Earnings Concall/ Q1 2013 OPEN Investor Update Q1 2013 Earnings Conference Call Henrik Clausen, CEO Terje Borge, CFO 23 Apr 2013 1
Key highlights Operational highlights Financials updates Guidance and outlook Q&A 2
Q1 2013 Steady revenue growth to commence the year Performance at a glance 1,647 1,629 1,580 1,583 1,569 752 737 715 725 720 321 324 315 329 246 Q112 Q212 Q312 Q412 Q113 PAT EBITDA Revenue 1.1% q-o-q 44% 34.0% q-o-q 5.0% y-o-y EBITDA margin PAT growth Revenue growth 3
Q1 2013 Current quarter financial performance in line with plans 1.1% revenue growth Network modernisation 44% EBITDA margin and progressing as planned against seasonally high Q412 driven by strong data revenues 34% q-o-q PAT growth additional 810 NW sites and and device bundles completion of 784km joint fibre data revenue at 34% of EBITDA at 44% from 68% of sites swapped and service revenues increased device bundles optimised device revenues 10% of Pop. coverage expansion: PAT increased to RM329m total revenues 3G at 68% and 2G at 95% MI subscribers up 2% 1st interim dividend of NW sharing – focus on q-o-q with steady ARPU 3.8 sen per share fiber built 4
Key highlights Operational highlights Financials updates Guidance and outlook Q&A 5
Q1 2013 New launches – marketing update • Smart Plans revamped with bundled minutes, sms Internet For All and data quota for smart apps usage – Increasing the monthly commitment fee for entry-level subscriptions with bundled offerings – Ensure allowance for traditional voice and sms usage – New plans to attract high ARPU subscribers • Re-launched DiGi Best Prepaid simpack at a higher value – Pack price up from RM8.5 to RM10.5 – Bundled with 2 days internet free trial after 1st call activation Focus on Youth • Extended Internet Tablet Plan, a zero contract with no bill shock and worry free internet roaming • Refreshed data offerings aimed at stimulating increase take up of data usage whilst protecting core offerings on traditional voice and messaging 6
Q1 2013 Continued focus on quality subscriber acquisition and data adoption Subscriber development (‘000) • Lower prepaid subscriber base due to – Initiatives taken to drive quality +4.4% subscribers from revision of SIM pack -1.2% 10,494 10,372 10,304 pricing and streamlining of sales 10,229 9,936 acquisition 1,671 1,678 1,657 1,649 1,633 – Higher prepaid rotational churn post year end festive period 8,823 8,647 8,694 8,580 8,303 • Higher postpaid subscriber base attributable to Q112 Q212 Q312 Q412 Q113 positive traction on device bundles take-up Prepaid Postpaid with focus on managing postpaid retention following expiry of contract period – MI subscribers now make up to 56.3% of Data subscriber mix (‘000) total subscriber base +7.7% +1.5% • Data subscribers recorded a healthy q-o-q 6,100 6,007 5,858 growth of 1.5% mainly driven by 1.8% q-o-q 5,733 5,664 262 273 298 growth on mobile internet subscription 320 315 – Tablet plans showing steady growth in Q1 5,838 5,734 5,560 5,413 5,349 – Revitalizing dongle business with strong on ground push and retention activities in Q112 Q212 Q312 Q412 Q113 pipeline MI Subs BB Subs 7
Q1 2013 Slight decline in ARPU in a seasonally low quarter but data ARPU continued to increase • ARPU continued to be resilient q-o-q despite a Blended ARPU composition (RM) slight decline for both postpaid and prepaid due to Q1 being a seasonally low quarter in addition 49 48 48 47 47 to the impact of lower termination rate from 1 2 2 2 2 2 January 2013 7 6 7 6 6 6 7 6 7 8 • Prepaid expansion into lower ARPU markets, 34 33 33 32 31 will inadvertently attract lower ARPU subscribers Q112 Q212 Q312 Q412 Q113 • Growth in data ARPU aided by improved data Voice MI & BB Messaging VAS network quality and network coverage as well as refreshed data offerings that stimulated data take up ARPU mix (RM) 85 85 • Ongoing drive on data usage through smart 83 82 82 apps and introduction of bite sized trial data quotas further proliferate the data adoption 41 41 41 41 40 Q112 Q212 Q312 Q412 Q113 Postpaid Prepaid 8
Q1 2013 Voice usage remained stable Voice MoU (min) • Voice MoU remained stable at 267, despite the more data centric subscriber base, and the 270 270 seasonal effects on the quarter. 267 267 • Slightly lower APPM from continuous price 265 competition on both domestic as well as international voice traffic resulting in overall lower voice ARPU Q112 Q212 Q312 Q412 Q113 Blended MoU Voice price (sen) 14 14 14 14 13 Q112 Q212 Q312 Q412 Q113 APPM 9
Q1 2013 Steady growth in smartphone penetration No. of handset and devices sold (‘000) • More devices sold in Q1 due to continued strong demand for iPhone 5 and Samsung Note II as well as more affordable range of android 119 100 phones. 95 91 66 • Further uptake driven from the Govt’s Youth Programme where qualifying youths are entitled to RM200 rebates on the purchase of smartphones Q112 Q212 Q312 Q412 Q113 • This has further spurred increase in: — Smartphone penetration +2.1pts to Smartphone penetration % 28.5% — MI subscribers penetration +1.7pts to 53.8% 52.9% 54.0% 54.6% 56.3% 56.3% 28.5% 26.4% 24.8% 23.5% 22.2% Q112 Q212 Q312 Q412 Q113 % of MI subs % of smartphone subs 10
Q1 2013 Solid foundation to bringing Internet For All to life, embracing a customer-centric mindset & completing the NW modernisation Network Minutes Per Drop (MPD) • Network quality continuing to improve ― Improved minutes per drop call, voice quality and successful call setup ― Healthy growth in NW traffic both for voice and data • Network swap on-track and good 3G rollout momentum 1 4 7 10 13 16 19 22 25 28 31 34 37 39 42 45 48 51 2'13 5'13 8'13 11'13 – Successfully upgraded >3,800 sites (68% of our network) Week – Additional 60 km fibre built with further acceleration in the remaining quarters 22 DiGi Stores and 56 DSEs nationwide – Pop. coverage expansion: 3G at 68.1%, 2G at (expanding to 25 and 150 over 2 yrs) 95.4% • Active roll out of Partner-Owned DiGi Store Express concept outlets nationwide – Improved customer experience – Enable more effective mobile internet acquisition – Drive increased data usage – More efficient retail operations 11
Key highlights Operational highlights Financials updates Guidance and outlook Q&A 12
Q1 2013 1.1% q-o-q revenue growth Revenue composition ( RM’m ) Service revenue composition ( RM’m ) (% of service revenue) q-o-q 1.6% 0.7% 0.2% 2.9% 1.1% 1,700 0.0% growth 1,650 rate 120% 1,600 -2000.0% 1,492 1,476 1,470 1,470 1,459 1,600 100% 1,500 171 -4000.0% 137 30% 1,550 31% 31% 33% 34% 80% 1,400 110 113 110 1,500 -6000.0% 60% 1,300 1,450 40% 1,200 -8000.0% 69% 70% 1,492 69% 67% 66% 1,476 1,470 1,470 1,459 1,400 20% 1,100 1,350 -10000.0% 0% 1,000 Q112 Q212 Q312 Q412 Q113 Q112 Q212 Q312 Q412 Q113 Service Revenue Device & Oher Revenue Voice Revenue Data Revenue 13
Q1 2013 Marginally lower service revenue on the back of seasonally high Q412 • Q113 service revenues were adversely impacted by Service revenue mix ( RM’m ) lesser days compared to the previous quarter and the +1.2% downward revision of the voice I/C rate -1.1% – Adjusting the two factors, service revenue growth would have been 0.7% q-o-q and 2.5% y-o-y 1,492 1,470 1,470 1,476 1,459 – Pro-longed business closures adversely impacted 425 436 420 426 427 the postpaid revenue q-o-q 1,034 1,050 1,067 1,050 1,032 • Recent market activities like refreshed smart plans, Q112 Q212 Q312 Q412 Q113 tablet and prepaid offerings will only have a visible impact from Q213 and onwards Prepaid Postpaid • Going forward, data revenues will be driven by Voice revenue ( RM’m ) – Converting occasional users to subscriptions -3.3% – Growth in active MI subscribers -2.6% – Tablet push, quota top up subscription as well as 1,025 1,011 1,010 1,004 978 higher share in BB market 226 233 218 219 210 • On the other hand, voice revenues will be driven by 785 792 792 785 768 – Sustained voice revenues through migrant retention plans and improved traction in SME Q112 Q212 Q312 Q412 Q113 segment Prepaid Postpaid – Improved prepaid churn and quality of subscribers – Acquisition drive in secondary markets 14
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