TM: Speed up­grade won’t hit bot­tom line

The Sun (Malaysia) - - SPEAK UP - BY LEE WENG KHUEN

KUALA LUMPUR: Telekom Malaysia Bhd (TM), which was quick to an­nounce its Broad­band Im­prove­ment Plan fol­low­ing Bud­get 2017, said the speed up­grade for its broad­band pack­ages won’t weigh on its bot­tom line in the short term.

How­ever, when asked about the price re­duc­tion by 50% by 2019, TM CEO Tan Sri Zamza­mzairani Mohd Isa said the group is in talks with the gov­ern­ment on the mat­ter.

“We’re still dis­cussing with the gov­ern­ment and MCMC (Malaysian Com­mu­ni­ca­tions and Mul­ti­me­dia Com­mis­sion) on how we will im­ple­ment it. We still have two years to look at it,” he told a press con­fer­ence here yes­ter­day.

Un­der the Broad­band Im­prove­ment Plan, Zamza­mzairani said, the av­er­age broad­band speeds for res­i­den­tial UniFi cus­tomers will be dou­bled with­out any change in pric­ing.

“For ex­am­ple, 5Mbps will be dou­bled to 10Mbps, and 10Mbps to 20 Mbps,” he ex­plained, not­ing that the up­grade will start in stages from Jan­uary 2017.

TM will in­tro­duce a greater value broad­band pack­age of­fer­ing for nonUniFi cus­tomers in 2017.

As part of the High Speed Broad­band and Sub­ur­ban Broad­band projects, Zamza­mzairani said, the speed en­hance­ment ini­tia­tives are not ex­pected to add to the group’s cost struc­ture for its telecom­mu­ni­ca­tion in­fra­struc­ture.

“It will not ma­te­ri­ally change the roll­out plan to de­ter­mined pop­u­lated ar­eas. It’s part of our capex (cap­i­tal ex­pen­di­ture) plan for the next three years. Of course, there will be a cost in­cre­men­tal if there is a need for modems to of­fer bet­ter speed, but we ex­pect, with bet­ter cus­tomer ex­pe­ri­ence, the churn rate to im­prove, and it will mit­i­gate the rise in cost,” he noted. Churn rate refers to the num­ber of sub­scrip­tion can­cel­la­tions.

TM ex­pects to spend 30% to 35% of its rev­enue as capex for 2016.

Zamza­mzairani de­clined to com­ment on the RM1 bil­lion fund al­lo­cated to MCMC by the gov­ern­ment, which some quar­ters claim that will then given to TM as a sub­sidy. The fund will be used to en­sure the cov­er­age and qual­ity of broad­band na­tion­aw­ide to reach up to 20Mbps.

To date, TM has more than 2.37 mil­lion broad­band cus­tomers, of which over 900,000 are UniFi cus­tomers. Worth not­ing is that more than 60% of TM’s broad­band cus­tomers are now on pack­ages of 4Mbps and above, while 68% of UniFi cus­tomers are on pack­ages of 10Mbps and above.

Mean­while, Zamza­mzairani is of the view that the in­dus­try will move from fixed con­sump­tion to us­age-based, which could see the set of quota limit.

“To­day there are no changes, but this is the over­all pic­ture that I’m giv­ing over the long run. If you want to em­power cus­tomers, then cus­tomers will have a choice of what they want to use that con­nec­tiv­ity for. On the flip side, for cus­tomer who don’t use that much, if you fix the price, then they have to pay that amount if they don’t use it.”

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