DiGi posts impressive growth with revenue up 26%

Press Release
October 25, 2005

DiGi posts impressive growth with revenue up 26%

- Customer base expands by 49% to 4.2 million
- EBITDA up 26% to RM899 million
- Net profit up 41% to RM314 million

Kuala Lumpur, October 26, 2005 - DiGi.Com Berhad ("DiGi") announced strong financial results for the nine-month period ended 30 September 2005, reflecting the success of its clear value propositions and launch of innovative mobile solutions.

The company also declared its first dividend policy of a recurring payout ratio of a minimum of 50% of net earnings commencing financial year 2006.

Despite the pressures of competition, DiGi's revenue jumped 26% from RM1.6 billion recorded a year ago to RM2.1 billion this year, as it added 1.4 million new subscribers, boosting net profit up by 41%. As a result, earnings per share rose to 41.9 sen when compared to 29.6 sen previously.

Earnings before interest, tax, depreciation and amortization ("EBITDA") grew by 26% to RM899 million from RM711 million achieved last year. EBITDA margin maintained at 43.7% as a result of continued improvements in operational efficiencies.

Profit before tax ("PBT") increased by 42% to RM443 million against RM312 million registered in the same period of 2004. The company attributed the surge to better EBITDA performance coupled with lower net finance costs.

Morten Lundal, DiGi's Chief Executive Officer said, "I am delighted to announce a robust set of results that demonstrates DiGi continued strong operational performance. The company has succeeded in all key performance indicators and shown clear leadership and innovation in consistently creating value for customers while staying profitable."

DiGi attributed its higher mobile revenue to the 32% rise in voice usage and the 58% increase in mobile data. Accounting for 17% of mobile revenue, mobile data grew from 14% as of last year, indicating the growing demands for advanced mobile data revenue. "As the pioneer providing the widest high speed mobile coverage in Malaysia, our slew of richer content and new applications is successfully driving our customers' increased usage of mobile data beyond SMS," Lundal highlighted.

The company's focus on postpaid continues to pay off as postpaid customers grew by 103% to 307,000 subscribers from the same period last year. The prepaid market recorded an increase of 46% to 3.9 million, amounting to 93% of the total subscriber base. Driven by the momentum of innovative value propositions and relevant promotions, the prepaid segment continues to drive yet another set of record achievements.

Q305 on Q304For this quarter, revenue increased by 29% to RM745 million compared with RM577 million achieved in the previous year corresponding quarter, driven by the 49% increase in its customer base.

EBITDA grew by 31% to RM327 million while EBITDA margin recorded a 0.6 percentage point increase to 43.9% this quarter. The better-than-expected improvement was due in part to higher revenue and benefits from economies of scale achieved.

PAT rose by 73% to RM143 million from RM83 million recorded in the previous year same time, a marked increase attributed to higher revenue, sustainable EBITDA margin and lower finance costs.

Q305 on Q205For the current quarter under review versus the previous quarter, PBT increased by 25% to RM199 million, driven mainly by a 9% increase in revenue to RM745 million as a result of 422,000 additional subscribers. PAT jumped 26% from RM113 million to RM143 million, while EPS rose to 19.1 sen from 15.1 sen last quarter.

Thanks to strong branding and promotions driving a high pace of customer acquisition, both prepaid and postpaid gained grounds. Postpaid subscribers as of this quarter stood at 307,000, a 27% increase from the preceding quarter, while prepaid subscribers increased by 10% to 3.9 million, registering an 11% increase overall on the total customer base.

Capital Management InitiativesDiGi today announced a dividend policy with commitment to pay out a minimum of 50% of its profit after tax to shareholders starting in 2006, marking the first time DiGi returns cash to shareholders.

At the same time DiGi also proposed a capital repayment of RM0.75 sen for every DiGi share. The proposed repayment in cash will be implemented via a reduction of DiGi's share capital pursuant to Section 64 of the Companies Act. The maximum amount to be distributed to entitled shareholders will be approximately RM562 million. The proposed repayment will be funded through internally generated funds and available credit facilities and is expected to be completed by the second quarter of 2006, subject to approval from relevant authorities and shareholders.

DiGi Telecommunications Sdn Bhd, one of DiGi's wholly-owned subsidiaries, has put in place a Private Debt Securities programme, comprising Commercial Papers and Medium Term Notes with aggregate value of up to RM700 million, which is now pending for approval from Securities Commissions. According to Lundal, the availability of such facilities is expected to accord further financial flexibility to the company. Lundal added, "The company is investing significantly in the business model for medium and long-term growth. We have considered all future operating requirements and financial obligations of the Group, and our conclusion is that the proposed return of excess cash does not compromise the Group's investment programme going forward."

In his presentation, Lundal said that DiGi continues to actively pursue sound investments in network expansion and ensuring quality coverage nationwide. "We are on track with our expansion plan and are focused to increase population coverage to above 80% by year-end," he said.

Lundal cited confidence in the Malaysian telecommunication industry's mobile sector, adding that industry dynamics will accelerate into an even faster pace in the near future. "We will not just experience faster pace but also a new direction, based on the transition from being a network provider to be one that offers exciting and relevant communication experiences. Our ambition is to continue to lead on delivering enhanced mobile solutions for our customers and to deliver superior returns for our shareholders," he concluded.

About DiGi

DiGi is a leading mobile communications company providing a comprehensive range of affordable, convenient and easy to use wireless services to simplify and enrich the lives of its customers. We create value for our customers by selecting the most appropriate cutting edge technology so that they benefit from products and services that give them choice, convenience and control.

We have an established presence as a leader in voice and data prepaid services with a number of firsts that have set industry benchmarks for creativity and innovation. These services are offered under the Beyond Prepaid brand name.  Our postpaid service under the Horizon Postpaid and Discover Business Solutions brand names deliver high quality voice as well as value-added mobile content and data services to both individual and corporate customers.