DITO CME Holdings (DITO)

Now that the battle for telco and internet is heating up. Most people are placing their bets on who will dominate the field. The incumbents, PLDT and Globe has already started upgrading their systems. Not anymore they can charge for more of the same sub par service. There are new boys in town that’s willing to spend a lot of money to disrupt the field.

One particular stock that’s been in the investing / trading circle is DITO. Because they are the “official 3rd telco”, people are hoping that the stock will reach P1,000 same as the other two telcos. Of course, this may or may not happen. But you can see how exuberant some people are. Is it really that possible for DITO to reach P1,000 (or more), like the other telco?

The present state of DITO

DITO is still on the early phase of their deployment. They claim to have erected thousands of towers that would support their infrastructure. Boasting to even have the permission to construct a telco tower inside a military base. While being in partner with China, who is a very honest and friendly country who never tries to spy on other countries nor invade them. *wink*wink*

Political issues aside, the present state of DITO the stock is very far from reality.

It has nothing to this moment. DITO is just a shell company right now.

Add to that, DITO the stock will increase the authorized capital stock to P40 Billion from P2.8 Billion.

The Future of DITO

Best case scenario is that DITO would be a formidable player in the telco industry. But the stock might not reflect the right valuation because of what the structure of the stock would be.

DITO the stock is not the same as the “real DITO telco” that you see on the ground. As far as I know, the real DITO is a private company held by a public company which is held by DITO the stock.

DITO (the stock) would ultimately become the holder of the shares of Udenna which owns “the real” DITO. It will just be a holding company, holding the shares of another holding company, that have a stake in the real DITO telco.

The other not so good scenario is that governments wake up to the participation of China. Some countries have started banning China related companies for a good reason. They already own a big stake on our national grid. As investors, we are just observers. Knowing what’s possible to happen.

Even if lets say its an ideal world. And China has the best intentions and DITO became a dominant player in the country. Would the stock still be at the right valuation to invest in today?

Insiders of DITO has been selling their shares. DITO the stock is different from the real company DITO. Plus the dilution that’s about to come to the stock, P1,000 is just a dream I think. There will only be tears and despair paying for something that has nothing. The insiders already made their buck.

Of course, I might be wrong… I’m just contemplating right now.

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