We walked away from the meeting with Digi’s incoming CEO reaffirmingour  view  that  the  telco’s  good  commercial  execution  will  continue. Maintain NEUTRAL with an unchanged DCF-based TP of MYR6.60 (5% upside),  as  most  positive  catalysts  have  been  priced  in.  Digi  remainswell-positioned in the  mobile internet  space,  armed with a modernised network and a converged billing platform.

Welcoming the new  Yellow Man.  Digi  hosted a breakfast  session for the  investment  community  yesterday  with  its  incoming  CEO,  Albern Murty. Digi‟s  outgoing CEO, Lars Ake Norling,  was handpicked earlier to take  over  Total  Access  Communication  (DTAC)  (DTAC  TB,  BUY,  TP: THB133.00),  Digi‟s  sister  company  in  Thailand.  The  appointments  will take effect on 1 Apr.

In  good  hands.  We  left  the  briefing  reaffirming  our  view  that  Digi remains  in good hands.  Murty reiterated  Digi‟s commitment to deliveringthe  best  mobile  internet  experience  to  subscribers  and  to  more effectively monetise data.  The telco has embarked on a  holistic  strategy to  improve  the  economics  of  data  and  will  be  capitalising  on  the  new converged  billing  platform  (which  offers real-time  pricing)  to  offer  more innovative  products  and  services.  Digi  is  adopting  a  cluster-based operating model  to  identify  regions  with  good  growth  potential  and  will continue to  introduce  more  bite-sized plans  to  encourage data  uptake. Management  sees  good  potential  within  the  mid-tier  smartphone segment  to  boost  mobile  internet  adoption  and  expects  this  to  further drive up smartphone penetration  from  49%  currently. Digi is  sticking to its  low-  to  mid-single  digit  service  revenue  growth  guidance  for  2015,which  has  taken  into  account  the  goods  and  services  tax  (GST).  Its superior mobile internet revenue growth of 40% in FY14  suggests that it is monetising data better than its rivals.

Spectrum re-farming.  Acknowledging that a process is  in  place, Digi is of  the  view  that  the  interest  of  the  industry  will  be  best-served  if  the exercise is conducted sooner rather than later. Management is confident that  the  regulator  will  adopt  an  „equitable‟  stance  in  the  process  with auction as the preferred methodology.

Maintain  NEUTRAL.  Although  Digi‟s  fundamentals  remain  solid,  we believe valuations are fair with most of the positive catalysts priced in.

Source: RHB