This article first appeared in The Edge Malaysia Weekly on August 18, 2025 - August 24, 2025

For the fourth year running, home-grown telecommunications and digital infrastructure services provider REDtone Digital Bhd (KL:REDTONE) has outperformed peers to win The Edge Malaysia Centurion Club Corporate Awards for the Highest Return On Equity (ROE) Over Three Years award in the telecommunications, media and utilities sector.

Even though REDtone’s ROE declined from 24.36% in FY2023 to 21.8% in FY2024, its weighted ROE over three years (FY2022 to FY2024) of 22.2% during the awards evaluation period was still above that of industry peers.

REDtone’s net profit also continued to show an uptrend during that same period, growing to RM59.8 million in FY2024 from RM57.5 million in FY2023, RM39.5 million in FY2022 and RM26.3 million in FY2021. This represents a stellar compound average growth rate (CAGR) of 31.5% over the three years, even though this was insufficient for it to retain its 2024 win for Highest Growth In Profit After Tax Over Three Years.

At the awards’ cut-off date of March 28, REDtone’s market capitalisation was RM452.2 million as its shares closed at 58.5 sen (adjusted). This was down from 94.5 sen as at end-March 2024, but higher than the 48.2 sen as at end-March 2023 and 37.1 sen as at end-March 2022. The stock closed at 52 sen on Aug 4 with a market capitalisation of RM401.93 million.

In an interview with The Edge in March 2024, REDtone group CEO Lau Bik Soon had expressed confidence that the company “will continue to grow and, hopefully, be a billion-dollar company” within the next five years.

REDtone — which started out in 1996 as a voice services provider and debuted on the ACE Market in 2004 as REDtone International Bhd — became an associate of Berjaya Corp Bhd (KL:BJCORP) in December 2014. From 40.79% as at Sept 27, 2024, Berjaya Corp’s stake in REDtone was trimmed to 36.65% after Juara Sejati Sdn Bhd sold 32 million shares on Nov 18, 2024, stock exchange filings show. Berjaya Group founder Tan Sri Vincent Tan Chee Yioun is deemed interested in that 36.65% stake.

His Majesty Sultan Ibrahim, King of Malaysia, still held a 17.34% stake in REDtone at the time of writing, no change from its 2023 and 2024 annual reports. His daughter, Tunku Tun Aminah is REDtone’s non-executive chairman.

For the nine months ended March 31, 2025 of the financial year ended June 30, 2025 (9MFY2025), REDtone’s net profit rose 17.9% to RM33.91 million from RM28.75 million in 9MFY2024 despite revenue dipping 1.3% to RM241.72 million from RM244.95 million due to lower revenue from the telecommunications segment. Earnings benefited from a fair value gain from investments compared to a fair value loss in the previous corresponding period.

REDtone, which will release its unaudited full-year numbers for FY2025 by end-August, noted that the last quarter of the financial year was challenging, but the group remains determined to maintain the momentum to boost its profitability by prioritising operational efficiency and adopting measures to enhance its core business.

“As part of its business strategy, the group will continue to explore new opportunities to expand the group’s business and strategise towards digitalisation to strengthen the group’s market position and ensure sustainable revenue streams,” REDtone said in notes accompanying its 9MFY2025 earnings release, adding the group “has participated in various tenders in government projects and government-linked agencies to enhance its future revenue stream”.

Citing tremendous potential in Malaysia’s digital transformation and growth in the Internet of Things (IoT) segment, REDtone entered into a strategic collaboration with Singapore’s ST Engineering in March this year to roll out next-generation connectivity solutions, targeting sectors such as agritech, telecommunications, healthcare, logistics and urban infrastructure in Malaysia. REDtone is also an authorised reseller of Elon Musk’s Starlink in Malaysia.

On March 21 this year, REDtone said it sold 5.08 million or 4.56% equity interest in HeiTech Padu Bhd (KL:HTPADU) for RM15.3 million, or an average of RM3.01 per share, between Oct 17, 2024 and March 19, 2025. It still had 2.02 million shares or a 1.81% stake in HeiTech Padu, following the disposal that increased its FY2025 retained earnings by about RM4.25 million.

REDtone also raised its holdings in Theta Edge Bhd (KL:THETA), in which it emerged as a substantial shareholder in July 2024. As at July 25 this year, REDtone had 15.87 million shares or a 15.38% direct stake in Theta Edge while also deemed interested in another 2.27 million shares or a 1.93% stake. This was up from 14.94 million shares or a 12.66% stake it had in the information communications and technology (ICT) solutions services company following open market purchases between July 12, 2024 and Jan 24 this year for RM13.7 million, or an average of RM1.84 apiece.

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