Friday, April 29, 2011

#Update* DiGi 1Q net profit RM331.39m, up 19%

KUALA LUMPUR: DIGI.COM BHD [] posted net profit of RM331.39 million in the first quarter ended March 31, 2011, up 19% from the RM278.25 million a year ago.

It said on Friday, April 29 that revenue rose 10.8% to RM1.43 billion from RM1.29 billion. Earnings per share were 42.6 sen versus 35.8 sen a year ago. It declared an interim dividend of 43 sen compared with 35 sen a year ago.

'The higher revenue was mainly contributed by increased usage from the larger subscriber base of 8.8 million (2010: 7.9 million), and more importantly increased data revenue which grew 38% year-on-year to RM361.7 million, as well as revenue contribution from handset-bundled offerings.

'Average revenue per user (ARPU) declined slightly to RM50 (2010: RM53); a result of new customers coming in at lower spend levels, competitive price pressure as well as reduced domestic interconnect revenue following the lower regulated mobile termination rate which took effect beginning July 2010,' it said.

DiGi said the group's earnings before interest, tax, depreciation and amortisation (EBITDA) and EBITDA margin at RM657.2 million and 45.9% respectively, were also higher than the RM575.8 million and 44.6% recorded a year ago.

The telco said it would continue to prioritise network modernisation initiatives to accelerate coverage and deliver higher speed, capacity, reliability and quality of service.

This will immediately result in major improvements of network quality and efficiency through significant increase in download speeds and better connectivity experience for customers. Further, this investment will ensure the successful delivery of long-term evolution services, the next-generation mobile TECHNOLOGY [] capable of delivering download speeds of up to 172 Mbps when spectrum becomes available.

DiGi chief executive officer Henrik Clausen said: 'We have seen a steady increase in demand for mobile Internet over the past few quarters, and have put in place a strong network transformation programme to continue delivering increased network quality, efficiency and coverage, to adequately meet our customers' demands in all parts of Malaysia.

'At present we have over 4.5 million internet users, and we foresee that demand for data services will continue to trend up going forward.'

On the prospects for the remaining quarters up to Dec 31, 2011, the company said the network modernisation programme would result in the replacement of existing equipment on its network.

'The board wishes to highlight that the group will undertake to accelerate depreciation related to these existing equipment in-line with generally accepted accounting practices (GAAP) beginning from next quarter,' it said.

DiGi added net profit would be impacted which would be corresponding to the quantum of accelerated depreciation to be reflected in its books over the next 21 to 33 months.

'The estimated accelerated depreciation will approximate RM400 million to RM450 million in 2011, RM500 million to RM550 million in 2012 and less than RM100 million in 2013,' it said.

It added this was subject to periodic reviews and re-assessment; of which the board will notify the market accordingly.

DiGi said the accelerated depreciation would not have any adverse impact on the group's operating cash-flow in the years mentioned above.

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