DiGi Telecommunications Sdn Bhd (DiGi) will start the sale of the iPhone at selected outlets from April 3 under its new plan.OSK Research Sdn Bhd (OSK Research) said in its research report that the key selling features of the new plan were the low entry cost, inclusive deals via extended 36 months contract, handset subsidies, and higher data limit, off-net short message service and multimedia messaging service bundles.
DiGi’s entry level iPhone plan (iDiGi88) comes with a monthly access of RM88 which is lower than Maxis’ RM100 (IV1 plan). It also offers two other plans priced at RM138 and RM238 which would compete with Maxis’ RM155 and RM225 packages.
It was reported that given the attractive price-points, DiGi’s current subscribers would be compelled to upgrade or re-contract. The plans would also appeal to subscribers of Maxis and Celcom, especially those at the tail end of their contractual obligations.
Furthermore, DiGi was making the iPhone more affordable by lengthening the lock-in period to 36 months versus the maximum 24 months for Maxis.
An ‘all-in-one’ monthly package that included a handset allowed the cost of the handset to be defrayed over an additional 12 months via an easy payment scheme with zero per cent interest.
The research house was of the opinion that the monthly commitment was four to nine per cent lower for DiGi that subsidizes the older 3G 8GB model for its top tier plan.
It was also reported that the handset subsidies offered by both DiGi and Maxis were in par at 33 to 64 per cent for packages on the 24-month contract. However, DiGi would take longer to recoup the subsidies given its lower monthly commitment charge.
Moreover, DiGi was offering higher data download of 1GB to 5GB versus the 500MB to 3GB of Maxis. It was also offering higher monthly short message service and multimedia messaging service bundles that were applicable off-net.
The research house was positive on the launch of iPhone for DiGi in the long-term since iPhone would help DiGi shore up data revenue contribution over the longer term from the current 20 per cent. Internet revenue was targeted to contribute 15-20 per cent of revenue for three to four years. However, it was viewed that the launch would exert pressure on DiGi’s earnings before interest, tax, depreciation and amortization (EBITDA) margins and earnings in the medium term.
Due to the fact that DiGi had customized its iPhone packages in order to cater for a larger addressable market, the research house expected the plans to be attractive enough to entice existing 2G and 3G subscribers to upgrade or re-contract their plans.
The research house maintained a neutral recommendation on the stock of DiGi with a target price of RM23.10. The key share price re-rating catalysts going forward were capital management and better than expected results.
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