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TM 1Q 2011 Financial Results

Telekom Malaysia Berhad (TM) has announced its financial results for the first quarter ended 31 March 2011.

Key points:

  • Revenue  growth of 1.1%  to RM2.148 billion in 1Q2011 from RM2.124 billion in the corresponding period last year
  • Added over 28,000 new Streamyx subscribers in 1Q201, now total 1.71 million Streamyx users
  • As of now, UniFi has been rolled out to 855,000 premises passed covering 66 exchange areas. There are over 86,000 UniFi customers today

Full press release below:

Malaysia’s leading new generation communications provider and broadband champion, Telekom Malaysia Berhad (TM), today announced its financial results for the first quarter ended 31 March 2011.

TM began the year on a positive note, posting revenue of RM2.148 billion, a 1.1% growth as compared to RM2.124 billion recorded in the same period last year. The growth was mainly attributed to higher revenue from data, Internet and multimedia services which when combined contribute 57% of the Group’s total revenue for the quarter.

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) increased 1.5% YoY from RM720.0 million in 1Q2010 to RM730.9 million in 1Q2011. Normalised EBITDA was up 0.4% YoY to RM729.0 million. Group Profit After Tax And Minority Interest (PATAMI) decreased by 32.8% to RM163.3 million YoY as compared to RM242.9 million in the corresponding quarter in 2010. This was mainly attributed to lower unrealised exchange gain on translation of foreign currency borrowings. However, boosted by higher revenue and lower tax expense, normalised PATAMI was up 40.3% YoY from RM87.2 million in 1Q2010 to RM122.3 million.

“We are pleased to report an encouraging start to the year with a 1.1% YoY growth in revenue in the first quarter to RM2.148 billion from RM2.124 billion registered in 1Q2010. We are making steady progress in all aspects of performance and operations despite the competitive market environment. We again returned a strong normalised EBITDA margin of 33.6% as a result of increasing revenue and controlled spending. In the first quarter, we continue to witness data and internet driving our revenue. The mix of voice to non-voice revenue continues to change with voice now contributing 43.0% of revenue, while non-voice contributed 57.0% collectively,” said Dato’ Sri Zamzamzairani Mohd Isa, Group Chief Executive Officer, TM.

Data revenue increased by 6.8% in the first quarter 2011 to RM424.6 million as compared to RM397.7 million in the corresponding quarter 2010 arising from demand for higher bandwidth services. Internet and multimedia services turned in higher revenue by 12.7% to RM453.4 million in the current quarter from RM402.2 million recorded in 1Q2010 arising from increased in broadband customers to 1.71 million in 1Q2011 from 1.49 million in 1Q2010. However, Other telecommunications services recorded a decrease of 3.0% to RM346.1 million in the current quarter from RM356.7 million in 1Q2010 whilst voice revenue decreased by 4.5% to RM924.1 million, from RM968.3 million in 1Q2011.

For 1Q2011, TM’s Total Capex spend was lower at RM209 million, with BAU capex at RM101 million and gross HSBB capex at RM108 million, mainly for “Access”, which is required to support TM’s expansion in the broadband space, for both business as usual and HSBB. TM also managed to achieve an improvement in its total capex/revenue ratio at 9.7% in 1Q2011, a reduction from 13.9% in 1Q2010.

In commenting on operational performance, Dato’ Sri Zam said, ”This reflects our market leadership, our growing data services, internet and multimedia business, and prudent cost management. Internet continues to be a strong revenue driver for TM with continuous growth in our Streamyx customer base with over 28,000 net additions in 1Q2011. In addition, UniFi has also been successfully rolled-out to 808,000 premises passed over 63 exchanges. UniFi demand has also been very strong since its launch last year, and we are seeing particularly strong take up in the first quarter, where our customer base has almost doubled since the beginning of this year from 32,896 customers to 63,541 customers. As at today, we have successfully rolled out the services to 855,000 premises passed covering 66 exchange areas. Our HyppTV service now provides 37 channels -15 free channels and 22 premium channels. On 1 June 2011, 8 new premium channels will be made available, making our IPTV offering to 45 channels in total. We have to date, activated more than 86,000 UniFi customers, which is more than our expected 10% take up rate of premises passed.”

Dato’ Sri Zam went on to comment, “This year we will continue to fortify our leadership by providing more innovative new products and services to satisfy customer needs. We are transforming our business and organisation to deliver integrated communication services and one-stop solutions to our customers at good value. The transformation underway to being a premier integrated communications provider includes having put in place a comprehensive set of enablers which include new content and technology partnerships, payment platforms, and end user equipment. In line with our plan to provide wireless broadband services to our existing customers, nomadic customers as well as in-building users, we expanded our WiFi Hotspots Zones nationwide from 2,245 sites to 13,251 sites, a year on year increase almost 5-fold. We will continue expanding to reach an expected 28,000 locations by year’s end.”

TM will continue its active capital management by optimizing its capital productivity and Return on Investment Capital, as well as creating shareholder value with a firm commitment to its dividend policy. In February, TM announced a total payout of RM1.389 billion to shareholders which included a final dividend of 13.1 sen less tax at 25%, amounting to RM351.5 million and capital distribution of RM1.037 billion and the payment will be made on 15 June 2011. With the September 2010 payment of interim dividends of RM348.8 million, the combined total payout for FY2010 amounted to RM1.738 billion.

“We have a healthy balance sheet with low debt and high cash position and enjoy a strong international credit rating of A-/Stable. We are also keeping a close watch on our capital expenditure (capex) planning. Improvement in cost/revenue ratio will continue to be emphasized. We remain committed to maintain our strong focus on efficiency improvement and cost management, without compromising on quality of our services and our customers’ experience, which remains our priority,” he continued.

Dato’ Sri Zam concluded, “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, especially in the key areas of “Business Service” and “Communications Content and Infrastructure”. In line with the relevant Entry Point Projects under the ETP, we recently extended our regional connectivity via two international partnerships to develop high capacity submarine cables i.e. the Batam-Dumai-Malacca and Cahaya Malaysia submarine fiber optic projects. We also recently entered into a collaboration agreement to build the first Telepresence exchange in Malaysia and offer Managed Telepresence Services. Another initiative is our concrete plans to expand our data centre footprint to position Malaysia as a world-class data centre hub. Additionally, the upcoming development of a content service delivery platform will satisfy the appetite of local creative content practitioners for a digital marketplace where producers and consumers of creative content can congregate and interact. TM’s collaboration with Government Agencies and Content Association will help us to nurture local creative content industry as cited clearly under ETP. We expect the above initiatives would provide opportunities to grow our triple play services “UniFi” as well as accelerate the monetization of our broadband infrastructure.”

Total Revenue by Products:

Products 1Q 2011

(RM mil)

Cont % 1Q 2010

(RM mil)

Cont %
Voice 924.1 43.0 968.3 45.6
Internet 453.4 21.1 402.2 18.9
Data & Leased 424.6 19.8 397.7 18.7
Others * 346.1 16.1 356.7 16.8
TOTAL 2,148.2 100.0 2,124.9 100.0

* Others include telecommunication related services and non-telecommunication related services

Prospects for the Current Financial Year
The improving economic environment together with its pursuit of business growth in key business segments, including the fast growing Internet market, would enable the Company to sustain a positive growth trajectory for the year. With the positive economic outlook, TM aspires to continue to be the national broadband champion, anchoring on Streamyx and UniFi as its key broadband products. TM will continue to enhance its product portfolio and bundling packages in bringing enhanced and integrated digital lifestyle into Malaysian homes coupled with initiatives to improve quality of services and customers’ experience has proven to be encouraging despite the competitive environment.
While the Company will remain focused in expanding UniFi coverage to meeting the HSBB project target of 1.1 million premises passed covering 78 exchange areas 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. The Company is targeting to achieve 1.3 million premises passed and 95 exchange areas by end 2012. In line with TM’s continued commitment to provide fair and equitable opportunities for other service providers, TM signed an MOU with an access-seeker to provide HSBB (Access) and HSBB (Transmission) services on a wholesale arrangement and expects to sign definitive agreement by end-May.

About Kugan

Kugan is the founder of MalaysianWireless. He has been observing the mobile industry since 2003. Connect with him on Twitter: @scamboy