Growth in key products lift TM 9-month revenue

The ringgit continued to trade lower yesterday, recording another historical one-year low against the US dollar. Pic by Hazreen Mohamad KUALA LUMPUR: Positive growth for Telekom Malaysia Bhd’s (TM) key products, mainly Internet and multimedia as well as data and other services, has reflected a strong ninemonth earnings performance for the company.

Group revenue for the period ended September 30 stood at RM8.82 billion, a 3.4 per cent increase from RM8.54 billion recorded last year, driven by higher revenue contribution from Internet, data and other services.

However, operating profit was lower by 13 per cent to RM868.1 million year-to-date compared to last year, primarily due to higher marketing cost, unrealised foreign exchange loss on international trade settlement and accelerated depreciation of assets.

“We remained resilient over the first nine months despite an overall challenging environment.

“Our Long-Term Evolution (LTE) service, webe, is now officially operational and still has an impact on our financial performance on account of the costs associated with the LTE rollout and webe’s initial operations,” said group chief executive officer Tan Sri Zamzamzairani Mohd Isa in a statement yesterday.

He said operationally, TM recorded a 3.3 per cent increase in total broadband customers to 2.37 million year-to-date compared with last year’s 2.29 million.

TM’s earnings per share of RM0.42 for the current quarter is 33.7 per cent below Bloomberg consensus estimates of RM0.63.

Most research houses have a “buy” call for the stock, with Kenanga Investment Bank having a fair value of RM7.50.

UniFi continues to drive the group’s growth, with more than 921,000 customers and more than 62 per cent of its broadband customers subscribing to packages of four megabits per second (Mbps) and above to date. Seventy-five per cent of UniFi customers subscribe to packages of 10Mbps and above.

Total capital expenditure (capex) until September this year was RM1.65 billion, or 18.7 per cent of revenue, with spending during the third quarter at RM715 million. The higher capex is in line with the expansion of major projects while higher year-to-date cost as a percentage of revenue is in line with higher revenue and launch of new products and services.

On quarter-on-quarter comparison, revenue stood at RM2.9 billion, lower by four per cent due to lower indefeasible right of use sales by global and wholesale and lower revenue from managed accounts customer projects.

Profit before tax rose 11.7 per cent to RM218.8 million against RM195.9 million in the same quarter last year.

In the broadband segment, both Streamyx and UniFi customers cumulatively grew by 0.2 per cent from 2.365 million to 2.369 million customers.