revenue growth


Digi’s Q4 earnings up 4.92%, declares 4.8 sen dividend

PETALING JAYA: Bhd reported a 4.92% rise in net profit to RM377.8 million for the fourth quarter (Q4) ended December 31, 2018 against RM360.08 million in the previous corresponding period, underpinned by strong contribution from the postpaid segment.

Its revenue expanded 1.84% to RM1.67 billion from RM1.64 billion.

Digi has proposed to declare a final dividend of 4.8 sen per share or RM373 million for the quarter under review, payable to shareholders on March 29, 2019.

The group’s full-year net profit increased 4.34% to RM1.54 billion from RM1.48 billion, while revenue grew 2.94% to RM6.53 billion from RM6.34 billion.

The group said in a filing with the stock exchange that it closed the last quarter with RM1.48 billion in service revenue, serving 11.7 million customers on its network.

Full-year service revenue stood at RM5.92 billion with earnings before interest, taxes, depreciation and amortisation (ebitda) of RM2.96 billion or 46% margin.

In Q4, Digi’s postpaid revenue grew 15% year-on-year to RM667 million with higher average revenue per user (ARPU) of RM77. Its postpaid internet revenue rose 26.1% to RM440 million.

Meanwhile, Q4 prepaid revenue fell 12.6% to RM815 million, along with weaker non-internet prepaid subscriber base and moderated ARPU of RM30.

“2018 was a strong year of execution for the business. We kept disciplined on driving growth, efficiency and digital transformation while staying focused on service delivery excellence to customers. This combined strategy has led us to deliver value for customers and shareholders alike. We plan to continue making smart investments to redefine our customer experience and offer affordable, meaningful connectivity for all, while enhancing targeted efficiencies,” said Digi CEO Albern Murty.

For 2019, Digi expects its service revenue growth to be around the 2018 levels with low single-digit growth for ebitda, while capex-to-service revenue ratio is expected to be in the range of 11%-12%.

At 2.40pm, Digi’s share price was trading 1 sen lower at RM4.51 on 530,600 shares done.

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HSBB rollout could bring revenue growth to TNB

PETALING JAYA: The rollout of high-speed broadband (HSBB) packages leveraging on Tenaga Nasional Bhd’s (TNB) fibre optic infrastructure could bring potential revenue growth to TNB via rental of fibre infrastructure.

However, it is uncertain whether TNB is capable of rolling out HSBB in untapped areas that have yet to be connected with existing fibre network, said PublicInvest Research in its report.

“If TNB can only provide services to areas that are already currently served by existing networks, then TNB has little differentiation from incumbent telco players apart from offering products at lower price points. Overall, we believe this could bring potential revenue growth to TNB through rental of the fibre infrastructure but earnings impact is expected to be insignificant to the group,” it said.

TNB’s wholly owned subsidiary City Broadband is among the broadband players in the pilot project but for TNB to compete directly against existing broadband players in a meaningful manner, significant investment would be required for last-mile connectivity.

On Tuesday, Astro, Maxis, Digi, Celcom and City Broadband launched new HSBB packages leveraging on TNB’s fibre optic infrastructure in Jasin, Malacca, where TNB implemented a three-month pilot project through the RM1 billion National Fiberisation and Connectivity Plan initiative announced in Budget 2019.

“Although this is negative to Telekom Malaysia (TM) as it introduces new competition into the fixed line broadband segment, connectivity is only restricted to limited areas covering 1,100 homes in Jasin.

“Impact on the respective players is expected to be immaterial but it remains to be seen whether TNB could also rollout similar arrangement with service providers in other locations throughout the country,” said Public-Invest Research, which maintained its “underweight” call on the sector.

For Astro, it believes that the deal would be value accretive as Astro’s 92% household penetration in Jasin is predominantly NJOI, which does not generate any TV subscription revenue currently. However, it noted that any earnings contribution would not be significant in the near term as it is only a trial project and will depend on the take-up rate by eligible households.

Meanwhile, Affin Hwang Capital has downgraded TM to “sell” from “hold” with an unchanged target price of RM2.30 in view of higher downside risk to its share price after a 13% rally since November 2018.

TNB’s high-speed fibre network should provide an irresistible option for TM’s 1.1 million Streamyx subscribers, given the significant speed upgrades and lower prices. However, competitive product offerings from Maxis and City Broadband may lure TM’s 1.2 million unifi subscribers, it said in its report.

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