Earnings Conference Call Quarter 4, 2013

Transcription

1 Earnings Concall/ Q OPEN Earnings Conference Call Quarter 4, 2013 Karl Erik Broten, CFO 6 Feb

2 Key highlights Operational highlights Financials updates Guidance and outlook Q&A 2

3 Solid round up and delivered DiGi s promise Q benefited from full scale modernised network with strong increase in internet services 3G/HSPA+ coverage has reached over 80% population nationwide with improved quality and stability Had a successful year end Thank You campaign 5.8% revenue growth Finish line to an eventful FY13 Delivered on 2013 financial guidance 4 th and final dividend payment of 7.0 sen per share Total payout for FY13 of 21.3 sen per share 45% EBITDA 34% Ops-CF 2013 Guidance 5% - 7% revenue growth ~1pp lower EBITDA and Ops Cash-Flow margin from 2012 levels (revised) 41% EPS growth 3

4 Stronger margins from service revenue and efficiencies 6.4% y-o-y revenue growth RM mln 1,733 1,700 1,629 1,647 1,653 1,526 1,553 1,577 1,492 1, % 3.0% -1.1% 1.1% 3.4% 0.4% 1.8% 2.8% 1.5% 1.9% q-o-q % Service Revenue Revenue 47% EBITDA margin 32% PAT margin 39% Ops Cash-Flow margin +11.7% +5.7% % +22.0% +44.7% +27.8% % 44% 45% 45% 47% 29% 32% 34% 31% 39% 4

5 Creating headlines on Internet For All offerings Campaigns and Year End Sales Increased focus on the internet based subscriptions and usage Launched special year end Thank You campaign with amazing deals for smartphones, tablets, modems, calls and internet with DiGi Encouraging internet take-up especially amongst the prepaid subscribers Affordable smartphones and tablets continued to bring positive spin to internet adoption Improved customers experience more customers who would promote DiGi s services 5

6 Steady rise on internet subscribers Subscriber development +4.8% +1.6% 10,494 10,372 10,548 10,827 10,995 1,671 1,678 1,686 1,696 1,700 8,823 8,694 8,862 9,131 9,295 6,007 6, Prepaid Internet subscriber mix 6, ,755 6, ,734 5,838 6,343 6,520 6,654 MI Subs Postpaid BB Subs Healthy subscriber base with +168K net adds for the quarter; and +501K net adds for FY13 Internet subscribers rose 14.5% y-o-y mainly driven by: internet subscriptions from both new and existing base leveraging on new coverage areas, on ground promotions and incentives Subscriber base remained resilient against intensified competition in the internet and IDD markets Well positioned at the front line in capturing affordable and reliable internet demands 6

7 Stable ARPU with more than 35% from non-voice Blended ARPU composition RM Maintained healthy ARPU development over a larger subscriber base ARPU uplift from existing subscriber base complemented those from emerging and less affluent coverage areas Voice Internet Messaging VAS ARPU mix RM Solid distribution network and relevant products offerings anchored consistent ARPU development The improved network quality and customer experience further contributed to overall customers satisfaction and ARPU stability Postpaid Prepaid 7

8 Voice remained resilient amidst stronger internet Minutes of Use ( MOU ) Minutes Fairly stable voice usage over a larger subscriber base through periodic usage campaigns Blended MoU Average price per minute ( APPM ) sen Effects from data shift well compensated by the growth in internet usage incremental top line revenue from new subscribers Pressure from IDD price competition managed sustainably with APPM remained unchanged at 13 sen. Voice pricing susceptible to next MTR revision effective 1 Jan 2014 Per Min 8

9 Volumes for year end sales and iphone 5S demands No. of handsets and devices sold Relatively lower volumes sold compared to prior quarters, which included SKMM Youth smartphones Current quarter s demand mainly from iphone 5S and year end sales Consequently, smartphone penetration rose to 38.1% (+11.7 pp from Q4 2012) Smartphone and MI penetration 54.6% 56.3% 60.1% 60.2% 60.5% 26.4% 28.5% 30.4% 34.0% 38.1% % of MI subs % of smartphone subs % Mobile internet adoption continued to gain traction among new and existing subscribers With the improved data network experience and greater access to smartphones, MI subscribers consumed more data at much faster pace with higher data quota demands 9

10 3G/HSPA+ population coverage reached 80.1% 3G/HSPA+ population coverage Substantially closing the 3G/HSPA+ network gap from 67%, a year ago 54% 67% z 80% Full scale modernised network poised for better network quality and speed to cater for growing data demands DiGi 4G LTE The own built and joint fibre network has positively expanded to > 3,200 KM important backhaul to support the always-on access, high-speed data connectivity experience With network modernisation completed and sizeable 3G/HSPA+ coverage established, LTE expansion will progress faster in 2014 while continuing on quality optimisation Well positioned in delivering Internet For All 10

11 Another industry collaboration breakthrough DiGi together with Celcom signed fibre collaborative deal with TM on 13 Dec 2013 to secure quick access to fibre infrastructure for future capacity demands covers > 3,000 KM fibre network An important part of the ongoing network collaboration between DiGi and Celcom to roll out > 10,000 KM of fibre network nationwide Capitalising on built - share infrastructure synergies to optimise on costs and avoid infra duplications Enhancing the ability to deliver affordable and high-quality internet connectivity to more Malaysians 11

12 4.1% service revenue growth against tepid industry growth Revenue composition RM bln Service revenue composition RM bln +5.8% +4.1% +6.4% +1.9% % +1.5% FY 2012 FY 2013 FY 2012 FY 2013 Service Device & Others Voice Data 12

13 Stronger prepaid revenue amidst intensified competition Service revenue mix 1,492 1,476 1,526 1,553 1, ,067 1,050 1,093 1,119 1,138 Prepaid Postpaid Voice revenue RM mln +5.7% +1.5% RM mln +1.6% +0.0% 1, ,011 1,020 1, Prepaid service revenue grew 6.7% y-o-y and 1.7% q-o-q +17.7% data revenue y-o-y +2.7% voice revenue y-o-y Postpaid service revenue grew 3.3% y-o-y and 1.2% q-o-q +9.2% data revenue y-o-y -2.3% voice revenue y-o-y FY13 service revenue strengthened +5.2% to RM4.4 bln for prepaid +1.4% to RM1.7 bln for postpaid Relatively stable q-o-q voice revenue though higher use of data services Prepaid Postpaid 13

14 Improved data speed fuelled internet growth Data revenue mix +14.1% +4.5% Internet Messaging VAS MI penetration rate RM mln For FY13, data revenue grew 14.2% while internet revenue grew 47.5%, % more than cushioned the lower revenue from messaging and VAS Internet revenue continued to surge 8.7% q-o-q and 43.8% y-o-y supported by improved data speed and usage rising mobile internet subscriptions; and higher smartphone penetration to 38.1% 67% 68% 69% 68% 72% 52% 54% 58% 59% 58% The continuous drive on internet related campaigns and offers has spurred MI penetration rate to 72% for postpaid. Postpaid Prepaid Prepaid MI penetration registered a 1pp dip to 58% mainly due to dilutive effect from larger prepaid subscriber base 14

15 Cost continued to trend efficiently Total cost trend COGS Opex Opex (% of revenue) RM mln +3.2% +0.1% 24.6% 25.3% 25.1% 24.7% 24.3% 7.5% 7.4% 7.8% 7.6% 7.7% 3.1% 3.6% 3.7% 3.4% 3.2% 4.5% 5.0% 4.9% 4.9% 4.4% 5.7% 5.8% 5.7% 6.1% 6.0% 3.8% 3.5% 3.0% 2.7% 3.0% % Total cost kept constant whilst delivering higher service revenue and benefiting from post network modernisation efficiencies Full year opex to revenue has improved to 24.9%, from 25.5%, a year ago Attributed to strong cost management discipline to counter rising cost of operations on larger network footprints; and inflationary effects Now, in a better position to benefit from the established operational efficiencies as well as synergies from on-going strategic industry partnerships Others USO O&M Staff Cost Sales & Mktg 15

16 Margins uplifted in the final quarter EBITDA % PAT % 1, CF margin Capex % 1, EBITDA and PAT margins 45% 44% 45% 45% 47% 15% 20% 23% 26% 32% Capex and Ops Cash-Flow margins 29% 32% 34% 31% 39% 16% 12% 11% 14% 7% OpsCF 449 EBITDA PAT Capex RM mln 548 RM mln 60.0% 40.0% 20.0% 0.0% EBITDA margin and PAT margin rose to 47% and 32% respectively as a flow through from lower device subsidies, improved OPEX to revenue discontinuation of accelerated depreciation Continued to take advantage on last mile tax incentive to bring effective tax to 20% for the full year resulting in 41.5% stronger PAT for FY13 Capex spent for the final quarter was relatively lower, bringing the overall full year capex to revenue ratio of 11% and Ops CF margin at 34%. 16

17 FY13 EPS improved by 41.3% Payout Ratio EPS and DPS 80% 90% 98% 99% 99% Q * Q113 Q213 Q313 Q413 DPS EPS Balance sheet sen RM mln Total Assets 4,014 3,809 3,923 3,788 3,752 Total Equity % 0% % % % % % EPS increased 22.4% q-o-q to 7.1 sen contributing to higher FY13 EPS to 21.9 sen (FY12: 15.5 sen) Interest-bearing debt ended 21.2% lower compared to previous quarter mainly due to settlement made Retained strong balance sheet with net debt/ebitda < 0.3x The Board has declared its 4th and final dividend of 7.0 sen per share (net) equivalent to RM544 million, payable to shareholders on 7 March 2014 Interestbearing debts Cash & cash equivalents 1, Total dividend payout of 21.3sen, equivalent 4.63% yield on average share price of RM

18 2014 ambition and priorities Aims to deliver 4 6% Revenue growth Sustain EBITDA margin Momentum in Q4 provided a good start leading to FY14 uptrend to continue although growth may not be as strong Priorities on delivering Internet For All, driving greater customer focus and solid revenue growth Higher investment on sustainable competitive network and platforms to strategically capture growth opportunities expand LTE and 3G/HSPA+ network develop more extensive fibre network Capex to revenue ratio slightly up while maintain healthy Ops Cash-Flow margin 18

19 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. 19

20 Thank you See you next quarter! 20

21 Appendix 21

22 Full year financial performance 6,361 6,733 5,891 6, % +4.1% +3.9% +41.5% +3.3% 2,929 3,043 1,206 1,706 2,229 2,302 Revenue Service Revenue EBITDA PAT Ops Cash-Flow

23 Key operating performance KPIs (RM mln) Q413 Q313 Q213 Q113 Q412 Q312 Q212 Q112 Q411 Q-o-Q Y-o-Y Subscriber base 10,995 10,827 10,548 10,372 10,494 10,304 10,229 9,936 9,920 2% 5% Revenue 1,733 1,700 1,653 1,647 1,629 1,583 1,580 1,569 1,545 2% 6% EBITDA % 12% EBITDA margins 47% 45% 45% 44% 44% 45% 48% 47% 47% 1.7pp 2.3pp Depreciation & Amortisation (122) (221) (247) (288) (361) (307) (332) (330) (337) -45% -66% EBIT % 89% Net finance (costs)/income (5) (6) (6) (8) (4) (2) (1) (1) (1) -17% 25% Profit Before Tax % 90% Taxation % 18% Profit After Tax % 123% *EPS (sen) % 122% Prepaid ARPU % 0% Postpaid ARPU % 0% Blended ARPU % 2% 23

24 Revenue composition (RM mln) Q413 Q313 Q213 Q113 Q412 Q312 Q212 Q112 Q411 Q-o-Q Y-o-Y REVENUE 1,733 1,700 1,653 1,647 1,629 1,583 1,580 1,569 1,545 2% 6% Service Revenue 1,577 1,553 1,526 1,476 1,492 1,470 1,470 1,459 1,468 2% 6% Voice revenue 1,020 1,020 1, ,004 1,010 1,025 1,011 1,023 0% 2% Data revenue % 14% Internet % 44% Messaging % -18% VAS % -4% Device and other revenue % 14% Prepaid Revenue 1,138 1,119 1,093 1,050 1,067 1,050 1,034 1,032 1,045 2% 7% Voice revenue % 3% Data revenue % 18% Postpaid Revenue % 3% Voice revenue % -2% Data revenue % 9% 24

25 Reported COGS and OPEX (RM mln) Q413 Q313 Q213 Q113 Q412 Q312 Q212 Q112 Q411 Q-o-Q Y-o-Y COGS % 2% Cost of materials % -4% Traffic charges % 4% OPEX % 5% Sales & marketing % 9% Staff costs % 12% Operations & maintenance % 3% Other expenses % 1% USP fund and license fees % 13% Credit loss allowances % -13% Others % -17% TOTAL % 3% 25

26 Reported Cash-Flow (RM mil) Q413 Q313 Q213 Q113 Q412 Q312 Q212 Q112 Q411 Q-o-Q Y-o-Y Cash at start ,453 1,517 1,518 1, % -62% Cash-flow from operations % 52% Changes in working capital (197) (248) 9 (142) (110) 55 (59) % 79% Cash-flow used in investing activities (126) (227) (180) (186) (243) (137) (165) (108) (296) -44% -48% Capex (130) (234) (186) (191) (255) (150) (177) (118) (309) -44% -49% Cash-flow used in financing activities (642) (352) (298) (346) (933) (459) (459) (156) (288) 82% -31% Net change in cash (139) (211) 182 (130) (744) (64) (1) % -81% Cash at end ,453 1,517 1,518 1,098-25% -42% Operational cash-flow (EBITDA Capex) % 45% Cash-flow margin 39% 31% 34% 32% 29% 36% 36% 39% 27% 8% 10% 26