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DiGi Malaysia Q2 08: Disappointing Customer Growth but Solid Financials
DiGi is MalaysiaÃ's third largest mobile operator by customer numbers behind Celcom and market leader Maxis. Between the end of 2001 and the middle of 2007 it saw a steady rise in market share, narrowing the gap between it and Celcom from over 15pp to less than 2pp. However, since Q2 07 Celcom has responded strongly while DiGi has flagged somewhat, and by the end of Q1 08 Celcom had restored a market share lead of more than 4pp, with 31.2% to DiGiÃ's 27.0%.
Although Celcom is yet to report its Q2 08 figures, it seems likely that the gap will have widened further. DiGi managed just 84k net additions in the quarter, its worst second-quarter result since Q2 01, and in proportionate terms the quarterly growth rate of 1.3% was the worst second-quarter result it has ever recorded.
At the end of the quarter, DiGiÃ's customer base stood at 6.64m, up 10.2% year on year. This compares to 10.7% growth in the prior twelve months. Contract customer growth actually improved, however, from 40.3% to 43.6%, with new records for quarterly net additions set in each of the past three quarters. In Q2 08, there were 75k net additions to the contract base, up from 43k in Q2 07. Net additions to the prepaid base are far more volatile, and in Q2 08 there were just 9k new prepaid customers compared to 198k in Q2 07. Annual prepaid growth stood at just 6.5%, down from 8.3% for the prior period. As a consequence of the divergence between contract and prepaid growth, customer quality improved significantly, from 9.8% contract at the end of Q2 07 to 12.8% a year later.
Contract ARPU has remained relatively flat over the past two years, with a total range of RM 9 over the past eight quarters. Q2 08 saw contract ARPU of RM 91, up RM 2 year on year. Prepaid ARPU has also remained flat at around RM 55 since the beginning of 2007. However, both of these trends belie steady falls in the effective price of contract and prepaid minutes: the contract ARPM (average revenue per minute) fell 9% year on year to RM 0.18, while the prepaid ARPM dropped 4% to RM 0.33. The companyÃ's financial figures remained robust, however, with revenues up 12.9% year on year to RM 1,194m and EBITDA up 11.0% to RM 557m. The EBITDA margin dropped 0.8pp, but was still strong at 46.6%.
Posted to the site on 29th July 2008
This article was extracted from The Mobile World Briefing, the weekly newsletter from The Mobile World.
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