KUALA LUMPUR (Aug 18): CelcomDigi Bhd will not put the brakes on its capital expenditure to boost network quality despite rising interest rates, as it pledged to maintain discipline in cost and capital allocation going forward.
CEO Datuk Idham Nawawi said the group’s capex intensity stood at about 5.7% of total revenue during the first half of the year, and expects higher capex in 2H2023 as CelcomDigi ramps up network integration activities after the merger between Celcom Axiata Bhd and DiGi.Com Bhd.
“Internally, we are focusing on our operational excellence to optimise costs while we serve our customers, and with very stringent discipline in terms of how we allocate our capital,” he told the audience during the group’s quarterly results briefing on Friday (Aug 18).
CelcomDigi, now the largest cellular network provider in the nation post-merger, is aiming to spend 15%-18% of total revenue as capex this year.
The group’s total borrowings declined to RM7.43 billion as at June 30, 2023 (2QFY2023), from RM8.29 billion in 1QFY2023 and RM8.88 billion in 4QFY2022, while net debt-to-Ebitda fell to 2.1 times in 2QFY2023, from 2.2 times in 1QFY2023 and 2.3 times in 4QFY2022.
Idham said one of the group’s current focus is to integrate and modernise about 24,000 network sites from Celcom Axiata and DiGi.Com across the country into 18,000 sites.
“This is one of the largest, if not the largest, network upgrade project in the country. At this scale, it took about 800 engineers working on this, with 250 different specialised contractor teams to get this done.
“We have completed about 2,000 sites, and we intend to complete about 5,000 sites by the end of the year,” he said.
Idham also updated that CelcomDigi has onboarded 4,747 sites from Digital Nasional Bhd to provide 5G network to customers.
Dual 5G network deliberation between industry and govt coming to tail end
Idham said industry players, including CelcomDigi, are coming to the tail end in their discussion with the government to implement the dual network model for the nation’s 5G network.
“There has been heavy discussion with the government on how to do this on all aspects, from regulatory, technical, commercial and equity participation. It has come to a point, almost towards the tail end of this process and it is going towards more of a governance approval period,” he said.
The government had decided to dismantle the current single wholesale network model next year, replacing it by establishing two new entities, one of which will be taking over DNB’s assets, while the other will be tasked with building a new 5G network.
While the decision is widely viewed to be beneficial to existing mobile network operators, Putrajaya’s rationale for the new model is to avoid single point failure especially when the entire nation relies on one network infrastructure.
“This SWN debate has been around for a long time, and the industry has a certain view on it. As you know, when the [new model] has been finalised, we were also one of the first to be part of that, because we want to be part of the partnership,” said Idham.
“This is sometimes also very political, because even before there was change of anything [being the network model and the government], there were statements made by the future government, they also had a view on the issue.
Idham says that at the end of the day, it is the government’s decision to make in terms of the type of network model to adopt and as an industry player, the group will always do what is in the best interest of the industry.
“If the government seeks our view, we will provide the industry’s view. But whatever the government decides, we will make the best out of it,” he added.
Meanwhile, CelcomDigi’s chief consumer business officer Praveen Rajan said currently, it is estimated that less than one-third of the country’s population are equipped with 5G compatible cell phones. Hence, the group is in a bid to widen 5G penetration by way of providing more attractive offerings for customers to acquire 5G smartphones.
“That means there is still a long journey to equip customers with the right devices so that they can get connected to the network,” he said.
Shares of CelcomDigi closed four sen or 0.9% lower at RM4.38 on Friday, giving it a market capitalisation of RM51.38 billion.