinces covering a total of 18 cities and municipalities. On May 17, 2021, Dito Telecommunity service became available in Metro Manila. One day later, on May 18, 2021, President Duterte signed Republic Act No. 11537 which renewed Dito's license for another 25 years. The law granted Dito Telecommunity a franchise to construct, establish, install, maintain and operate wire and/or wireless telecommunications systems in the Philippines. As of August 2022, Dito Telecommunity's total mobile subscriber base had reached 12 million.
Staff comments
1. Prior to November 2020, Mislatel (Dito Telecommunity) was jointly owned by Udenna Corporation (35% ownership stake), Chelsea Logistics and Infrastructure Holdings Corporation (25% ownership stake, and China Telecommunications Corporation (40% ownership stake). 2. China Telecommunications Corporation is a Chinese state-owned company. 3. Based on its audited financial statement as of March 2022, DITO CME Holdings had amassed P58 billion in total loans in its first year of commercial operations, all from Chinese banks. 4. This project is also known as the Philippines DITO Mega Full Turnkey Telecom Network Deployment Project. The Chinese project title is 菲律宾 DITO 大型交钥匙通信网络部署项目. 5. Phase 2 is expected to link Palawan to the rest of the main islands of the Philippines to provide redundancy to Visayas and Mindanao. Phase 3 is expected to target the island provinces of Basilan, Sulu, and Tawi-Tawi. 6. It is unclear if this loan received another extension in order to be refinanced by the USD 3.9 billion syndicated loan. This issue warrants further investigation.