Digi’s 4Q19 earnings dip 9.2% to RM342.9m, declares 4.4 sen dividend

The telco ended the year with 11.28m subscribers, down from 11.33m in 3Q19


DIGI.COM Bhd’s net profit fell 9.2% year-on-year (YoY) to RM342.92 million in the fourth quarter ended Dec 31, 2019 (4Q19), from RM377.8 million a year ago, as the group ramped up efforts to secure stronger postpaid contracts and plan upgrades.

“Earnings before interest, tax, depreciation and amortisation (Ebitda) moderated 3.1% to RM717 million (4Q18: RM740 million) or a 43% margin, while profit after tax traced to RM353 million (4Q18: 378 million) or a 21% margin, due to higher investments into driving higher customer contracts and improvements in network experience for customers,” Digi said in a statement yesterday.

Earnings per share for the three months in focus were lower at 4.41 sen against 4.86 sen recorded in 4Q18, the telecommunications company (telco) added.

Quarterly revenue, however, rose 0.6% to RM1.68 billion from RM1.67 billion in 4Q18, backed by higher service revenue.

Service revenue improved 0.7% to RM1.49 billion in 4Q19 from RM1.48 billion previously, supported by postpaid revenue, and growth in Internet and digital revenue.

Mobile service revenue for the year declined 1.4% to RM5.84 billion or RM5.65 billion net of contract assets amortisation, due to lower interconnect and a shift in revenue mix with lower reliance on traditional voice.

Blended average revenue per user (ARPU) strengthened to RM41 in 4Q19 from RM40 in 3Q19.

The telco ended the year with 11.28 million subscribers, down from 11.33 million in 3Q19.

Postpaid revenue rose 9.6% YoY to RM731 million in 4Q19 from RM667 million previously, as the postpaid subscriber base increased by 39,000 to three million while contract renewals and upgrades strengthened.

Subsequently, postpaid ARPU rose to RM72 from RM71 in 4Q18.

However, prepaid revenue slipped 9.7% YoY to RM736 million in 4Q19 from RM815 million previously on lower interconnect rates, moderating non-Internet prepaid services and continued postpaid conversions.

Prepaid subscribers stood at 8.25 million as at end-2019 compared to 8.34 million in 3Q19, while prepaid Internet subscribers stood at 6.7 million.

Prepaid ARPU climbed to RM30 in 4Q19 from RM29 in the third quarter last year.

For the year ended Dec 31, 2019 (FY19), Digi’s profit decreased 7.1% YoY to RM1.43 billion, while revenue fell 3.5% YoY to RM6.3 billion.

Operating expenditure (opex) stood at RM495 million in 4Q19 against RM502 million in 4Q18.

Total FY19 opex declined 0.5% to RM1.96 billion, aided by some RM95 million of one-off adjustments and benefits.

The telco invested RM205 million capital expenditure (capex) or 14.3% of service revenue in 4Q19, bringing full-year capex spending to RM753 million mainly on network coverage expansion and infrastructure upgrades.

Operating cashflow retraced to RM512 million from RM510 million in 4Q18 following higher capex in the final quarter.

The telco declared a fourth interim dividend of 4.4 sen, to be paid on March 27, 2020. It’s guiding for flat to low single-digit declines in Ebitda and service revenue this year, while capex should be at similar levels to FY19.

“Moving forward into 2020 and the era of 5G, we remain focused on driving sustainable growth, efficiency and digital transformation for our customers, as we upgrade our network to deploy next-generation technologies to connect customers to what matters most,” the group said.