2Q 2016 RESULTS Albern Murty, CEO 11 JUL 2016 1
Disclaimer This presentation and the following discussion may contain forward looking statements by Digi.com Berhad (Digi) related to financial trends for future periods. Some of the statements contained in this presentation or arising from this discussion which are not of historical facts are statements of future expectations with respect to financial conditions, results of operations and businesses, and related plans and objectives. Such forward looking statements are based on Digi’s current views and assumptions including, but not limited to, prevailing economic and market conditions and currently available information. These statements involve known and unknown risks and uncertainties that could cause actual results, performance or achievements to differ materially from those in the forward looking statements. Such statements are not and, should not be construed, as a representation as to future performance or achievements of Digi. In particular, such statements should not be regarded as a forecast or projection of future performance of Digi. It should be noted that the actual performance or achievements of Digi may vary significantly from such statements. 2
Key Highlights Performance Review 2016 Outlook Q&A 3
2Q 2016 Key Highlights Resilient performance anchored on solid postpaid growth 76% LTE-A @ KMCs SOLID POSTPAID REVENUE GROWTH 4G LTE 6.0% q-q and 9.8% y-y 62.0% 3.3 m RESILIENT SERVICE REVENUE Smart- LTE Subs RM1,557 m phones ~ 8 m STRONGER SEQUENTIAL EBITDA Internet Up 4.4% to RM735 m Subs or 44% margin HIGHER SHAREHOLDERS RETURN 5.4 sen dividend per share equivalent to RM420 million or almost 100% payout ratio Note: KMCs refer to key market centers 4
2Q 2016 Network Sprinting ahead with 4G LTE-A deployment Lead the market with deployment of LTE-A network in key • market centres (KMCs) – Twice the internet speed of 4G LTE covering more than 34% of population nationwide Rapid expansion of 4G LTE network coverage to 76% of the • population – Available in 191 major towns and cities, supported by 6,500 LTE sites and 7,000 km of fiber network – Higher efficiency and quality of data services with increasing traffic delivery on 4G LTE network from to 27%, from 6% a year ago Proliferate growth of LTE subscribers to 3.3 million with • consistent high speed internet experience on their 4G LTE capable smartphones and devices Highly committed on strengthening 4G LTE network while • leveraging on efficient technology and fiber rollout to support customers growing digital lifestyle 5
2Q 2016 Digital Innovations Putting skin in the game towards digital transformation 1 Revolutionise and digitise as a next step of digital • Accelerate digital transformation transformation Appointment of Chief Digital Officer and empower dedicated • CDO digital teams to develop digitally adjacent businesses, digital Digital Businesses (Digi-X) innovations and unlock new business partnerships Digital Innovation Digitise core mobile business across products, channels, • marketing and delivery Partnerships / Digital Startups Adjacent digital – Intuitive digital channels for dealer distribution and opportunities customer self-serve functions DIGITISING OF – Enable nimble and agile operations with significantly Digital Products / Channels CORE BUSINESS improved speed to execution and to serve more customers nationwide efficiently Digital Marketing Digital Engineering and Leverage on Telenor’s scale and opportunities on • Delivery – Acquisitions of global platforms and capabilities – Strategic partnerships with global digital players – Adjacent digital businesses opportunities such as 2 Leverage on Telenor’s digital financial services and cloud storage businesses and partnerships Opportunities via global platforms and capabilities 6
2Q 2016 Digital Innovations Making “sens” on MyDigi lifestyle app MyDigi - one stop digital platform for intuitive self-care, customer support, rewards and primary distribution channel to customers • One view of all Digi accounts • > 750K monthly active users and • Convenience of instant bill growing payment and purchase reload • Positive NPS score since MyDigi • Personalise setting such as launch. App rating of 4 for both internet sharing, change of plans Android and iOS • Purchase Add-Ons and services • 4-5 folds increase in bill payment transactions. • In-app customer support and rewards coming soon! 7
2Q 2016 Digital innovations Fuelling digital innovations and opportunities amongst budding entrepreneurs ENGAGEMENT WITH START-UP COMMUNITIES Digi Incub8 Digi Accelerator Telenor - Digi Ignite • Pre-accelerator program for • 360' launchpad to fast track • Global startup program for idea stage startups startup businesses budding intrapreneurs with great ideas on digital • 6-day intensive bootcamp • 4-month bootcamp with products or services regional and global exposure, • Access to business support, seed funding, as well as • 1st batch of 8 winners from mentorship, capital and the commercialisation support across 10 countries network to build and grow - Digi’s ALFRED team • 1 st batch of winners: Vase, digital business opportunities among the winning team Local Usher and GrabGas 8
2Q 2016 Products and Marketing Bringing the best choices, convenience and value for Digi’s customers 4G LTE carnival and Internet campaigns Actively designed and shaped postpaid value propositions • relevant to changes in customers’ behaviour and lifestyle – Sharpened focus on internet, digital services, flexible internet sharing propositions – Embarked on nationwide 4G LTE carnival with affordable 4G bundles – Launched quota top up campaigns and promotions on higher tiered subscriptions – Continued to tap on prepaid to postpaid migration Targeted campaigns with stronger prepaid mobile internet • proposition on the back of rationalised IDD prices – Introduced internet centric reload voucher – Bundled internet subscriptions with promotional quota upsizing and complimentary off-peak quotas Internet sharing – 360° Ramadan prepaid campaigns in conjunction with Hari Raya festive Relentlessly innovate to make life easier for customers such • as the flexibility of charging in-app and game purchases to Digi postpaid and prepaid account via Google Play Store 9
Key Highlights Performance Review 2016 Outlook Q&A 10
2Q 2016 Performance Review Resilient service revenue performance against relatively weaker industry development Relatively steady y-y service revenue development Sustained service revenue q-q amid consistent with preceding quarter month-long Ramadhan effects in 2Q16 Effects from significant shift in market conditions Y-Y Q-Q 2Q15 3Q15 4Q15 1Q16 2Q16 2Q15 3Q15 4Q15 1Q16 2Q16 12.0% 8.0% 10.0% 6.0% 8.0% 4.0% 6.0% 4.0% 2.0% 0.1% 2.0% 0.0% 0.0% 1.3% -0.2% -2.0% -2.0% -1.8% -1.9% -1.7% -1.7% -4.0% -2.0% -4.0% -6.0% -4.8% -3.7% Postpaid Prepaid Postpaid Prepaid -8.0% -6.0% Service revenue Industry Service revenue Industry Industry refers to mobile service revenue from the 3 leading mobile operators in Malaysia • Ramadhan month usually observes moderated voice traffic and revenue on prepaid • Post 2Q16 Y-Y comparison will be more comparable with similar market conditions • 11
2Q 2016 Performance Review Well-fought quarter with sustained service revenue at RM1.56 billion Steady subscriber base at 12.3 million although Blended • challenged by lower daily active subscribers and high rotational churn Service 1,589 1,587 1,584 1,560 1,557 revenue – Internet subscribers increased to almost 8.0 (RM m) million or 64.5% of total subscribers ARPU – Smartphone penetration rose to 62.0% 45 45 44 42 42 (RM) Robust growth development on postpaid continued to 12,336 12,347 • 12,125 11,815 11,675 Subscribers bolster decline on prepaid service revenue from (‘000) prolonged price war and IDD price rationalisation Non-Internet Service revenue sustained q-q on the back of steady • ARPU and subscriber base with increasing contribution from postpaid 7,965 7,917 – Internet revenue grew 4.3% q-q and 10.8% y-y, 7,502 Internet 7,024 6,843 contributing to 36.1% of service revenue for the quarter 2Q15 3Q15 4Q15 1Q16 2Q16 Steadily strengthened service revenue market share • market although y-y development continued to be distorted by significant shift in market conditions since 2H 2015 12
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