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SEN. Mary Grace Poe has called Dito Telecommunity to blame for requesting a franchise without knowing how much it would need to finance her company to become the third giant telecommunications company (telco) in the country.
The senator previously regretted that Dito could not anticipate how much she needed to finance the company, as she opposed the use of Dito’s franchise, which will expire in 2023 as a guarantee for more funds.
The chairman of the Senate Committee on Public Services cited the study by Asia-Pacific consultancy CreatorTech, which showed Dito’s possible inability to raise enough capital.
The Senate is deliberating on the measure that seeks to renew Dito’s franchise for 25 years. The company received a franchise in 2018 to be the third telecommunications company in the country.
CreatorTech said that to meet its spending commitments of $ 3 billion in its first year, Dito will need $ 2.5 billion in addition to the $ 500 million already drawn from its Bank of China credit facility. It is 40 percent owned by China Telecommunications Corporation.
“Given the current balance sheet, this $ 2.5 million would not come from equity. The only other source is debt. The only lender is the Bank of China. Commercially, the Bank of China alone is unlikely to extend the full amount. Therefore, funding would appear to be a risk for Dito, and funding from China is seen as expanding for political reasons, ”the report says.
CreatorTech has warned that delays due to various factors can delay the implementation of Dito’s commitments. This would result in a large fine and possible waiver of your license.
“Building a telecommunications network in the Philippines is extremely challenging due to natural and geographic conditions and therefore the new telco may not be up to these challenges as well as the two have done. established telecommunications companies, ”the study reads.
Dito’s managing director, Adel Tamano, had admitted that the company has a debt-to-equity ratio of 70-30, with P20 billion in equity and P150 billion in debt and shareholder advances for its initial launch this year.
He confirmed that postponing the renewal of his franchise would make it more difficult for the telecommunications company to obtain more financing or loan approvals.
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