TM earnings hit by competition, broadband price cut

Firm hurt by rising competition, mandatory lowering of prices in broadband market

TELEKOM Malaysia Bhd’s (TM) net profit dropped to RM259.09 million in the first six months ended June 30 2018 from RM440.92 million a year ago, hurt by rising competition in the fixed broadband market and the mandatory lowering of prices.

TM’s second-quarter net profit was down 71 per cent to RM45.26 million against RM156.48 million in the same period a year ago.

Communications and Multimedia Minister Gobind Singh Deo had made it compulsory for telcos to drop broadband prices by at least 25 per cent by year-end.

He made it mandatory for players to adopt the standard on access pricing (MSAP). Overall highspeed Internet service prices are likely to fall by up to 80 per cent with MSAP.

TM said lower second-quarter profit was due to foreign exchange losses on its borrowings compared with a net gain last year.

Group revenue for the quarter eased 1.5 per cent to RM2.93 billion from RM2.98 billion a year earlier.

“This was primarily due to a decline in voice, data and other telecommunication related services as well as provisions recognised against wholesale revenue, impacted by regulatory mandated access pricing,” it said.

TM acting group chief executive officer Datuk Bazlan Osman described the first six months as “very challenging” and expects the challenging environment to persist for the group’s retail and wholesale segment.

“TM will continue to strengthen performance of core business and operations,” said Bazlan.

Being cognisant of the potential impact on the group, he said TM had in early July revised its headline key performance indicators (KPIs) for this year as well as its capital expenditure (capex) guidance.

“We expect regulatory and sector challenges to persist in the near to medium term. It was necessary to undertake the Performance Improvement Programme 2018 (PIP 2018 )initiatives to ensure the sustainability of our business in the long term,” said Bazlan.

PIP 2018 was launched alongside the KPIs and capex revision as broad initiatives to overcome headwinds.

He said TM’s Unifi basic plan would be extended to all beginning next month and would no longer be for households earning less than RM4,500 a month.

PIC BY AMIRUDIN SAHIB (From left) Telekom Malaysia Bhd acting group chief executive officer Datuk Bazlan Osman, chairman Tan Sri Dr Sulaiman Mahbob and group chief financial officer Nor Fadhilah Mohd Ali at the company’s financial results announcement in Kuala Lumpur yesterday.