Innovations spur DiGi's revenue by 25% to RM1.3 billion

Press Release
July 20, 2005

Innovations spur DiGi's revenue by 25% to RM1.3 billion

-      Customer base increases by 46% to 3.77 million
- EBITDA increases by 24% to RM572 million
- Rise in net profit by 23% to RM171 million

Kuala Lumpur, July 21, 2005 - DiGi.Com Berhad ("DiGi") today announced its financial results for the first six months and second quarter of 2005, proving again the success of its underlying fundamentals to grow on a profitable basis. Despite intense competition, DiGi chalked impressive revenue growth driven by high net subscriber additions, high usage and the ongoing commitment to innovation.

The Group achieved higher revenue of RM1.31 billion from RM1.05 billion recorded in the previous year corresponding period, riding mainly on the back of the hefty 46% or 1.2 million increase in its mobile customer base and the encouraging take-up rate for its new products and services.

Morten Lundal, DiGi's Chief Executive Officer said, "DiGi is well-placed for future growth. We have stayed on track in our pursuit for sustainable revenue increase and have chased the right key drivers to achieve this."

"As we compete on all fronts, we kept our promise to deliver on bold product innovation, new functionality and service quality. We have invested heavily in expanding our already widest highspeed mobile network nationwide, now to include East Malaysia and the east coast of Peninsular Malaysia.  DiGi's mobile data solutions have transformed the way our customers are entertained and informed, and how they communicate and do business," he added.

Lundal also commented that the company has managed to attract customers and drive data usage by coming up with exclusive and compelling services this year. "Coupled with the right marketing and pricing strategies, our launches this year such as the MTV Powerpack, SmartMail, the EDGE PC card, BubbleTalk and DiGi's 10th Anniversary promotions have opened up new revenue streams, buffering the long-term pressures on the average revenue per user."

Data revenue surged by 57%, accounting for 16% of total mobile revenue against 14% as registered a year ago. Earnings before interest, tax, depreciation and amortization ("EBITDA") grew by 24% to RM571.8 million from RM461.6 million recorded previously. EBITDA margin remained at approximately 44%, while earnings per share rose by 23% to 22.9 sen compared with 18.6 sen previously.

Q205 on Q204
For the second quarter versus the corresponding quarter last year, revenue grew by 29% to RM685.9 million thanks to a larger customer base compared with RM533.4 million achieved in Q204. As a result of cost conscious efforts and the economies of scale, EBITDA margin increased by 0.6 percentage points to 43.2% despite higher marketing costs.

Although profit before tax ("PBT") for the quarter continued to be affected by the accelerated depreciation expenses due to the change in depreciation rates with effect from 1 January 2005, PBT registered a significant improvement of 68% to reach RM159.3 million. This was largely attributable to better EBITDA performance and reduction in finance costs. Accordingly, the Group's net profit increased by RM47.2 million to RM113.5 million, a 71% growth compared with RM66.3 million recorded in the previous year corresponding quarter.

Q205 on Q105
For the current quarter under review as compared to the preceding quarter, revenue grew by 10% to RM685.9 million, driven mainly by the solid addition of 304,000 new subscribers to the customer base as well as higher usage. Aside from the better revenue performance, the higher PBT of RM159.3 million was due for the most part to the lower impact on the acceleration of depreciation charges of RM11.3 million against RM45.4 million in the previous quarter.

The postpaid focus this quarter has paid off. For the second quarter, DiGi's postpaid base stood at 241,000 customers against 202,000 last quarter, registering a growth rate of 19%. The prepaid customer base chalked an increase by 8% to 3.52 million customers this quarter.  

Capex investments for Q2 2005 for network expansion and quality enhancements stood at RM106 million, a 61% increase over the previous quarter.  The Group expects capex spending to increase over the next two quarters as it further expands its investment to deliver high service quality and coverage expansion.

Commenting on DiGi's prospects for the remaining quarters of 2005, Lundal was confident that growth will continue to be positive, and the Group's steady growth bodes well for DiGi to keep on investing in infrastructure in Malaysia, and in new products and services that are equal to the region's best.

Lundal concluded, "Even as we pursue a high investment program that prioritizes high service quality and coverage expansion, we will continue to set the benchmark for bringing to the market innovative mobile solutions that are simple, attractive and of clear relevance to our market segments."

"Our focus moving forward is to drive a segmented approach and build-up our customer base in our target markets, while ensuring ongoing operational efficiencies and profitability."

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.