DiGi posts marginally lower Q3 net profit

 

Its quarterly net profit fell one per cent to RM269.9 million on higher spending on advertisements, promotions, marketing and sales campaigns

DIGI.COM Bhd - the country's third largest mobile operator - posted a marginally lower third quarter net profit, as it spends more on advertisements, promotions as well as marketing and sales campaigns.

Competition among mobile operators gained traction in the third quarter, as they launch new postpaid plans, new services, as well as other campaigns to prepare themselves for mobile number portability (MNP).

Chief executive officer Johan Dennelind in a statement yesterday said that "although we expect increased price competition to exert pressure on core tariffs and margins, we believe that over time, higher voice and advanced data usage will lead to continued revenue growth".

"We also see opportunities to further generate revenues in the medium to long-term with the newly-introduced mobile number portability and the impending launch of our 3G mobile broadband offerings in early 2009.

"We are in for exciting yet challenging times ahead of us and we can't wait to realize our full potential to our customers and stakeholders."

During the third quarter ended September 30 2008, its net profit was down by one per cent to RM269.9 million, against RM273.3 million in the same period last year. For the nine-month period, net profit was up by 11.5 per cent to RM858.5 million.

Its sales for the third quarter rose almost 10 per cent to RM1.22 billion, while revenue for the entire nine months was up by over 12.5 per cent to RM3.58 billion.

Ebitda (Earnings before interest, tax, depreciation and amortization) margin was lowered to 45.6 per cent, against 47.9 per cent same period last year, due to pressure from higher traffic and network operating costs.

"The overall numbers for 2008, no issues, although it may be on the low side of our expectations," said an Aseambanker analyst.

The company - 49 per cent owned by Telenor ASA - added 166,000 new customers during the quarter, comprising 126,000 new postpaid users and 40,000 prepaid users.

For the third quarter, it has 5.83 million prepaid customers and 976,000 postpaid users, or 6.8 million customers in total.

"Growth looks like going to be more concentrated in the postpaid segment than the prepaid, partly because of the growing maturity of the consumer base and ongoing prepaid to postpaid migration," said the analyst.

DiGi also rewarded shareholders with a special single-tier exempt dividend of 78 sen a share, equivalent to more than RM600 million.

"The decision to proceed with the special dividend was taken in view of DiGi's strong cashflow. This is also a logical step forward in fulfilling our commitment to have an optimal capital structure," said Dennelind.