Digi.Com Berhad (425190-X) 4Q 2018 Results 24 January 2019 1
Key Highlights Operational & Performance Review 2019 Outlook & Priorities Q&A 2
FY 2018 Key Highlights SOLID PERFORMANCE - DELIVERED 2018 GUIDANCE alongside healthy shareholders return FY 2018 PERFORMANCE +19.9% +14.8% Internet +2.4% Flat service revenue GROWTH Postpaid Revenue EBITDA Revenue (+503K Internet Subscribers) 46% EBITDA margin Robust 4G Plus 11.6% Capex to service Flat Opex RM685m EFFICIENCY LTE-A: 65% (RM1,956m) Capex revenue 4G LTE: 89% +4.3% uplift in 3.0M #1 dividend per share to Digital DIGITAL MyDigi MAU Net Promoter 19.6sen distribution (85.9m upsell TRANSFORMATION Score (higher Facebook l Android transaction) satisfaction Y-Y) All analysis and comparisons are made based on old accounting principles. A summary of the financial impact post adoption of MFRS 15 will be included as part of Other Updates 3
4Q 2018 Key Highlights STRONGER POSTPAID AND EBITDA GROWTH to deliver a solid close for 2018 4Q 2018 PERFORMANCE +15.0% +13.7% +2.2% Postpaid Internet GROWTH EBITDA Revenue Revenue (Y-Y) (Y-Y) (Y-Y) 12.0% Rapid growth 0.8% Lower Improvement EFFICIENCY on 4G subs to in Sales & Mktg OPEX efficiency 7.9M (Y-Y) (Y-Y) 3.0M Digital JomStudi DIGITAL MyDigi MAU Distribution (Digital Learning (23.4m upsell and Digi TRANSFORMATION Hub) transaction) Connectivity All analysis and comparisons are made based on old accounting principles. A summary of the financial impact post adoption of MFRS 15 will be included as part of Other Updates 4
4Q 2018 Operational Review SOLID EXECUTION OF STRATEGIC FOCUS AREAS and stronger digital proposition Core business MyDigi Digital distribution • Continued postpaid conversions • 3.0M monthly active users, • Enabled mobile data management with entry level plans +20% Y-Y feature on Android devices • Ease purchase of relevant offers • Strengthened high ARPU base • Personalize “Box of Surprise” directly within the Android user with plans upgrades, Family and contributed 10% of the total interface borderless roaming proposition upsell transactions within MyDigi • Increased in contracted base • 10.7x monthly logons with the launch of easy device ownership program - Phone Freedom 365 (PF365) Digi Connectivity • Enabled Digi Wifi access across 277 locations • Pilot Digi Home Fibre in Jasin 5
4Q 2018 Operational Review ROBUST INTERNET GROWTH anchored on better network experience and growing internet adoption DATA TRAFFIC GROWTH 4G PLUS NETWORK COVERAGE INTERNET REVENUE (RM M) Nationwide LTE upgrade on • +13.7% Y-Y 4G LTE: 89% +58% Y-Y +3.9% Q-Q +11% Q-Q • LTE-A: 65% • 849 FIBRE: 8,400KM 817 805 761 747 MONTHLY 4G & INTERNET 440 +26% 418 DATA USAGE (GB/user) 400 SUBSCRIBERS (M) 368 349 Y-Y 8.7 8.6 8.8 9.0 9.2 7.9 7.5 7.1 6.6 6.2 9.9 405 409 398 399 +3% 9.1 393 8.2 7.2 6.8 Y-Y 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 Prepaid Postpaid 4Q17 1Q18 2Q18 3Q18 4Q18 4G Internet 6
4Q 2018 Performance Review CONTINUED SOLID POSTPAID GROWTH fuelled by healthy acquisitions and plan upgrades • Solid acquisition momentum with +75K net adds and growing POSTPAID internet subscribers to 2.5M or 89.1% Service 667 640 • Increase in high ARPU base from plan upgrades and contracted 619 revenue 591 580 (RM m) base - Higher demand for device bundles and new PF365 78 ARPU (RM) 77 77 76 76 program - Postpaid ARPU strengthened to RM77 while postpaid 2,805 Subscribers 2,730 subscriber base expanded to 2.8M 2,655 (‘000) 2,571 - RM5-10 ARPU uplift for new acquisitions in 2H18 2,480 Non-Internet • Postpaid revenue grew 15.0% Y-Y and 4.2% Q-Q to RM667m - Internet revenue rose 26.1% Y-Y and 5.3% Q-Q to RM440m 2,498 2,416 2,335 Internet 2,248 2,256 • Best postpaid revenue growth in 2018 underpinned by solid acquisition momentum and stronger base management activities - FY 2018 postpaid revenue grew 14.8% to RM2.52b or 4Q17 1Q18 2Q18 3Q18 4Q18 42.5% of service revenue while internet revenue increased 28.7% to RM1.63b 7
4Q 2018 Performance Review HIGHER PREPAID INTERNET SUBSCRIBERS AND REVENUE amid steady conversions to postpaid • Efforts to strengthen prepaid internet adoption and usage PREPAID contributed to increasing internet subscribers to 6.7M or 75.3% and prepaid resilience Service 933 891 865 revenue 835 815 (RM m) • Prepaid internet revenue climbed 2.8% Y-Y and 2.5% Q-Q to ARPU RM409m or 50.2% of prepaid revenue, although growth 34 (RM) 32 32 31 30 challenged by intense data price competition and abundance 9,266 data offers 9,186 9,073 9,004 Subscribers 8,855 (‘000) • Moderating demand for prepaid legacy services and steady Non-Internet conversions to postpaid led to 12.6% Y-Y and 2.4% Q-Q lower prepaid revenue - Non-internet revenue contracted 24.1% Y-Y and 6.9% Q-Q 6,664 6,585 6,411 6,356 6,422 Internet - Prepaid ARPU levelled to RM30 albeit supported by stronger internet contribution • FY 2018 prepaid revenue decline narrowed to 8.5% to 4Q17 1Q18 2Q18 3Q18 4Q18 RM3.41b (2017: 12.9%) - Prepaid internet revenue strengthened 12.2% to RM1.61b or 47.2% of prepaid revenue 8
4Q 2018 Performance Review RESILIENT SERVICE REVENUE supported by solid postpaid growth • Service revenue rose 0.5% sequentially to RM1.48b, BLENDED underpinned by solid postpaid growth and steady ARPU at RM41, although challenged by continued decline in prepaid Service legacy services and intense data competition 1,513 revenue 1,483 1,484 1,482 1,475 (RM m) • Internet revenue climbed 13.7% Y-Y and 3.9% Q-Q to ARPU 43 42 42 41 41 RM849m or 57.3% of service revenue (RM) - Internet subscribers strengthened to 9.2M and 11,747 11,757 11,803 smartphone penetration reached 79.6% 11,659 11,660 Subscribers (‘000) - Monthly average data usage increased to 9.9GB along with growing 4G subscriber base to 7.9M Non-Internet • Subscriber base trimmed marginally to 11.7m but well cushioned with stronger postpaid and internet subscribers 9,162 9,001 8,757 8,659 8,612 Internet • Prepaid revenue decline and impact from mobile termination rate revision substantially mitigated by solid postpaid performance and internet growth 4Q17 1Q18 2Q18 3Q18 4Q18 - Service revenue remained resilient at RM5.92b for FY 2018 - Internet revenue grew 19.9% to RM3.23b or 54.6% of service revenue 9
4Q 2018 Performance Review SOLID OPERATIONAL EFFICIENCY to support sustainable growth and network upgrades TOTAL COST (RM m) • Cost of goods sold (COGS) increased 4.8% Y-Y and 18.2% Q- Q — Surge in demand for contracted device bundles and Total cost 935 919 866 856 843 new PF365 program (RM m) 500 Opex 504 490 488 478 • Gross profit remained solid with 1.1% Y-Y and 3.3% Q-Q improvement to RM1,244m 435 415 376 365 368 COGS • Continued focus on OE contributed to opex reduction of 4Q17 1Q18 2Q18 3Q18 4Q18 0.8% Y-Y representing 33.7% of service revenue — Efficiencies realised for sales and marketing and OPEX - % OF SERVICE REVENUE network operations activities Net opex 1 — Q-Q increase mainly due to higher staff cost 33.0% 32.5% 32.2% 32.5% 33.5% Opex 33.7% provision and professional fees rendered to 33.3% 33.0% 32.2% 33.1% Sales & marketing strengthen digital marketing and distribution 7,9 8,1 8,8 8,5 8,3 Staff cost capabilities 3,7 5,2 3,9 4,4 3,8 O&M 8,8 7,3 9,1 7,7 8,0 • Development of new digital capabilities managed within flat USO 6,5 6,4 6,2 6,8 6,7 2018 Opex at RM1.96b, reflecting solid cost management Others 6,8 6,0 5,9 5,7 4,8 and operational efficiency across sales and marketing 4Q17 1Q18 2Q18 3Q18 4Q18 activities, network and IT operations 10 1 Net opex = Opex + Forex/FV changes + Other income
4Q 2018 Performance Review STRONGER Y-Y EBITDA AND PAT underlined by solid postpaid growth and efficient operations EBITDA AND MARGIN (RM m and %) • EBITDA rose 2.2% Y-Y and 2.8% Q-Q to RM745m or 44% margin — Supported by solid postpaid growth and efficient 741 743 747 731 725 800 100% cost management 80% 600 60% • FY 2018 EBITDA rose 2.4% to RM2.96 billion or 46% 400 40% margin 46% 47% 46% 200 44% 44% 20% - 0% • PBT for the quarter improved 9.4% Y-Y and 4.2% Q-Q to 4Q17 1Q18 2Q18 3Q18 4Q18 RM525m due to a flow through from stronger EBITDA — Aided by modest depreciation cost at RM197m PAT AND MARGIN (RM m and %) (4Q17: RM210m) and steady finance cost of RM25m 500 90% 385 368 • PAT remained steady at 23% margin or RM385m, up 6.9% 360 359 352 400 70% Y-Y and 4.6% Q-Q to deliver RM1.46b PAT for the year 300 50% 23% 23% 23% 22% 22% 200 30% 100 10% - -10% 4Q17 1Q18 2Q18 3Q18 4Q18 11
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