DiGi maintains capex at RM904m in 2015

KUALA LUMPUR: DiGi.Com Bhd plans to maintain its 2014 capital expenditure (capex) level of RM904 million in 2015 to continue to drive mobile internet revenue growth.
"On the capex, where we spend most is on mobile internet to drive expansion, especially the 4G rollout, both 4G and fibre to the base stations," its CFO Karl Erik Broten said in a conference call yesterday after announcing its financial results for the fourth quarter ended Dec 31, 2014 (Q4).
In 2014, Digi invested RM904 million in capex to strengthen its infrastructure capabilities, which included the delivery of a new convergent billing system, expansion of 3G population coverage to 86%, growth of LTE sites to nine market centers and increase in fibre network to more than 4,700km.
Digi CEO Lars Norling said its 2015 guidance includes a low mid-single digit service revenue growth, compared with an expected industry revenue growth of low single digit, as well as sustained earnings before interest, tax, depreciation and amortisation (ebitda) margin at 2014 levels (45%).
"We believe that the solid foundation we have built for a data business positions us strongly to deliver on our promise to customers and drive data growth. The market condition remains challenged but we believe there's ample growth opportunity for the mobile industry fuelled by strong demand for internet," said Norling.
This year, it will continue to drive mobile internet revenue growth opportunities, strengthen infrastructure capabilities to support the internet experience, deliver service excellence to customers and focus on operational efficiency.
It also plans to grow its postpaid business across consumer and business segments, while maintaining its leadership in prepaid.
On the implementation of the Goods and Services Tax (GST), Broten said in general consumers will be affected by GST and people will be careful with their spending but Digi will continue to fuel growth for mobile communications industry.
"Mobile services and connectivity is also fast becoming a necessity than discretionary spending so we're relatively more resilient compared with consumables," he said.
In Q4, Digi's net profit rose 2.1% to RM560.1 million from RM548.52 million a year ago, on the back of revenue that increased to RM1.8 billion. Ebitda was at RM801 million.
For FY14, its net profit jumped 19% to RM2.03 billion from RM1.71 billion, fuelled by strong momentum from data revenue. Revenue was up to RM7.02 billion from RM6.73 billion a year ago. Ebitda stood at RM3.16 billion.
Digi will pay a fourth interim tax exempt dividend of 7.2 sen per share equivalent to RM560 million or 100% payout ratio to shareholders on March 13, 2015. Total dividend payout for the year increased by 22.1% to 26 sen.
In a report, BIMB Securities Research said at current price, the stock offers potential upside together with dividend yield of over 10%. It upgraded Digi to a "buy" recommendation.