Digi-Grooming for Growth

Quest for lower spectrum bands

Digi would like to have more spectrum in the lower bands especially in the 800Mhz and 900Mhz as it deemed it necessary to provide 'better user experience' for its customers.

According to DiGi CEO Henrik Clausen, the company which has allocated RM800mil in capital expenditure for 2012 was assigned a block of the 2.6G spectrum

He added that though Digi have spectrum,they would like to add more to provide enough capacity. The 2.6G
spectrum would be good for high speed connections but lower range spectrum is also necessary.

As Digi is expanding its network, they would like adequate amount of spectrum in the right bands,so says Clausen.

For the 2.6G, DiGi has been allocated 2x10Mhz (or 20Mhz) of spectrum which can be used by  Jan 1, 2013 provided its business plan was approved by the industry regulator.

This is not the first time the company is asking for more spectrum but Clausen said it was a “very cost effective way to provide broader coverage indoor and for 3G.”

The company is on a three-year transformation journey which started last year to modernise its network to cater for more capacity and coverage.

The transformation is necessary as it is moving from a basic voice celco to one that offers Internet. Data will be the next growth driver for DiGi and other celcos and while speed and capacity is crucial, providing the “customer experience” would differentiate one service provider from the other.

Clausen said the planning for the network began last year and the equipment swapping began this year and would be completed by end of 2012.

“By end 2012, we would have swapped 5,000 sites with new equipment and that in itself will give users a better experience when they use their devices to access Internet,” he said.

He elaborated that by then its 3G coverage would have increased to 70% from 52% from the current level.

“Customer expectation is increasing by the day. Unless we embark on the transformation we cannot become the best. We want to provide Internet to all and we have to transform the company and make radical changes to our network, product and process so that we can give the consumers what they want," he said.

He intimated  that the big change to its network would happen next year but the full impact of the transformation could be in 2013, he said.

On the capex, Clausen said the company had previously allocated RM650mil for this year but has only spend RM550mil and the additional RM100mil amount would flow into next year, hence the higher allocation for 2012.

The capex is self-funded as the company has accumulated RM1.7bil in operating free cash flow as at third quarter of financial year 2011. It posted a net profit of RM860mil for the first nine months of current financial year.

Digi's share price was last traded at RM3.70.