DiGi.Com Bhd will focus on growing its Internet-driven and postpaid businesses as it sees more sustainable earnings from those segments amid expectations for flat or lower revenue this year.
Its CFO Nakul Sehgal (picture) said the telecommunications company (telco) is anticipating flat to low single-digit decline in service revenue this year.
“The competitive environment in this market continues to be as challenging as it was in 2017. We will continue to focus on increasing the data consumption for prepaid users, as well as drive monetisation for postpaid customers for 2018 and beyond,” he told reporters after the telco’s AGM in Kuala Lumpur yesterday.
Apart from aggressive competition in the industry, the group’s top line will also be impacted by the reduced mobile termination rates and voice data cannibalisation.
However, it has guided for earnings before interest, tax, depreciation and amortisation (Ebitda) in 2018 to be similar to the level in 2017.
Nakul said the telco’s transition from being a legacy prepaid driven operator to a more Internet and postpaid-driven company has been working well for them.
“We’re focusing on a strategic shift into more profitable avenues for revenue, as well as growing Internet revenue, which is a more sustainable business going forward,” he said.
On postpaid, the group will concentrate on the entire market as a whole, with offers for the lower-entry group, passes for mid-tier customers and data bundles with device subsidies aimed at customer retention.
“The operator that will do the best in this market is one that can slice and dice the market, and offer the best package to customers, therefore our focus cannot be restricted to any particular segment,” Nakul explained.
Digi recorded a net profit of RM386.11 million for the first quarter ended March 31, 2018 (1Q18), up 3.5% from RM373.11 million a year ago on improved service revenue, gross profit and Ebitda, stronger operational efficiencies and better operating cashflow.
Its 1Q18 revenue rose 3.8% to RM1.63 billion from RM1.57 billion registered last year, while service revenue climbed 0.7% to RM1.48 billion on Internet revenue growth from a strong postpaid performance and stronger data monetisation of the prepaid business.
The telco’s postpaid subscribers amounted to 2.57 million or 21.9% of its total subscriber base of 11.8 million users as at end-March 2018.
Prepaid subscribers stood at 9.19 million or 78.1% of the total subscriber base.
As a Shariah-compliant company, Nakul said the group is on track to be reinstated into the Securities Commission Malaysia’s (SC) list of Shariahcompliant securities.
He said the group’s conventional debt-over-assets ratio stood at around 21% to 22% for its last audited financial statements, as at Dec 31, 2017. The Shariah-compliant financial ratio threshold is 33%.
“This means that the key criterion to comply has been met by us. We already submitted our audited financial statements for 2017 by the cut-off date of March 31, 2018, so whatever we as a company had to do to come back to being compliance, we’ve already done.
“The next assessment by the SC is expected to be sometime in May, so hopefully by then, we will be Shariah-compliant again in the revised list,” Nakul said.
https://themalaysianreserve.com/2018/05/15/digi-eyes-data-driven-postpaid-growth-with-lower-revenue/
