Digi’s latest offering may intensify price war

PETALING JAYA: Digi.com Bhd’s latest service package is expected to further intensify the already fierce price war in the prepaid segment, said Aminvestment Bank Bhd.

For a long time, Digi is known to be the disruptor in the cellular industry until U Mobile emerged a few years ago and spiced up the marketplace.

This latest offering by Digi could potentially see data prices being reduced slightly or more data added to offerings for the prepaid segment of the market.

In early June, Maxis Bhd had revised its current postpaid plan. It added more data for the same price. That also meant that it was getting rid of the weekday-weekend day split, a move welcomed by some users.

Celcom Axiata Bhd also last week offered new add-on options for its postpaid customers.

Digi this week launched its new prepaid Next, which it claims is the only prepaid starter pack to come preloaded with 30 days of high-speed Internet.

Aminvestment said the price point of the new package was half of Digi’s first quarter 2020 average revenue per user (ARPU) of RM30 per month.

“Despite these unlimited data plans, both Maxis and Celcom aim to maintain their prepaid ARPU above RM30 per month versus the celco sector’s RM31 per month,’’ the research house said.

It added that even U Mobile’s most affordable prepaid plan with unlimited data is priced at RM30 per month with speed caps at 6Mbps and 6GB of hotspot quota.

“With these substantively lower prices, we may be at the cusp of another all-out war as prepaid subscribers gravitate towards the least expensive monthly outlays under the current Covid-19-dampened economic outlook and diminished consumer spending power,’’ it said.

For the first quarter of this year, Digi’s net subscribers had slumped year-on-year by 250,000 mainly from the prepaid segment losing 500,000 subscribers, which was partly offset by gains in postpaid users.

It said while prepaid ARPU was stable quarter-on-quarter at RM30 per month, blended ARPU slid RM1 per month to RM40 per month due to a Rm3-per-month decline in postpaid to RM69.

“This stemmed from lower pricing entry from prepaid migration and decreasing non-revenue generating subscribers,’’ the research house said.

“We view Digi’s new marketing strategy as management’s desperate efforts to retain its leading position in the prepaid segment, which accounts for a market share of 39% among the top 3 operators.

“For now, we retain our forecasts pending further clarity on the reaction of other cellular operators over the next few months,’’ Aminvestment said.

It continues to have a “hold’’ call on the stock.

“We view Digi’s new marketing strategy as management’s desperate efforts to retain its leading position in the prepaid segment, which accounts for a market share of 39% among the top three operators.” Aminvestment