Friday May 14, 2010
By LEONG HUNG YEE
hungyee@thestar.com.my
CEO: Higher handset subsidies to impact EBITDA margin
KUALA LUMPUR: DiGi.Com Bhd’s earnings before interest, tax, depreciation and amortisation (EBITDA) margin for 2010 may face some pressure due to its higher level of handset subsidies.
Chief executive officer Johan Dennelind said the handset subsidies, which were given out to customers to capture data traffic growth, was expected to have some impact on its EBITDA margin.
“We had a strong first quarter with EBIDTA margin of about 45%. We expect this to go to last year’s level mainly due to handset subsidies,” he said after the company’s AGM which lasted for two hours yesterday.
Last year, the telco achieved an EBITDA margin of 43.3%. For the first quarter, it achieved a net profit of RM278.2mil, or 35.80 sen per share on revenue of RM1.29bil.
Johan Dennelind (right) and DiGi CFO Stefan Carlsson at a press conference after the AGM
He said the subsidies were coming more into play as DiGi drove smartphones sales not just for the iPhone but also other phones such as the Android.
Dennelind, in its CEO review, said while its EBITDA margin would continue to be under some pressure but it targeted to improve the margin with further cost optimisation measures.
“We are confident of achieving an absolute operating cash flow higher than that of 2009. Operational efficiency will continue to be an important focus area to ensure we remain competitive,” said the outgoing CEO.
Overall, Dennelind said DiGi was optimistic of its growth. “The industry is still growing. Industry-wise, we anticipate revenue growth to be around 5% this year but DiGi aims to grow its revenue above this level.”
He said the group was in a great position in terms of capital management. He said its yield over the last five to six years was “superior”. He added that the accumulated dividend payout over the last five years was some RM6bil and its shareholders were very happy with the fact.
Dennelind said DiGi would “not compromise” on dividend and was looking to maintain its dividend policy of distributing a minimum 80% of annual net profit to shareholders.
On the sales of its iPhone, he said the takeup rate was “very encouraging”, but he did provide any numbers.
He said DiGi continued to see intense competition, its new business model being attacked and the rise of Internet usage. “There are many (challenges) but we rather see it as opportunities.”
On its 3G network coverage, he said the group was playing catch up. DiGi’s 3G network currently covers some 30% of populated areas. By year-end the coverage will be about 50%.
http://biz.thestar.com.my/news/story.asp?file=/2010/5/14/business/6258570&sec=business
Sunday, May 30, 2010
DiGi units terminate MVNO agreements
Saturday May 15, 2010
PETALING JAYA: DiGi.Com Bhd’s wholly-owned subsidiary DiGi Tel and Baraka Telecom Sdn Bhd have terminated their mobile virtual network operator (MVNO) agreement.
DiGi told Bursa Malaysia that this was due to Baraka “re-considering its MVNO business in Malaysia.”
http://biz.thestar.com.my/news/story.asp?file=/2010/5/15/business/6269255&sec=business
PETALING JAYA: DiGi.Com Bhd’s wholly-owned subsidiary DiGi Tel and Baraka Telecom Sdn Bhd have terminated their mobile virtual network operator (MVNO) agreement.
DiGi told Bursa Malaysia that this was due to Baraka “re-considering its MVNO business in Malaysia.”
http://biz.thestar.com.my/news/story.asp?file=/2010/5/15/business/6269255&sec=business
Chairman: DiGi board not a rubber stamp of Telenor
Monday May 31, 2010
DiGi chairman Sigve Brekke shares with StarBiz his thoughts on the company’s board composition and decisions as well as Telenor’s plans for India. Brekke is also executive vice-president of Telenor
STARBIZ: The Employees Provident Fund has a 16.06% stake in DiGi and no board seat. Has it asked for one?
Sigve Brekke: No, we haven’t received a request from them. We have met them and this question did not come up.
»We see benefits from changing CEOs at every different stage the company goes through« SIGVE BREKKE
How independent are your independent directors?
Datuk Abdul Halim Mohyiddin is the chairman of our audit committee. They go through all the financials, so there are checks and balances. (The other independent director is Tan Sri Leo Moggie.)
It is said the three Norwegian representatives decide on matters before any board meetings and the meeting is only to endorse these decisions. Your comments, please.
Telenor has a majority but the way the board operates is that there is a consensus way of deciding matters and there is seldom voting. I discuss with board members in and out of boardrooms. But we have real discussions at our board meetings.
Telenor’s worry is whether we are doing things that can be criticised by the minorities, so we have rules. We also do not give out sensitive information to Telenor or minorities. We are very focused as a board.
The board is certainly not a rubber stamp of Telenor; if we were, we would not have got away with it. We would have got into trouble as the analyst community tracks us and so does the Securities Commission. I must say, during the last AGM, we got a lot of credit for what we have done at DiGi.
Is is true that a rebranding of DiGi is in the offing and the Telenor’s propeller logo may replace DiGi’s existing logo.
We have no propeller (Telenor’s logo) for our operations in Ukraine and Russia. There will be no change now (for DiGi) but I can’t say for the future. It is not important but we have value and leadership expectations and ethics, so the graphical expression in branding is not so important.
But if there is a need to refresh and change over time, we could opt for it. But not now. We did that in Thailand when the brand became old, so we added the propeller to give it a fresher look.
Any update on your request for additional spectrum 900 megahertz spectrum from the Government?
We are still in discussions.
The dividends earned by Telenor from its operations in Malaysia is used for the Indian operations and there is talk that the higher dividend is meant to help Telenor pump money into India. Your comments, please?
DiGi’s dividend policy is driven by debt gearing of the company and not to help Telenor (earn more dividends). If the balance sheet looks better, the policy is to give better dividends. We are not over-leveraging the company by paying out more dividends. That’s a fact and we do not take additional dividends to fund India and that policy is very clear.
Of course someone is funding India. It comes from DiGi, Thailand, and other markets and indirectly go to India but that is how it has been.
We go in the early phase, grow a company, follow the development and pay out dividends and use that money to invest in emerging markets.
(DiGi declared an interim dividend of 35 sen per share, which is close to 100% of its first-quarter profit. The telco paid 138% of its net profit in 2009. For the past five years, it had paid total dividends of about RM6bil.)
Why didn’t Telenor bid for 3G spectrum in India?
We believe the whole bid pricing had become very expensive and there was no way we could raise that kind of money. We also need to focus on 2G right now and we don’t want the management and shareholders to think of 3G for now. There will be more opportunities later.
Does this in any way jeopardise your business in India?
No. Our business plan is to build on 2G and the main growth area is voice calls and SMS. It will take another six to seven years before 3G is really needed there. There will be more opportunities and more licences in the future and we can also share.
The industry will also consolidate at some point. That is why we are not worried about missing out in the first round. In any case, 3G is not meant for rural areas or mass market, it is mainly for the metro areas.
This is the same strategy deployed by DiGi when 3G spectra were offered in the early 2000s. Did DiGi feel it missed the boat in the first round?
As for Malaysia, we should have got in (the first round) but we decided not to go. It is less important than getting it in Malaysia than India.
http://biz.thestar.com.my/news/story.asp?file=/2010/5/31/business/6359392&sec=business
DiGi chairman Sigve Brekke shares with StarBiz his thoughts on the company’s board composition and decisions as well as Telenor’s plans for India. Brekke is also executive vice-president of Telenor
STARBIZ: The Employees Provident Fund has a 16.06% stake in DiGi and no board seat. Has it asked for one?
Sigve Brekke: No, we haven’t received a request from them. We have met them and this question did not come up.
»We see benefits from changing CEOs at every different stage the company goes through« SIGVE BREKKE
How independent are your independent directors?
Datuk Abdul Halim Mohyiddin is the chairman of our audit committee. They go through all the financials, so there are checks and balances. (The other independent director is Tan Sri Leo Moggie.)
It is said the three Norwegian representatives decide on matters before any board meetings and the meeting is only to endorse these decisions. Your comments, please.
Telenor has a majority but the way the board operates is that there is a consensus way of deciding matters and there is seldom voting. I discuss with board members in and out of boardrooms. But we have real discussions at our board meetings.
Telenor’s worry is whether we are doing things that can be criticised by the minorities, so we have rules. We also do not give out sensitive information to Telenor or minorities. We are very focused as a board.
The board is certainly not a rubber stamp of Telenor; if we were, we would not have got away with it. We would have got into trouble as the analyst community tracks us and so does the Securities Commission. I must say, during the last AGM, we got a lot of credit for what we have done at DiGi.
Is is true that a rebranding of DiGi is in the offing and the Telenor’s propeller logo may replace DiGi’s existing logo.
We have no propeller (Telenor’s logo) for our operations in Ukraine and Russia. There will be no change now (for DiGi) but I can’t say for the future. It is not important but we have value and leadership expectations and ethics, so the graphical expression in branding is not so important.
But if there is a need to refresh and change over time, we could opt for it. But not now. We did that in Thailand when the brand became old, so we added the propeller to give it a fresher look.
Any update on your request for additional spectrum 900 megahertz spectrum from the Government?
We are still in discussions.
The dividends earned by Telenor from its operations in Malaysia is used for the Indian operations and there is talk that the higher dividend is meant to help Telenor pump money into India. Your comments, please?
DiGi’s dividend policy is driven by debt gearing of the company and not to help Telenor (earn more dividends). If the balance sheet looks better, the policy is to give better dividends. We are not over-leveraging the company by paying out more dividends. That’s a fact and we do not take additional dividends to fund India and that policy is very clear.
Of course someone is funding India. It comes from DiGi, Thailand, and other markets and indirectly go to India but that is how it has been.
We go in the early phase, grow a company, follow the development and pay out dividends and use that money to invest in emerging markets.
(DiGi declared an interim dividend of 35 sen per share, which is close to 100% of its first-quarter profit. The telco paid 138% of its net profit in 2009. For the past five years, it had paid total dividends of about RM6bil.)
Why didn’t Telenor bid for 3G spectrum in India?
We believe the whole bid pricing had become very expensive and there was no way we could raise that kind of money. We also need to focus on 2G right now and we don’t want the management and shareholders to think of 3G for now. There will be more opportunities later.
Does this in any way jeopardise your business in India?
No. Our business plan is to build on 2G and the main growth area is voice calls and SMS. It will take another six to seven years before 3G is really needed there. There will be more opportunities and more licences in the future and we can also share.
The industry will also consolidate at some point. That is why we are not worried about missing out in the first round. In any case, 3G is not meant for rural areas or mass market, it is mainly for the metro areas.
This is the same strategy deployed by DiGi when 3G spectra were offered in the early 2000s. Did DiGi feel it missed the boat in the first round?
As for Malaysia, we should have got in (the first round) but we decided not to go. It is less important than getting it in Malaysia than India.
http://biz.thestar.com.my/news/story.asp?file=/2010/5/31/business/6359392&sec=business
DiGi focused on wireless services
Monday May 31, 2010
By B.K. SIDHU
bksidhu@thestar.com.my
It aims to win bigger share of broadband for small-screen market
KUALA LUMPUR: DiGi.Com Bhd wants to concentrate on wireless services rather than venture into Internet protocol television (IPTV) or broadcast so as not to spread its risks, says chairman Sigve Brekke.
He said the company would strive to achieve higher margins and win a bigger share of the broadband for the small-screen market.
“We will not be at a disadvantage if we did not go into the IPTV or broadcast business. We have to stay focused on wireless services and not spread into too many areas,’’ he told StarBiz in an interview.
“We believe there is enough growth for us to remain in data and voice business,’’ he said.
Telcos and celcos globally are increasingly venturing into broadcast to diversify their earnings and while that requires big investments, the returns can be lucrative if content is compelling.
»We see benefits from changing CEOs at every different stage the company goes through« SIGVE BREKKE
As for DiGi, it prefers to stick to what it knows best. And it is unwilling to invest millions to lay fibre because it doesn’t foresee credible returns if it were to make such an investment.
“We need to have an attacker’s mindset, bring in value propositions and segmentise the market further. That will allow us to take a fair share of the broadband market for small screens,” Brekke said.
“We are also coming to a situation where the industry growth is in the single digit. It will become more competitive and managing costs will become more crucial for us to improve our margins,’’ he said.
The mobile-phone industry is expected to grow by 5% this year.
Brekke did not give any targets but for the first quarter ended March 31, 2010, DiGi’s EBITDA (earnings before interest, tax, depreciation and amortisation) margin was at 44% compared with 43.3% a year earlier.
The company could face some pressure on margins due to its higher level of handset subsidy for iPhone sales but it is working on other areas to offset any shortfalls.
In contrast, Maxis’ EBITDA margin as at December last year was 50.4%, while for Axiata Group Bhd it was 39.3%.
For its fiscal first quarter ended March 31, DiGi reported net profit of RM278.2mil on revenue of RM1.29bil. In that period, data services made up 20.6% of mobile revenue.
DiGi recently saw a change at the helm. Henrik Clausen, who has worked in markets that thrive on broadband, took over from Johan Dennelind on May 17. Clausen is the sixth CEO for DiGi, in which Telenor has a 49% stake.
“We see benefits from changing CEOs at every different stage the company goes through. DiGi has had six CEOs in 11 years and all have different characters and expertise and each one has taken DiGi to a new level,’’ Brekke said.
http://biz.thestar.com.my/news/story.asp?file=/2010/5/31/business/6359397&sec=business
By B.K. SIDHU
bksidhu@thestar.com.my
It aims to win bigger share of broadband for small-screen market
KUALA LUMPUR: DiGi.Com Bhd wants to concentrate on wireless services rather than venture into Internet protocol television (IPTV) or broadcast so as not to spread its risks, says chairman Sigve Brekke.
He said the company would strive to achieve higher margins and win a bigger share of the broadband for the small-screen market.
“We will not be at a disadvantage if we did not go into the IPTV or broadcast business. We have to stay focused on wireless services and not spread into too many areas,’’ he told StarBiz in an interview.
“We believe there is enough growth for us to remain in data and voice business,’’ he said.
Telcos and celcos globally are increasingly venturing into broadcast to diversify their earnings and while that requires big investments, the returns can be lucrative if content is compelling.
»We see benefits from changing CEOs at every different stage the company goes through« SIGVE BREKKE
As for DiGi, it prefers to stick to what it knows best. And it is unwilling to invest millions to lay fibre because it doesn’t foresee credible returns if it were to make such an investment.
“We need to have an attacker’s mindset, bring in value propositions and segmentise the market further. That will allow us to take a fair share of the broadband market for small screens,” Brekke said.
“We are also coming to a situation where the industry growth is in the single digit. It will become more competitive and managing costs will become more crucial for us to improve our margins,’’ he said.
The mobile-phone industry is expected to grow by 5% this year.
Brekke did not give any targets but for the first quarter ended March 31, 2010, DiGi’s EBITDA (earnings before interest, tax, depreciation and amortisation) margin was at 44% compared with 43.3% a year earlier.
The company could face some pressure on margins due to its higher level of handset subsidy for iPhone sales but it is working on other areas to offset any shortfalls.
In contrast, Maxis’ EBITDA margin as at December last year was 50.4%, while for Axiata Group Bhd it was 39.3%.
For its fiscal first quarter ended March 31, DiGi reported net profit of RM278.2mil on revenue of RM1.29bil. In that period, data services made up 20.6% of mobile revenue.
DiGi recently saw a change at the helm. Henrik Clausen, who has worked in markets that thrive on broadband, took over from Johan Dennelind on May 17. Clausen is the sixth CEO for DiGi, in which Telenor has a 49% stake.
“We see benefits from changing CEOs at every different stage the company goes through. DiGi has had six CEOs in 11 years and all have different characters and expertise and each one has taken DiGi to a new level,’’ Brekke said.
http://biz.thestar.com.my/news/story.asp?file=/2010/5/31/business/6359397&sec=business
Axiata upgraded to 'buy' from 'hold'
Published: 2010/05/31
Axiata Group Bhd was upgraded to “buy” from “hold” at HwangDBS Vickers Sdn Bhd, with a raised share forecast of RM4.50.
The research house said in a report today it also increased the mobile phone company’s earnings estimate by 46 per cent for its 2010 financial year and by 39 per cent for 2011.
Its shares climbed 1.1 per cent to RM3.73 at 9:04 am local time, set for their highest close
http://www.btimes.com.my/Current_News/BTIMES/articles/20100531093353/Article/index_html
Axiata Group Bhd was upgraded to “buy” from “hold” at HwangDBS Vickers Sdn Bhd, with a raised share forecast of RM4.50.
The research house said in a report today it also increased the mobile phone company’s earnings estimate by 46 per cent for its 2010 financial year and by 39 per cent for 2011.
Its shares climbed 1.1 per cent to RM3.73 at 9:04 am local time, set for their highest close
http://www.btimes.com.my/Current_News/BTIMES/articles/20100531093353/Article/index_html
TM rises on Q1 net income leap
Published: 2010/05/31
Telekom Malaysia Bhd, a fixed-line phone and internet operater, rose its highest level in almost two weeks in Kuala Lumpur trading after saying first-quarter net income jumped to RM242.9 million from RM27.7 million a year ago.
The stock rose 2.8 per cent to RM3.35 at 9:14 a.m. local time, set for its highest close since May 18. -- Bloomberg
http://www.btimes.com.my/Current_News/BTIMES/articles/20100531093018/Article/index_html
Telekom Malaysia Bhd, a fixed-line phone and internet operater, rose its highest level in almost two weeks in Kuala Lumpur trading after saying first-quarter net income jumped to RM242.9 million from RM27.7 million a year ago.
The stock rose 2.8 per cent to RM3.35 at 9:14 a.m. local time, set for its highest close since May 18. -- Bloomberg
http://www.btimes.com.my/Current_News/BTIMES/articles/20100531093018/Article/index_html
TM net profit surges in Q1
Published: 2010/05/29
Share
TELEKOM Malaysia Bhd's (TM) (4863) first quarter net profit for the period ended March 31 2010 jumped to RM242.9 million from only RM27.7 million a year ago, backed by strong growth from Internet, data and other related telecommunication services.
Revenue for the quarter rose by 0.9 per cent to RM2.12 billion from RM2.11 billion in the same quarter in 2009.
In a statement, the telecommunication company said Internet revenue grew by 9.8 per cent to turn in RM422.6 million from RM385 million previously.
Data and leased services revenue increased by 8.4 per cent to RM397.7 million from RM366.9 million a year before.
Other telecom services grew by 16.1 per cent to RM296.7 million from RM255.5 million.
The strong growth in these non voice revenue streams was partially offset by lower voice revenue and international inpayment.
TM group chief executive officer Datuk Zamzamzairani Isa said Internet continues to be a strong revenue-driver for the company.
As at end-March 2010, its customer base stood at 1.48 million.
The strong growth for the first quarter period was also boosted by favourable foreign exchange currency translation.
TM recorded an unrealised exchange gain on translation of foreign currency borrowings of RM166.6 million as compared to a loss of RM175.5 million in the period of 2009.
Zamzamzairani said TM has been aggressively introducing new and innovative products over the last six months, to cater for the ever changing demand pattern as well as competition from other players in the broadband space.
The notable ones are Super Upgrade Deals and the Blockbuster Deals.
The Super Upgrade Deals has so far registered about 55,000 existing broadband customers moving into higher Internet speed packages while the Blockbuster Deals has 24,000 new customers.
TM, however, registered a lower earnings before interest, tax, depreciation and amortisation (Ebitda) in the first three months of 2010 of RM715.3 million as compared to RM816.2 million previously.
This was due to, among others, higher advertising and promotion expenses for product promotion and UniFi related activities, higher international outpayment due to increase in traffic minutes, higher supplies and materials cost, as well as higher customer premises equipment and parts cost in line with increased Internet installations.
Zamzamzairani said Ebitda margin of 33.2 per cent for the first quarter of 2010, however, remains in line with key performance indicator of 33 per cent set for this year.
Moving forward, he said TM was set to benefit from the economic recovery, especially in the broadband space.
"Penetration rate in the broadband market is still low at 34.2 per cent of households as of end-March 2010," he said, adding this gives TM the opportunity to further enhance its leading role in the industry.
http://www.btimes.com.my/Current_News/BTIMES/articles/teleup/Article/
Share
TELEKOM Malaysia Bhd's (TM) (4863) first quarter net profit for the period ended March 31 2010 jumped to RM242.9 million from only RM27.7 million a year ago, backed by strong growth from Internet, data and other related telecommunication services.
Revenue for the quarter rose by 0.9 per cent to RM2.12 billion from RM2.11 billion in the same quarter in 2009.
In a statement, the telecommunication company said Internet revenue grew by 9.8 per cent to turn in RM422.6 million from RM385 million previously.
Data and leased services revenue increased by 8.4 per cent to RM397.7 million from RM366.9 million a year before.
Other telecom services grew by 16.1 per cent to RM296.7 million from RM255.5 million.
The strong growth in these non voice revenue streams was partially offset by lower voice revenue and international inpayment.
TM group chief executive officer Datuk Zamzamzairani Isa said Internet continues to be a strong revenue-driver for the company.
As at end-March 2010, its customer base stood at 1.48 million.
The strong growth for the first quarter period was also boosted by favourable foreign exchange currency translation.
TM recorded an unrealised exchange gain on translation of foreign currency borrowings of RM166.6 million as compared to a loss of RM175.5 million in the period of 2009.
Zamzamzairani said TM has been aggressively introducing new and innovative products over the last six months, to cater for the ever changing demand pattern as well as competition from other players in the broadband space.
The notable ones are Super Upgrade Deals and the Blockbuster Deals.
The Super Upgrade Deals has so far registered about 55,000 existing broadband customers moving into higher Internet speed packages while the Blockbuster Deals has 24,000 new customers.
TM, however, registered a lower earnings before interest, tax, depreciation and amortisation (Ebitda) in the first three months of 2010 of RM715.3 million as compared to RM816.2 million previously.
This was due to, among others, higher advertising and promotion expenses for product promotion and UniFi related activities, higher international outpayment due to increase in traffic minutes, higher supplies and materials cost, as well as higher customer premises equipment and parts cost in line with increased Internet installations.
Zamzamzairani said Ebitda margin of 33.2 per cent for the first quarter of 2010, however, remains in line with key performance indicator of 33 per cent set for this year.
Moving forward, he said TM was set to benefit from the economic recovery, especially in the broadband space.
"Penetration rate in the broadband market is still low at 34.2 per cent of households as of end-March 2010," he said, adding this gives TM the opportunity to further enhance its leading role in the industry.
http://www.btimes.com.my/Current_News/BTIMES/articles/teleup/Article/
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