Digi’s Internet Chili Padi prepaid plan may exacerbate fierce price war
KUALA LUMPUR: Digi.Com Bhd’s (Digi) new Internet Chili Padi prepaid plan may exacerbate the celco sector already fierce price war, analysts opine.
AmInvestment Bank Bhd (AmInvestment Bank) recapped that Digi recently launched a new Internet Chili Padi prepaid plan offering 3GB and unlimited social media (Facebook, Instagram and Twitter) at only RM15 for 30 days.
“This new package could potentially exacerbate the celco sector already fierce price war given that the price point is half of Digi’s first quarter of financial year 2020 (1QFY20) average revenue per user of RM30 per month,” the research firm said.
“Recall that the intense competition of rival U Mobile Sdn Bhd (U Mobile) and mobile virtual network operators had led Maxis Bhd (Maxis) to become the first of the three largest incumbent operators to launch a prepaid package with unlimited data priced at RM35 per month at speed capped at 3Mbps last week.
“Celcom Axiata Bhd (Celcom) followed accordingly within a week.”
According to AmInvestment Bank, despite these unlimited data plans, both Maxis and Celcom aim to maintain their prepaid average revenue per user (ARPU) above RM30 per month versus the celco sector’s RM31 per month.
It highlighted 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 Covid19-dampened economic outlook and diminished consumer spending power.”
AmInvestment Bank also recalled that in 1QFY20, Digi’s net subscribers slumped year on year (y-o-y) by 250,000 mainly
from the prepaid segment losing 500,000 subscribers which was partly offset by gains in postpaid users.
The research firm noted that while prepaid ARPU was stable quarter on quarter (q-o-q) 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 per month.
“This stemmed from lower pricing entry from prepaid migration and decreasing nonrevenue generating subscribers.”
Hence, AmInvestment Bank viewed Digi’s new marketing strategy as management’s desperate efforts to retain the group’s leading position in the prepaid segment, which accounts for a market share of 39 per cent amongst the top three operators.
For now, AmInvestment Bank retained its forecasts pending further clarity on the reaction of other cellular operators over the next few months.