Postpaid segment remains bright spot for Digi

KUALA LUMPUR: Telecommunication services provider Digi.Com’s postpaid segment remains a bright spot for the company, registering 3.9 per cent sequential revenue growth.

“We believe this was also partly driven by the prepaid-to-postpaid migration as well,” said Alliance Investment Bank Bhd in a recent report.

The research firm said the prepaid segment had stabilised and its revenue was flat quarter-onquarter in the third quarter of this year despite Digi losing close to 281,000 subscribers, mostly rotational churn and international direct dialling migrant subscribers.

“The saving grace was the solid growth in Internet revenue, spurred by higher Internet use, in which the subscribers form 68 per cent of the prepaid base now,” said Alliance.

Overall, service revenue climbed by 1.9 per cent sequentially in the third quarter under review, driven by the strong growth in data that offset the lower voice revenue.

Digi attributed the effective monetisation of higher data usage to its strategy to segmentise the market and offer various data plans and bit-sized top-ups to suit different needs.

Earnings before interest, tax, depreciation and amortisation margins were also stable at 46 per cent as the normalisation in universal service obligation cost from 4.1 to 6.8 per cent in the third quarter of this year was mitigated by savings in sales and marketing expenses, the research firm noted.

Alliance maintained it “fully valued” recommendation, with an unchanged target price of RM4.20.