Widescale retail closure during the containment measures period impacted the company’s acquisition activities

by FARA AISYAH/ pic by MUHD AMIN NAHARUL

DIGI.COM Bhd’s net profit for the second quarter ended June 30, 2020 (2Q20) declined 26.6% to RM288.04 million from RM392.48 million last year, after accounting for a taxation of RM89 million, and higher depreciation and amortisation costs.

Depreciation and amortisation costs rose to RM328 million in the quarter, including a RM13 million depreciation from the Malaysian Financial Reporting Standards 16 adjustment and RM3 million impact on the recognition of asset retirement obligations.

Quarterly revenue dipped 6.5% to RM1.45 billion from RM1.55 million a year earlier, as service revenue fell 6.1% to RM1.32 billion from RM1.4 billion previously due to pandemic containment measures.

“Widescale retail closure during the period impacted the company’s acquisition activities, while roaming revenues were under significant pressure from a near-complete ban on inbound and outbound travel. Overall data monetisation and traditional voice usage were also impacted,” the telecommunication company (telco) said in a statement yesterday.

Earnings before interest, tax, depreciation and amortisation (Ebitda) slipped 9% to RM770 million in the quarter from RM846 million last year.

Operating cashflow stood at RM545 million, as the telco invested RM225 million in capital expenditure for network enhancements.

The telco declared a second interim dividend of 3.7 sen, to be paid on Sept 25, 2020.

Notably, its overall subscriber base was smaller at 10.62 million during the quarter, down 6.5% from 11.36 million a year ago and 3.5% lower from 11.01 million in 1Q20.

“The reduction was due to a decrease in non-active users, lesser on-ground activities on our channels, leading to involuntary churn, no inbound subscriptions and continued SIM consolidation,” the telco said.

Blended average revenue per user (ARPU) was unchanged year-on-year (YoY) and quarter-on-quarter (QoQ) at RM40.

Postpaid subscriptions rose 3.6% YoY to 3.03 million against 2.93 million previously, but fell 0.9% QoQ from 3.06 million in 1Q20. Postpaid ARPU diluted to RM68 due to lower roaming and interconnect ARPU.

Prepaid subscribers amounted to 7.59 million in 2Q20, down 10.1% YoY from 8.44 million in 2Q19 and 4.5% lower QoQ from 7.95 million in 1Q20. Prepaid ARPU was flat at RM29 in 2Q20.

“Mobile subscription developments may continue to face headwinds given the following factors: The evolving Covid-19 situation, uncertain effect on the country’s economic outlook, the expected pace of market recovery, and growing industry competition,” Digi cautioned.

The telco also revised its 2020 guidance, with service revenue to see a low single-digit decline and Ebitda to register a medium single-digit drop.

It had previously guided for flat to low single-digit declines across service revenue and Ebitda in 2020, according to its 4Q19 earnings announcement.