PETALING JAYA: Digi.com Bhd’s focus on the postpaid and fixed (FTTH) as well as the business-to-business (B2B) segments will help the group mitigate risks of further declines in its average revenue per user (Arpu).
Given that the migrant segment has taken a hit as a result of the Covid-19 pandemic, Digi’s pre-paid subscriptions are anticipated to remain under pressure, said Kenanga Research.
“As migrant workers are unlikely to return to Malaysia in 2021, we foresee continued downward pressure on prepaid subscriptions. Among other targets in Digi’s three-year growth plan, Digi is targeting to achieve a 20% growth in FTTH subscribers and a 33% growth in B2B revenue, both from the 2020 base.
“In our view, its focus on the FTTH and B2B segments helps the group mitigate risks of further Arpu declines, ” it said in a report yesterday.
TA Securities, meanwhile, said the focus for Digi in 2021 would be on building its core mobile business. “While Digi’s subscriber base, especially the migrant segment, has been challenged by the Covid-19 pandemic, efforts remain on growing its Malaysian active data subscribers.”
Apart from growing its fixed broadband services and B2B solutions, the telco is also looking at accelerating digitalisation.
UOB Kay Hian also noted that Digi’s prepaid subscribers continued to see a downtrend in the first quarter of the year, on the back of continued shortfall in the migrant segment.
“We believe this is also attributable to the intense data price competition.
“Digi believes this segment could see a swift rebound once international borders reopen, ” it pointed out.
For its first quarter ended March 31,2021, Digi reported a 20.2% year-on-year decline in net profit to RM264.8mil, as a result of higher interest costs due to mark-to-market adjustments on interest rate swaps.
PublicInvest Research said the company’s results came in within estimates. It said its earnings forecasts for the company remained unchanged.
MIDF Research meanwhile said the merger would be an advantage to Digi, as it would cement the group’s position as a leading telecommunications service provider in Malaysia.
“We think that the possibility of a merger will positively affect Digi’s business prospects, although such a scenario is premature at this juncture.
“All factors considered, we are maintaining our ‘neutral’ recommendation on the stock.”