Mobile services

Malaysia's Digi Aims for Mobile Internet Top Spot

Malaysia's Digi has set itself an ambitious target of becoming Malaysia's biggest provider of mobile Internet services after reporting solid growth in sales and profit during the last three months of 2014.

The operator trails Celcom Malaysia and Maxis Communications Bhd. in Malaysia's mobile telecoms market but has been slowly eating away at their market share and making especially good progress in the country's mobile data sector.

Its revenues were up by 3.8% in the October-to-December quarter, to 1.8 billion Malaysian ringgit (US$500 million), compared with the same period of 2013, while net income rose by 2.1%, to MYR560 million ($157 million), over the same period.

Having invested MYR904 million ($253 million) in capital expenditure last year, DiGi Telecommunications Sdn Bhd. says its 3G service is now available to 86% of Malaysia's population and also claims to have deployed a 4G network in nine "market centers" in the country.

Those investments appear to have paid off: Data revenues rose by 17.4% on a year-on-year basis in the final three months of 2014 and accounted for as much as 40% of total sales.

Digi, which is 49% owned by Norwegian incumbent Telenor Group (Nasdaq: TELN), finished the year with about 11.5 million subscribers, 426,000 more than at the end of 2013, and claimed that nearly 6.5 million of them were using mobile Internet services, compared with just 4.9 million a year earlier.

Around 5.6 million of those customers were using smartphones, Digi added.

Even so, as in more developed markets, average revenue per user (ARPU) has failed to rise despite the take-up of mobile data services.

In fact, blended monthly ARPU fell to MYR47 ($13.1) in the quarter, from MYR48 ($13.4) in the year-earlier period, because of a decline in usage of and revenues from ordinary voice services.

That means Digi is still dependent on growth in its customer base for year-on-year sales improvements, and the rate at which it has been adding subscribers has recently slowed. In the October-to-December quarter, Digi added just 76,000 customers, compared with 442,000 in the preceding quarter and 168,000 in the final three months of 2013.

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Rival Maxis had 12.4 million subscribers in September 2014, down from 13.2 million a year earlier, but claimed 7.6 million mobile Internet users and 6.7 million smartphone customers. It also flagged an increase in monthly ARPU, saying this rose to MYR50 ($14) in the July-to-September quarter from MYR48 ($13.4) in the year-earlier period.

Meanwhile, market leader Celcom served about 13.3 million customers in September 2014, although just 5.4 million of them were using smartphones.

Catching up with Maxis in the mobile Internet market will clearly prove challenging, but Digi CEO Lars Norling plans to maintain capital expenditure at 2014 levels in 2015 so as to further improve the coverage and quality of mobile data networks.

"We aim to be the be the leading mobile Internet provider for the mass market by making access to the Internet easy, seamless and enjoyable," he said in a company statement. "In the coming months, we plan to grow our postpaid business across consumer and business segments, while maintaining our leadership in prepaid."

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

iainmorris 2/10/2015 | 8:15:13 AM
Mobile Internet race The race is clearly on in Malaysia's 4G market and it will be interesting to see whether Digi can emerge as the country's number-one provider in that particular sector in the next year or so. Clearly, it has a lot of work to do to catch up with Maxis on mobile Internet customers.
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