Digi.Com Berhad announced its Quarter 3 (Q3) financial results today.
As of Quarter 3, Digi has a total of 11.7 million subscribers (from 11.8 million subscribers in 2Q15). There are 9.9 million (9,899) prepaid subscribers (down from 10 million in 2Q15) and close to 1.8 million (1,776) postpaid subscribers. ARPU for prepaid is RM38 while ARPU for postpaid is RM81 (down from RM82 in 2Q15).
60.2% of its subscribers are Internet users, including 1.4 million from Postpaid and 5.6 million Prepaid. There are 1.5 million Digi 4G LTE users (13.2% of its total subscriber base).
Recently Digi announced that its 4G LTE coverage in the country now stands at 50% (human population). It has aggressive plans to build an additional 1,500 4G LTE sites by the end of this year.
Smartphone penetration (4G/3G devices) in the network is 58.4%.
For the quarter under review, Internet revenue registered an encouraging growth of 18.0% year-on-year and 4.5% quarter-on-quarter, aided by stronger smartphone penetration at 58.4%. Postpaid internet subscribers rose steadily to 1.4 million or 78.8% of total postpaid subscribers from 68.9%, a year ago. Digi’s postpaid internet revenue rose 14.7% while postpaid service revenue strengthened 2.8%, from a year ago. A similar upward trend is seen on prepaid with internet revenue surging 20.1% year-on-year to RM335 million on the back of higher prepaid Internet penetration at 56.8%.
During the quarter, Digi invested another RM223 million with year-to-date cumulative investment of RM616 million in Capex primarily on 4G-LTE network deployment nationwide. The company has committed to spend around RM900 million in 2015 with aggressive plans to further expand its 4G LTE footprint in the fourth quarter.
Service revenue remained solid at RM1,584 million (Q3 2014: RM1,584 million) against downward pressure from persistent price competition and weak consumer sentiments. Earnings before interest, tax, depreciation and amortisation (EBITDA) moderated to RM719 million from RM789 million a year ago primarily due to adverse FOREX development in the quarter, and intense competition, Digi said. Profit After Tax (PAT) also narrowed to RM397 million during the quarter (Q3 2014: RM487 million) from moderated EBITDA and higher progressive depreciation from its network expansion exercise.
Albern Murty, CEO of Digi explained that the healthy internet growth was a result of its stronger network and customer focus. “We’ve been persistent in driving quality experience, and have focused effort in completely modernising our network and fiber infrastructure capabilities over the last three years to give us a solid foundation and competitive advantage to fast-track 4G LTE rollout to more than the 28 cities we are already in, and preparedness to accelerate the network in tandem with future needs. 4G LTE is a game changer offering high-speed internet on-the-go, previously confined to fixed line, and enabling enjoyment of next generation services and advanced applications. Taking a leadership position on 4G LTE is therefore crucial for us to make inroads in postpaid and the fast growing mobile internet segment.”
Digi today delivers 4G LTE on 1800Mhz and 2600Mhz spectrum bands respectively, and overlays both spectrum bands for 4G LTE in an increasing number of key market centres to provide customers with wider network coverage, greater capacity and significantly improved indoor and outdoor internet experiences.
Commenting on the quarter’s performance, Albern added, “While the prospects for the industry remain optimistic from growing uptake of the internet and opportunities to monetize data, volatile consumer sentiment from GST, shrinking wallet size from weaker Ringgit and fierce competition has brought about a lackluster third quarter.”
“Our focus now is to fuel data momentum to drive future growth. In the coming months we will continue to make access to high-speed Internet easy through our wide service touchpoints in stores and online, with competitive smart device bundles and plans, and innovative digital service offerings that will allow our customers to enrich their internet experience. We will do this while driving deeper focus on customer experience. Demand for quality Internet access will be the key driver, and we are hopeful of increasing revenues from our growing number of Internet users going forward,” said Albern.
Digi announced that it will pay an third interim tax exempt dividend of 5.1 sen per ordinary share equivalent to RM397 million or almost 100% payout ratio to shareholders on 4 December 2015. A total of 17.1 sen dividend per share has been declared year-to-date, which is equivalent to RM1,330 million.