DITO exec floats possibility of welcoming more foreign investors

China Telecom-backed DITO Telecommunity is open to welcoming additional foreign investors as the amended Public Service Act (PSA) is just one signature away from becoming a law.

“Once it gets passed, it’s something that we can look into. We see it as positive [development] that you are opening up investments in telco space…,” DITO chief administrative officer Adel Tamano said at a virtual press briefing on Thursday.

“As you can see for telco, kailangan mo ng malaking malaking pera and if the local market cannot provide that, [money] then foreign investors really are needed for that,” he added.

(As you can see, for telco, you really need a lot of capital, and if the local market cannot provide that, then foreign investors really are needed for that.)

On Wednesday, the Senate and the House of Representatives ratified the bicameral conference committee report on the proposed measure modernizing the 85-year-old law. It will then be sent to Malacañang for signature by President Rodrigo Duterte.

The bill seeks to clear ambiguity surrounding the terms “public utility” and “public service,” identifying public utilities as the following: the distribution and transmission of electricity; petroleum and petroleum products pipeline transmission systems; water pipeline distribution systems and wastewater pipeline systems, including sewerage pipeline systems; seaports; and public utility vehicles.

According to the proposed law, any industry not included among these will remain public services and will be liberalized.

This means other industries not identified as public utility such as telecommunications will be open to 100% foreign ownership.

Tamano said that DITO cannot give a definitive answer on whether the telco is planning a debt-to-equity arrangement or will sell shares to foreign investors.

“We do not have any conversation on that yet. We’re really focused on operations at this time,” he said.

“If one way to look at it, I don’t want to put the impression that we're inclined, but… maybe [if we] get foreign investment, puwede na lumampas sa 40% (it may exceed 40%),” he said, noting that when DITO was formed, it needed to be 60% owned by Filipinos and 40% owned by foreigners due to limits set by the 1987 Constitution.

Asked if China Telecom, a foreign state-owned company, can increase its stake in DITO, Tamano said, “Right now, we're still studying it just to be very clear… that's why I don't want to answer categorically.”

Section 34 of the bill states, “An entity controlled by or acting on behalf of the foreign government or foreign state-owned enterprises shall be prohibited from owning capital in any public service classified as public utility or critical infrastructure.”

The prohibition, however, shall only apply to investments made after the effectivity of the proposed law.

“Foreign state-owned enterprises which own capital prior to the effectivity of this law are prohibited from investing in additional capital upon the effectivity of this Act,” the proposed law states.

DITO was commercially launched in March 2021. It received its permit to operate in 2019 after winning a government-sanctioned search for the country's third telecommunications player.

It is 60% owned by Davao-based businessman Dennis Uy’s Udenna Group through publicly listed DITO CME Holdings Corp., and 40% owned by China Telecom.

As to the fate of the company after the change of leadership following the May 2022 elections, Tamano said, “Whoever is going to win, we want to partner with that administration, because the goals we want to do will be more impactful in the next administration. We are now moving to the more underserved areas.” —VBL, GMA News