Q1: ARPU decrease was needed to maintain RGU growth

DIGI reported its Q1 results. Compared to the restated Q1 figures, Revenue arrived +12% yoy but lower than
expected by 2.5% or ca EUR 10 m to EUR 394m which was a result of lower Group ARPU in our view. EBITDA
and net profit arrived to EUR 133.7 (+7% yoy) and EUR 11 million (-29% yoy).

1. Key positives:
1. EBITDA growth is maintained +7% yoy (Spain’s EBITDA grew by 51% yoy).

2. Key negatives:
2. Still no plans for inflation indexation – as long as they could maintain a
reasonable EBITDA growth in Romania (+2% yoy) prices stays the same.
3. Price erosion in Spain (-4% qoq)

Underlying trends: RGU growth continued (Q1: +4% qoq; ‘22Q4: 3.5% qoq), however lower ARPU (-6% qoq)
was needed to maintain that pace. DIGI added slightly more RGU’s in Q1: 844 vs 708k than in Q4. This was
enough to keep Group Sales at the dynamic of 10% yoy (RO: +4%yoy; ES: +29%yoy). On EBITDA level, Group
EBITDA advanced by 7% yoy, fuelled by Spain +51% yoy followed by RO + 2% yoy. Operating expenses grew
by 14% yoy, as DD&A and employee expenses jumped by +19% yoy and 23% yoy respectively, taking its toll
on net profit that fall to EUR 11m (-29% yoy).
Opinion: Optically, it does not look good that DIGI needed to decrease ARPU (-6% qoq) in both of the
countries in order to maintain growth at a time when other listed operators (HU) are able to adjust ARPU by the
inflation. In that sense DIGI has not become a “real asset” though it could indeed change easily. Nevertheless,
DIGI remains a long duration equity asset in our view, as the company is in heavy investment cycle in Portugal,
Spain and in Belgium in which the earnings would arrive a few years later (expect in Spain where EBITDA has
grown at a decent pace lately).