Digi starts off 2Q earnings season with net profit of RM288m

“Internet and digital revenue rose 8% y-o-y to RM953mil or 72.4% of service revenue, " it said about its second quarter results.

UALA LUMPUR: Digi.com Bhd started the second quarter with net profit of RM288.03mil on lower revenue during the movement control order (MCO) which started on March 18 but it is positive that business activity will resume to pre-MCO levels.

In its financial results for the quarter ended June 30,2020, its net profit was down 26.6% from RM392.47mil a year ago.

Digi said on Tuesday its revenue fell 6.2% to RM1.45bil from RM1.55bil due to impact on roaming revenues, free connectivity to support customers, and decline in traditional voice usage during the MCO

Its earnings per share were 3.7 sen compared with 5.05 sen. It declared an interim dividend of 3.7 sen compared with five sen a year ago.

“Internet and digital revenue rose 8% y-o-y to RM953mil or 72.4% of service revenue. Postpaid revenue eased 1.2% y-o-y to RM639mil over a steady base of three million subscribers.

“Operating expenditure improved by 7% y-o-y to RM369mil. Earnings before interest, tax, depreciation and amortisation (Ebitda) at RM770mil or 53% margin while profit after tax (PAT) was RM288mil or 19.8% margin, ” it said.

Its operating cash flow at RM545mil or a 37.5% margin. having invested RM225mill capex for network enhancements.

Digi's net debt to Ebitda was ratio healthy at 1.5 times while conventional debt over total assets was at 8.2%, well within the shariah threshold.

It said in 2Q, Digi continued to operate effectively with a largely remote workforce organised around a strong business continuity management focus to meet operational and customer needs.

The company focused its efforts on securing network availability in critical and high demand locations, transforming channels to provide customers more digital touchpoints to transact, and calibrating offerings to suit customers’ connectivity needs.

Additionally, Digi continued to provide cohesive support for consumer and business customers, the community, and national efforts in the form of the free daily 1GB internet offer and business continuity boosters, over a reliable network experience.

These prompt efforts, combined with responsible financial management that yielded an opex reduction of 7% y-o-y, drove the company’s resilient performance in the quarter despite the challenging macro environment.

Digi also said widescale retail closure during the period however, impacted the company's acquisition activities, while roaming revenues were under significant pressure from a near-complete ban on inbound and outbound travel.

This cause its overall data monetisation and traditional voice usage was also impacted.

Digi’s CEO Albern Murty said: “This was a well-fought quarter with a solid focus on operational efficiency driving business resilience, and on network excellence to support growing customer demand amid impact from Covid- 19.

“As we see run rates gradually return in June, we believe these proactive and well-coordinated business continuity efforts position us well to drive continued operational resilience in the second half of 2020.

“Our focus is to deliver business priorities to create value for stakeholders and to play a key role in supporting the society’s recovery in the new normal.”

In the first half ended June 30, its net profit was down by 15.5% to RM620.03mil compared with RM733.98mil in the previous corresponding period. Its revenue declined by 1.4% to RM3.01bil from RM3.05bil.

Digi said for the near-term, it will prioritise on:

* Segmented and best-in-value propositions to deliver on core and digital businesses;

* Optimising spend and cash management efforts to secure resilient cash flow;

* Enhancing channel digitalisation and modernisation across sales, marketing and distribution; and

* Strengthening network and IT infrastructure to support growing internet and digital adoption.