This article first appeared in The Edge Financial Daily on January 23, 2020

KUALA LUMPUR: DiGi.Com Bhd saw a 9.23% drop for its fourth quarter net profit to RM342.92 million from RM377.8 million a year earlier, as the mobile telecommunication network service provider recorded a fall in prepaid revenue as postpaid income grew.

Higher depreciation, amortisation and impairment besides finance cost also curbed net profit growth during the fourth quarter ended Dec 31, 2019 (4QFY19).

In a statement to Bursa Malaysia yesterday, DiGi said the group’s total revenue rose to RM1.68 billion from RM1.67 billion a year ago. Postpaid revenue grew 9.6% year-on-year (y-o-y) to RM731 million, while prepaid revenue declined 9.7% y-o-y to RM736 million.

Prepaid revenue decline came “amid impact from lower interconnect rates, moderating non-Internet prepaid services and continued postpaid conversions”, DiGi said.

DiGi’s income statement showed that the company’s depreciation, amortisation and impairment rose to RM290.78 million from RM196.49 million, while finance cost more than doubled to RM67.91 million from RM30.68 million.

The company also registered an operating model transition cost of RM8.6 million during the quarter.

For the full FY19, DiGi’s net profit fell 7.14% to RM1.43 billion from RM1.54 billion a year earlier, while revenue retreated 3.52% to RM6.3 billion from RM6.53 billion.

DiGi proposed a fourth interim dividend of 4.4 sen a share, payable on March 27, which brings its full-year dividends to 18.2 sen a share, versus FY18’s 19.6 sen.

Looking ahead, DiGi said it will continue to sharpen its focus on structural operational efficiencies, investing in what matters most for its customers and continuously driving value creation for its stakeholders.

“Our continued strategic focus and investments in shifting revenue mix, supported by robust network expansion enabled sustainable revenue growth while delivering profitable operations and healthy returns to shareholders,” DiGi said.

Specifically for FY20, DiGi expects its service revenue and earnings before interest, tax, depreciation and amortisation to see flat growth to low single-digit decline.

DiGi’s share price fell four sen or 0.88% to close at RM4.51, for a market capitalisation of RM35.07 billion. The stock traded between RM4.47 and RM4.57 yesterday.