Hong Kong Branch of Bank of China provides $200 million term loan to DTC for Phase 1 of 4G/5G Telecommunications Network Project

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. In 2019, Dito Telecommunity — the third largest telecommunications service provider company in the Philippines — signed three loans worth $500 million with various branches of Bank of China for Phase 1 of a 4G/5G Telecommunications Network Project: a $100 million term loan facility with the Singapore Branch of Bank of China, a $200 million term loan facility with the Singapore Branch of Bank of China, and a $200 million term loan facility with the Hong Kong Branch of Bank of China. All of these loans carried maturities of one to two years and interest rate of three-month LIBOR plus a margin of 1.8-2.6 percent. All of the loans had fully disbursed by February 2020. The purpose of the Phase 1 was to undertake land acquisition activities, the construction of 1600 telecommunication towers, and the purchase of 4G radio equipment. China Railway 25th Bureau, Huawei Technologies Co., Ltd., ZTE Corporation, and Nokia were all involved in Phase 1 implementation. 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. 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 reached 12 million.

Additional details

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. The precise interest rates and maturities that applied to the Bank of China loans are unknown. For the time being, AidData assumes 1.5 year maturities and all in-interest rates of 4.53% (equivalent to the average 3-month LIBOR in 2019 of 2.33% plus a 2.2% margin).

Number of official sources

4

Number of total sources

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