Wednesday, 24 April 2013

DiGi mulls business trust, pays 90% of net profit as dividend

PETALING JAYA: DiGi.Com Bhd, which recorded a net profit of RM328.6mil for the first quarter ended March 31, has confirmed it is currently working on setting up a business trust.

“We are working on it (business trust) now and it has not been concluded yet. It is a new framework and it will be the first business trust in Malaysia, so we are evaluating it,” DiGi chief executive officer Henrik Clausen (pic) told StarBiz yesterday.

Asked if DiGi would set up its business trust this year, Clausen said the trust was a new concept and DiGi was working on it without committing to a timeline.

Business trusts are business enterprises set up as a trust structure, managed by a trustee-manager which holds the assets on trust for unit-holders of the business trust. It has hybrid structures with elements of both a company and a trust. Business enterprises with stable growth and cash flow may now consider business trusts as an alternative structure to raise capital through initial public offerings in Malaysia.

The telecom company's revenue in the first quarter ended March 31 rose to RM1.64bil against RM1.56bil a year ago, driven by increased data usage, from a larger mobile Internet subscriber base of 5.8 million and higher sales of smart devices. Its earnings per share rose to 4.23 sen in the second quarter against 4.12 sen a year a go.

“We are on track for our 2013 guidance of 5%-7% revenue growth. Our first quarter revenue grew 5% and we are sticking to our guidance,” Clausen said, adding that it had earlier guided that DiGi was looking at sustaining its earnings before interest, tax, depreciation and amortisation (EBITDA) and cash-flow margin at 2012 levels.

DiGi has also declared its first interim dividend of 3.8 sen, or RM295mil, translating into a 90% payout ratio.

“We are sticking to our guidance of distributing 80% of our net profit as minimum payout ratio. We are paying 90% in the first quarter. We have been consistent,” Clausen said when asked if shareholders could be getting a higher dividend this year.

Clausen said its growth would largely be driven by its initiatives to increase mobile Internet revenues. It is looking to launch its 4G LTE services by the end of the second quarter this year.

He said DiGi was currently modernising its network and expanding capacity to capture a bigger share of data revenues and grow its business in the long term. He added that DiGi had modernised 68% of its network and expanded 3G coverage to 68% of the population from 56% last year.

“In the third quarter, we will have a brand new network,” Clausen said. He explained that the network would be a single Radio Access Network which was capable of delivering multi-spectrum data solution on the 2G, 3G and 4G-LTE bands from a single base station site.

On top of that, DiGi has completed a 800 km joint fibre-optics built with Celcom Axiata Bhd.

In the first quarter, DiGi's total subscriber base was marginally lower at 10.73 million as it embarked on initiatives to drive quality subscribers through higher SIM pack pricing and streamlining of sales acquisition and also higher prepaid rotational churn.

Clausen said DiGi had embarked on initiatives to make people stay longer with the telco. “Our churn rate is at market level with postpaid of about 22% and prepaid of 60%-70%.”

Nevertheless, its mobile Internet subscription recorded a 1.8% quarter-on-quarter increase and 9.1% year-on-year. Its blended average revenue per user remained stable at RM47 in the first quarter.

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