TM posts record revenue

Telco’s 2016 turnover surpasses RM12bil boosted by strong demand

KUALA LUMPUR: Local telecom giant Telekom Malaysia Bhd (TM) saw its revenue breaching the RM12bil mark in 2016, its highest ever, led by strong demand coupled with efforts at lowering operating costs.

Managing director and group chief executive officer Tan Sri Zamzamzairani Mohd Isa (pic) expects the growth momentum to continue this year, and has set growth targets of 3.5% to 4% for revenue for 2017.

However, for the fourth quarter of October-December 2016, TM suffered a foreign-exchange loss of RM120.5mil versus a gain of RM24.6mil a year ago due to the weaker ringgit against the US dollar. This was due to TM’s loan exposure.

In the same quarter, its net profit fell nearly 20% to RM154mil from RM192mil previously, although it added 1.7% in revenue to RM3.2bil from RM3.1bil.

For the full financial year ended Dec 31, 2016 (FY16), TM reported a 10% rise in net profit to RM776mil from RM700mil previously, and added 2.9% to revenue to RM12.0bil from RM11.7bil.

Earnings before interest, tax, depreciation and amortisation was marginally higher at RM3.7bil from RM3.6bil.

Earnings per share for the full year was at 20.6 sen from 18.7 sen. Its share price closed three sen down to RM6.14 yesterday.

The group has declared a dividend of 12.2 sen per share, bringing the total dividend payout for the year to 21.5 sen or RM808mil.

“Overall, we had a solid good year, although it was challenging,” Zamzamzairani said during a press conference to announce the company’s results.

Analysts said TM’s FY16 results were within expectations.

One analyst said he would be reviewing his outlook on TM, including his target price and fore-

cast earnings.

“The overriding concern is broadband pricing after what was announced in Budget 2017, as that points to the lowering of prices for players like TM. There are uncertainties on broadband pricing in the future,” he added.

(In last year’s Budget 2017 announcement, it was stated that the government was aiming to double broadband speeds and reduce prices by 50% in the next two years. It stated that fixed-line broadband service providers should offer services at a higher speed for the same price within the next two years.)

Zamzamzairani said that for 2017, TM expects to accelerate growth and focus on the theme of convergence.

Since buying over wireless mobile operator Packet One Networks (M) Sdn Bhd in 2015 and renaming it “webe”, TM is now offering a full suite of services to its 2.66 million household customer base. Its services range from fixed broadband to wireless solutions, as well as entertainment offerings via its HyppTV.

Zamzamzairani said about 2% of its 2.66 million customer base are webe users now, and the immediate target is to get 8%-10% of its household base to be webe subscribers.

TM continues to expand its network and develop more products and services. It forked out RM3.3bil last year in capital expenditure (capex), which is about 27.5% of revenue, and is looking to invest about 30% of revenue this year.

Of the RM3.3bil last year, Zamzamzairani said RM500mil was spent to roll out webe in the country, and the investment this year would be about the same.

It has over 2,000 webe base stations, covering about 61% of populated areas in the country.

Webe’s coverage in Johor has reached 90%, the Klang Valley 71% and 60% in Penang, he said.

“We will be covering more areas this year.”

TM is sticking to its earlier projections of its webe business breaking even in 2018.

Asked if there would be more fund-raising exercises to fund capex, TM group chief financial officer Datuk Bazlan Osman said it was able to rely on internally generated cashflows, adding, however, that it was always on the lookout for cheaper sources of funding.

“It could well be a mix (of funding sources),” Bazlan said.