Disciplined operational efficiency drives steady Q1 2020 for Digi

  • With performance fuelled by internet, announces 4.2 sen dividend of US$75mil
  • Mindful of Covid-19, protecting cash flow through cost measures & financial flexibility

Albern Murty, Digi's CEO says its continued good momentum from Q4 2019 was to ensure they were able to quickly adapt to the growing Covid-19 concern, leveraging on its digital capabilities and resilient organisational culture.

Digi.com Bhd (Digi) recorded a 0.7% y-o-y service revenue (service revenue excluding interconnect) growth to US$313.2 million (RM1.366 billion), buoyed by a 13.3% y-o-y internet and digital revenue growth in the first quarter of 2020 the company announced on 23 April. Digi credits its discipline on operational efficiency which resulted in EBITDA at US$173.3 million (RM756 million) and operational cash flow at RM617 million.

[RM1 = US$0.23]

Speaking on the results, Albern Murty, Digi’s CEO said, “We continued the good momentum from Q4 2019 to ensure we were able to quickly adapt to the growing Covid-19 concern, leveraging our digital capabilities and resilient organisational culture. Our first quarter results also reflect the sustainable revenue portfolio of our business. Moving forward, we will continue to maintain a balance of responsible financial management together with focused investments on network and digital capabilities to stay resilient, while we address the challenges from Covid-19.”

 

Steady Q1 2020 business performance

In the quarter, the company’s internet customer base was 9.2 million, with customers using 14.5GB of data monthly, driving data traffic volumes up by 42% y-o-y. Internet and digital revenue increased to RM977 million as a result of higher data usage across segments, and 21.4 million upsell transactions on MyDigi, now surpassing 4.0 million monthly active users.

 

RM million

1Q20

4Q19

1Q19

Q-o-Q

Y-o-Y

Total revenue

1,560

1,678

1,509

(7.0%)

3.4%

Service revenue1

1,366

1,400

1,357

(2.4%)

0.7%

EBITDA (boi)

756

817

806

(7.5%)

(6.2%)

EBITDA margin

49%

49%

53%

(0.4pp)

(4.9pp)

PAT

332

343

342

(3.2%)

(2.9%)

1 Service Revenue excluding interconnect .. All analysis and comparisons are based on post MFRS 16

 

Key Financial Highlights (Y-o-Y)

  • Service revenue grew 0.7% y-o-y to RM1.366 billion, supported by internet and digital revenue growth
  • Internet and digital revenue rose 13.3% y-o-y to RM977 million or 70% of service revenue
  • Postpaid revenue grew 5.5% y-o-y to RM656 million over a base of 3.1 million subscribers, attributed to healthy acquisitions, pre-to-post conversions and plan upgrades
  • Prepaid internet and digital revenue increased 8.2% y-o-y to RM434 million
  • OPEX sustained at RM411 million on the back of continued network investments
  • EBITDA at RM756 million or 49% margin while Profit After Tax (PAT) was RM332 million or 21% margin
  • Ops cash flow traced to RM617 million or 40% margin having invested RM139 million capex for network enhancements
  • Net debt to EBITDA ratio healthy at 1.5 times while conventional debt over total assets was at 9%, well-within the Shariah threshold
  • First interim dividend per share of 4.2 sen or RM327 million, payable to shareholders on 26 June 2020
  • See slower revenue development post 18 March due to Covid-19 related impact, such as travel, roaming, and closure of stores and dealer touchpoints.

 

Covid-19 Response

Digi remains focused to support customers by delivering consistent network availability and support services:

  • Activated BCP (Business Continuity Planning) covering network operations and customer service teams, and work from home capabilities for the broader organisation for business continuity. Mobilising over 700 operations staff working 24x7 to keep Malaysians connected
  • Ensuring network quality, coverage, and capacity to manage shifts in demand, prioritising performance at critical sites, such as hospitals, relief centres, and government offices among others
  • Strengthening digital channels to support customer needs, while continuing to work with authorities to gradually open Digi Stores in a post MCO period
  • Supporting small business customers and consumers with benefits focused on connectivity, learning and productivity. See here for more on these efforts

Due to the uncertainty related to the duration and severity of the Covid-19 pandemic, Digi is taking a practical view on its earnings parameters for the remainder of 2020, and will prioritise:

  • Continued value creation for stakeholders
  • Ensure network and IT infrastructure maintained
  • Protecting cash flow through cost measures and financial flexibility
  • Deliver on core and digital businesses

More on Digi’s Q1 2020 performance is available here and on #DigiCares Covid-19 efforts here.

 
 
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