Telekom Malaysia has 1.68 million Streamyx/broadband customers as at end of 2010. The number of its WiFi hotspots now stands at 10,982 locations as at end of 2010 and expected to reach 28,000 locations nationwide by year end 2011.
As for HSBB/UniFi, it is now available at more than 780,000 premises(60 exchanges- the inner Klang Valley, Iskandar Malaysia & Northern Corridor Economic Region) and has close to 50,000 customers to date. TM is targeting to make available UniFi at 1.1m premises by end 2011.
TM’s 2010 Financial Results below:
TM RECORDS FULL-YEAR PROFIT UP 87.6 % TO RM1,206.5 MILLION; MEETS ALL 3 HEADLINE KPIs
Telekom Malaysia Berhad (TM) delivered a commendable performance despite a challenging economic environment and intense competition faced last year. For the financial year ended 31 December 2010, TM registered a Profit After Tax And Minority Interest (PATAMI) of RM1,206.5 million, a healthy increase of 87.6% as compared to RM643.0 million recorded last year. This was achieved on the back of overall improvement in revenue along with tight cost management, gains from disposal of non-core investments and unrealised foreign exchange gains on translation of foreign currency borrowings. Excluding the foreign exchange gain, the gain on disposal of investment and other non-operational gain/losses, the current year PATAMI of RM563.7 million would be 44.2% higher than RM390.8 million recorded in last year.
TM achieved all 3 Headline Key Performance Indicators (KPI) for 2010 with revenue growth of 2.1%, Normalised Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) margin of 33.1% and spent 5.1% of its revenue on improving the quality of customer experience.
TM posted a revenue of RM8,791.0 million for the FY10 ended 31 Dec 2010, up 2.1% as compared to RM8,608.0 million recorded last year. The growth was led by the increasing demand for Internet and Data services.
The FY2010 EBITDA margin at 33.1%, is lower than FY2009 of 34.0%, due to higher expenses related to UniFi and National Broadband Initiative (NBI) related activities such as marketing, customer premises equipment (CPE) and network operating and human capital costs. These investments are necessary to ensure the future growth and profitability of TM and will be compensated in the next few years.
TM’s market position remains strong despite the challenging economic environment and intense competition. Performance for the year was boosted by growth in data revenue by 15.4% to RM1,754.3 million compared with RM1,519.4 million previously arising from demand for higher bandwidth services. Leveraging on the strong brand presence and wide distribution network, Internet revenue for FY10 increased by 5.9% from RM1,561.3 million to RM1,652.8 million YoY. The lower percentage growth in revenue as compared to physical was mainly due to the introduction of NBI-related packages such as low income broadband, Universal Service Provision Broadband PC (USP BBPC) and Cool UNI Pack packages. Total net additions in FY10 were 249,000 as compared to 151,000 in FY09. UniFi has also been successfully rolled-out to 48 exchanges with 33,000 customers, just 10 months after its launch.
In line with its continued focus on shareholder returns and capital management, the Company also announced a proposed final gross dividend of 13.1 sen less tax 25% or approximately to RM351.5 million on top of the interim gross dividend of 13 sen less tax 25% amounting to RM348.8 million distributed in September last year. TM announced its plans to carry out a capital distribution exercise to its shareholders of approximately RM1,037 million whereby TM’s shareholders will be entitled to receive a cash payment of RM0.29 for every TM share held. The total payout of the final dividend and capital distribution of approximately 39 sen or RM1,388.9 million is expected to be paid in June 2011.
Speaking at the press conference after announcing the Company’s 2010 full-year financial results, Dato’ Sri Zamzamzairani Mohd Isa, Group Chief Executive Officer, TM, said, “We are committed to strong, sustainable returns to our stakeholders through our dividend commitment of RM700 million or up to 90% of normalised PATAMI, whichever is higher and continue to deliver value to our shareholders. I’m also pleased to announce that we will be carrying out a capital distribution of RM1,037 million or 29 sen per share to our shareholders. The distribution is consistent with TM’s capital management framework which includes returning cash in excess of TM’s requirement to shareholders. At TM, we believe that this is an opportune time to implement the proposed capital distribution in view of its strong cash position as a result of disposal of non-core assets undertaken by TM and its subsidiaries. By returning equity to its shareholders, we are providing immediate value enhancement and improvement to the shareholders’ long term rates of return.”
“2010 was nothing short of historic for TM. With the launch of HSBB and UniFi, we are transforming a legacy to leave a legacy for future sustainable growth. TM is moving from being a voice exchange to become an information exchange. We are transforming the network to a fully IP network. We have migrated our core network onto the latest IP network infrastructure that provides a future-proof platform for TM to deliver a more integrated service proposition. We are also transforming our systems. We are working hard to transform our people to be customer focused; improving customer experience end-to-end, in line with our aspiration to become a customer centric organization. We have also simplified our product offerings to the market with our bundled packages and introduced the first Malaysian triple play service. We are also changing the way we communicate with our customers and to the market – to show that we listen and that we are taking action.” added Dato’ Sri Zam.
Dato’ Sri Zam went on to comment, “We are also pleased to report that we are very much on track with HSBB. In the one year since the launch, we have achieved more than 780,000 premises passed and installed the service to close to 50,000 customers to date. While we are on track to meeting the UniFi target of 1.1m premises passed by end 2011, due attention will be given to ensure the rollout of UniFi is effectively managed from the aspects of cost effectiveness and customer satisfaction. UniFi sales are steadily increasing as service installation capabilities being progressively ramped up. Despite the fierce competition, TM continued to attract new customers and maintained leadership position in the broadband segment with 1.68 million customers as at end of 2010, a growth of 17.4% from 1.43 million customers a year ago. We also expanded the number of our hotspots from 2,069 as at end of 2009 to 10,982 as at end of 2010. We will continue expanding our wifi areas and expect to reach 28,000 locations nationwide by year end 2011.”
“We continued to place emphasis on improving the quality of customer experience for our customers and have spent 5.1% amounting to RM451 million of our revenue to that end in line with our KPI guidance and our promise to deliver on customer experience. We strengthened our direct channels, e.g. call centres and TMpoints, which in return helped improve quality of services and enhance customers’ experience. TM intends to continue our quality improvement program over the coming year and will keep our customers informed on the key measures taken to that end. Moving forward, continuous improvement is expected in the 4 key measures of quality services i.e., customer satisfaction measure (TRI*M Measuring, Managing, Monitoring), MSQOS, Customers services charter and internal customers measures.”
“We have a healthy balance sheet with low debt and high cash position and enjoy a strong international credit rating of A-. Our strong focus on cost optimization and capex efficiency is being reflected in the lower Business as Usual (BAU) capex in FY10. TM spent RM1,128 million during this period, 6.8% lower as compared to RM1,211 million in the same period last year. About half of the capex was for network access infrastructure, mainly to cater for increasing demand for broadband. HSBB capex has increased to RM1,584 million from RM1,338 million last year due to the rapid expansion of HSBB coverage areas and higher premises passed target for 2010. For the financial year 2010, we recorded a significant improvement of capex management with capex over revenue for BAU capex at 12.8%, down from 14.1% in 2009.” he concluded.
Total Revenue by Products:
* It includes revenues from bundled offer Internet + Voice
**Others include managed network services, system integration services, contact centre and customer projects
Comparison: Quarter-on-Quarter (Q4 2010 vs Q4 2009 Results)
For the current quarter under review, Group operating revenue increased by 5.7% QoQ to RM2,320.6 million in 4Q10 as a result of higher contribution from data and internet & multimedia services. Reported PATAMI increased by 135.4% to RM400.7 million as compared to RM170.2 million in the corresponding quarter in 2009. This was mainly attributed to higher operating revenue, gain on disposal of investments, lower tax expense, and partly offset by higher depreciation, impairment and amortization of assets. Excluding gain on disposal of investments foreign exchange losses on international trade settlement and foreign currency borrowings and impairment of financial assets, PATAMI stood at RM238.4 million, up by 579.2% as compared to RM35.1 million in the corresponding quarter in 2009.Internet and multimedia services registered higher revenue by 12.6% to RM436.6 million in the current quarter arising from the 5.3% increase in broadband customers as a result of attractive product offerings.
EBITDA for 4Q10 is RM758.5 million, up by 2.7% compared to RM738.2 million recorded in the same quarter last year primarily due to higher operating revenue. Excluding foreign exchange losses on international trade settlement and share option related income, EBITDA stood at RM795.8 million, up by 10.3% from the corresponding quarter in 2009.
Prospects for the Next Financial Year Ending 31 December 2011
The Performance Improvement Programme (PIP 2.0) will continue to drive TM’s 4 strategic thrusts in 2011. The first thrust on addressing customer needs will enhance customer experience by focusing on customer and network-facing improvements. The second thrust to propel revenue growth is leveraged on improving overall offering, segment-based management of TM’s core business and accelerate momentum on Broadband for General Population (BBGP) and HSBB. The third thrust towards operational excellence and capital productivity will focus on capital and operating expenditure (capex and opex) optimisation through tighter requirements scrutiny. The fourth thrust in driving execution will continue to see impactful training for all-IP transformation. TM’s capital management approach is guided by two major principles; striving to optimise capital productivity and Return on Investment Capital (ROIC) and creating shareholder value with strong commitment to dividend policy.
TM’s focus on customer centricity is further emphasised by moving to a Headline KPI that measures customer satisfaction, going beyond its continuous investment and commitment to improve the quality of customer service. TM also announced its Headline KPIs for 2011 consisting of revenue growth of 2.5%; EBITDA margin of 32%; and customer satisfaction measure of 70.
On the HSBB Project, TM successfully launched UniFi in March 2010 and was the first to introduce triple play services in the country. To date, the total number of UniFi customers is close to 50,000, whilst premises passed exceeded the 780,000 level on the back of 60 exchanges. These include the inner Klang Valley, Iskandar Malaysia, and Northern Corridor Economic Region. TM is on-track to achieve 1.1 million premises passed and a total of 78 exchange areas by end of 2011. The Company is targeting to achieve 1.3 million premises passed by end 2012. In line with TM’s continued commitment to provide fair and equitable opportunities for other service providers, a landmark agreement was signed with an access seeker in December 2010 to provide HSBB (Access) service on a wholesale arrangement.
2010 witnessed a key milestone in propelling Malaysia into high income society by 2020 with the announcement of the Economic Transformation Programme (ETP) “A Roadmap for Malaysia” by the government. It aims to lift Malaysia’s gross national income from RM23,700 in 2009 to more than RM48,000 by 2020 while creating more than 3.3 million jobs. TM is well positioned as the enabler to deliver the nation’s agenda towards achieving the government’s Entry Point Projects’ (EPP) objectives under the ETP by leveraging on its extensive network infrastructure and collective expertise and opening up possibilities for Malaysians through connection, communication and collaboration. Against this backdrop, with a promising economic outlook and despite a fierce competitive environment, TM is set to take its stage of growth to the next level.
In view of the intense competitive telecommunication landscape and the lead time necessary to build the HSBB related businesses, the Board of Directors expects TM’s business environment for the next financial year to remain challenging.
Telekom Malaysia Berhad (TM) delivered a commendable performance despite a challenging economic environment and intense competition faced last year. For the financial year ended 31 December 2010, TM registered a Profit After Tax And Minority Interest (PATAMI) of RM1,206.5 million, a healthy increase of 87.6% as compared to RM643.0 million recorded last year. This was achieved on the back of overall improvement in revenue along with tight cost management, gains from disposal of non-core investments and unrealised foreign exchange gains on translation of foreign currency borrowings. Excluding the foreign exchange gain, the gain on disposal of investment and other non-operational gain/losses, the current year PATAMI of RM563.7 million would be 44.2% higher than RM390.8 million recorded in last year.
TM achieved all 3 Headline Key Performance Indicators (KPI) for 2010 with revenue growth of 2.1%, Normalised Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) margin of 33.1% and spent 5.1% of its revenue on improving the quality of customer experience.
TM posted a revenue of RM8,791.0 million for the FY10 ended 31 Dec 2010, up 2.1% as compared to RM8,608.0 million recorded last year. The growth was led by the increasing demand for Internet and Data services.
The FY2010 EBITDA margin at 33.1%, is lower than FY2009 of 34.0%, due to higher expenses related to UniFi and National Broadband Initiative (NBI) related activities such as marketing, customer premises equipment (CPE) and network operating and human capital costs. These investments are necessary to ensure the future growth and profitability of TM and will be compensated in the next few years.
TM’s market position remains strong despite the challenging economic environment and intense competition. Performance for the year was boosted by growth in data revenue by 15.4% to RM1,754.3 million compared with RM1,519.4 million previously arising from demand for higher bandwidth services. Leveraging on the strong brand presence and wide distribution network, Internet revenue for FY10 increased by 5.9% from RM1,561.3 million to RM1,652.8 million YoY. The lower percentage growth in revenue as compared to physical was mainly due to the introduction of NBI-related packages such as low income broadband, Universal Service Provision Broadband PC (USP BBPC) and Cool UNI Pack packages. Total net additions in FY10 were 249,000 as compared to 151,000 in FY09. UniFi has also been successfully rolled-out to 48 exchanges with 33,000 customers, just 10 months after its launch.
In line with its continued focus on shareholder returns and capital management, the Company also announced a proposed final gross dividend of 13.1 sen less tax 25% or approximately to RM351.5 million on top of the interim gross dividend of 13 sen less tax 25% amounting to RM348.8 million distributed in September last year. TM announced its plans to carry out a capital distribution exercise to its shareholders of approximately RM1,037 million whereby TM’s shareholders will be entitled to receive a cash payment of RM0.29 for every TM share held. The total payout of the final dividend and capital distribution of approximately 39 sen or RM1,388.9 million is expected to be paid in June 2011.
Speaking at the press conference after announcing the Company’s 2010 full-year financial results, Dato’ Sri Zamzamzairani Mohd Isa, Group Chief Executive Officer, TM, said, “We are committed to strong, sustainable returns to our stakeholders through our dividend commitment of RM700 million or up to 90% of normalised PATAMI, whichever is higher and continue to deliver value to our shareholders. I’m also pleased to announce that we will be carrying out a capital distribution of RM1,037 million or 29 sen per share to our shareholders. The distribution is consistent with TM’s capital management framework which includes returning cash in excess of TM’s requirement to shareholders. At TM, we believe that this is an opportune time to implement the proposed capital distribution in view of its strong cash position as a result of disposal of non-core assets undertaken by TM and its subsidiaries. By returning equity to its shareholders, we are providing immediate value enhancement and improvement to the shareholders’ long term rates of return.”
“2010 was nothing short of historic for TM. With the launch of HSBB and UniFi, we are transforming a legacy to leave a legacy for future sustainable growth. TM is moving from being a voice exchange to become an information exchange. We are transforming the network to a fully IP network. We have migrated our core network onto the latest IP network infrastructure that provides a future-proof platform for TM to deliver a more integrated service proposition. We are also transforming our systems. We are working hard to transform our people to be customer focused; improving customer experience end-to-end, in line with our aspiration to become a customer centric organization. We have also simplified our product offerings to the market with our bundled packages and introduced the first Malaysian triple play service. We are also changing the way we communicate with our customers and to the market – to show that we listen and that we are taking action.” added Dato’ Sri Zam.
Dato’ Sri Zam went on to comment, “We are also pleased to report that we are very much on track with HSBB. In the one year since the launch, we have achieved more than 780,000 premises passed and installed the service to close to 50,000 customers to date. While we are on track to meeting the UniFi target of 1.1m premises passed by end 2011, due attention will be given to ensure the rollout of UniFi is effectively managed from the aspects of cost effectiveness and customer satisfaction. UniFi sales are steadily increasing as service installation capabilities being progressively ramped up. Despite the fierce competition, TM continued to attract new customers and maintained leadership position in the broadband segment with 1.68 million customers as at end of 2010, a growth of 17.4% from 1.43 million customers a year ago. We also expanded the number of our hotspots from 2,069 as at end of 2009 to 10,982 as at end of 2010. We will continue expanding our wifi areas and expect to reach 28,000 locations nationwide by year end 2011.”
“We continued to place emphasis on improving the quality of customer experience for our customers and have spent 5.1% amounting to RM451 million of our revenue to that end in line with our KPI guidance and our promise to deliver on customer experience. We strengthened our direct channels, e.g. call centres and TMpoints, which in return helped improve quality of services and enhance customers’ experience. TM intends to continue our quality improvement program over the coming year and will keep our customers informed on the key measures taken to that end. Moving forward, continuous improvement is expected in the 4 key measures of quality services i.e., customer satisfaction measure1 (TRI*M Measuring, Managing, Monitoring), MSQOS, Customers services charter and internal customers measures.”
“We have a healthy balance sheet with low debt and high cash position and enjoy a strong international credit rating of A-. Our strong focus on cost optimization and capex efficiency is being reflected in the lower Business as Usual (BAU) capex in FY10. TM spent RM1,128 million during this period, 6.8% lower as compared to RM1,211 million in the same period last year. About half of the capex was for network access infrastructure, mainly to cater for increasing demand for broadband. HSBB capex has increased to RM1,584 million from RM1,338 million last year due to the rapid expansion of HSBB coverage areas and higher premises passed target for 2010. For the financial year 2010, we recorded a significant improvement of capex management with capex over revenue for BAU capex at 12.8%, down from 14.1% in 2009.” he concluded.
Total Revenue by Products:
* It includes revenues from bundled offer Internet + Voice
**Others include managed network services, system integration services, contact centre and customer projects
Comparison: Quarter-on-Quarter (Q4 2010 vs Q4 2009 Results)
For the current quarter under review, Group operating revenue increased by 5.7% QoQ to RM2,320.6 million in 4Q10 as a result of higher contribution from data and internet & multimedia services. Reported PATAMI increased by 135.4% to RM400.7 million as compared to RM170.2 million in the corresponding quarter in 2009. This was mainly attributed to higher operating revenue, gain on disposal of investments, lower tax expense, and partly offset by higher depreciation, impairment and amortization of assets. Excluding gain on disposal of investments foreign exchange losses on international trade settlement and foreign currency borrowings and impairment of financial assets, PATAMI stood at RM238.4 million, up by 579.2% as compared to RM35.1 million in the corresponding quarter in 2009.
Internet and multimedia services registered higher revenue by 12.6% to RM436.6 million in the current quarter arising from the 5.3% increase in broadband customers as a result of attractive product offerings.
EBITDA for 4Q10 is RM758.5 million, up by 2.7% compared to RM738.2 million recorded in the same quarter last year primarily due to higher operating revenue. Excluding foreign exchange losses on international trade settlement and share option related income, EBITDA stood at RM795.8 million, up by 10.3% from the corresponding quarter in 2009.
Prospects for the Next Financial Year Ending 31 December 2011
The Performance Improvement Programme (PIP 2.0) will continue to drive TM’s 4 strategic thrusts in 2011. The first thrust on addressing customer needs will enhance customer experience by focusing on customer and network-facing improvements. The second thrust to propel revenue growth is leveraged on improving overall offering, segment-based management of TM’s core business and accelerate momentum on Broadband for General Population (BBGP) and HSBB. The third thrust towards operational excellence and capital productivity will focus on capital and operating expenditure (capex and opex) optimisation through tighter requirements scrutiny. The fourth thrust in driving execution will continue to see impactful training for all-IP transformation. TM’s capital management approach is guided by two major principles; striving to optimise capital productivity and Return on Investment Capital (ROIC) and creating shareholder value with strong commitment to dividend policy.
TM’s focus on customer centricity is further emphasised by moving to a Headline KPI that measures customer satisfaction, going beyond its continuous investment and commitment to improve the quality of customer service. TM also announced its Headline KPIs for 2011 consisting of revenue growth of 2.5%; EBITDA margin of 32%; and customer satisfaction measure of 70.
On the HSBB Project, TM successfully launched UniFi in March 2010 and was the first to introduce triple play services in the country. To date, the total number of UniFi customers is close to 50,000, whilst premises passed exceeded the 780,000 level on the back of 60 exchanges. These include the inner Klang Valley, Iskandar Malaysia, and Northern Corridor Economic Region. TM is on-track to achieve 1.1 million premises passed and a total of 78 exchange areas by end of 2011. The Company is targeting to achieve 1.3 million premises passed by end 2012. In line with TM’s continued commitment to provide fair and equitable opportunities for other service providers, a landmark agreement was signed with an access seeker in December 2010 to provide HSBB (Access) service on a wholesale arrangement.
2010 witnessed a key milestone in propelling Malaysia into high income society by 2020 with the announcement of the Economic Transformation Programme (ETP) “A Roadmap for Malaysia” by the government. It aims to lift Malaysia’s gross national income from RM23,700 in 2009 to more than RM48,000 by 2020 while creating more than 3.3 million jobs. TM is well positioned as the enabler to deliver the nation’s agenda towards achieving the government’s Entry Point Projects’ (EPP) objectives under the ETP by leveraging on its extensive network infrastructure and collective expertise and opening up possibilities for Malaysians through connection, communication and collaboration. Against this backdrop, with a promising economic outlook and despite a fierce competitive environment, TM is set to take its stage of growth to the next level.
In view of the intense competitive telecommunication landscape and the lead time necessary to build the HSBB related businesses, the Board of Directors expects TM’s business environment for the next financial year to remain challenging.
1 Using TRiM index measuring end to end customer experience at all touch points. TRiM (Measuring, Managing and Monitoring) is a standardized indicator system. It analyzes, measures and portrays stakeholder relationships on the basis of standardized indicators. The TRI*M Index is an indicator of the status quo of a particular relationship. The index is made up of four points of view on the stakeholder relationship, e.g. for customer loyalty: overall rating, recommendation, repeat purchasing of product/services, and a company’s competitive advantage. The information is based on surveys/interviews on a sample customer base.
