First Quarter of FY 2021 (1Q 2021)

Earnings PresentationDIGI.COM BERHAD

199701009694 (425190-X)

23 April 2021

Sensitivity: Open

Agenda & Contents

2

1Q2021 Highlights

FinancialReview

StrategicUpdates

Albern Murty, CEOPraveen Rajan, CMOJoachim Rajaram, CCAO

Inger Folkeson, CFO

Inger Folkeson, CFO

Sensitivity: Open

1Q2021 Highlights

Strengthened Malaysian base to

sustain Q-Q momentum led to

internet growth

Enhanced customer engagements on

digital and self-serve channels to

deliver best customer experience

Accelerated support to societies

via government-led initiatives

Growth

Responsible

Business

Modernisation

3

Axiata & Telenor in advanced discussions on a possible merger

4

• Business as usual

and focus on our

2021 ambitions

3

MergeCo: Celcom Digi Berhad

33.1% 33.1%

55

+0.4% Y-YB2B revenue

(Excl. roaming: +3.3%)

RM43Blended ARPU

(+RM2 Y-Y)

RM33Prepaid ARPU

(+RM2 Y-Y)

-1.7% Y-YOpex reduction

-0.6% Y-YTotal revenue

(Excl. roaming: +0.3%)

10.1%Capex-to-total

revenue

19.7 GBGB/user

(+35.9% Y-Y)

-3.6% Y-YService revenue

(Excl. roaming: -2.6%)

3.09milPostpaid subs

(+29k Y-Y)

+7.0% Y-YB2B subs

1Q2021 reflected a positive start of the year

66

Network: Sustained leading position on consistency

#1 or #2 on network speed across 13 states

#1 on consistency & throughput by Ookla

Improved network stability and coverage to support

government’s needs at essential locations such as;

• Covid vaccination centers and public hospitals

Delivered stronger coverage and network capacity nationwide

to support higher data usages, +4.6% Q-Q and +28.2% Y-Y

• Ongoing collaboration on joint fibre roll-outs

On track to deliver JENDELA’s targets for Phase 1 and 3G

sunset

Ongoing technology awareness campaigns and educational events

77

Consumer: Positive momentum amid the prolonged pandemic

Increasing cross-selling opportunities to the existing

subscriber base through bundle offeringsFIBRE

BROADBAND

PREPAID

POSTPAID

Targeted acquisition and retention strategy via the newly

launched Digi Postpaid portfolio

• New mid-to-high ARPU plans as the focus for acquisition

• New service add-on contracts as the focus for retention

Consistent acquisition and retention of Malaysian subscribers

through high-speed Internet passes of RM30/35/45

• Malaysian subs grew +2.1% Q-Q and +6.3% Y-Y

• Prepaid ARPU +RM1 Q-Q, +RM2 Y-Y to RM33

B2B: Delivered growth through digitalisation & partnerships

8

Growing traction in the large enterprise segment

across various industries e.g., ports, oil and gas (O&G)

and banks through customised connectivity and

solution offerings

Progressively raising Digi Business brand through

strategic partnerships e.g., Touch n’ Go Digital and

Cisco

Supported over 2,500 micro & small businesses via Go

Digital bundles with Penjana SME Digitalisation Grants

Continuing to accelerate digitalisation initiatives

9

Digitalisation

of the core businessDigitalisation

beyond connectivity

Digital bill payments now at 76% to

enhance digital experience and

improve overall collections

Steady base of active users on MyDigi

app (4.48mil, +2.3% Q-Q) and growing

upsell transaction volumes (+10.4% Q-Q)

Lightning SIM penetration now above

90% to increase capability of selling

in under-represented segments

Over +500% Y-Y account growth to

accelerate companies’ digital human

resource management

Over +200% Y-Y revenue growth to

drive business continuity through Omni,

SIP and vPABX solutions

Reaches 15% of the B2B base with

enhanced Cybersecurity and Privacy

protection

Holistic Responsible Business approach

10

TRANSPARENCY &

ACCOUNTABILITY

Launched second Integrated

Annual Report 2020

Ongoing sustainability data

integrity exercise

1Q2021 Highlights

INCLUDE ADVANCE SAFEGUARD

Connecting you to what matters most

Empowering Societies

BUILDING SKILLS FOR AN ACCELERATED DIGITAL FUTURE

INCLUSIONIncluding the

digitally excluded

FUTURE SKILLS Importing skills to excel

in the future

ONLINE SAFETYEnsuring a safe internet

experience for all

RAISING STANDARDS IN OPERATIONS & SUPPLY CHAIN

DIVERSITY &

INCLUSION

HEALTH, SAFETY &

WELLBEING

SECURITYPRIVACY CLIMATE &

ENVIRONMENTHUMAN RIGHTS

TRANSPARENCY &

ACCOUNTABILITY

approach

Strategic

foundation

ONLINE SAFETY

Launched Yellow Heart Safe

Internet portal, in conjunction

with Digi’s 10th year of running

flagship Safe Internet programme

INCLUSION &

FUTURE SKILLS

Ongoing partnership with

Ministry of Education to provide

future skills module on digital

education learning platform

Delivered growth in data users and increased blended ARPU

Subscribers Development (‘mil) Monthly GB per User

4Q202Q201Q20 3Q20 1Q21

14.5

18.017.4

19.019.7

+36.0% +3.7%

3.033.06

1.591.53

5.99

10.25

6.016.42

1.14

1Q20

3.04

2Q20

3.02

10.44

1.58 1.41

4Q20

6.02

3.09

3Q20

10.62

1Q21

6.07

11.0110.68

-759K -191K

Postpaid Prepaid Internet Non-Internet

Blended ARPU (RM)

• Larger Malaysian base of +2.1% Q-Q and +6.3%

Y-Y

• Postpaid net adds of 46k Q-Q and 29k Y-Y

driven by stabilised acquisitions and lower

churn rate

• Continued shortfall in migrant segment

• Improved blended ARPU from shift in

acquisition mix and contracting efforts

• Prepaid ARPU +RM1 Q-Q to RM33 led by

Malaysian active data subs

• Postpaid ARPU -RM1 Q-Q to RM65 partially

due to lower roaming ARPU

• Monthly data usage per user of 19.7GB

supported by growing 8.8mil internet

subscribers, or 85.9% of total subs

(1Q20 of 83.5%)

• LTE-enabled subs grew to 87.2% of total

base (1Q20 of 80.3%)

11

0.8 0.4

42.8

0.3

40.1

1Q21

40.4

1Q20 3Q20 4Q20

42.5

41.8

41.2

40.5

42.8

42.5

0.2

41.6

0.3

2Q20

+RM2 +RM1

Roaming ARPU Mobile ARPU

Underlying revenue improved on stronger internet traction

Q-Q Revenue Development (RM)

• Sustained underlying performance driven by solid internet and digital revenue growth of

+3.2% Y-Y

• Service revenue of RM1,337mil, -3.6% Y-Y as roaming declined -56.6% Y-Y

• Excluding roaming, service revenue would have declined by -2.6% Y-Y

• Prepaid revenue of RM640mil, -6.7% Y-Y and postpaid revenue of RM617mil, -5.8% Y-Y

due to customer spend optimisation

12

1,561 1,550

Postpaid4Q20

2 3

Devices

and

Others

2

Prepaid 1Q21Digital

8

Total Revenue (RM)

389344

348 314 306

173135

205 211 213

1,5501,579

22

977

2Q20

21

1Q20

953

20

1,004

1,560 1,561

1,014

22

3Q20 4Q20

1,008

23

1Q21

1,452

-0.6% -0.7%

Devices and OthersInternet & Digital InterconnectNon-Internet

• Improved device and other revenues from

encouraging take-ups for value accretive PF365

plans

• Both prepaid and postpaid revenue sustained Q-Q

momentum (-0.3% Q-Q each) from continued good

commercial momentum despite softer gaming

activities

Disciplined cost control and effective collection process

13

798 821

OthersMaterial costs

4Q20 S&M costs

16 16

Traffic charges

6 6

Staff costs

20

O&M

8

Doubtful debts

allowance

11

1Q21

397318

407 417 417

821

687

798

411

1Q20

369

2Q20

397

3Q20

381

4Q20 1Q21

804

404

808

+1.6% +2.9%

COGS Opex

Total Costs (RM)

• COGS +5.0% Y-Y due to higher digital costs to support

digital demands, offset by lower roaming volumes

• Opex Y-Y reduced -1.7% on efficiency initiatives,

while Opex to service revenue remained healthy at

30.2%

Q-Q Cost Development (RM)

• COGS Q-Q sustained as lower traffic and digital costs due to Covid-19 effects

offset by higher device cost to fuel stronger demands for device bundles

• Opex +6.0% Q-Q due to higher sales activities and O&M expenses, offset by

RM8mil lower provision for doubtful debt on efficient collection process

• 4Q20 Opex included non-recurring cost benefits of RM10mil

OpexCOGS

Continued cost focus to drive efficient operations

• Softer EBITDA reflective of soft topline

development offset by well managed

OPEX expenses

• EBITDA (boi) margin equalised to 47.5% to

underscore resilient core performances

14

EBITDA before other items

756 770 786 766 737

48.5%

2Q20

53.0%

1Q20

49.1%49.8%

3Q20 4Q20

47.5%

1Q21

EBITDA (boi) (RM’m) Margin (%)

332 288 321 280 265

17.9%

1Q20

21.3%

4Q20

19.8%

3Q202Q20

20.3%

17.1%

1Q21

PAT (RM’m) Margin (%)

280 265

24

OpexCOGS4Q20

11 8

Depreciation,

tax and

others

Revenue

114

Prior

quarter

cost

benefits

6

Financial

items1Q21

-5.4%

Q-Q PAT Development (RM)

• PAT -5.4% Q-Q on higher depreciation and amortisation of RM309mil and higher finance costs, manly

due to the reported fixed asset reconstruction exercise reported in Q42020

• PAT -20.2% Y-Y impacted by fair value loss of RM22 million on interest rate swaps as compared to fair

value gain of RM37mil same period last year

Profit after tax – PAT

Note: EBITDA herein is EBITDA before other incomes and other expenses

Financial

items

Deprecia

tion,

tax and

others

Optimal capex and operational cash flow

• Higher capex Y-Y of RM157 million or 10.1% of total revenue to support

network rollouts and site deployments

• Close monitoring of capex allocation by prioritising near-term

modernisation initiatives

15

CAPEX Operational Cash Flow (OCF)

• Operational cash flow remained healthy at RM580 million,

or margin of 37.4%

39.6% 37.5% 41.3% 31.5% 37.4%

Margin (%)

617545

652

491580

2Q20 3Q201Q20 4Q20 1Q21

OCF (RM’m)

46

179

132

270

151

1Q211Q20

2

2Q20

6

3Q20

5

4Q20

139

225

134

275

157

Capex (RM) ARO Adjustment (RM)

8.9%15.5%

8.5%17.6%

10.1%

% capex to total revenue

Note: ARO refers to asset retirement obligation

Sustained shareholder return and resilient balance sheet

• Earnings per share (EPS) -0.2 sen Q-Q and

-0.9 sen Y-Y to 3.4 sen per share

• The Board of Directors declared 1st interim

dividend of 3.4 sen per share equivalent to

payout of RM264 million

16

• Total asset trimmed -2.6% Q-Q on lower

cash balances and right-of-use assets

• Continued prioritisation on efficient

asset management

Shareholder Return (sen) Composition of borrowingsTotal Assets (RM)

4.3

3.74.1

3.63.4

4.2

3.74.1

3.63.4

3Q201Q20 2Q20 4Q20 1Q21

EPS (sen) DPS (sen)

18%

82%

Current Asset Non-Current Assets

Total Assets

RM7.98 billion

As at 31 Mar’21

• Finance leases of RM2.58b and total loans of

RM2.74b reduced by -25.4% Y-Y and -7.7% Y-Y,

respectively

• Conventional debt over total assets of 6.2%

and net debt over EBITDA ratio of 1.7 times

42%

9%

49%

Islamic Conventional Finance Leases

Total Borrowings

Including finance

leases

RM5.32 billion

As at 31 Mar’21

Reiterating FY2021 guidance

• Remain steadfast and committed on

delivering 2021 priorities to reach our

strategic ambitions

• Built on robust financials, organisational

agility, trusted brand and responsible

business standards

Guidance 1Q21 Y-Y %

Service

revenue

Low single digit

decline-3.6%

EBITDAMedium single

digit decline-2.5%

Capex-to-total

revenue ratio14.0% - 15.0% 10.1%

17

Sensitivity: Open

Committed on delivering 2021 priorities

Growth

o Build core mobile and strengthen

with FTTH across Malaysian base

o Pioneer innovative solutions to

digitalise enterprises in key

verticals (ports, oil & gas)

o Invest to deliver competitive and

consistent network experience

Responsible Business

o Raise ESG standards and

continued responsible

business focus

o Develop digital resilience and

future skills competencies

o Improve ease of performing self-serve

transactions across digital channels

o Modernise enterprise IT platforms to

serve B2B customers efficiently

o Leverage automation and AI/Machine

Learning to enhance Digi’s lean

operating model

Modernisation

OUR STRATEGY

18

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19

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Digi Integrated Annual Report 2020

20

View digital copy here

THANK YOU

Email for further enquiries: Investor_Relations@digi.com.myCorporate website: www.digi.com.my

Disclaimer

21

This presentation and the following discussion may contain forward looking statements by Digi.Com

Berhad (Digi) related to financial trends for future periods. Some of the statements contained in

this presentation or arising from this discussion which are not of historical facts are statements of

future expectations with respect to financial conditions, results of operations and businesses, and

related plans and objectives. Such forward looking statements are based on Digi’s current views and

assumptions including, but not limited to, prevailing economic and market conditions and currently

available information. These statements involve known and unknown risks and uncertainties that

could cause actual results, performance or achievements to differ materially from those in the

forward-looking statements. Such statements are not and, should not be construed, as a

representation as to future performance or achievements of Digi. In particular, such statements

should not be regarded as a forecast or projection of future performance of Digi. It should be noted

that the actual performance or achievements of Digi may vary significantly from such statements.

Appendix – Operational Statistics

22

Operational Statistics 1Q2020 2Q2020 3Q2020 4Q2020 1Q2021 Q-Q Y-YPostpaid ('000) 3,061 3,032 3,022 3,044 3,090 1.5% 0.9%Prepaid ('000) 7,948 7,591 7,658 7,397 7,160 -3.2% -9.9%

Total subscribers ('000) 11,009 10,623 10,680 10,441 10,250 -1.8% -6.9%Postpaid ARPU (RM) 69 68 67 66 65 -1.5% -5.7%Prepaid ARPU (RM) 30 29 33 32 33 3.3% 11.1%

Blended ARPU (RM) 40 40 42 42 43 4.5% 7.7%

Monthly active users for MyDigi ('mil) 4.0 4.3 4.3 4.4 4.5 2.3% 10.9%Monthly average data per user (GB) 14.5 18.0 17.4 19.0 19.7 3.7% 35.9%Internet subscribers 83.5% 82.0% 82.2% 83.5% 85.9% 2.4% 2.4%Smartphone penetration rate 85.4% 85.9% 85.6% 87.3% 89.2% 1.9% 3.8%

Population Coverage (%)4G (LTE) 90.7% 90.9% 91.3% 91.6% 91.7% 0.1% 1.0%4G Plus (LTE-A) 73.0% 73.6% 74.4% 74.8% 75.0% 0.2% 2.0%

Fibre Network (km) 9,617 9,617 9,617 9,981 10,052 0.7% 4.5%

Appendix – Summarised Profit & Loss Statement

23

Income Statement (RM'm) 1Q2020 2Q2020 3Q2020 4Q2020 1Q2021 Q-Q Y-Y

Postpaid revenue 656 639 626 619 617 -0.3% -5.9%

Prepaid revenue 686 627 668 642 640 -0.3% -6.7%

Digital revenue 45 52 80 89 80 -10.1% 77.8%

Service revenue 1,387 1,317 1,374 1,350 1,337 -1.0% -3.6%

Device and other revenue 173 135 205 211 213 0.9% 23.1%

Total revenue 1,560 1,452 1,579 1,561 1,550 -0.7% -0.6%

Cost of goods and services (COGS) (397) (318) (407) (417) (417) 0.0% 5.0%

Cost of materials (195) (129) (218) (214) (230) 7.5% 17.9%

Traffic charges (202) (189) (189) (203) (187) -7.9% -7.4%

Gross profit 1,163 1,134 1,173 1,144 1,133 -1.0% -2.6%

Operating expenditures (OPEX) (411) (367) (394) (381) (404) 6.0% -1.7%

Sales & marketing (110) (92) (107) (96) (102) 6.3% -7.3%

Staff costs (64) (51) (59) (68) (62) -8.8% -3.1%

Operations & maintenance (58) (56) (38) (39) (59) 51.3% 1.7%

USP fund and license fees (80) (80) (77) (82) (81) -1.2% 1.3%

Other expenses (86) (68) (83) (78) (90) 15.4% 4.7%

Credit loss allowances (13) (20) (30) (18) (10) -44.4% -23.1%

EBITDA before other items 756 770 786 766 737 -3.8% -2.5%

EBITDA (boi) margin 48.5% 53.0% 49.8% 49.1% 47.5% -1.5% -0.9%

Depreciation, amortisation and impairment (306) (328) (313) (276) (309) 12.0% 1.0%

Other items - - - (51) -

Profits before interests and tax (PBIT) 450 442 473 439 428 -2.5% -4.9%

Net finance costs (14) (65) (41) (63) (69) 9.5% 392.9%

Profit before tax (PBT) 435 377 432 377 359 -4.8% -17.5%

Taxation (103) (89) (111) (97) (94) -3.1% -8.7%

Profit after tax (PAT) 332 288 321 280 265 -5.4% -20.2%

PAT margin 21.3% 19.8% 20.3% 17.9% 17.1% -0.8% -4.2%

Capex 139 225 134 275 157 -42.9% 12.9%

Operational cash flow 617 545 652 491 580 18.1% -6.0%

Appendix – Summarised Statement of Cash Flows

24

Income Statement (RM'm) 1Q20 2Q20 3Q20 4Q20 1Q21

Cash at start 458 307 519 365 303

Cash flow from operations 628 734 812 661 691

Changes in working capital (106) 110 (333) (74)-139

Cash flow used in investing activities (138) (178) (134) (274)-153

Cash flow used in financing activities (537) (453) (498) (375)-485

Net change in cash (152) 213 (153) (61)-86

Cash at end 307 519 365 303 217

Appendix – Summarised Balance Sheet and Key Ratios

25

Summary of Financial Position (RM'm) 1Q2020 2Q2020 3Q2020 4Q2020 1Q2021

Cash and short-term deposits 307 519 365 303 217

Other assets 7,690 7,650 7,671 7,884 7,759

TOTAL ASSETS 7,997 8,169 8,036 8,187 7,976

Conventional borrowings 718 666 604 555 493

Islamic borrowings 2,247 2,241 2,166 2,316 2,242

Finance lease 2,062 2,251 2,250 2,581 2,586

Other liabilities 2,320 2,400 2,373 2,129 2,064

Total liabilities 7,347 7,558 7,393 7,581 7,385

Total equity 650 651 652 606 591

TOTAL LIABILITIES AND EQUITY 7,997 8,209 8,045 8,187 7,976

Key Financial Ratios 1Q2020 2Q2020 3Q2020 4Q2020 1Q2021

Earnings per share (sen) 4.3 3.7 4.1 3.6 3.4

Dividend per share (sen) 4.2 3.7 4.1 3.6 3.4

CAPEX to total revenue (%) 8.9% 15.5% 8.5% 17.6% 10.1%

Operational cash flow margin (%) 39.6% 37.5% 41.3% 31.5% 37.4%

Conventional debt over total asset (%) 9.0% 8.2% 7.5% 6.8% 6.2%

Net debt to EBITDA (times) 1.5 1.5 1.5 1.7 1.7