Digi’s Q2 profit falls 14.7% on higher depreciation

PETALING JAYA: Digi.com Bhd reported a 14.7% drop in net profit to RM358.89 million for the second quarter ended June 30, 2017 against RM420.61 million in the previous corresponding period, due to higher depreciation of RM194 million and an additional finance cost from the issuance of RM900 million sukuk last April.

Revenue for the quarter under review declined 6.2% from RM1.66 billion to RM1.55 billion.

The group has proposed an interim dividend of 4.6 sen per share or RM358 million, payable to shareholders on Sept 29.

Digi said in a filing with the stock exchange that its postpaid subscriber growth continued with net additions of 103,000 to 2.3 million, representing a 4.7% increase while its prepaid subscriber base strengthened 151,000 to 9.7 million, bringing its overall subscriber base to 12 million.

The group’s postpaid revenue surged 8.9% to RM536 million, underpinned by robust postpaid internet revenue contribution of RM302 million, but prepaid revenue moderated to RM917 million. Postpaid and prepaid average revenue per user (ARPU) stood at RM78 and RM32 respectively.

Digi said its focus for the next six months will be to strengthen operational and financial performance, continue to deliver on operational excellence and ensure solid execution to deliver value for its customers and shareholders.

“As part of the focus, we will continue to drive postpaid core propositions with ‘Freedom to Internet’ and digital entertainment offerings and strengthen prepaid operations with stronger internet revenue growth,” it noted.

In addition, the group will strive to ensure prudent financials with operational efficiencies and manage net debt/earnings before tax, interest, depreciation and amortisation (ebitda) ratio not exceeding 1.0 time for FY17.

On financial guidance for FY17, Digi expects a low-mid single digit decline in service revenue growth, ebitda margin of around 45% and capex-to-service revenue ratio of 11% to 13%.

For the first half of the year, Digi’s net profit dropped 10.7% from RM819.65 million to RM732 million, with revenue going down by 5.5% from RM3.31 billion to RM3.13 billion.

Digi fell 10 sen to RM4.90 on some 7.38 million shares done yesterday, giving it a market capitalisation of RM38.1 billion.