AGM 2020

Jun 1, 2020

Slides

Good morning, ladies and gentlemen. I am Joakom Briosertjern, the Chair of the Board. Welcome to the 23rd Annual General Meeting of tg.comenhut. It is indeed a special time. The fight against COVID-nineteen, the virus, leads to many restrictions on how we live our lives and interact with one another. So also now for how we convene and meet for AGMs. So rather than meeting face to face in Karl Lemberg, something that has been Our practice for the past 22 AGMs, we this year have to meet virtually. I am confident that we will have a good AGM also when we convene in this way and I thank you for your kind cooperation and understanding. Before we proceed with today's meeting, I would like to inform you that in view of the travel restrictions related to the COVID-nineteen pandemic, I am regrettably not able to be physically present at the main venue for this meeting in Malaysia. In line with the Companies Act And the Security Commission's guidelines, the Board has elected Senior Independent Non Executive Director, Tas Ryssoo Tuvung, As the Chair of this meeting, pursuant to Article 57 of the company's articles of association. I hereby hand over to Chair, Vikram Sridhar. Thank you. Thank you, Hakon. Good morning, ladies and gentlemen. I am Tan Sri Soh Chiwoon, your Chair of the meeting today. Welcome to our 23rd Annual General Meeting of digi.comberhard. This will be our first Fully virtual AGM conducted via live streaming and online voting using remote participation and voting facility. In accordance with Section 3 27 of the Company's Act 20 16 and Article 56A of the articles of exclusion of the company. This facility is being used as a precautionary measure Amidst the COVID-nineteen pandemic, as your safety is of paramount importance to us And to support the government's advice against having mass gatherings to combat the spread of the virus. Your company has also played a very major role as part of the whole industry in supporting the government in this And we hope we will be able to overcome this soon. Before we proceed with the morning Proper meeting proper. Can the Secretary confirm there is a quorum for the meeting? Chair, I confirm that there is a quorum for the meeting. Thank you. With the requisite quorum being present, I hereby call the meeting to order. Ladies and gentlemen, I would like To inform the majority of our directors are participating in the meeting today remotely, This is in accordance with the guidance and FAQs on the conduct of general meetings for listed issuer Issued by Securities Commission. With me today, let me Introduce the participants of this meeting now. With me today at the broadcast venue is Mr. Albin Moorthy on my right, do you pen to him? The Chief Executive Officer of the company. On my left, immediate left is Mr. Zhu Man Lai. Ms. Zhu Manlai, our company Secretary. And next on the far left is Ms. Inger Fokersen, the Chief Financial Officer of the company. The rest of the Directors are joining this meeting remotely. You can see them on your screen. Dear directors, please acknowledge yourself by raising your hands when your name is called. Firstly, Our non independent, non executive directors, you have met Hakon. And next is Mr. Thorstein Peterson And Mr. Lars Erik Talvan. Lars, yes. Thank you. And next are our independent non executive directors, Ms. Yasmin Khan And finally, Ms. Vimala Menon. Thank you. I would like to convey the apologies from Ms. Anna Kwaam for not being able to attend this meeting due to the different time zone in Oslo. We also have our auditors Ernst and Young at the meeting today. At the same time, we So welcome the representative from minority shareholders watchdoggroup. The company had on the 28th April issued a notice of the 23rd AGM and subsequently Due to the extension of the CMCO by the government of Malaysia until 9th June 2020, The company had on 20th May announced that DG's 23rd AGM will be a fully virtual AGM Conducted via live streaming and online voting using the RPV facility. The notice of the meeting have been circulated within the prescribed period. With your permission, I shall take it as read And proceed with the agenda proper. Based on the report issued by the appointed Chair Registrar of AGM, TRICORE Investor and Issuing House Services to Sedangham Berhad. A total of 4.97 members Comprising shareholders, proxies and ordinary representative representing approximately 6,000,000,000 Ordinary shares or 76.89 percent of the total paid up shares of dj.comberhard Have registered themselves to attend this today's meeting. I would like to advise that based on the share registry report, We have received in total 610 proxy forms from the shareholders for a total of approximately 7,000,000,000 shares, Representing 89.34 percent of the issued share capital of the company. Out of these, there were 575 shareholders who have appointed the Chair of the meeting as proxy to vote on their behalf and the shares so represented Stood at approximately RMB1 1,000,000 which represents 12.47 percent of the issued Share capital of the company. Ladies and gentlemen, in accordance with paragraph 8.29A of the main market listing Requirements of Bursar Malaysia, all the resolutions set out in the notice of today's meeting will be voted by poll. In my capacity as Chair of the meeting, I hereby demand a poll to be taken on all resolutions pursuant To the company's articles of association, I would like to inform you that the company has appointed TRICOR Investor and Issuing House Services, Sedangan Berhad to conduct the poll voting electronically. And Asia Securities, Senangand Berhad, has scrutinized to verify the poll results. Please note that the voting session has opened and is available now until the closure of the voting session To be announced later, the results of the poll voting and declaration of resolutions Will be reflected on the screen after the scrutineers have verified the results upon closure of the voting session. Shareholders are requested to view and take note of the results from the screen and you will not be read by the Chair and scrutinize. I would now like to invite the representative of Tricor, the poll administrator To brief all of you on the voting procedure. Thank you, Mr. Chairman. I'm the representative from Trico acting as the poll administrator for the conduct of the Online voting via Trico's remote participation and voting, I. E, RPV application. The steps for you to cast your vote remotely are as follow. You do not need to exit from live stream meeting, instead to click on the corporate exercise or corporate event button on the left side Off the screen, an open link in new window. Under a new window, select the corporate event for the relevant company, remote voting, AGM or EGM. Read and agree to the terms and conditions and confirm the declaration. Select CDF's account that represents your shareholdings. Indicate your votes for the resolutions that are tabled for voting. Confirm and submit your votes. Download and print remote voting document if required. The voting session is open now until a time to be announced later. Shareholders and proxy holders are reminded that Our voting system allows you to vote for all the resolution at one time. Please ensure that you have completed voting on all resolution Before you confirm the submission of your votes, you will be automatically disconnected from the remote voting Once Chairman announced the end of the voting session, if you have any question to raise to the Board of Directors, Please submit your questions in the query box provided in the live stream meeting. Thank you for your attention. I shall now hand over the floor back to Mr. Chairman. Thank you. Thank you. Before we proceed with the agenda, we note that there are questions submitted to us prior to the AGM. I would also like to inform the participants that shareholders and proxies Welcome to raise questions in real time by submitting your question via the query box. We will endeavor to respond to questions submitted. If there It's a time constraint. The responses will be emailed to you in the earliest possible time after the meeting. We shall now proceed with the business of today's meeting. Ladies and gentlemen, the first item On the agenda is to receive the audited financial statements for the financial year ended 2019, together with the reports of the Directors and Auditors, DayOn. The audited financial statements And the auditors report have been sent to you within the prescribed period And with your permission, I shall take them as read. This agenda item is meant for discussion only. They do not require a formal approval and will not be put for voting. I would now like to invite the CEO, Mr. Alban Moorthy to give an overview of the 2019 performance Of the company and the key highlights for the financial year ended 31 December 2019, Together with the CFO, Ms. Inger, over to you. Thank you very much, Tan Sri. So we will go over a couple of slides this morning to highlight and give you a view of the past The items of the presentation for the AGM. Inge will join me from time to time in the various slides to add on the financial comments. Let me first start with the next slide. Let me give you a view of where we ended the year, 2019. The company ended with a $6,500,000,000 total revenue in the full year 2019. We closed off with 11,300,000 customers for the full year. And we had a 99% dividend payout ratio for the year. It was overall a good year for DG in terms of subscribers And maintaining our market position, and that was helped mainly by what you will see on the next slide, which is our strategy. You've seen this strategy now for a couple of 2 years now, and it's around building, connecting customers to what matters most. We are guided, of course, by our 4 behaviors, which is always explore, create, connect together, keep promises and be respectful. And we continue to drive this with customer obsession and Innovation 360. The strategy wheel, as we call it, has 4 elements, which is extremely important to the growth strategy for the company in 2019, but also for 2020 2021, which is around growth, Which is around operating efficiently through simplification, to ensure that we are running this company with a responsible business And also with the team of Digi Sense that's got a winning spirit. If you look at the next slide, a little bit more on just what I started talking and guiding is About the future growth is going to come from consumer and B2B. And this was derived from value from existing customer base And a network that we have built over the last couple of years. On the efficiency side, we continue to focus on digital transformation. We have taken a multiyear structural improvement initiative that is led by specific teams in the organization focused around driving efficiency. And this, again, will not be possible if we didn't have the right teams and right people in place, and we continue to also upscale Our staff to ensure that they are able to do critical work going forward. And also on the response of business To ensure that secure and sustainable business conduct adhering to high governance, but also focused on economic environment and social priorities. On the next slide, I will talk to you about the evolution and where we've come from. In the last couple of years, we've moved this company from A traditional telecommunication company into a company that's driving Internet for all, becoming an Internet service provider, Introducing small packages and introducing apps and services and solutions. In 2017, with a robust network rollout, We then focus on customer value. Here we built core offerings and also solutions were added onto our portfolio. And then we see ourselves in last year and going forward, taking customers to really what matters most to them from a connectivity point of view. And here you can see that we've taken core offerings out to the marketplace, including digital solutions and simplicity for the customers, Such as my DG app is continuing to grow and show us, especially in these times, how important the digital transformation is for us. On the next slide, I will highlight things that we are adapting to and managing in the changing environment. If you look at where what we have done, we have 9,400,000 Internet customers in our base today, 85% smartphone penetration, so it's very close to almost all our customers out there using smartphones. And average usage as of 2019 ended at close to 14 gigabytes on an average monthly data usage. And we also have 48% data growth, of which, as I mentioned on mydg, you could also see Close to slightly shy of 80,000,000 upsell transactions under MyDJF, which is extremely good. On the network side, we not only rolled out new sites, but we continue to optimize and refound the network, particularly on the spectrum, using the spectrum that we have And focus on quality partnerships. In this example here, I call out one of the partnerships that we did with a submarine cable to East Malaysia, ensuring that we're able to Cater for the capacity, demands and the growth in the East Malaysia province. On the right, it is also about modernizing what we do. We have invested a lot of time and effort into the IT space. We have also now collaborated with industry partners and modernized our network through simplification and different models. We have taken CDC, a common delivery center out on the network side with one of our partners. And we've also just recently announced a common delivery center on IT, Thus ensuring that we focus on the front service to customers while we get the top notch service quality to provide a support in the back end. The next slide before I hand over to Inge, I'll just briefly highlight how our share performance has been versus the KLCI. What you see at the start of the year versus where you find us now, we're basically at 448 on the 20th May, Performing slightly a little bit above the KLCI average line, but more importantly is The dividend yield continues to be 4.1%. The EBIT to EBITDA ratio is 12.2 27x and the PE ratio at 20 4.69x, taking 0.0857 dollars net assets per share. Inge, would you walk through the next couple of slides, please? Thank you, Alban. Yes, so I will walk you through the 2019 numbers and review. And we can really see that the focus that we have on our strategy that Alvaro presented is really bearing fruit. Starting with the growth. You see that our Internet and digital revenue has grown 11% year on year, and our postpaid revenue grew 11.9 percent with now reaching over 3,000,000 subscribers, then actually leaving DGS the number 2 in postpaid in the market, which We are also now seeing good traction on our B2B revenue, increasing 6% year on year. And we're doing new growth in DG Home Fiber, both in Sabah and in Klang Valley, Reaching through partnerships with CTS and also time.com to Capture new revenue opportunities in a more faster and efficient way. On the efficiency side, we have managed to keep our OpEx Flat year on year despite the growth that we have in our network that actually also requires OpEx. This has given us a 46 percent EBITDA margin. And post MFRS 16, it's actually a 53% margin. Our investments to reach the guiding is BRL753,000,000 and a 13 point 3% CapEx to service revenue ratio. This leaves us with a 24% industry leading PAT margin. On digital transformation, we reached 3,800,000 users on MyDG, which is actually a 24% increase Inter monthly active users year on year. We also introduced a new operating model innovation by Transferring into a new IT Common Delivery Center. And we also started our new innovations in 5 gs With OpenLab and Pilots, which Alban will come back to a bit later. And we're also very happy that we introduced a new digital way of working through Office 365 with the digital workplace, which has been very welcoming now during the working from home time. Moving to the next slide. We have met our guidances that we gave to the market With a low single digit decline on service revenue and the low- to medium single digit decline on EBITDA. And we also delivered on the CapEx to service revenue ratio, which was guiding between 12% to 13% and ended at 13.3%. We are also proud to see that our strategy to move into postpaid and Internet and digital has bared fruit. So we actually increased our percentage of this revenue from 69% of our revenue to 77% of our revenue. And this is a more sustainable future proof revenue. Also, we reduced our reliance on our non Internet We paid from 31% of our revenue to 23%. We keep an industry leading margin, as I also said. This is driven by Structural cost saving opportunities and also prioritizing our cost spend at areas that drive the highest profitability. Moving into the next slide. I want to highlight that we have a shift in our subscriber and revenue mix. By really On our base management, you see that we have a good subscriber development into the postpaid, prepaid and Internet and digital And strengthening also sustainable returns with this more loyal and revenue generating base. Our PET margin, I mentioned, is resilient at 24%, and our shareholder return ended at 0.18 2¢ for the year with a 99% payout ratio. Moving on to the next slide. Our company is backed by a very solid financial balance sheet. Our total asset ended at €8,150,000,000 And of these, noncurrent assets are 78% of it. I have to highlight that due to the IFRS 16 change that we did, our total assets increased by 2 €600,000,000 due to the rights of use assets. On the compositions of borrowings, We have a total borrowing of SEK 5,150,000,000 and our commercial debt over total asset is at 10%, which is well below the 33% threshold Within the Sharia compliance. And our net debt to EBITDA is low at the 1.6x. And you see that the finance leases coming from MFRS 16 is 40% of our total borrowings. The SUKUK program has equipped us to have a very balanced capital structure and financial facilities. And we also see that we continued our AAA credit rating due to our excellent profitability and robust cash flow. So then I'll leave it back to you, Alban, to go through our number of coverage. Thanks, Inge. So please allow me just a few more minutes on the next couple of slides. Firstly, I would like to talk a little bit about the network coverage and expansions that we have done. If you look at where we come from today, we closed in 2019 at 91% 4 gs coverage nationwide And an LTE in advance at 72% of the population coverage. And if you look at the map, we have basically covered all key market centers, secondary towns and important areas where the population Demands for connectivity in terms of high speed connectivity on mobile. We've also covered 300 plus cities and towns. We've also deployed close to 10,000 kilometers of fiber in the year 2019, and we've taken our Net Promoter Score for the network up by 3 percentage points. And this shows that the investments that we've done not only in 2019, but Previous years in terms of focus on the network has been has received now sufficient support from also our consumers, But we've also addressed those needs. Now besides 4 gs, there's also a lot of buzz about 5 gs. And one of the areas is What are we doing on 5 gs? On the next slide, you will see that we're exploring 5 gs possibilities with various partners. And The reason we do this is 5 gs is slightly different from previous network connectivity programs or technologies that we have done, particularly 3 gs, 4 gs. This is about building ecosystems that are able to serve consumers, businesses in terms of utilization of the network To run their business much more efficiently and more directly. So what we've done is, I think I mentioned earlier, we've done Two approaches on 5 gs. 1, we have deployed pilots of 5 gs in various areas. We've seen that we've done a pilot project in Langkawi Earlier this year, whereby we part of the launch of 5 gs in Malaysia, you were able to have virtual tourism And 5 gs demonstrations. But we also created an opportunity for Malaysian businesses, particularly SMEs and start ups, To take part in an open lab in Cyberjaya, which then allows them to be the first ones in the country to utilize And create innovative products and services that it can test on a 5 gs network. This was done together with our partner in Cyberview, in Cyberjaya. On the next slide, I would like to maybe just take a few quick seconds in terms of just highlighting The value that we have driven across our stakeholders by some of the recognitions that we have received. Some of the key highlights, as you can see, I'm not going to read all of it. But basically, some of the key highlights have been the HBRC, highest return on equity over the 3 years period. We've nominated Finance Asia as Malaysia's best managed company and most committed to social causes and loyalty and engagement rewards for Best Mobile. So you see it from 3 different from a shareholder and investor from a broader society and our responsibility that we have in society as a corporate Malaysian citizen And for our consumers and the rest of the awards are highly appreciated and it goes towards the dedication of our employees that contribute every day to this. Last part, I want to cover on the next slide is about what we're doing beyond just products and services, But also the company in terms of building loyalty and trust as a brand that cares. Last year in the AGM, I introduced a concept on Yellow Heart, We talked about Yellow Hat being an all encompassing product that we take in terms of being socially responsible out to society and empowering societies. On the left here, you will talk we talk about digital inclusion and resilience. While we push Internet and products out there and services and make it more affordable, We also have a responsibility to ensure that it's safe for children and users alike. So inclusion and resilience is going to be very important. Cybersecurity, as you can see it, there are more and more cybersecurity concerns. Hence, we continue to invest in making sure that we are providing safe Internet not only for our consumers, but also run our operations safely. Data protection continues to be a principle That guides us in our operations and our rollout of our network and IT capabilities, response with business around how we work And who we are when we work with partners around ethics and compliance, we ensure the highest level of ethics and compliance in our operations. And not forgetting HSE. How we operate out there and how our partners operate on our behalf is also something that we Truly spend a lot of time on, all this driving towards the bigger brand beyond just product and services, but who we are as a company reflected in Yellow Heart. Inger, maybe you would like to take a little bit of an overview on the next slide, and then I'll come back on COVID-nineteen. Yes. I will walk you through the Q1 results very briefly. So in the growth area, We already saw a 42% growth year on year of our data monthly data usage To 14.5 gigabyte per user. And we continue to see the healthy growth in Internet and digital revenue To €977,000,000 at 13.3% year on year growth. Our service revenue remained at 1.36 €6,000,000 year on year, a 0.7% increase year on year, excluding the interconnect rate that were halved in the beginning of the year. For efficiency and simplification, my DG users reached 4,000,000 users, accelerated actually from the Situation on COVID-nineteen, that's a 25% increase year on year. And our OpEx remained flat, leaving our EBITDA margin at 48.5%. On winning team, we continue to drive Office 365 across all functions and also introducing new cybersecurity and privacy courses for all employees. And on responsible business, we revised and updated our data, privacy and security policies and continued our Future Skills for All program By Yellowheart in collaboration with Emtek and Unitef. Alvar? Yes. Thanks, Inger. So I'm going to move a little bit on to something that the Chairman started off this morning talking about different times, and we were definitely all Affected by what happened in COVID-nineteen and the movement control order. And so for the shareholders, we just want to share what are we preparing and what we have done for COVID-nineteen and our BCP response. On two slides, when COVID-nineteen and the MCO happened, our first priority was to ensure that connectivity Remained the top and main focus for us. I want to make sure that not only our consumers were able to have the network and stay connected, But also the frontliners, the hospital staff, the stakeholders, the government and everyone else. So if you look at the next slide, we spent Enormous amount of time while reminding consumers to stay home and supporting the government on targeted messages to customers on a daily basis On what to do and what not to do, we also spent a tremendous amount of time and effort in making sure that the network and IT Maintained its service level so that consumers could use it, especially if connecting to what matters most given this period of time. Our network teams, you will see this image basically also keep appearing everywhere where we asked everybody to stay home while we work. As an essential service, telecommunications was asked to maintain its operations. And so we had a critical team of people supporting both network and IT operations Throughout this period of time. For consumers, which is on the next slide, you will see that what has happened since the MCO Towards the CMCO, we've had many different iterations of how we supported consumers, making sure that our digital services that we provided out They were available for customers to top up to pay their bills conveniently via online channels and banks. So services that Inge and I covered earlier on like MyDG was extremely critical that we had done that in the past and billed for that. It paid off in terms of now when there was a lockdown and people their homes, people were able to reach those channels. We have also now repositioned our market facing offerings based on what we see in the market going forward. We've made some adjustments to cater for the changes and the new normal going forward. And we will continue to invest in some of those digital channels that I spoke about earlier, making it much more simple for consumers to interact with us, but also to carry out whatever they need to do when it comes to the connectivity and Internet needs. And of late, you've also seen that we've taken out some new plans and products, particularly 2 that I'll highlight for the SME space was around broadband connectivity as more people From home, we've been also providing broadband connectivity for SMEs to take out to for their Staff and for the employees so that their sales force can continue. And for our consumers, we continue to have a new product proposition out there, targeting with insurance and care for our consumers. Now all of this is over and above what we had done to support the government. And as you have seen in the announcements, we have also supported the government in a call for providing Some data, in this case, a 1 gig data plan for consumers during the period to help them stay connected during the MCO and CMCO period. Inger, maybe on the next slide, a little bit of the outlook before we close off. Yes. So I just want to highlight there are I meant that go over and beyond what DG can do, that creates certain uncertainty. So as you all know, the macroeconomic forecast is Very fluid as of now. The GDP growth is estimated to be between minus 2% and 0.5% in 2020. And we still don't have clarity on how long the pandemic will last And the economic impact on Malaysian people. This is the reason why we thought that it was prudent to currently put Our 2020 guidance on hold, while we are pending more clarity on the economic recovery and focusing on our near term priorities. So we will continue to create value for our stakeholders and committing be committed to our long term strategy. And as Albern said, we are well equipped With both the way we work as well as how we are connected to our customers to drive future growth. We also are protecting our cash flow through cost measures, through both prioritizing our spend and efficiency The initiatives. And this is then also giving us financial flexibility, and we also have a practical view on our earnings parameters. And we will continue to invest in strengthening our network and IT infrastructure just to both support the growing data demand that we see And also improving our customer experience. And finally, we want to deliver on our core and digital businesses Drew continue to focus on our customer offerings, as Alden mentioned. So to summarize end to end Our presentation, just maybe a thank you note to all our frontliners, those that are working in retail technology and those that have been Supporting us for the last 80 plus days since MCO and CMCO. A big thank you and a lot of appreciation to our frontliners. And to our customers and to all our shareholders, we also want to make sure that you remain safe at home while we protect and keep you connected to what matters most. If it's not too late, also would like to wish all our shareholders that have celebrated Heiraya, Salamat Heiraya from all the entire management team and Digi, And wish you all well and stay safe. Thank you very much. Chairman, over to you. Welcome back. Thank you, Alban and Inger. I would just like to add that This the team, the company has not only provided free data, Which was originally intended to be for 2 weeks. Now it has stretched on to nearly 12 weeks. And throughout this period, we have seen quite a big increase in data usage. So the company has invested money and worked hard to ensure that the quality and speed does not did not Deteriorate, I'm sure you would have found that to be the case. Now I wish to put on record that the audited financial Statements have been duly received by shareholders and proxies and move on to the next agenda item. Ordinary Resolution, the following I will move on to agenda item 2, which details the resolution. Agenda 2, ordinary Resolution 12, which is the reelection of Directors Hakon and Vimala, who are to retire pursuant to Article 98A of the Company's articles of association and being eligible have offered themselves for reelection. The profiles of the directors are set out in the annual report. So ordinary resolution number 1, re election of Hakwon. Ordering Resolution number 2, re election of Ms. Vimala. Agenda item 3 is the re election of Director, Mr. Lars Thalmann. Ordinary Resolution Number 3 is on the re election of Mr. Lars Erik Thalmann, Who is to retire pursuant to Article 98E of the company's articles of association And being eligible, has offered himself for reelection. Details of his profile is also set out in the annual report. Agenda 4 is with regard to ordinary revision number 4 is to seek shareholders' approval On payment of directors' fees of up to R900000 for the independent non executive directors And benefits payable to the directors up to an average aggregate amount of RM16000 From the date of the forthcoming AGM until the next AGM of the company, pursuant to the Malaysian Code on Corporate Governance, The directors who are also shareholders of the company shall extend themselves from voting on this resolution. For your information, none of the directors of the company holds shares in the company. Agenda 5 is with regard The Honorary Resolution number 5. This is to seek the shareholders' approval to reappoint Messrs Ernst and Young PLT as auditors of the company and to authorize the directors to fix their remuneration. The retiring auditors Ernst and Young have indicated they are winged us to accept reappointment. Special business. Having concluded the ordering business of the Annual General Meeting, we shall now move on to the special business On the agenda, the first item under special business of the agenda is Ordinary Resolution Number 6, which is to seek shareholders' approval on the proposed retention of myself, Tan Sri Sohru Boon, as the Senior Independent Non Executive Director Until the conclusion of the next AGM in accordance to the new Malaysian Code on Corporate Governance, Please be informed that I have served the company as a Senior Independent Director for a cumulative term Of 9 years since 9th December 2010, the rationale for this recommendation It's set out under the explanatory notes of the notice of Annual General Meeting. In view that this agenda is related to my retention as a senior Independent Non Executive Director, I hereby declare interest and will abstain from voting On this agenda, agenda number 7. The last item under special business is Ordinary Resolution Number 7, which is to seek shareholders' approval on the proposed renewal Of the existing shareholders' mandate for recurrent related transactions of revenue Our trading nature to be entered with Telenor ASA and persons connected with Telenor ASA. Details of the current recurrent related party transaction have been set out in Section 3 Of the circular to shareholders dated 28 April 2020 and has been Circulated together with the 2019 annual report of the company. The rationale for seating the shareholders' approval for this mandate is Set out in Section 3 on Page 10 of the circular, it is also my duty to inform you The related parties involved in these transactions are Telenor ASA, the ultimate holding company Of the company and parties relating related to them and they shall accordingly abstain from voting on the resolution. The Directors, namely Mr. Hakon Gajol, Ms. Anna Kwam, Mr. Thorstein Peterson And Mr. Lars Erik Talman, who are nominees representatives of Telenor, are deemed interested in the proposed shareholders' mandate. And therefore, they have abstained and will continue to abstain from all deliberations at Board meetings and on this resolution approving the Proposed shareholders mandate. Ladies and gentlemen, we have concluded agenda of this meeting and we shall proceed To the Q and A session. I would like to inform you that we have received some questions From the minority shareholder Watchdog Group. I would like to Thank the MSWG for submitting these questions. There are always questions of high quality And penetrative in nature, it does give us an opportunity to highlight some of the key points of our strategy And our plans going forward. There are questions And our replies are projected from the screen and will be handled by Alban, the CEO and Inge, the CFO. Over to you, Alban. Thank you, Jay. So let me allow me to please take the next couple of questions from MSWG together with Inger. We'll take the first three questions and then Inger will come on. I will also just remind everybody that the questions and answers have been uploaded, so you could refer to them for a full response. On the first question, it's about how The group would strategize specifically to address the outlook in 2020, given that due to the current situation, there is an increase in Internet adoption And also companies and consumers are forced to adapt a new normal during COVID-nineteen. And there's an expectation on quality of service On top of that from the regulators. So if you take the answer, for us, the response is actually, This is very much something that we've had in the strategy that I also just shared with all of you. And in the strategy, it looks at about execution In terms of how can we enable consumers to stay connected given any circumstance that they might face. And the investments that Tan Sri also mentioned in terms of what has happened now in Last 80 plus days during MCO and CMCO, in terms of how we are able to flexibly move Our network capabilities fine tune optimize to cater for those changes has also proven that we've been quite successful in managing that. And going forward, we continue to look at creating products and services that drive value for consumers, both business and consumers. And digitization and modernization is a big part of how we will do this. This not only will enable us To stay much more agile in providing services and better availability of how customers can self serve, But also make sure that we are prepared for anything else that could happen in the future as well, as robust as we can. All of this will drive a better quality, We believe both from a network IT, but also a service level for our customers, which then meets the quality requirements. On question number 2, The questions are broken into 2. What is the progress of 5 gs development and when is it expected to be launched? How successful has the group been in securing opportunities under 12, and I'll read the 12 now in a bit, which is around deploy and monetize 5 gs And develop digital solutions for corporate small and medium companies and also our view on FTTH. So let me take the 5 gs question in a whole. Now we have been prepared for 5 gs and we are preparing for 5 gs For the period of time where we've already have a 4 gs network that we've deployed, we have done upgrades into our core readiness for 5 gs By modernizing both our network and IT systems, including virtualization and advanced security, as I mentioned earlier. On 5 gs, during my presentation, I touched on some of the partnerships that we're doing on 5 gs because we won't be able to do 5 gs as an operator ourselves. You need to understand the ecosystem out there and you need to understand what is the purpose of using 5 gs. And hence, partnerships through open labs, demonstrations and key partners True collaboration is extremely important. Being part of Telenor Group, we then have the opportunity of also having best practice And technology innovations shared with us in a timely manner when some of the other markets work On 5 gs, either collaboratively or ahead of the rest. Now, when it comes to B2B solutions and the revenue contribution, We continue to focus on SME and B2B area as presented in our strategy plan as we believe that this is an area that is going to grow And not only due to 5 gs or 4 gs technology, but this is an area where digitization has the biggest opportunity and we've seen this in the last 2 years and we continue to focus on it in 2020. Even given the challenges that we've had from COVID, we continue to communicate solutions to B2B customers As we believe that this together with FTTH and other solutions that we can bundle together are extremely critical for our business customers. We can take the next question. The next question is around blended ARPU Remain relatively resilient at ringgit, comprised of stronger Internet revenue, postpaid prepaid Internet subscribers increased To 9,700,000 representing 85.9 percent of the 11,300,000 customers. What is the current percentage mix between postpaid and prepaid Internet subscribers? And is there an optimal mix and an optimal ARPU level? And what measures are being taken to achieve preferred optimal mix? So postpaid and prepaid internet customers actually represent about 26% 60%, respectively, of our total subscriber mix. Now we need to remember that that has actually been very positive for us over the last couple of years. We've been growing postpaid base quite ahead of the industry. And while it's hard to pinpoint exactly an optimal mix or a preferred ARPU, we believe that our strategy on focusing on the various Packages addressing the various level of society in Malaysia is the right method to do it because you will have various segments and opportunities within those segments to address With the different bundles and personalized offers that we can take out to market, protecting ARPU and the base of customers. On the channel side, there's lots of channel transformation taking place. And this is to really to modernize our channels, as I mentioned earlier, to provide consumers options on subscribing for these affordable worry free plans, But also reaching out to these customers through digital means directly and personally. Inge, would you take question number 4? Yes. Question number 4 is around our EBITDA margin at 46% in 2019 and what the average industry EBITDA margin was And what are the specific measures taken to improve this margin? We would like to highlight that on a comparable basis, our MFRS 16 industry, now EBITDA margins stood at 53%. And if you compare that to the industry of 39% to 41%, it is Outstanding. We have, over the years, been very disciplined in driving profitable growth, both in our product offerings Through driving efficiency and simplification in our business processes and through digitization and operating model innovation and shifts, And we will continue to strive for this going forward to achieve structural efficiencies. And as Alban has mentioned, we are an agile organization that will continue to find ways to protect our EBITDA. We are also now doing reprioritization of spend given the economic situation we're in. So I think that will answer this question. Then I'll also take the next question, which is Related to the global COVID-nineteen pandemic and navigating in this difficult time And to what extent this has impacted our business and how we are preparing ourselves to face a new business landscape. So we believe it's too early to share the exact Impact, we will get back to that in our Q2 results. However, we do see a slower revenue development, and we highlighted this already in our Q1 reporting. One driver is, of course, given the reduction of travel worldwide, we have impact on our roaming revenues. And also due to the MCO and closure of stores and dealer touch points, we also had impact on our acquisition revenues in this period. But we will have a clearer view on this when we come back in our Q2 results. But we do see that the run rates are slowly picking up, And we are taking a practical view now to protect our cash flow, as mentioned earlier, both through cost measures and also through our investments. And we believe that our steadfast focus on executing on our strategy the last years have really prepared us for this situation. Again, I think our team has been working extremely agile and efficient to manage this throughout the MCO. Moving on to the next question. This is related to the interconnect ratio. This was halved in the beginning of 2020. And the question is how and to what extent this will impact the group's business. So we have a lower interconnect Revenue. And our service revenue growth year on year in the Q1 was 0.7%. It would have been minus 0.4%, including the interconnect revenue reduction. However, a similar cost reduction on our traffic cost It's also coming. And hence, the impact on EBITDA and our earnings are fairly neutral in this respect. Then I'll hand it back to you, Albert, for the next couple of questions. Thanks, I guess. I'll take this question and then back to you on the last two. The company is actively I think this question is around spectrum and our fiber footprints. And the question is around refirmed Spectrum portfolio to deliver stronger, more consistent 4 gs network, along with expanding our fiber footprint. In October 2019, we also announced a Partnership with TM Global to enable DG on providing Wi Fi access hotspots nationwide. And the question is, what are the respective targeted expansion on fiber footprint And a number of Wafer hotspots and timelines. Please allow me to draw 2 separations here. 1 is on the fiber footprint that we continue to work with Ourselves and also the industry in ensuring that we are able to fiberize as much of our base station sites out there As we as the traffic and data usage of customers increase on the 4 gs network, it is critical that we continue to have fiber backhaul To ensure that the traffic is taken back efficiently and that we are able to handle the capacity on the site level. And hence, we as you know, we have signed Roll out partnership with Cellcom previously, and we've now recently signed a memorandum of understanding, including Maxis and Cellcom in March 2020 To explore further fiber joint infrastructure development, so that we can do this in a much faster and much more efficient manner. When it comes to partnerships and in this example of the question that was asked about the Wi Fi, we continue to use these Partnerships in areas where we believe we can add value to our existing customers and complement the data packages that they've already signed up with us, So that they are all they can always stay connected. And this is also part of the national fiberization connectivity plan for consumers. We can take the next question. So this question is around the allowance for expected credit losses on trade Receivables and contract assets, that rightfully has increased significantly last year. And the question is around what are the reasons for the significant increase and how much is Attributed to contract assets and what is its nature and what is the probability of recovery and measures taken to recover the trade receivables and contract assets. So this is the so called allowance for expected credit losses, AECL, and trade receivables. And this is in line with our strong postpaid revenue growth of 9.8% year on year. So the higher allowance is attributed to Entry level device bundle acquisitions and also our device financing program, which is called Phone Freedom 365. At the end of 2019, our ratio on AECL stood at 2.7%, which is relatively lower than the industry average on 3.4%. And on a specific question on our IAEA ECL on contract assets, it improved to RM, euros 2,400,000 from €3,700,000 the year before due to the shift that we had from the device bundle contract To this PhoneFurium 365 device financing where we have an installment payments over a 24 month contract period. We do have a lot of solid measures in place, and we are monitoring this very closely, especially during this MCO and COVID-nineteen period where we see that the economic conditions may impact the receivables recovery. And we're constantly exploring new initiatives to maximize this receivables recovery. Thank you. I think I'll take the last question as well. The question is around the group's trade receivables and contract assets. What are the reasons for the increase in the 91 and the 180 days Past due buckets that we have in 2019 compared to 2018 and what are the measures taken to recover the overdue trade receivables And contract assets. So the increase in trade receivables, again, is due to the aging buckets from bad debt associated with The entry level bundle acquisition as well as the device receivables and Phone Freedom 365 installment scheme, again linked to our Postpaid Growth. And in addition to collection and recovery efforts geared towards increased adoption of digital payment methods, DG also constantly And proactively pioneers initiatives to maximize chances of recovery of overdue trade receivables and contract assets. Thank you, Inger and Alban, for the answers To the MSWG questions, I hope we have answered these questions to your satisfaction. If there are any further clarification required, we will be pleased to meet up for further discussions. We now proceed to a few pre submitted questions by shareholders. I shall pass it over to Alban. Okay. So the first question is, we understand that DG will not be giving out doggy vouchers this year. Would the Board consider to give the shareholders DG vouchers instead? Due to the current situation, we basically there will be no distribution of By AGM Doggifts, all electrocommunic lead this year to also make sure that we have privatized our resources to ensure our customers and frontliners stay Safe and connected during this period. In this respect, we just already given a free one gig daily from 8 to 6 p. M. During the COVID-nineteen period. And that's from March 18 sorry, from the MCO period up till June 9th, our consumers and our customers and shareholders will be able to enjoy That and that's what we'll be doing now for the Malaysian Society at Large. Next one. Next one. Any plans for DG to expand on IoT business? Yes. So we didn't spell out IoT as a Particular item in the strategy, but it is part of our overall digital and business B2B solutions strategy. And it is embedded in our overall technology strategy when we look at AI and IoT. We have made strategic investments including Some NB IoT solutions for businesses and industries. And we're also working with some key strategic partners as of today, Deploying some of these solutions and we'll continue to draw on our expertise and assets to seize these opportunities going forward as well. On the next question, any new business ventures tie up in partnerships? Yes, we continuously build on partnerships as you've seen. I've given you so many examples in this session. And if you look at what we plan to do going forward, some of the notable ones that I would like to maybe bring up again is Digi Partners Telecom Asia to test 5 gs capabilities, this was done in Langkawi. We continue to expand our home broadband service, so fiber to the home. We did an agreement with That time in January 2020, and you will see more of this going out over the next period of time. The MOU I talked about on fiber, super important part of fiberization of Sites and ability to cope with the capacity of the network. Moving a little bit to consumers, We just launched a new prepaid plan in the month of May, fully digital by the way, because we were in the period of COVID-nineteen MCO, CMCO. And together with our partners, AXA was able to offer life insurance on top of a prepaid offering, very innovative and very well done by the teams. And lastly, maybe something that just went out as last week, you might have seen that we also are now Part of a business continuity digitization ready company through the help of MDEK being able to serve small and medium enterprises. And so we continue to do different innovative partnerships and tie ups in order to serve customers Much more creatively in the past and also going forward in the future. The next question? No more. We have received several questions during the course of this meeting. I shall read them out. Okay. The first one is For resolutions to reappointing the existing directors to the Board, can the nomination committee Provide his recommendation as to why these directors are worthy of being reappointed the Board. What have the directors contributed the Board and company to deserve their respective reappointments? You'd like to answer that, Evan? Yes. Why? It is a nomination committee. Yes. I can answer. Yes, on your reappointment. Is this on my reappointment or all the other items? Yes, on your reappointment. Since this question refers To me, can I pass the floor to Ms? Yasmin Khan to answer this question? It's unclear. You put here a bracket and then we'll know. Jasmin, can you Please unmute, Yasmin. Can you hear me? Yes. Yes. Yes, we can. Okay. So this question is pertaining to The retention of Tan Sri Soh as a senior independent Non Executive Director, is that the question? That is correct. Okay. So in response to that question, we believe that he's fulfilled the criteria Under the definition of independent directors as stated in the listing requirements. Secondly, his experience enables him to provide The Board with a diverse set of experience, expertise, skills and competence. His good understanding of the industry And company's business operations enabled him to participate actively and contribute effectively during the deliberation And robust discussion at the Audit and Risk Committee, the Nomination Committee and Board meetings without compromising his independence An objective judgment. Thirdly, Sang Sri has demonstrated high commitment and devoted sufficient time to his responsibilities A senior independent non executive director of the company. And fourthly, he's given sufficient time That's required by the company. I mean, we need sufficient time, but the company to find a suitable successor of Tan Sri As an independent director, who's also a member of the Audit and Risk Committee to ensure an orderly succession plan. Thank you, Yasmin. Question number 2 is On the question of during this MCO and CMCO period, Most people just stay at home, work at home. So has there been any increase on usage or data Per customer and has there been any increase in the number of new DG customers? I shall pass the floor to Alban. Okay. Thank you, Tan Sri. So yes, we have, over the last period of time, Especially when more people work from home, there is more pent up demand in terms of data connectivity. And we believe that we've been able to provide customers besides the one free gig that we've given them. We've been able to serve these customers. And that's why when I talked about COVID-nineteen, Our main focus was ensuring that our network and our IT systems were able to cope for the demands of the consumers. We've also We've seen a change in customer usage pattern. So most of the customers now have shifted from being in cities, city dwellers, in offices, moving back The traffic to homes, also in terms of the busy hours have also shifted from the nights to almost all day. So we've been able the technology teams have done a great job in terms of making sure that we're able to cope for those changes that the customers have required. Yes, we've also seen a potential of addressing some of these customers, which is why I would also look at the product that we just launched on the prepaid side, addressing customers With more affordable and relevant packages given the current period of time. And one of the digital capabilities that we have from myDG has So it's shown that more customers have been able to shift to digital usage of those channels, being able to pay their bills, but also stay connected, Buy things that they need, additional quota capabilities, everything else that they need during the Response has been done accordingly to prepare and serve our customers during this period. Over to you, Cheung. Well, the next question is on COVID-nineteen pandemic. Has it affected the company? Alvin, would you like to give? Inger? Inger, you like to answer that or? Because question number 4 is essentially about the same Yeah, Question number 34 are the same. What are the measures the company have taken to reduce its impact on the company's Financial performance. So we should take it together, these two questions. Okay. I can do that. So as I mentioned earlier, We have really looked into our cost spend to protect our free cash flow. So we have a very efficient free cash flow management by both looking into the by both looking into the collections of our customers that we monitor closely and have mitigating actions on. And also, this is to enable us to identify potential of nonpayment upfront as a result of the economic slowdown And COVID-nineteen situation and mitigate or minimize the situation. And further, for cash flow management, we also had a Tax law, taxes stimulus, which gave us a deferment of tax payments provided by the tax authorities, Which we have enjoyed. And the MCO also resulted in a much more efficient process improvement, which is expected to be the new way of work And moving forward, that will result in positive financial impact. So we're optimizing our inventory holding and negotiation with vendors as Well, to get improved terms. On the OpEx side, we continue to have a cost optimization and efficiency task force To reprioritize our costs and optimize our nonessential spend. And some examples are that we have renegotiated Contracts, rates, accelerated our digital adoption, and we also see less of the Traveling and other work from home impact. Thank you. Okay. Thank you, Inger. We move on to the next question, which I think part of it you already answered, But you can continue with it. It's a question on how we are performing against our competitors. Yes. So we our competitors came with their results shortly after us. And we can see that we continue to lead on industry profitability. We have a sustainable dividend yield of over 4 In line with our earnings performance. And I can also highlight that, that is higher than the competition. The same goes for the year on year revenue that we saw in the Q1 on the core mobile revenues, We've also outperformed competition. Thank you. The next question is on That our live streaming virtual meeting that we are conducting today And the person asking this question says that we will save money instead of a fiscal meeting. And the person asked whether we would give consideration to pay high dividend to the shareholders. I don't think the difference is that great to make any impact on the amount of dividend we pay each year. We pay 100 of 1,000,000. So Anyway, we will take this opportunity to again reiterate our dividend policy. Alvin, would you like to? I will do that, Jay. So just to reiterate that the dividend is a factor of profit after tax and Digi is close to paying 100% of profit after tax. Hence, we will stick to that principle. And our dividend policy is a minimum of 80% payout of our PAT, Of course, subject to the availability of cash. We have a strong balance sheet and cash flow, while our net EBITDA ratio 1.6% as of Q1 is well below the industry benchmark. So we will have to stick to those policy, dividend policy for now. And thank you for that question. Thank you. On number 7, the question is on Whether there are other impacts on revenue, human resource, In terms of retrenchment, pay card, if any, so far as we weather the MCO and global pandemic, What is the forecast on these matters that shareholders can expect when we close