Unabated competition leads to Digi’s flat FY17F service despite four new offerings
KUCHING: The unabated competition amongst cellular operators (celcos) has led to analysts continuing to view Digi. Com Bhd’s ( Digi) management’s guidance for a flat year on year (y- o-y) financial year 2017 forecast ( FY17F) service revenue as increasingly difficult.
According to AmInvestment Bank Bhd (AmInvestment Bank), Digi has announced four Freedom propositions – Music, Video, Gaming and Roaming for its customers.
“Given the need to constantly offer more attractive value propositions to consumers, we continue to view management’s guidance for a flat y- o-y FY17F service revenue as increasingly difficult given the unabated competition amongst celcos,” the research firm said.
AmInvestment Research recalled that Digi registered a 1QFY17 service revenue decline of six per cent y- o-y but still hoped that continued accretion of higher margin customers could offset the impact from the declining low value segment.
“Last month, Digi Postpaid 50 Internet Lite was introduced, offering three gigabits (GB) of data and 7GB for Facebook and YouTube applications together with unlim- ited voice option at only RM50 per month as a direct competition to U Mobile’s unlimited voice package at RM38 per month which currently offers 4GB of data and unlimited for MusicOnz, ApOnz and Waze applications,” the research firm said.
“For further comparison, Celcom’s First Gold postpaid plan, priced at RM80 per month, offers a combined 20GB data (including 10GB for weekends).”
“Meanwhile, Maxis One’s unlimited voice option offers 20GB (including 10GB for weekends) at RM98 per month, the highest amongst its peers.”
Given the highly competitive landscape, the research firm expected Digi’s subscriber growth and average revenue per users (ARPUs) to remain under pressure as both Maxis Bhd ( Maxis) and Celcom Axiata Bhd (Celcom) are already aggressively improving 4G coverage and service quality.
ll in, AmInvestment Bank maintained its ‘ hold’ rating on Digi with unchanged forecasts and a fair value of RM4.95 per share.