DiGi to spend more on capex in 2014

• DiGi posts revenue and profit growth in Q4 despite fall in handset sales
• Financial results confirm decline of SMS revenue, jump in mobile Internet

MALAYSIA’S third largest mobile operator DiGi.Com Bhd expects to allocate more for capital expenditure (capex) this year, as it aims to further expand its wireless broadband and fibre coverage.
 
“During the briefing earlier, the top management indicated that capex for this year will be higher than last year,” said an analyst from a foreign brokerage who attended DiGi’s briefing. “Unfortunately, the company did not disclose further details.”
 
DiGi, which had a capex of RM700 million (US$211 million) in 2012, spent RM741 million (US$223 million) in 2013, mainly to expand its network coverage.
 
DiGi said that it has managed to expand its 3G/ HSPA+ (Third Generation/ High Speed Packet Access) network significantly during the year and claims that its 3G/ HSPA+ network now covers 80.1% of population, versus 67% coverage in 2012.
 
“With a stronger-than-ever network over a larger coverage footprint, we are solidly positioned to deliver an even better Internet experience to our growing base of customers across Malaysia,” chief executive officer Henrik Clausen (pic above) said in a media statement.
 
The statement came after the company released its full year financial results, which saw fourth quarter net profit more than doubling to RM548.52 million (US$165 million). The jump was partly driven by lower depreciation costs and better cost management, DiGi said.
 
During the quarter ended Dec 31, 2013, it also registered a 6.3% or RM1.73 billion gain in revenue. The gain was partly driven by higher service revenue from a higher subscriber base, as well as strong momentum in its mobile Internet growth.
 
The higher revenue was achieved despite the lower handsets and devices sales in the quarter. In the fourth quarter, DiGi sold 90,000 units of handsets and devices, a steep decline compared with the 367,000 units it sold in the third quarter. In the same quarter a year ago, it sold 95,000 units.
 
For the full year, it posted a net profit of RM1.7 billion (US$511.6 million) and a revenue of RM6.73 billion (US$2.03 billion), representing a gain of 41% and 5.8%, respectively.
 
“The healthy momentum gained in the quarter poise DiGi for a good start for year 2014,” the company said in its management discussion and analysis report filed with Bursa Malaysia on Thursday (Feb 6).
 
The full year numbers were also slightly above most analysts’ expectations of RM1.64 billion. HwangDBS Vickers Research, in a report, had forecasted DiGi to register a net profit of RM1.59 billion for the full year ended Dec 31, 2013.
 
Its 2013 financial results also reaffirm the trend of declining SMS business and the growing importance of the mobile Internet business.
 
Messaging revenue declined for the eighth consecutive quarter, from RM204 million (US$61.39 million) in the fourth quarter 2011 to RM158 million (US$47.55 million) in the fourth quarter 2013. During the same period, Internet revenue jumped from RM181 million (US$54.47 million) to RM557 million (US$167 million).
 
“We continue to see affordable smartphone and tablets driving Internet usage, especially among prepaid subscribers,” said Clausen.
 
The year also saw average revenue per user (ARPU) trend remaining stable, with prepaid ARPU maintained at the RM41 level while the postpaid ARPU was at the RM83 level.
 
Data also revealed that DiGi customers are now spending less time talking on the phone. Blended Minutes of Use (MOU) for the fourth quarter declined 4.11% to 256 minutes, versus 267 minutes in the fourth quarter 2012.
 
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