DITO Q3: loses P1.8 billion; below-target to 2021 goals
DITO [DITO 5.95 1.49%] reported a Q3/21 net loss of P1.8 billion, down 12,446% from Q3/20 profit of P15.0 million, and down 22,606% from Q2/21 profit of P8.0 million.
Let’s just get this out of the way right from the start: the year-on-year comparisons for DITO are basically useless. Yes, being down more than 12,000% from last year IS objectively hilarious, but it’s not actually indicative of anything that’s happening at DITO. For starters, the meager profits that DITO earned up until Q3 of this year were all made by DITO lending money to various Dennis Uy-owned businesses; DITO itself, up until the transaction with Udenna that transferred ownership of Dito Telecommunity, did not own enough of an indirect share of Dito Telecommunity to incorporate Dito Tel into its financial statements. But now, it does. So comparing life as Dennis Uy’s friendly bank to life as the nation’s third telecom is really a complete waste of time. Then, of course, there’s the whole problem (that we’ve seen time and again with COVID-impacted financial results) of comparing relatively small numbers with large numbers.
A great example is how DITO lost P1.8 billion this quarter. That’s a lot. And compared to having made P15 million in Q3 last year, it’s 12,446% less. But compared to the P8 million it made last quarter, it’s down... 22,606%? If it made just another million, it would have been down around 20,000%, but it doesn’t feel at all like those mathematical artifacts really tell the story.
♦ What about the Dito Tel performance metrics? What Dito Tel performance metrics? We’ve been waiting for more than a year to get a better look at hard data about DITO’s execution of its audacious strategy, and it looks like we’re going to be waiting for a while longer. The document contains no subscriber count, no segmented analysis, no “average revenue per user” figure... nothing.
♦ Then, what do we really know? Only what DITO decides to tell us through press releases and interviews. We know that they’ve got 4 million subscribers, and that the rate of new subscribers coming into the DITO ecosystem is slowing. We know that they’ve only built 3,300 cell towers out of the 4,500 they said they’d build this year, and that they will not hit their target by the end of the year. We know that they’ve got another 4,000 cell towers in various stages of development that are “scheduled” to be “online” by this time next year.
♦ Tell me more about their random side projects! In case you were already tired of hearing stats and analysis about what is clearly DITO’s most important business and one of the most important things (supposedly) happening in the Philippines right now, DITO felt that it was important to remind us that “DITO CME is more than DITO Telecommunity”. How could we have forgotten about Luna Academy, the online learning platform, or Unalytics, the customer data analytics platform, or media solutions provider Acuity Global? Did you forget about these side quests?
MB BOTTOM-LINE
Reading the whole report, I got the impression that DITO CME was sad to transition from life as Dennis Uy’s banker to owner and operator of the country’s third telecommunications company. Like it was just so tired of all the new complications that ruined its pristine (if shallow and one-dimensional) financials. How much easier would it have been to just go on indefinitely, lending investor money to Udenna and Chelsea [C 1.93 unch] on friendly terms? Regardless of whether the association is convenient to DITO’s management or not, DITO *is* Dito Telecommunity; that’s how it was framed to investors, and that’s the absolute truth of its financial statements.
It also feels like DITO would love for people to stop focusing on whether Dito Tel is hitting its targets (spoiler: it’s probably not), whether its projected profitability is tracking according to DITO’s earlier statements (spoiler: it’s probably not), and whether it’s generating enough organic revenue to continue with its business plan without having to raise additional capital and potentially dilute investors (spoiler: it’s probably not). I’m very excited by the prospect of a third telecommunications company to break up the Globe [GLO 3460.00 2.37%] and SMART [TEL 1750.00 2.94%] profit party, I’m just waiting for DITO to be excited about it, too. Let's not even talk about DITO's plummeting stock price until then.
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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