Earnings Concall/ 3Q 2014 OPEN Earnings Conference Call 3 rd Quarter 2014 Lars Ake Norling 20 October 2014 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 Operational highlights Financials updates Guidance and outlook Q&A 3
3Q 2014 Achieved another set of important milestone Expansion of 3G pop coverage to 84% population More LTE powered sites Modernised billing platform (both postpaid & prepaid) Stronger prepaid revenue (YTD 4.7% growth) Surpassed 11.3 million subscribers 4
3Q 2014 Delivered positive growth amidst challenging environment Revenue RM1,756 million 3.3% Y-o-Y Service Revenue RM1,584 million 2.0% Y-o-Y 45% EBITDA Margin RM789 million 3.0% Y-o-Y 29% Ops Cash-Flow Margin RM513 million -3.6% Y-o-Y 28% PAT Margin RM487 million 8.5% Y-o-Y 5
3Q 2014 Strong demand for internet but growth opportunities challenged • Challenges Approach – Stronger positioning with Increased competition – relevant products • Solid market execution Tepid industry growth (Distribution, network, IT) • Complexities from billing Affordable smart phone bundles migration • • – free what’s app, • • – • • 6 • • – • • • • • • – • • – • – •
3Q 2014 Modernised billing platform for postpaid and prepaid Solid teamwork • Successfully completed migration to serve our customers better although not without challenges • The convergent billing platform for both postpaid and prepaid customers is now in operation within stabilisation phase • Further strengthens DiGi’s capabilities to – Deliver more flexible and innovative products and services; – Improve lead time to support go-to- market launches; – Support dynamic charging functionalities; – Enable better customer insights with real time intelligence; and – Optimise cost structure to support future growth 7
3Q 2014 Targeted internet focused initiatives • Continued focus on Internet For All Plans and promotions – Affordable prepaid smart phone bundles with internet package • Initiatives to promote modernised network – Trial promotions and nationwide customer engagements; – Entry level bite-sized internet packages; and – Airtime rewards • Strengthened position on prepaid – Competitive offers to drive internet adoption, data revenue and acquisition Click to view DiGi Best For Internet info video 8
3Q 2014 Robust development on smartphone and internet penetration • Smartphone and internet penetration [1] Both smartphone and internet % penetration continued to rise 53.0% 49.4% 46.6% — Sharp increase contributed by 44.8% 43.9% prepaid smartphone bundles 47.0% 41.9% 38.1% 38.4% 34.0% • Continued to capitalise on distribution strengths and affordable bundles to 3Q13 4Q13 1Q14 2Q14 3Q14 encourage smartphone adoption Internet Smartphone • Leveraged on No. of smartphones and devices sold ‘000 — Relevant new smartphone ranges (mid and affordable) 453 — Bite-sized internet packages to 367 328 stimulate internet adoption and demand 102 90 • Solid demands led to higher volumes of smartphones, enabling increased internet 3Q13 4Q13 1Q14 2Q14 3Q14 penetration and service revenue growth 9 [1] Revised to include subscribers with at least 150kb for the last 3 months
3Q 2014 Actively acquired subscribers to build momentum into 4Q14 • Stronger subscribers base led by positive Subscriber development ‘000 momentum from prepaid smartphone +4.8% bundles and network trial campaigns +4.1% 11,345 10,995 10,885 10,903 10,827 1,698 • +440K prepaid subscribers for the quarter 1,700 1,686 1,696 1,696 ― Favourable trajectory into 4Q14 9,647 9,131 9,295 9,199 9,207 service revenue 3Q13 4Q13 1Q14 2Q14 3Q14 Prepaid Postpaid • Postpaid subscriber base continued to remain flattish Internet [1] subscriber mix ‘000 ― Modest demand in anticipation for new smartphone launches +26.5% +11.6% 6,011 • Internet focused initiatives continued to 5,384 5,072 4,926 4,753 217 222 221 spur positive growth for internet subscribers 226 235 5,794 5,162 4,700 4,851 4,518 • +627K new active internet users, bringing a step closer to the Internet 3Q13 4Q13 1Q14 2Q14 3Q14 For All aspiration MI BB 10 [1] Revised to include subscribers with at least 150kb for the last 3 months
3Q 2014 ARPU remained stable over a larger subscriber base • Blended ARPU stayed resilient at RM47-48 Blended ARPU composition RM range 48 48 47 48 47 2 2 2 1 2 • Internet focused initiatives successfully 4 4 5 5 4 10 10 11 13 14 lifted Internet ARPU 40% y-o-y to RM14 – Cushioned ARPU dilution from 31 31 30 29 28 traditional services; and 3Q13 4Q13 1Q14 2Q14 3Q14 – Enabled relatively stable ARPU over a larger subscriber base Voice Internet Messaging VAS ARPU development RM • Additional pressure on voice ARPU due to price competition 82 83 83 82 81 – Marginally mitigated by increased voice usage during the Raya festive 41 41 41 41 41 • Sustained both prepaid and postpaid ARPU levels steadily 3Q13 4Q13 1Q14 2Q14 3Q14 Postpaid Prepaid 11
3Q 2014 Rise in data traffic fueled by stronger internet usage • Solid data demand continued to fuel Data traffic volume Traffic (‘000 TB) traffic development 90% y-o-y and 22% q- o-q 14.7 12.1 9.9 8.7 7.8 • The uplift has also been stimulated by: — Higher subscriptions on affordable prepaid smartphone bundles; 3Q13 4Q13 1Q14 2Q14 3Q14 — Data network coverage expansion and stability; and Postpaid Prepaid — Encouraging bite-sized entry level packages Minutes of use (MOU) minutes 260 256 • Slight increase in MOU aided by 252 249 251 incremental usage during the festive season 3Q13 4Q13 1Q14 2Q14 3Q14 Blended MoU 12
3Q 2014 Solid execution paved the growth story • – • Revenue development RM mln • +3.3% Service • +3.3% 4,555 4,706 +0.6% Revenue 1,756 1,746 1,733 1,718 1,700 172 156 178 164 147 +4.4% 5,220 • – 5,000 514 445 557 533 571 598 627 – 1,796 1,546 • – 1,020 1,020 • 983 970 957 3,009 2,910 • – YTD 2013 YTD 2014 3Q13 4Q13 1Q14 2Q14 3Q14 • o Voice Data Device and others Voice Data Device and others – e • 13 • – • • • – • • – • – • – – • – • • –
3Q 2014 Service revenue growth driven by robust prepaid development Service revenue • Increased usage from internet and Raya RM mln festive alongside with larger subscriber base +2.0% +1.0% resulted in stronger sequential growth in 1,577 1,584 1,553 1,554 1,568 service revenue 431 439 433 434 427 • Relative to 3Q13, which benefited from 1,153 1,119 1,138 1,127 1,135 exponential data coverage expansion and 3Q13 4Q13 1Q14 2Q14 3Q14 more benign competition, y-o-y service revenue growth moderated Prepaid Postpaid • Prepaid service revenue increased 3.0% y-o- Voice revenue RM mln y and 1.6% q-o-q, weighed down by -6.2% levelling voice revenue which declined 5.5% -1.3% y-o-y and 1.2% q-o-q. 1,020 1,020 983 970 957 213 214 199 198 194 • Flattish postpaid revenue development on 807 806 784 772 763 the back of tepid subscribers development – Continuing efforts to build stronger 3Q13 4Q13 1Q14 2Q14 3Q14 momentum for postpaid Prepaid Postpaid 14
3Q 2014 Steadily unlocking data monetisation opportunities Data revenue mix • Strong uptake on prepaid smartphone RM mln bundles boosted incremental data usage +17.6% +4.8% and revenue 627 598 571 557 533 – Unlocking data monetisation 47 47 49 51 131 51 opportunities 142 148 158 162 449 409 374 348 320 • Data and internet revenue as % of service 3Q13 4Q13 1Q14 2Q14 3Q14 revenue continued to surge Internet Messaging VAS – Data: +5.3pp y-o-y to 39.6% – Internet: +7.7pp y-o-y to 28.3% – More than compensated shortfall in Internet penetration [1] % messaging revenue 69% 67% 65% 63% 62% • Internet penetration for both prepaid and postpaid continued to rise steadily q-o-q, 50% 46% 43% 41% 41% aided by a combination of affordable smartphones and internet packages 3Q13 4Q13 1Q14 2Q14 3Q14 Postpaid Prepaid 15 [1] Revised to include subscribers with at least 150kb for the last 3 months
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