PETALING JAYA: Industry observers are generally upbeat on DiGi.Com Bhd given the company's positive third quarter earnings, consistent performance and innovative strategies. For the nine months ended Sept 30, DiGi's revenue grew 31% to RM2.
69bil from RM2.06bil in the previous corresponding period while net profit jumped 80% to RM566.1mil against RM314.
3mil before. The company said the revenue growth was mainly driven by a 34% increase in mobile customer base to about 5.6 million and higher non-voice revenue, which represented 19% of total mobile revenue compared with 17% a year ago.
TA Securities has revised DiGi's subscriber base by 50,000 to 6.1 million in 2006 as it anticipates a strong fourth quarter driven by promotional activities during the festive season. It said DiGi's net additions for the third quarter had slowed to 150,000 compared with 354,000 in the second quarter.
?The company was impacted by higher churn this quarter in tandem with the promotional activities held in conjunction with the World Cup,? it said in an updated note yesterday.
It also said DiGi's prepaid average revenue per user (ARPU) had weakened slightly to RM49 in the third quarter from RM50 in the second quarter due to higher rebates. It believes there would be further downside to ARPU due to stiffer competition and the effect of DiGi's new flat rate pricing plan for prepaid users, which was introduced on Oct 16. The brokerage expects the move to impact the company's earnings in the short-term, but believes volume would pick up over the long term and iron out any effects of the price cut.
OSK Research believes that the lower tariffs were made possible by the new access-pricing framework implemented in February where mobile termination rates were reduced by a weighted average of 24.8% to 27.3% for the next three years.
The research outfit pointed out that DiGi's call usage would have to increase by 150% for the company to offset the tariff reduction and maintain its voice revenue. It believes this level of usage would be achieved in the long term. While DiGi may have continued to deliver on its earnings, the brokerage believes there are medium term issues, which could cloud its outlook.
Among them are Telenor's shareholding limit. In 2001, Telenor received special approval from the Malaysian government to increase its stake in DiGi from 32.9% to 61%, on condition that Telenor sell down its stake to 49% in five years, i.
e. 2006. ?
This has sparked rumours of a new strategic shareholder but there has been little update from management on this issue,? OSK said in an updated note yesterday. It added that DiGi would also need to comply with the 30% bumiputra shareholding ruling by year-end.
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