Good morning. Good afternoon, ladies and gentlemen. Welcome to the conference call. Will you please give me your call and I'll stand by for your name. Thank you.
Hello. Hi, everyone. Good afternoon. Welcome to Digi's third quarter earnings call. With me here, we have our Digi management team, our CEO, Albern Murty, our CFO, Inger Folkeson, as well as other members of our management team today to walk us through the third quarter's performance, and then they will later take in a session for questions and answers. Without further ado, I'll pass the line to Albern.
All right. Thanks, Winnie. Good afternoon. Good morning to everyone. Thank you for joining us for our Q3 2019 call. We'll go through the level of presentation from the management team. Together with me today, the CFO, Inger, and the CMO, Loh, and the CTO, Kesavan, is here, and the rest of the management team. The four of us will be the ones that will add to this presentation, but also take some of the questions. The agenda, we will cover key highlights, performance, and we'll wrap up with other updates and priorities with a little bit of an outlook. Please allow me to start. The first nine months of 2019, we have seen tracking well towards the internet growth ambition that we had. Year-on-year comparison, you see 11% improvement on internet and digital revenue.
This has been a key focus from us as part of our changing strategy on data products and data revenue. That's also getting translated to 4% increase in subscribers for the subsequent period. What we see is that we've been able to achieve this through continuous focus on the right plans and products, but also definitely on deployment of much better 4G network experience, giving better speeds, and I'll cover that later on through the slides. The base, as I said, has improved, and the usage on the base has also increased, thus giving us solid internet and postpaid revenue growth, which we can see from the quarter-on-quarter improvement in the chart below. If you look at 9 months of 2018 versus the same period in 2019, you see that postpaid growth is now 12.7%.
When you look at service revenue overall, there is a reduction of 1.9%. If you look at the overall performance, we are quite happy on a quarter-to-quarter, and I'll come back to that in a short while. Our digital solutions continue to take a position. We have reached 2.6 million customers using the MyDigi app. We also have some good traction on digital services, particularly around games, with PUBG Digi and in the app, which is a new platform that we just launched. We continue to expand our B2B ambition. Besides pushing on SME solutions, we have now also opened our retail to serve our customers for the business consumers. On this slide, you'll see that we have also mentioned the 5G open lab, a field trial that we're working with partners. It's a collaboration to partners to self-test the open 5G market on use cases.
On the next slide, just to give you a little bit of a key highlight. Internet revenue, slightly shy of 11% year-over-year. Postpaid revenue is at 12% year-over-year. Service revenue, a slight contraction of 0.7% year-on-year, and improving from the previous quarters, then taking the current quarter to a positive 0.9%. On OpEx, happy to report that it was a flat OpEx year-on-year and quarter-on-quarter, taking EBITDA margins to 48%, sorry, 46%, or MYR 725 million in absolute. CapEx, a little bit leading to my point earlier on the network and the deployment, is now at MYR 548 million year-to-date, giving us a strong network position. Also here, I will talk a little bit about it in terms of how we have taken a number one, number two position in 4G network experience in Southeast Asia.
On MyDigi app, I covered that earlier, but MyDigi 3.0 continues to garner customers' choice in terms of rewards and account management. We have launched a Digi Wi-Fi extension to our internet proposition, now providing close to 7,000 Wi-Fi spots nationwide, where consumers can use Wi-Fi as an option for connectivity. Not forgetting, going beyond what the brand does, is also then taking privileges to senior citizens and differently-abled persons, as part of our digital inclusion promise to society. Our commitment towards placing customers first, as the slide there indicates there, is a combination of engagement that we take out to market. We are still the only brand that does this consistently. Here you would see a couple of images.
The one on the left talks a little bit about taking employees and reaching out to over 7,000 Malaysians, listening, and also providing them services or just engaging them. On the right side, you will see that digitization of SMEs. Part of our B2B ambitions that I talked to you about a couple of quarters ago, we are now going one step further to actually going out there and educating and training SMEs, giving them the tools and the capabilities to actually go and automate their business with digital platforms. Very well received. We ran four of these nationwide, across this period. It was very well received, and we are expecting to continue to engage the SME in this space. On the next slide, a little on the network that I talked about.
Investment in the network was very visible, and you saw that reflected on CapEx. 4G, LTE, we have now reached 90% coverage. LTE plants at 70%. Fiber at 9,020 kilometers nationwide. On the subscribers, the 9.4 million that I mentioned earlier is our 4G internet subscribers at 9.4 million. On the network, the stats that I just wanted to highlight to you earlier, we are now ranked number 1 and number 2 on Ookla Speedtest across 13 states nationwide. That has come from two things. One is the investment and capacity and management of the network. Second one is also optimization for better experience for our customers. Mobile data usage is now around 12.9 GB per capita per month in the third quarter. As I mentioned earlier, I covered the internet. In this diagram, we just split between post-paid and internet.
Post-paid and pre-paid, both showing positive growth on internet usage. Inge, would you walk through the next couple of slides, please? Thank you.
Thank you, Albern. I'll go into subscribers and ARPU. We are building our base to become a much stronger internet and also a base. We have continued to focus on capturing our customers into device ownership programs, and that's for our PhoneFreedom 365 program. We're also seeing very good traction on post-paid family plans and also our pre-to-post conversions as well. As Albern touched upon, also the pre-paid internet practice is resulting in pre-paid revenue cycle as well. In total, we see that our subscribers coming from pre-paid internet and post-paid is increasing year-over-year by 3.7%. The decline that you see here from non-internet pre-paid is narrowing. It was -5% this current quarter, narrowing from 6.2% last quarter. In total, we have strengthened our subscribers to post-paid and pre-paid internet by 341,000 subscribers or 3.7% year-over-year.
The blended ARPU is resilient at MYR 40 due to the stronger internet and post-paid revenues. This is sufficient to cushion the non-internet dilution that we see. The post-paid ARPU has actually increased to MYR 71 from MYR 70 last quarter. This is due to our effort in ARPU uplift, especially from our existing customer base. Although we see our ARPU is also challenged by new entry-level customers that we also want to come into this post-paid segment. We continue to grow with our customer needs to have a continued focus on our ARPU uplift. Moving on to the service revenue. We see a solid internet growth, as we mentioned before. The service revenue overall, excluding the contract customer optimization quarter-on-quarter, has increased 0.9%. The decline has also narrowed year-over-year to -0.7%. Last quarter, it was -2.2%.
If you exclude the non-internet prepaid, actually, our service revenue grew by 3.4% quarter-over-quarter and 8.9% year-over-year. Looking at the internet and digital revenue growth, we really see that it's gaining momentum. We also want to highlight here the increase in higher demand on digital services, which for the first time, we show here on the chart, 7 million this quarter. In total, our non-internet revenue has moderated by 6.7% quarter-over-quarter. We continue to see the impact from, of course, the revision of internet rate and also the increase from the higher contract customer optimization. Moving to cost slide. We continue to deliver very efficient operations. As you can see here, our underlying COGS have remained flat.
Last quarter, we had a non-recurring traffic cost of MYR 34 million, meaning that we actually see that we have been able to have a pretty flat cost quarter-over-quarter if you disregard that. It's a 5.4% year-over-year decline also coming from internet. OpEx, we have managed to remain flat both year-over-year and also quarter-over-quarter. This is actually a very favorable 34.6% of our service revenue only. Even as we continue to invest in our network, which also increases our OpEx base, we managed to compensate that with efficiency initiatives as well. Actually, our underlying OpEx is lower compared to the last quarter because the one-off and non-recurring cost that we have this quarter of MYR 17 million is lower than the MYR 28 million that we recorded last quarter.
We continue to have a very high commitment and focus on driving our operations efficiently. Moving to the EBITDA and profit after tax, relatively resilient, and we've included here for your convenience, the non-recurring costs that we have mentioned in the previous quarters as well. As you can see, the underlying EBITDA increased by 2.7% quarter-over-quarter, and it's -2.6% year-over-year after the normalization and the cost structure democratization. It's basically trickling down from the top line, which causes the decline year-over-year. We have improved our earnings quarter-over-quarter, mainly after closer from the core service revenues and also more efficient operations. Our reported EBITDA, as Albern mentioned, is now RM 725 million, resulting in a 46% EBITDA margin.
Our underlying profit after tax have increased by 2% quarter-over-quarter, but also a decline of -5.6% year-over-year, after the normalization as mentioned earlier. Our reported profit after tax has felt -12.6% quarter-over-quarter and -17% year-over-year because we have accounted for MYR 202 million in depreciation cost and an increase in finance cost, but also higher effective tax rate. This is related to additional tax from finalization of our tax return filing and higher non-tax deductible cost. Moving on to the CapEx. We are in line with our strategy and investing in what matters most to our customers. We are seeing that our cumulative CapEx year-to-date has now reached MYR 548 million, and it's equal to 30% CapEx service revenue. This has given us a more optimized 4G network.
You can also see that we have enhanced our capacity with the building fiber network expansion now reaching 9,200 km. We're also using more spectrum dedicated specifically for 4G. As Albern also mentioned, now we have results from Ookla that we are ranked as number 1 and 2 across 13 states in Malaysia when it comes to 4G network performance. In the same assessment, our average data download speed is now at 30 Mbps across our network. In total, our operational cash flow actually strengthened 24% quarter-over-quarter to MYR 606 million, giving us a 39% margin after recording a relatively lower CapEx this quarter, which was part of our plan. It was to accelerate the network experience improvements. Moving on to the dividend. Basically, earnings per share, it's good at MYR 0.047 or MYR 0.046 after adjusting for MFRS 16 effects.
This was presented to the board, they have declared a third interim dividend of MYR 0.025 per share or equivalent to MYR 350 million that will be payable to our shareholders on the 19th of December this year. For your information, also, we secured a MYR 900 million Shariah sukuk facility over two tranches of MYR 450 million for 10 and 10 years tenures. This is part of our already announced MYR 5 billion sukuk program will support us in investing in our business going forward. We remain at EBITDA healthy at 0.8 times before MFRS 16 effects and 1.5 times after. Our conventional debt over total assets is at 10% after MFRS 16. Moving to the impact of MFRS 16 leases. This is something we continue to report just to show you the impact.
Basically, we continue to move our lease list from our fixed line onto the right of use asset. This time it's MYR 109 million, and then we move it back up into depreciation and amortization and finance cost, giving us a delta of -MYR 6 million this quarter.
Okay, Inge, thank you very much. Just to wrap up the last couple of slides. I'm just shifting gears a little bit to give you a little bit of a better picture as a brand and as a company, aside to the financials ambitions that we have. On this slide, you will see that we have embarked on being a thought leader, but also a leader in the space of sustainability, bringing programs across the SMEs and across the business partners, where we're talking about the importance of sustainability. In the visual up there, you will see an engagement on Sustainability Day that we just had, where we have brought in external parties, about 150 different companies joining us for that event. You will see that we have launched a Yellow Heart program.
I've talked about this before, where we've taken Yellow Heart to retail, making this an opportunity for all customers to differentiate as a brand. In this instance, we have now extended what we did previously to the differently-abled persons by offering us lifetime MYR 10 monthly rebates. We've now extended that offer to seniors as well. We truly believe that everyone deserves to use the internet, and yeah, and inclusion. On the last one is empowering the next generation. While we sell the internet, I've always said that we have a responsibility to educate and build resilience for children. Here, you see that we cover 130,000 students across the country through various programs that have been developed. Next slide.
Just to share with you that while we are pushing our business and made in growth, we are recognized and humbled by the recognition that we receive, it's dedicated to our employees, to the brand overall, to society, and to our investor community. On the last slide, just to close off with the priorities and outlook. What we've seen is basically that we've been able to provide sustainable revenue growth of 11%. You've seen that postpaid has maintained its momentum from the previous quarters, but also from last year, with 12% growth. Efficiency remains to be our main focus in terms of driving the mindset, but also the culture in terms of delivering good quality network, good quality service, but in an efficient manner. If you factor back then 40% EBITDA margin with healthy returns that Inger shared earlier, with accumulated dividend per share of 13.8%.
What we're going to be focusing on for next period is continue our growth strategy in terms of execution and delivery in the channel, driving postpaid B2C and prepaid internet growth. That has been our strategy from the start of the year, and we're going to continue to do that. You've seen now in the third quarter improvements in all the three areas that are listed below. We're also going to continue to focus on structural efficiencies. We believe that we can do even more in this space, and on the network side, we continue to expand and improve the quality of our network as we've committed to our customers. On the guidance, based on the performance, we've also now looked at a CapEx ratio of 12%-13%.
On the EBITDA, we've taken that now to low to medium single-digit declines, and on service revenue, we place that low single-digit decline. With that, I'll conclude the presentation, and Regina, I will open then for Q&A. Thank you.
Thank you, sir. Ladies and gentlemen, we may now open for questions. If you'd like to register for questions, please press star one on your telephone. Thank you. Our first question comes from Arthur Pineda with Citigroup in Singapore. Please go ahead.
Hi. Hello? Can you hear me? Hello?
I'm sorry, Mr. Arthur. Would you please stay on the line because our speaker's line has just been disconnected. Ladies and gentlemen, please stay on the line. Our call will resume virtually. Sorry for the inconvenience. Ladies and gentlemen, thank you for waiting. The speaker's back on the line. Please go ahead, Arthur.
Hi. Thanks for the opportunity. Several questions, please. First, could you clarify on the guidance? It seems like the CapEx guidance is now slightly higher at 12%-13%. What's driving this change on the guidance? Second question I have is, on the prepaid side, it continues to be problematic with declines. What can be done to stem the prepaid decline? What's being done on that side? Lastly, a housekeeping question. Can we clarify the non-recurring items for this quarter? Thank you.
Thank you. I will start with the CapEx guidance. Basically, it's a combination of two things. One is that CapEx guidance is on a CapEx to sales, and since our sales revenue has a slight decline, that also increased the ratio in itself. However, we have also invested slightly more than we thought in the beginning of the year because we want to continue to deliver on our customer promise on the customer experience, and that's also what we see resulting. As mentioned earlier, we front-loaded our investments this first half, and we see those results now in the second quarter.
On prepaid declines, though.
Back to the questions on the prepaid, I think as we want to share in the earlier slides, there's really two components in the prepaid. If you look at the internet, definitely, I think we are able to narrow the gaps and it starts to show some of the uptrends again. Again, I think if you look at the prepaid postpaid segment, the internet user behavior obviously is very different. Postpaid, it comes with a commitment, a bit more stable, and prepaid, there's a lot more choice, and personally, the competition for the fees are still abundant, available in the market.
On the third question on the non-recurring items in Q3, quite similar to the previous quarters. It's a combination of efficiency efforts we are doing on negotiation. We are reversing some of our approvals based on the new prices we get, as well as some pure cleanups that we have done in the balance sheet.
Sorry. The line was not very clear. What cleanup in the balance sheet?
Oh, some aged purchase orders that we've had, that we have cleaned up.
Oh, understood. Sorry, just to put it back on the prepaid side. I understand that you mentioned that's been problematic. What can be done to actually reverse this trend? Is this just all being driven by competition? We just have to wait until competition subsides before we can actually see stabilization.
Again, Eva, I think that in terms of internet usage, that will continue to grow. Of course, we are continuing to lean and now go into segmentation models, work on the different offerings, different affordability level. That will allow us to continue to I mean, monetize the internet. Again, right, I think you also have to take into consideration, what you see in the prepaid is after the pre and post migration. I don't think we can look at pre and post, completely separately, but I think you really need to look at it a bit more in totality as well.
Yeah. I'll just add, in that last comment that Lo had, which is pre to post. There's a couple of methods that you would defend the growth and expand the ARPU levels. One is pre to post, as you know, they've usually doing that systematically. The other part is there are pockets of growth in prepaid that there are other types of data which we have our fair share of intentions to go and get. Those two things combined and the network expansion that Inge mentioned, those are things that will drive towards managing how we actually take going forward.
Thank you very much.
Thank you. Our next question comes from Prem with Macquarie in KL. Prem, thank you.
Hi. Thank you for the opportunity. Two questions from me. First of all, more shorter term, do you think that the industry has come to a point where we can actually start seeing positive service revenue growth going into next year? Do you think that competitive pressures are still intense and there's no hope in sight or no chance of us getting a positive service revenue growth for the industry over the next 12-18 months? That's the first one. Second one, a bit more longer term. Could you give us some comments around what you think about the NFCP and all this talk around 5G networks, and how does Digi fit into, digital strategy? What implications does it have for your long-term CapEx requirements? Thank you.
Prem, back to the question number one, right. Of course, I think if you look at the service revenue today with the internet revenue component and the non-internet revenue. Today, if you see some of our progress on the internet, really, I think, of course, the postpaid internet has grown much promising compared to the prepaid, as what we have just explained just now. Really, I think it's another component, right, in order for the industry to have a positive service revenue. There's a non-internet portion, which is really still, there's a lot of other element there that's not within our control. There's interconnect and also, I mean, the voice data cannibalization is going on. As and when we go into more and more bundle, the voice bundle, obviously there's a price dilution as well on the non-internet.
Again, I think the focus is how do we continue to build internet business in a sustainable and a profitable. I think that is still what we are focusing on in the near term.
Yeah. Prem, thanks for the question. On the second question, in terms of NFCP and 5G. The way we look at it is, first of all, NFCP was a very clear decision from the government in terms of how they actually see improving connectivity in the country, for the better of the consumer. I think Digi is very much in line with the NFCP mission. There are several items in the NFCP, as you know, you're part of the launch. I think on the mobile space, we're looking at improving the quality and also making sure that we're able to perform on the coverage side. It's very much, part of what Digi would look at in terms of network expansion and quality improvements to serve our customers, in that period.
That would be then translated into the CapEx that we would already have provided for that period and our customers. When it comes to 5G, it is a step by step, and you have seen how we've done together as an industry together with MCMC and the regulators in terms of taking from a showcase to a trial, to a field trial, and there's a roadmap that we've shared with them as well, is my understanding. The other thing that's quite different is it's The federal and the states are working together with the operators to actually find a much more effective way of rolling out connectivity in the various states. For me, it's very much welcome, and it's part of our CapEx ambitions as part of NFCP and as part of our own network plan.
Thanks, Albern. Do you think that Digi would look at building its own 5G network, or do you think you could move something closer to what China Unicom and China Telecom have done, where we have some form of an infrastructure layer for players to come on board and therefore save on the CapEx element? What do you think that long-term direction is?
As you said, it's a long-term direction, and it's very early days. Right now we are actually doing a trial, and we're also doing the 5G open lab. We're taking a very pragmatic approach in terms of looking at it, and we're also doing an assessment in terms of what would the use cases of 5G be. You know this, but just to remind everybody that we're also part of Telenor Group, and there we also have the potential of looking at what's not just the use cases, but what are the methods in terms of deployment of 5G that we could look at and explore. Very early days. We're keeping our options open in terms of whether we build or whether we do anything else. We will come back once we have a clear ambition.
As you said, that's a little bit of a long-term view right now.
All right. Thank you very much.
Thank you. Our next question comes from Arisco with AHAM Capital in KL. Please go ahead. Thank you.
Thanks for the opportunity. I've got several questions. The first is regarding your operating costs. I'm just looking in terms of your traffic, your O&M, and your material costs. Quarter to quarter, compared to the second quarter, I noticed they ran up. Can you just give us a bit of guidance? Are these seasonal, or is there something that we should bear in mind going into the fourth quarter? My second question is regarding your tax rate. May I know whether this is now your normalized rate, which in this third quarter was 27%? Is that the rate that we should be looking at going forward? The third question is regarding your home fiber plans. Can I know what are your plans for expansion, even in light of your comments earlier on the NFCP? How does that fit into the overall plans for Telenor as well?
My fourth question is regarding your MYR 900 million sukuk. Are you planning your funds for CapEx, or is it on spectrum? What do you intend to do with the funds?
Thank you for your question. I'll do number 1, 2, and 4, and then I'll hand over back to Albert. The increase quarter-on-quarter on O&M and material cost, the reason it went up, it's related to the one-off that we had last quarter in this area. On the effective tax rate that we had this quarter was related to additional actual finalization of our tax returns filing but also a higher non-tax-deductible cost. It will not be our run rate going forward. As you saw from last quarter, it was also significantly lower. That was due to deferred tax last quarter. As you know, the normal tax rate is 34%, and that's the average. I think we would rather look at it at an annual basis.
When it comes to question 4, the MYR 900 million sukuk that we have issued this quarter is for our working capital management as well as our CapEx investments going forward.
I'll just take the last question that you had on fiber to the home and as part of NFCP. The fiber to the home position that we've taken is that we have done some pilots that we've seen. In the last quarter, we talked about some launches that we've had, where we've taken a few positions in strategic locations that we feel that we wanted to get better knowledge of how fiber would be as a bundle, and we run that now in one key market in KL. The latest one was that we launched in Sabah. We are looking at that in terms of being able to provide customers a bundle value proposition.
We're taking it step by step, and we're making sure that we're able to have a value proposition and a different equation that makes sense for us to bring into. It's very early days for us. We are open to exploring all ways of taking that as a value proposition and as the bundle to our customers, but step by step.
Janice, do you have any further questions?
Yes. That is all. Thank you.
Thank you. Our next question comes from Foong Choong Chen with CIMB in KL. Please go ahead. Thank you.
Hi, guys. Thank you so much for the call. Four questions from me. Firstly, on the post-paid ARPU increase on a Q on Q basis, can you give us a sense of the plan of rates that you're seeing? Is this happening at the lower end level, or are you seeing that across all your various post-paid plans? Inge mentioned earlier on about efforts for ARPU uplift. Could you also elaborate on that? My second question regarding the U.K. test result. That was very encouraging. You also mentioned that you're now putting more spectrum dedicated for 4G. On that, can you just provide more color as to what spectrum you're using for 4G? How much bandwidth is allocated on a basic for that use case? My third question regarding your cost.
If we look at the underlying cost of goods sold and also the OpEx, it's overall about flat for the first nine months if you take out all the exceptional or one-off items. Given the fact that your 4G coverage is already quite high and I think going forward probably incremental expansion, do you think that there is more room to drive down the overall cost levels over the next 12 to 24 months? If so, in what particular areas would you be looking at? The final question regarding your 7,000 Digi Wi-Fi locations. Do you see that as potentially contributing in a material way to your top line and earnings? Perhaps more importantly, how are you going to be paying for this? Is this a variable cost or is it a fixed cost that you're committing to? Those are my four questions. Thank you.
Thank you, Foong. I'll start with that. Maybe Paul?
On the post-paid ARPU or ARPU uplift activity, I think it's closely linked back to what we have been sharing. We put a lot of effort on the price plan management, and that's really cut the cost from pre to post. Of course, in the last many quarters, we are building the postpaid base, and that's really same time moving to a device plan as well. It's really is a mix of activities across the entire base, and matching their usage pattern to the whatever that we believe that the ARPU is relevant and affordable to their segment. That's what we are doing. I just jump directly on the question before passing to Inge. Back to the Digi Wi-Fi, that's really more on I don't think there's a significant contribution, but it's really more on convenience and also loyalty, seamless connectivities to our prepaid post-paid.
They can actually subscribe it to the MyDigi, our digital channel.
Yep. Thank you.
Kesavan?
I'll take the second question with regards to the spectrum. I think one of the things that we have done over the years is through spectrum refarming and more efficiency of the spectrum that we have. As we see voice declining, we are able to move more spectrum from the 2G and 3G networks into our 4G. That's the result of doing that and optimization of the network and spectrum efficiency as well.
Okay. Let me move to flat cost that we see on CapEx and OpEx year-over-year YTD, even though we have an increase in our network. We continue to work on efficiency measures in order to be able to offset the cost increase, and we will continue to do that going forward as well.
Okay. Thank you, guys.
Thank you. Our next question comes from Ranjan Sharma with JP Morgan in Singapore. Please go ahead.
Hi. Good afternoon, and thank you for the presentation. A couple of questions from my side. Firstly, on your digitalization initiatives and your MyDigi app, how should we think about the cost savings going forward from potential reduction in channel costs? Is that allowing you to learn more about your customers, which can permit you to upsell services or offer tailor-made plans for customers? Maybe that can help stabilize some of the revenues. The second question would be on the industry. We have seen industry revenues declining for years now, at least for the big three players. Customer capital have been under pressure as well for the entire industry. When should we realistically think about industry revenues turning around? I know it's a pretty broad question, but would appreciate your thoughts. Thank you.
Back to the question from the MyDigi. Really, I think here, we see two benefits. One is really, of course, allow us to now engage our customers in more frequent and also able to deliver cross-offering or personalized offerings that we believe based on their usage behavior and patterns. On the cost side, we believe also as I mentioned, more and more customers are connect through this digital channel. It will also allow us to simplify cost. You see today, I think we deliver our service in multiple channels, and that over the years have created complexities. If you will, impact to the cost. I think this is also one initiative that we believe it will continue to build on the platforms. It will also allow us to redefine some of this workflow and work processes where you will digitize the processes.
Of course, we will hope that this will translate into a positive cost savings in the future.
Yeah. Digi has really come a long way. It's actually been very pleasing for us to see the development of it and also the take-up of it. Besides what Loh said in terms of the benefits, in terms of cost and reach, actually, we have gotten a lot of positive feedback from the customers and the stickiness that they see. Also those things that we introduced on offers, surprises, on rewards. It's a much better way of us communicating these loyalty and these benefits to customers without being intrusive. Yet the stickiness is created. It's been an extremely positive upside for us and hence why we also report the MAU every quarter as for us, that's a key traction that we want to keep track of.
Okay. Hi, Ranjan. I think I'll just comment a little bit on the revenue, the turnaround and the revenue. As you've seen, we've had a positive increase quarter-over-quarter the past two quarters. Our main focus is on the growth that we see in postpaid and internet revenue growth, which is, as you know, 90% in the postpaid internet year-over-year, which is significant, and then 12% on the postpaid growth in itself. I think, yeah, we will continue to see decline in the traditional services along with competitors as well. We see that it's flattening out slightly the past quarter. Next year, our focus is loyalty and also monetization of the data.
I think the key focus in order to do it in this market is on the customer experience on the data in order to be able to do that monetization. I think, we will continue to see how Digi plays in that going forward.
I think the opportunities are all up to us, Ranjan. 2018, you saw Digi did a recovery after a change in strategy. In the previous years, we had moved away from price sensitive to profitability and basic growth. In 2019, of course, there was headwinds, but mainly on prepaid. For us, the importance was growth on postpaid, which has maintained double digits. As I indicated earlier, our growth on B2B is also progressing extremely well, along with digital services. Hence why those combination of those three and a stabilization of prepaid going forward could potentially see a different picture going forward in the long term, as Inge mentioned, where customers appreciate a better network and the willingness to pay for a better network experience while receiving the benefits from the other platforms that we offer.
Okay. Thank you so much, and good luck.
Thank you.
Thank you. Next we have a follow-up question from Arthur Pineda with Citi in Singapore. Please go ahead.
Hi. Two follow-up questions for me, please. Firstly, just wanted to get management's thoughts on TM's proposal to build a national 5G network. Is this something you'd be supportive on, or do you think the mobile carrier should own their own networks? Second question I had is regard to the margin differential between prepaid and postpaid. Obviously, you've been pushing more subs to postpaid. When you do that migration, are the margins actually better considering there are subsidies implied with postpaid? Thank you.
Let me take the first question on TM. We actually don't comment on anyone else's proposal, and that's also from a public inquiry, from what I understand. We just focus on our own plans, and we are evaluating all options, as I mentioned earlier to another question. We will basically look at what makes sense for Digi in terms of our deployment and our network plans going forward.
Understood.
On the margins, we don't specifically comment on the margins on a pre- and post-paid level. I think I've spoken to this with Loh mentioned as well. I think there's not really a pre- and post anymore. It's more catering for what the customer needs. If the customer needs a prepaid subscription, we will offer and deliver that to that customer in the best possible way. When the customer is ready to move over to postpaid, we do that. We offer the best package as well as to the customer based on their needs.
Okay. Thank you.
Thank you.
Thank you. Once again, ladies and gentlemen, that is line one queue for questions. [Ladies and gentlemen it is star one three for questions] . Thank you. Testing, we no further question at this point in time. Thank you.
Regina, thank you very much. To everybody who had taken the time to join us on the Q3 2019 call. Thanks a lot. Have a good day and a good weekend ahead, guys. Thank you.
Thank you.
Thank you. Thank you for your participation. This concludes the conference.