Quarter 4 2 0 0 5 Results for DiGi Analyst presentation February - - PowerPoint PPT Presentation

DiGi Q3 2005

Quarter 4 2 0 0 5

Results for DiGi Analyst presentation February 15th 2006 Chee Pok Jin, CMO Johan Dennelind, CFO

DiGi Q3 2005

Quarter four in brief

3 Investor Relations DiGi Q4 2005

DiGi Highlights

• Stro ng re ve nue g ro wth with susta ine d pro fit ma rg ins
• I

nno va tio ns a nd pro mo tio ns c o ntinue to drive DiGi

• F

urthe r impro ve me nt in b ra nd e q uity a nd ma rke t po sitio n

• Bo o m in SI

M-c a rd sa le s

• Pre pa id ARPU sta b le

4 Investor Relations DiGi Q4 2005

Competitive landscape

• Pre pa id sta rte r pa c k pric e b a ttle
• Pro mo tio ns driving inte rna tio na l c a lling a nd o n ne t tra ffic
• Custo me rs’ inc re a sing inte re st in a dva nc e d VAS
• Co mpe titio n inte nsifying
• F

ixe d-to -mo b ile c o nve rsio n mo de ra te

5 Investor Relations DiGi Q4 2005

Key innovations in 2005

Q1 2005 Q2 2005 Q3 2005 Q4 2005

• Bub b le T

a lk # 1

• L

ife lo g g e r # 1

• Pre pa id F

le xi e -lo a d

• MT

V Po we rPa c k # 1

• Online E

nha nc e me nt + Dia l a DiGi # 1

• 10th Annive rsa ry Pro mo tio ns
• Co mmunity Zo ne # 1
• E

nha nc e d UMB # 1

• UMB Po stpa id # 1
• Busine ss Po stpa id Clo se d Use r Gro up # 1
• XMS # 1
• Po stpa id Pa yme nt via F

le xi e -lo a d # 1

BubbleTalk™ BubbleTalk™

#1 = first in Malaysia

6 Investor Relations DiGi Q4 2005

2005 – record numbers

Q4 0 5 Q-on- Q vs Q3 0 5 Y-o- Y 2 0 0 5 vs 2 0 0 4 Custom er base 4 .8 0 m il + 15% (4.19 mil) + 48% (4.80 mil) (RM745 mil) (RM2,884 mil) (RM1,259 mil) (43.7% ) (RM471 mil) 62.8 sen (RM327 mil) (43.9% ) (RM143 mil) 19.1 sen Revenue RM8 2 8 m il + 11% + 29% EBI TDA RM3 6 1 m il + 10% + 29% EBI TDA m argin 4 3 .6 %

• 0.3pp
• 0.1pp

PAT RM1 5 7 m il + 10% + 48% EPS 2 0 .9 sen

DiGi Q3 2005

Key Num bers

8 Investor Relations DiGi Q4 2005

Surge in SIM card activations

• 608k ne t a dditio ns
• Pro mo tio ns a nd

pric e o f SI M pa c k ke y drive rs

• Attra c tive b ra nd

a nd inc re a se d c o ve ra g e pa ying

• ff

Subsc r ibe r s

+48% +15%

Q3 Q4 Q1 Q2 Q3 Q4 2004 2004 2005 2005 2005 2005

2804 3239 3461 3765 4187 4795 21.5% 22.2% 21.9% 22.8% 23.9%

Customers (‘000) Market share

?

9 Investor Relations DiGi Q4 2005

Prepaid driving subscriber base

+45% Prepaid +105% Postpaid 4442 3880 3525 3259 2653 3067 353 307 241 202 172 151 Q3 2004 Q4 2004 Q1 2004 Q2 2005 Q3 2005 Q4 2005 +14% Prepaid +15% Postpaid

Q3 Q4 Q1 Q2 Q3 Q4 2004 2004 2005 2005 2005 2005 Prepaid (‘000) Postpaid (‘000)

• Pre pa id drive n b y

a ttra c tive pro mo tio ns a nd sta rt pa c k pric e s

• So lid po stpa id

g ro wth

• Ove ra ll ve ry

c o mpe titive in va lue , simplic ity a nd re le va nc e Subsc r ibe r s

Active users (‘000)

3686

10 Investor Relations DiGi Q4 2005

High subscriber growth dilutes AMPU

AMPU

• Hig he r I

DD a nd intra ne t tra ffic

• Sub sc rib e r b a se

g ro wing fa ste r tha n inc o ming minute s; AMPU lo we r

• Po stpa id; usa g e

furthe r dilute d b y upta ke o f supple me nta ry line s

+4% Prepaid

• 22% Postpaid

+2% Blended +2% Prepaid

• 15% Postpaid

+2% Blended

Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2004 2004 2005 2005 2005 2005 Prepaid (mins) Postpaid (mins)

528 499 465 471 439 389 512 434

• 3% Prepaid
• 11% Postpaid
• 3% Blended

150 146 145 150 156 152 148 151

Blended (mins)

170 165 163 170 175 169 166 170

11 Investor Relations DiGi Q4 2005

ARPU sustaining; held up by usage mix

+2% Prepaid

• 31% Postpaid
• 2% Blended
• 4% Prepaid
• 28% Postpaid
• 3% Blended

AR PU

• Ble nde d ARPU

sta b le in spite o f re c o rd SI M upta ke

• Pre pa id ARPU

hig he r o n pro mo tio na l a c tivitie s a nd fe stive se a so ns

• Po stpa id lo we r due

to usa g e

164 143 142 128 111 99 161 116 55 54 51 54 54 55 55 53

Prepaid (RM) Postpaid (RM)

+2% Prepaid

• 11% Postpaid

0% Blended 61 59 56 59 58 58 60 58

Blended (RM) Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2004 2004 2005 2005 2005 2005

12 Investor Relations DiGi Q4 2005

Growing contribution from data revenues

• Be ne fiting fro m

e xpa nde d E DGE c o ve ra g e

• SMS do mina te s in

Q4, fe stive se a so n ke y drive r

• Ric he r c o nte nt a nd

ne w a pplic a tio ns drive o the r da ta Data r e ve nue s

+56% +57% 284 446

% of Mobile Revenue

+14%

14.9% 16.3% 16.7% 16.0% 17.0% 17.3% 14.9% 16.8%

Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2004 2004 2005 2005 2005 2005 Data Revenue (RM mil)

73 86 94 101 118 134

13 Investor Relations DiGi Q4 2005

Revenue growth continues to be high

• Ne w c usto me rs

a nd ma inta ine d ARPU pushing re ve nue hig he r

• Ste a dy

impro ve me nt in re ve nue ma rke t sha re R e ve nue

Q3 2004 Q4 2004 Q1 2004 Q2 2005 Q3 2005 Q4 2005 2004 2005

17.7% 18.4% 18.5% 20.4%

+37% +29%

?

2234 2884 +11%

? 17.4% 21.5%

Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2004 2004 2005 2005 2005 2005 Revenue (RM mil) Estimated Mobile Revenue Market share (%)

577 606 626 686 745 828

14 Investor Relations DiGi Q4 2005

Mobile revenues 95% of total revenues

• Pre pa id do mina te s

in va lue & g ro wth

• Po stpa id a lmo st

10% re v g ro wth

• I

nte rc o nne c t re ve nue s a ro und 12% mo b ile re ve nue s in Q4 Mobile r e ve nue s

70 69 78 85 90 +45% +12% +38% 98 1947 257 2695 351 676 504 541 571 640 700 784

Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2004 2004 2005 2005 2005 2005

423 460 483 546 599 676 1647 2305

Others (RM mil) Postpaid (RM mil) Prepaid (RM mil)

15 Investor Relations DiGi Q4 2005

EBITDA up in line with revenues

E BIT DA

• Ma rg in he ld up in

spite o f a g g re ssive e xpa nsio n a nd c o mpe titio n

• Unde rpinne d b y

stro ng o pe ra tio na l pe rfo rma nc e

+35% +29%

43.3% 44.2% 44.0% 43.2% 43.9%

979 1259 +10%

43.6% 43.8% 43.7%

Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2004 2004 2005 2005 2005 2005 EBITDA Margin (%) EBITDA (RM mil)

250 268 275 297 327 361

16 Investor Relations DiGi Q4 2005

EBITDA margin resilient

EBITDA margin Q305

43.9% +0.9% (Operations & Maintenance @ 5.4%)

• 0.8% (Other expenses @ 9.7%)

+0.3% (Staff costs @ 4.5%) +0.0% (Sales & Marketing @ 13.5%)

• 0.1% (Traffic charges @ 19.8%)

43.6%

EBITDA margin Q405

E BIT DA mar gin

• Hig he r I

DD tra ffic re sulte d in hig he r tra ffic c ha rg e s

• Sig ns o f e c o no mie s
• f sc a le ; in O&M

a nd sta ff c o sts

• A&P re ma in hig h
• 0.6% (Cost of materials @ 3.4%)

@ denotes % of revenue in Q405

17 Investor Relations DiGi Q4 2005

• Hig he r tra ffic

c ha rg e s; drive n b y I DD

• S&M pushe d

hig he r b y ne w la unc he s a nd pro mo tio ns

• Slig ht inc re a se in

b a d de b ts; fro m hig he r po stpa id b a se

Conscious cost management

Ope x

(RM mil) Q405 Q305 2005 2004 Cost of materials 28.0 20.6 88.6 557.2 393.5

168.3 225.2

135.0 180.0 Other expenses

• USP fund and license fees
• provision for bad & doubtful

debts

• others

80.7

50.3 3.8 26.6

68.2

41.8 2.9 23.5

272.8

164.3 11.9 96.6

208.8

129.7 6.9 72.2

1,627.1 43.7% 90.2 Traffic charges 164.2 147.1 422.1 Sales & Marketing

• Advertising & promotions
• Commissions

112.0

45.2 66.8

100.4

41.8 58.6

275.2

113.9 161.3

Staff Costs 37.3 35.9 114.2 Operations & Maintenance 45.0 46.7 146.7 Total 467.2 418.9 1,257.2 EBITDA margin 43.6% 43.9% 43.8%

18 Investor Relations DiGi Q4 2005

Improvements flow through to PAT

PAT

• L
• we r fina nc e c o sts

fro m pre pa yme nt o f lo a ns

• Ac c e le ra te d

de pre c ia tio n e ffe c ts Q4 with RM 9 mil

• PAT

a nd E PS inc re a se > 9% q -o n-q

(RM mil) Q405 Q305 2005 2004 EBITDA 360.8 326.8 1,259.3 (583.5) 675.8 (14.2)

(32.4) 18.2

661.6 (190.6) 471.0 62.8 979.0 Depreciation & Amortization (145.4) (132.1) (469.6) EBIT 215.4 194.7 509.4 Net finance income / (costs)

• finance costs
• interest income

3.2

(3.7) 6.9

4.1

(1.1) 5.2 (62.6) (75.5) 12.9

PBT 218.6 198.8 446.8 Taxation (62.0) (55.9) (129.4) PAT 156.6 142.9 317.4 EPS (sen) 20.9 19.1 42.3

19 Investor Relations DiGi Q4 2005

Accelerated roll-out; slight short-fall

Cape x (R M mil)

• Ne two rk e xpa nsio n

sho rt o f ta rg e ts

• Co ve ra g e no w a t

lo w 80s na tio nwide

• 49% c a pe x o n

e xpa nsio n - 29% o n c a pa c ity a nd ma inte na nc e

66 106 333 249 129 524 688 182

Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2004 2004 2005 2005 2005 2005

20 Investor Relations DiGi Q4 2005

High year end cash balance

• Hig h c a sh-flo w

g e ne ra tio n

• Wo rking c a pita l

b uild up due to hig he r a c c rua ls

• F

irst ta x pa yme nt

• f RM15 mil

F r e e c ash-flow

(RM mil) Q405 Q305 2005 Cash at start 888.9 636.0 634.7 338.5 Cash-flow used in financing activities 0.0 0.0 (379.9) (201.9) Net change in cash 294.1 252.9 548.3 296.2 1,227.5 369.9 (669.2)

(686.9)

1,183.0 572.4 330.8 100.8 (178.7)

(181.9)

Cash at end 1,183.0 888.9 634.7 144.9 2004 Cash-flow from operations 339.6 924.9 Changes in working capital 279.2 79.7 Cash-flow used in investing activities

• Capex

(324.7)

(333.0)

(506.5)

(519.9)

Operational cash-flow (EBITDA – Capex) 27.8 459.1

21 Investor Relations DiGi Q4 2005

Balance sheet has flexibility

(RM mil) 31 Dec 2005 31 Dec 2004 Fixed Assets 2,791.1 2,687.0 Intangible Assets 35.1 39.1 Deferred Expenses 0.5 15.2 Current Assets

• Cash and its equivalent

1,405.6

1,183.0

838.8

634.7

Current Liabilities

• Short-term borrowings

(1,302.6)

(0.0)

(1,142.8)

(224.6)

2,929.7 2,437.3 Financed by:- Shareholders’ Funds 2,248.1 1,777.2 Long-term & Deferred Liabilities

• Long-term borrowings

681.6

300.0

660.1

455.3

2,929.7 2,437.3

• F

ixe d a sse ts a ffe c te d b y RM76 mil a c c e le ra te d de pre c ia tio n e ffe c t in 2005

• F

irst time po sitive ne t c urre nt a sse ts Balanc e she e t

22 Investor Relations DiGi Q4 2005

Key ratios show strength

Q405 Q305 2005 7.0% 20.9% 23.1% Net cash Net cash 47.3x 76.3 sen 9.7% 23.8% 11.6% Net cash Net cash 49.7x 19.3 sen 2.4% 24.4% 2004 ROE (%) 7.0% 17.9% ROCE (%) 7.4% 20.9% Net debt-to-equity (%) Net cash 2.5% Net debt-to-EBITDA (x) Net cash 0.05x Interest Coverage NA 8.1x FCF/share 3.7 sen 61.2 sen FCF yield (%)* 0.5% 7.7% Capex/Sales (%)

* Based on share price of RM7.90 (closing on 14th February)

40.3% 23.4%

Ke y r atios

• Go o d

impro ve me nt in ROE a nd ROCE

• Ca pe x/ sa le s ra tio

a t its pe a k q ua rte r

DiGi Q3 2005

Updates and outlook

24 Investor Relations DiGi Q4 2005

Regulatory update

3G

• sub mitte d stro ng a nd c re dib le

b id

• b id b a se d o n pro ve n

inve stme nt c o mmitme nt & inno va tio n pro mise

• fo rma l b id a nno unc e me nt

e xpe c te d e nd F e b rua ry Numbe r Por tability

• fra me wo rk still unde r disc ussio n
• c e ntra l da ta -b a se a ppro a c h
• imple me nta tio n a ims fo r 2007
• we ll po sitio ne d to c a pture

po te ntia l c ha ng e s Pr e paid R e gistr ation

• ma nda to ry fro m 2006
• DiGi a nd industry wo rking

to g e the r to me e t g o ve rnme nt ta rg e t

• no ma jo r impa c t o n lo ng te rm

re ve nue de ve lo pme nt Ac c e ss Pr ic ing

• na rro wing o f g a p in fixe d a nd mo b ile

te rmina tio n ra te s

• full ye a r ne g a tive ne t impa c t le ss

tha n RM35 mil (re duc e d re ve nue s – re duc e d c o sts)

• ne w ra te s e ffe c tive 15 F

e b 2006, within g uida nc e

25 Investor Relations DiGi Q4 2005

SOA 404 (SOX) update

T e le nor liste d on Nasdaq

• T

e le no r a ims to b e SOA c o mplia nt b y e nd o f 2006

• DiGi a s a sig nific a nt o pe ra tio n

in T e le no r, the re fo re ne e ds to c o mply a s we ll Gove r nanc e and Contr

• l
• stre ng the ning inte rna l c o ntro ls
• ve r fina nc ia l re po rting
• mo re struc ture d, a nd visib ility o f,

ke y pro c e sse s

• e nha nc ing ke y c o ntro ls

Wor k done for

• ve r
• ne ye ar
• 2005: Busine ss pro c e ss

do c ume nta tio n a nd re me dia tio n

• 2006: Re me dia tio n, te sting a nd

fina l a udito r’ s a tte sta tio n

• Afte r 2006: Ong o ing

do c ume nta tio n upda te s, te sting a nd a tte sta tio n Pote ntial e ffe c ts to DiGi

• fixe d a sse t re g iste r re c o nstruc tio n
• a sse t ta g g ing a nd re c la ssific a tio n
• inc re a se o r de c re a se o f a sse ts’

re po rte d va lue

• mo re upda te s in 2006

26 Investor Relations DiGi Q4 2005

Delivering good returns to shareholders

75 se n c apital r e payme nt

• b ta ine d sha re ho lde rs’

a ppro va l

• pe nding Hig h Co urt a ppro va l
• e xpe c t c a sh pa yo ut in Q2

2006

• c urre nt sha re pric e indic a te s a

ne t yie ld o f 9.5% Balanc e she e t

• ROE

to b e e nha nc e d b y c a pita l re pa yme nt

• ng o ing a sse ssme nt o n o ptima l

c a pita l struc ture F inanc ing

• RM700 mil CP/ MT

N pro g ra mme a ppro ve d b y SC

• dra wdo wn de pe nde nt o n

re q uire me nts/ pla ns

• RM300 mil te rm lo a n in pla c e

Divide nd

• re a ffirme d; pa yo ut o f minimum 50%
• f ne t e a rning s b e g inning F

Y2006

• c urre nt sha re pric e a nd g uida nc e

indic a te a ne t yie ld in e xc e ss o f 4%

• first inte rim e xpe c te d in se c o nd ha lf
• f 2006

27 Investor Relations DiGi Q4 2005

Outlook maintained in relative terms

2006

Re ve nue 10-15% g ro wth ARPU lo we r E BI T DA marg in lo we r tha n 2005 Cape x RM800 mil – RM900 mil PAT mid te e ns g ro wth

28 Investor Relations DiGi Q4 2005

thank you se e you ne xt quar te r 3 May 2006

29 Investor Relations DiGi Q4 2005

Disclaimer

T his pre se nta tio n a nd the fo llo wing disc ussio n ma y c o nta in fo rwa rd lo o king sta te me nts b y DiGi.Co m Be rha d (“DiGi”) re la te d to fina nc ia l tre nds fo r future pe rio ds. So me o f the sta te me nts c o nta ine d in this pre se nta tio n o r a rising fro m this disc ussio n whic h a re no t o f histo ric a l fa c ts a re sta te me nts o f future e xpe c ta tio ns with re spe c t to fina nc ia l c o nditio ns, re sults o f o pe ra tio ns a nd b usine sse s, a nd re la te d pla ns a nd o b je c tive s. Suc h fo rwa rd lo o king sta te me nts a re b a se d o n DiGi’ s c urre nt vie ws a nd a ssumptio ns inc luding , b ut no t limite d to , pre va iling e c o no mic a nd ma rke t c o nditio ns a nd c urre ntly a va ila b le info rma tio n. T he se sta te me nts invo lve kno wn a nd unkno wn risks a nd unc e rta intie s tha t c o uld c a use a c tua l re sults, pe rfo rma nc e o r a c hie ve me nts to diffe r ma te ria lly fro m tho se in the fo rwa rd lo o king sta te me nts. Suc h sta te me nts a re no t a nd, sho uld no t b e c o nstrue d, a s a re pre se nta tio n a s to future pe rfo rma nc e o r a c hie ve me nts o f DiGi. I n pa rtic ula r, suc h sta te me nts sho uld no t b e re g a rde d a s a fo re c a st o r pro je c tio n o f future pe rfo rma nc e o f DiGi. I t sho uld b e no te d tha t the a c tua l pe rfo rma nc e o r a c hie ve me nts o f DiGi ma y va ry sig nific a ntly fro m suc h sta te me nts.