DITO CME Q2 net loss: P18B (down 624% y/y)

DITO CME [DITO 1.97, down 0.5%; 61% avgVol] [link] reported a Q2 net loss of P18.1 billion, down 624% y/y from its Q2/23 net loss of P2.5 billion, and down 81% q/q from its Q1/24 net loss of P10.1 billion. The primary driver of DITO’s H1 net loss of P28.2 billion is the P12.4 billion in foreign currency exchange losses that it recognized on its loans, which is up 67% y/y from DITO’s H1/23 forex loss of P7.4 billion. DITO’s H1 interest expense on those loans also increased, up 132% to P9.3 billion. Operationally, DITO reported having 11.3 million subscribers with an average revenue per user (ARPU) of P126/month. H1 revenues were up 54% y/y to P7.6 billion, and DITO narrowed its operating loss by 2% to P6.5 billion. DITO’s H1 EBITDA increased 282% to P0.4 billion, up from H1/23’s negative EBITDA of P0.2 billion. EBITDA excludes forex losses, depreciation, amortization, interest expense, and tax expense.

MB bottom-line: I’d love to look at this absolute mess as an opportunity, but I’ll be honest that I just don’t see it. Maybe in 5 to 10 years I’ll be forced to eat some humble pie if DITO ever manages to figure out how to not drown in its own filth (debt) while also managing to shoulder its way to attractive profitability in a highly competitive industry (telecommunications) with two behemoth incumbents (Globe and SMART). Asking me to look at P374 million in EBITDA in a period with P12,400 million in forex losses and P9,300 million in interest expenses is like asking me to consider the positive flavor notes of bitter melon soup while I gag, spit, and then try to gargle the taste of a single spoonful out of my mouth. I wish I had the constitution of a person who can taste the ginger and appreciate the barley in DITO’s soup, but that person is not me. I don’t even consider the investment opportunities of DITO’s main rivals, Globe [GLO 2338.00, up 0.9%; 114% avgVol] and SMART [TEL 1570.00, down 1.9%; 150% avgVol], appealing or interesting, and they have delicious non-telco ingredients. Again, if this kind of thing is your flavor, more power to you. Maybe the interest expense will come down a bit with falling rates, and maybe the peso won’t devalue too much more. Best of luck to the ditomaniacs! 

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