UOB Kay Hian
23 May 2025

CelcomDigi 1Q25 Results: Steady Growth, Strategic Integration, and Attractive Dividend Yield

Investment Highlights: CelcomDigi Maintains BUY Rating with 9.7% Upside Potential

CelcomDigi Berhad, one of Malaysia’s leading mobile operators, has reported its 1Q25 financial results, delivering performance in line with market expectations. UOB Kay Hian reiterates its BUY recommendation, maintaining a target price of RM4.30, reflecting a potential upside of 9.7% from the current share price of RM3.92. The company remains focused on integrating its operations post-merger, driving synergy realization, and delivering shareholder value.

Company Overview and Market Position

• Sector: Communication Services
• Market Cap: RM45,987.5 million (US\$10,761.1 million)
• Shares Outstanding: 11,731.5 million
• Major Shareholders: Telenor ASA (33.1%), Axiata Group Bhd (33.1%), Employees Provident Fund (10.6%)
• 52-Week Price Range: RM4.09 – RM3.25

CelcomDigi offers nationwide 2G, 3G, and 4G mobile services, and is rapidly advancing its 5G rollout and home broadband offerings. The company is a key player in Malaysia’s telecom landscape.

1Q25 Financial Highlights: Core Net Profit Meets Expectations

• Net Profit: RM388 million, up 141% quarter-on-quarter (qoq), and 5% year-on-year (yoy)
• Core Net Profit (excluding one-offs): RM430 million (+6% qoq; -10% yoy)
• Revenue: RM3,209.3 million (-2% qoq, +1.2% yoy)
• Reported EBITDA: RM1,348 million (-12.9% qoq, +0.1% yoy)
• EBITDA Margin: 42.0% (vs 47.2% in 4Q24, 42.5% in 1Q24)
• Dividend Per Share (DPS): 3.7 sen (112% payout ratio for the quarter)
• Subscribers: 20.655 million (+1.3% qoq, +0.9% yoy)
• Blended ARPU: RM41/month (-2.4% qoq, +2.5% yoy)

The 1Q25 results included one-off costs relating to changes in the operating model, inventory, and equipment asset adjustments. Excluding these, the core net profit was in line with both house and consensus estimates, representing 21% and 23% of full-year forecasts, respectively.

Key Financial Table

Detailed Segment Analysis

Service Revenue and Segment Performance

• Group Revenue: Rose 1% yoy but declined 2% qoq to RM3,209 million.
• Service Revenue: Down 1% yoy and 2% qoq, mainly due to softness in enterprise solutions and mobile sales (-4% yoy, -8% qoq).
• Postpaid: Consumer postpaid revenue increased 3% yoy to RM1,066 million (flat qoq), driven by strong subscriber net adds (+340,000 yoy; +46,000 qoq). ARPU remained stable at RM60/month, supported by bundled offerings like CelcomDigi One plan.
• Prepaid: Revenue fell 6% yoy and 3% qoq to RM1,056 million, despite a positive net adds trend (+113,000). ARPU dropped to RM27/month due to seasonality (Chinese New Year, fasting month before Hari Raya) and fewer operating days.
• Home and Fibre: Subscriber base grew by 18,000, with total revenue at RM55 million (+1% yoy, -2% qoq). ARPU decreased to RM97/month (from RM107 in 4Q24) due to bundling rebates, spurring higher demand for premium data plans.

Cost Structure Trends

Direct expenses have trended upwards, primarily due to increased 5G access charges and higher device/backhaul transmission costs.

Dividend and Shareholder Returns

• Interim DPS: 3.7 sen in 1Q25, equating to a 112% payout for the quarter.
• Full-Year Estimate: 17.3 sen DPS (100% payout), reflecting an attractive 5% dividend yield for investors.

Synergy Realization and Integration Progress

• CelcomDigi has completed 80% of its network integration and modernization initiatives, setting the stage for annual cost savings of RM700m-800m beyond 2027.
• Some synergy benefits are expected to materialize as early as this year.
• Strategic focus on IT platform enhancements and retiring legacy network components to optimize energy use and reduce costs.

Guidance and Outlook for FY2025

Environmental, Social & Governance (ESG) Initiatives

• Environmental:
  • Committed to developing a Net Zero 2050 roadmap with SBTi-aligned targets by 2025.
  • Transition to cloud-based data centres with lower carbon emissions.
  • Optimization of network energy consumption through efficient hardware and decommissioning of legacy systems.
• Social:
  • 100% employee pass-rate in integrity program assessment for 2024.
  • Implementation of social impact initiatives targeting digital inclusion, entrepreneurship, and skills development.
  • Support for government programs such as JENDELA and outreach via NaDi internet centres.
• Governance:
  • Full implementation of Privacy Control Framework for high-risk data processing by 2024.

Comprehensive Financial Forecasts and Key Metrics

Conclusion: Strong Fundamentals and Integration-Fueled Growth

CelcomDigi’s 1Q25 results affirm its resilient business model, robust subscriber growth in key segments, and disciplined cost management amid ongoing integration. The company is well-positioned to unlock further synergies, enhance shareholder returns through attractive dividends, and deliver sustainable growth. With strategic investments in network modernization and IT platforms, CelcomDigi is poised to maintain its leadership in Malaysia’s dynamic telecom sector. The stock remains a compelling BUY on weakness for investors seeking growth, yield, and exposure to Malaysia’s digital future.