Here’s the latest interview with DiGi CEO Johan Dennelind:
Q: At present, what disappoints you, and what were above expectations?
Dennelind: We were a little upset especially about the bad debt’s side, that we couldn’t find the balance between the growth in postpaid and the bad debts. But, if you look at our revenue market share, excluding broadband, we are holding up very well.
Q: DiGi has launched mobile broadband in three areas – Kota Kinabalu, Penang and parts of Klang Valley. Why Kota Kinabalu (KK)?
Dennelind: Because it is a key market for us. We have the demand, based on our experience with the previous data services on EDGE technology. The data services there have been very well-subscribed. We see that the customers in KK are very demanding, and they will be very good ambassadors for us.
Q: Has 3G and mobile broadband changed the competition landscape?
Dennelind: When I talk about DiGi to investors and stakeholders, we position the company as a company in transition, because we are in a market that is in transition. We are in a transition from high-growth market into a matured market. We are in a transition from a voice business model into a data business model. We are in a transition from a company that was over-reliant on low-income segment, to a company that is more balanced. That requires a lot of tuning in the organisation.
There are extreme predictions that data will take over voice in five years. Now, the ratio for voice and data revenue is about 80:20, but in five years, it could be 20:80, if things go to the extreme. I would say that is not likely, but it could, so you got to be mentally prepared, so that the company and management can deal with that. It is both an opportunity and threat.
Q: What can investors expect from DiGi in 2010?
Dennelind: I am optimistic, but I don’t want to be too bullish about it either. Because, technically, we are still in a recession. Hopefully, we would be able to increase our pace, also continue to deliver superior shareholder returns. So far, we have always delivered that and I hope we can continue to deliver that. I hope in 2010, we will be on par with our competitors in terms of capabilities. We have always been catching up, for example, on coverage, 3G and mobile broadband.
Q: Can you elaborate more about the status of the capital restructuring?
Dennelind: We are reshaping our balance sheet in order to get into an optimal capital structure. We have set a target for 2010 to be in a more optimal debt to equity ratio. Optimal is when we can say that cost of capital is at a level where you are spending shareholders’ money wisely. The exact ratio I won’t give you, but, I can say that our ratio won’t be very different from peers with similar profile. So, right now, it is too little debt. We are still a high cash generator, and still barely in a net debt position. If you take the cash we have and minus the debt we have, we are just barely negative, which in many perspective is not optimal, especially when you look at the current interest rates. So, our capital management strategy is to gear up the balance sheet.
Q: Does this mean DiGi will be returning cash to shareholders?
Dennelind: We haven’t said that exclusively, but you ask analysts and fund managers, you probably have the expectation there. Until then, we are not ready to reveal anything until the general announcement.
P.s: Little bird says DiGi will be launching 3G sometime this week or next week, although there are high possibilities that it may be delayed.