Analyst Teleconference Quarter 3 2006 20 October 2006 Q306 in - PDF document

Analyst Teleconference Quarter 3 2006 20 October 2006

Q306 in brief Steady underlying revenue growth Strong EBITDA margins Prepaid growth slowing down as expected Postpaid progressing well Interim dividend paid and 2 nd capital repayment approved 2

Q306 key numbers Q306 Q-on-Q vs Q206 Y-o-Y vs Q305 Customer base 5.6 mil + 3% (5.4 mil) +34% (4.2 mil) Revenue RM921 mil +2% (RM904 mil) +24% (RM745 mil) EBITDA RM419 mil +2% (RM410 mil) +28% (RM327 mil) EBITDA margin 45.5 % +0.2pp (45.3%) +1.6pp (43.9%) PAT RM181 mil -10% (RM201 mil) +27% (RM143 mil) EPS 24.1 sen 26.7 sen 19.1 sen 3

Industry and DiGi in Q306 Prepaid registration DiGi - focus intensive industry drive expand weaker segments unregistered users still relatively acquisition and retention high industry wide brand building 15 th Dec deadline remains Competition and tariffs DiGi - value propositions aggressive promotions to drive Postpaid: “123-plan” on-net and IDD traffic Prepaid: “Bonus airtime” to focus shifted to postpaid/data drive acquisition/retention no major pressure on core VAS: Promotions (MMS, XMS, FriendFinder and FunVoice) tariffs new price plans introduced (at end Q3 and early Q4) 4

Prepaid SIM activations slowed; postpaid sustaining +32% Prepaid +51% Postpaid Custome rs +2% Prepaid +10% Postpaid 150k net additions; 464 total subscribers at 422 5.6 mil 382 353 5126 5018 307 Prepaid momentum 4704 4279 241 clouded by ongoing 4442 3880 registration exercise 3525 25.3% ? 24.8% 24.6% New value 23.9% 22.8% propositions driving business and postpaid mass Q2 Q3 Q4 Q1 Q2 Q3 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 2005 2005 2005 2006 2006 2006 Prepaid (‘000) Active Users (‘000) Postpaid (‘000) Subscriber market share 5

AMPU held up by postpaid -10% Prepaid -4% Postpaid -7% Blended -3% Prepaid AMPU +8% Postpaid -1% Blended Prepaid declined on 471 439 389 380 392 422 lower outgoing usage Postpaid driven by 170 175 169 162 163 162 effective price plan 150 156 152 145 144 140 Q2 Q3 Q4 Q1 Q2 Q3 2005 2005 2005 2006 2006 2006 Prepaid (mins) Postpaid (mins) Blended (mins) 6

ARPU stable -9% Prepaid -14% Postpaid -9% Blended -2% Prepaid ARPU -10% Postpaid -2% Blended Prepaid weakened slightly 128 111 99 96 105 95 Higher rebates (bonus airtime) to drive retention and 59 58 58 54 54 53 prepaid registration 54 54 55 51 50 49 Postpaid sustained vis-à-vis last quarter Q2 Q3 Q4 Q1 Q2* Q3 2005 2005 2005 2006 2006 2006 * (Including one-time adjustment of RM12 mil for postpaid (RM10 on postpaid and RM1 blended Prepaid (RM) Postpaid (RM) Blended (RM) ARPU)) 7

Steady underlying revenue growth +24% +3% (normalised) +2% Re ve nue 921 904 Higher subscriber 861 828 base driving revenue 745 686 Segmentation drive effective in ? strengthening customer retention 24.6 % 23.5% 22.5% 21.1% Increased brand 20.0% recognition in non- core segments Q2 Q3 Q4 Q1 Q2* Q3 2005 2005 2005 2006 2006 2006 * (Q206 revenue included an one- Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 time adjustment of RM12 mil for postpaid) Revenue (RM mil) Est. Mobile Revenue Market share (%) 8

Data revenue rebounded SMS +30% Non-SMS +48% SMS +6% Non-SMS +7% Da ta re ve nue * 164 154 Strong growth in 151 140 non-SMS revenue 122 46 43 104 42 Bundled VAS 32 31 innovations driving higher prepaid 25 GPRS usage 18.9% 18.7% 18.0% 18.1% 17.6% 16.4% Postpaid VAS/data 79 91 108 109 111 118 usage on uptrend Q2 Q3 Q4 Q1 Q2 Q3 2005 2005 2005 2006 2006 2006 * (Data revenue restated for all 6 quarters to include monthly fees) SMS (RM mil) Non-SMS (RM mil) % of mobile revenue 9

EBITDA improving E BIT DA +28% EBITDA increase in +2% tandem with higher revenue 419 410 390 Also lower sales & 361 327 marketing costs this 297 quarter 43.2% 43.9% 43.6% 45.3% 45.3% 45.5% Q2 Q3 Q4 Q1 Q2* Q3 2005 2005 2005 2006 2006 2006 * (Q206 normalised EBITDA RM398mil) EBITDA (RM mil) EBITDA Margin (%) 10

EBITDA margin strengthened 45.3% EBITDA margin Q206* E BIT DA ma rg in EBITDA margin Q206 +0.7% (Cost of materials @ 2.2%) Gains contributed by: Relatively lower -1.2% (Traffic charges @ 19.0%) marketing spend post- World Cup hype +1.4% (Sales & Marketing @ 11.7 %) +0.1% (Staff costs @ 5.2%) Partially offset by: Higher IDD traffic +0.4% (Ops & Maint @ 6.4%) cost Higher governance -1.2% (Other expenses @ 10.0%) compliance cost 45.5% EBITDA margin Q306 * (Q206 normalised EBITDA margin at 44.6%) @ denotes % of revenue in Q306 11

PAT impacted by accelerated depreciation PAT (RM mil) Q306 Q206 % chg PAT impacted by finalisation of AoUL* EBITDA 419.3 409.6 +2.4 Depreciation & Amortisation (170.1) (135.2) -25.8 Additional EBIT 249.2 274.4 -9.2 accelerated Net finance income 6.1 6.2 -1.6 depreciation of - Finance costs (3.9 ) (3.8 ) -2.6 RM42mil in Q306 - Interest income 10.0 10.0 0.0 PBT 255.3 280.6 -9.0 Approximately Taxation (74.5) (80.0) +6.9 another RM42mil will be taken up in PAT 180.8 200.6 -9.9 Q406 EPS (sen) 24.1 26.7 -9.9 * (AoUL - Assessment of Useful Life) 12

Closing in on 90% population coverage Ca pe x (RM mil) 333 Accelerated coverage; now at 87% nationwide 215 182 Continuous capacity and quality 126 117 expansion 106 38% coverage, 37% capacity 15.5% 24.4% 40.2% 14.6% 12.9 % 23.3 % Q2 Q3 Q4 Q1 Q2 Q3 2005 2005 2005 2006 2006 2006 Capex/Sales (%) 13

Cash flow generation is high F re e c a sh- flow (RM mil) Q306 Q206 Cash at start 1,103.9 1,412.9 Higher tax paid in Q3 vs Q2 Cash-flow from operations 372.5 372.8 (RM49 mil) Changes in working capital 155.6 (11.7) Cash-flow used in investing activities (204.3) (107.6) Interim dividend - Capex (214.8) (116.9) paid RM289mil Cash-flow used in financing activities (288.9) (562.5) Net change in cash 34.9 (309.0) Positive working Cash at end 1,138.8 1,103.9 capital due to higher accruals Operational cash-flow 204.5 292.7 (EBITDA – Capex) 14

Underleveraged balance sheet RM mil Q306 Q206 Ke y ra tios Capex 214.8 116.9 ROE and ROCE Capex/Sales (%) 23.3% 12.9% lower q-o-q; Total borrowings 300.0 300.0 impacted by Cash & cash equivalents 1,138.8 1,103.9 accelerated depreciation Total shareholders’ funds 1,962.8 2,070.9 ROE (%) 9.2% 9.7% FCF/share lower ROCE (%) 9.4% 10.0% on higher capex Current ratio (x) 0.9x 1.0x spent this quarter Net debt/equity (x) net cash net cash Net debt/EBITDA (x) net cash net cash FCF per share (sen) 27.3 sen 39.0 sen Net assets/share (RM) RM2.62 RM2.76 15

RM1.3bn cash to shareholders 2 nd capital repayment Borrowings cash payment date 27 October no immediate plans to draw down on CP/MTN current share price indicates 4.8% net yield AA2 rating reaffirmed by RAM no additional borrowings Dividend policy Balance sheet initiatives recurring policy remains at committed to optimise balance minimum 50% of net earnings sheet interim dividend of 75% pro-active management of excess declared and paid out on 28 cash August no target gearing determined 16

17 Management changes Verbal updates Ownership Regulatory

Governance Fixed assets Other initiatives remediation initiative completed ongoing efforts to enhance internal in Q3 controls; realigned key assurance functions to increase coverage on all key assets tagged and end-to-end processes reconciled to FAR revenue assurance findings; additional RM84 mil accelerated potential positive one-off effect in depreciation and amortization Q4 expenses from finalised AoUL for FY2006 progressing well towards SOA 404/SOX compliance by end-2006 year 2 SOA compliance, DiGi to embed SOA requirements as part of day-to-day operations 18

DiGi moving forward Industry Competition potential impact from prepaid intensifying; new players and new registration brands opportunity from mobile number pressure on core tariffs and margins portability very limited impact from 3G Focus 2007 guidance (verbal) drive revenue and usage strengthen relative market share; core segments and weaker segments churn and loyalty management 19

see you next quarter thank you