Digi’s 1Q20 earnings 2.8% lower at RM332m


DIGI.COM Bhd’s (Digi) net profit fell 2.8% to RM332 million in its first quarter ended March 31, 2020 (1Q20) from RM341.5 million recorded a year ago, on greater investments into postpaid acquisitions as well as depreciation and amortisation cost.

“Profit before tax declined 4% year-on-year (YoY) to RM435 million as a flow-through from Ebitda and after accounting for RM306 million depreciation and amortisation cost despite a lower net finance cost of RM14 million,” it said in a filing with Bursa Malaysia yesterday.

Softer topline development from shift in revenue mix and increased investments on postpaid contracting and renewal activities moderated Ebitda by 6.2% YoY to RM756 million, although Ebitda margin was sustained at 49%. However, group revenue for the quarter rose 3.4% YoY to RM1.56 billion from RM1.51 billion previously, underpinned by growth in postpaid and Internet and digital revenue. “Notwithstanding the weaker macroeconomic and competitive operating landscape, restrictions on travel and the spread of Covid- 19 since the start of the year have led to a steep surge in demand for secure and consistent mobile network connectivity,” it said.

The telecommunications company (telco) declared a first interim dividend of 4.2 sen per share equivalent to a total payout of RM327 million, to be paid on June 26, 2020.

Digi’s postpaid revenue grew 5.5% YoY to RM656 million in 1Q20, attributed to a 7.2% YoY jump in postpaid subscriptions, conversion of prepaid to postpaid plans and plan upgrades.

Internet and digital revenue climbed 13.3% YoY to RM977 million on Internet usage, subscription management services and customised digital solutions for large corporations and small and medium businesses.

Mobile service revenue fell 0.4% YoY to RM1.39 billion due to lower traditional voice and roaming contributions following the stricter travel advisory amid the Covid-19 outbreak, alongside the impact from lower interconnect rates.

Revenue from devices and others grew 49.1% YoY, anchored by higher demand for the telco’s device ownership plans.

“We also registered a surge in monthly data usage of 14.5GB per user compared to 10.3GB per user in 1Q19, an increase of 42% YoY,” Digi noted.

Blended average revenue per user (ARPU) grew to RM40 in 1Q20 from RM39 in 1Q19, while postpaid and prepaid ARPU stood at RM69 and RM30 respectively for the quarter.

The telco’s overall subscriber base declined to 11.009 million in 1Q20 from 11.281 million in 4Q19 and 11.251 million in 1Q19.

Postpaid users stood at 3.061 million in the first quarter this year versus 3.032 million in 4Q19 and 2.855 million in 1Q19, while prepaid users slid to 6.422 million from 6.659 million in 4Q19 and 6.454 mil- lion in 1Q19.

Operational expenditure for the quarter was 0.5% higher YoY at RM411 million, mainly spent on continued network investments.

Capital expenditure was 17.8% lower YoY at RM139 million compared to RM169 million previously, mainly for capacity upgrades, fibre network expansion and traffic management.

Under the Movement Control Order, the total data traffic for Digi surged primarily in residential areas due to remote working and learning institutions switching to distance learning.

Greater data consumption could create congestion causing speeds to fall, the telco added.

“Digi has also noticed a change in usage pattern as evidenced by a significant increase of 29% during the hours of 12am to 6pm nationwide,” it said.

Following the emerging impact from Covid-19 pandemic, Digi said it will be prioritising investments to strengthen its network and infrastructure to support growing data demand and deliver its core and digital businesses.