CIMB to ride on TM network

  • Business
  • Thursday, 11 May 2006

PETALING JAYA: Telekom Malaysia Bhd (TM) is scheduled to ink an agreement today with the country’s second largest banking group, CIMB Bhd, to provide an Internet protocol virtual private network (IPVPN) to help the banking group save money on its data bills. 

With this, it is believed that CIMB will become the first banking group in the country to ride on TM’s VPN network.  

It is learnt that the network will link CIMB headquarters with its entire branch network within the country. IPVPN provides traffic optimisation and secured VPN that is based on the widely-deployed Internet Protocol technology.  

With a single network infrastructure the banking group is able to run multiple applications and transfer content between the branches of the banking group at a faster and more efficient rate. 

It is unclear how much CIMB can save or how much it will spend on the network but some banks globally are also moving towards adopting the IPVPN for security of networks and savings. 

Both the chiefs of TM and CIMB, Datuk Abdul Wahid Omar and Datuk Nazir Razak respectively, are expected to be at the signing ceremony today that is scheduled to be witnessed by Second Finance Minister Tan Sri Nor Mohamed Yakcop. 

TM is also scheduled to announce on Monday its first-quarter results ended March 31.  

An analyst said she expected the results to be positive and another analyst forecast a 16% year-on-year rise in core net profit and 20% rise from the fourth-quarter 2005. 

For first-quarter 2005, TM reported net profit of RM374.5mil on the back of RM3.4bil sales. However, it reported a net loss of RM701mil in the fourth quarter ended Dec 31, 2005 due to a huge payout of RM880mil it made to settle a legal dispute with DeTeAsia Holdings GmbH. 

The analyst said she expected revenue growth of 5% quarter-on-quarter and 15% year-on-year for three months ended March 2006.  

Growth of its local cellular unit and fixed line business would be “flattish’’ but this would be offset by earnings from its overseas operations, particularly Excelcomindo (Indonesia), MobileOne (Singapore) and Dialog Telekom (Sri Lanka). 

Meanwhile, an analyst report said TM could also expect an estimated RM142mil forex gain due to the appreciation of the ringgit and rupiah. TM has 56.9% stake in Excelcomindo, 29.8% in Mobile One and 93% in Dialog. 

For full-year 2006, Reuters Estimates showed that TM was expected to earn net profit of RM2.08bil on sales of RM15.5bil.  

Next week, rival Maxis Communications Bhd is also expected to release its first-quarter results which analysts say should see a rise in earnings led by higher subscriber growth despite a fierce price war that exists in the local mobile market. 

But they reckoned Maxis would have to take a charge after its 51% Indonesian unit, PT Natrindo Telephon Seluler, made an upfront payment for a 3G spectrum, even though some expected this to be included in the second-quarter figures. Despite that, Maxis should ring in RM1.66bil net profit on the back of RM7.28bil sales for full year 2006, according to Reuters Estimates.  

For its first quarter ended March 31, 2005, Maxis ringed in RM439mil net profit on revenue of RM1.59bil. 

However, smallish but aggressive mobile player Bhd reported sterling three-fold profit rise for its first quarter last week as a result of a jump in subscriber base, and traffic volumes for voice and data.  

For the three-month period ended March 2006, DiGi rang in net profit of RM184.7mil versus RM57.9mil a year ago.  

Revenue rose 38% to RM861mil. 

In yesterday’s trading, TM shares slipped 5 sen to RM9.95, Maxis shed 10 sen to RM8.80 but DiGi gained 10 sen to RM10.80. 

Meanwhile, TM unit VADS Bhd announced to Bursa Malaysia yesterday that it had won an outsourcing contract worth RM47.7mil from TM Net Sdn Bhd.  

The contract is for one year and involves the outsourcing of Streamyx customer interaction centre. 

In another announcement, TM said it had completed the purchase of a 49% stake in India’s Spice Communications Pte Ltd for US$178.8mil.  

India’s Business Standard reported that Spice was expected to raise close to US$250mil from a consortium of banks, led by DBS of Singapore and including Barclays and Deutsche Bank, over the next 24 months to fund its expansion plans. 

Now operating in Karnataka and Punjab, Spice has the rights to offer cellular services to many other circles in India.  

Spice chairman B.K. Modi was reported to have said in India last week that the restructuring of the company was complete and hinted that the company might go public soon.  

Modi’s MCorp Global owns the remaining 51% stake in Spice. 

 CIMB :  [Stock Watch]  [NewsTM :  [Stock Watch]  [News]

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