TM in mobile service, finally: new package in 2 weeks

TM Group Chief Executive Officer Tan Sri Datuk Sri Zamzamzairani Mohd Isa during the media briefing in Kuala Lumpur, yesterday.

KUALA LUMPUR: Telekom Malaysia Bhd (TM) has been working overtime to put in the final touches on its long-awaited wireless service roll out, which will complete the full service-offering of the telecommunications giant.

“Watch this space. It is going to be exciting,” declared TM’s group chief executive officer Tan Sri Zamzamzairani Mohd Isa (pic).

The wireless offering stems from the acquisition TM made two years ago of Packet One Networks (M) Sdn Bhd (P1).

“We realised there was one piece missing – mobility. The moment subscribers walked out of their houses or a building, they are no longer our customers. This final piece changes that,” Zamzamzairani said.

TM has been conducting various trials to make sure its “quad-play” offering, would be a success.

TM is said to be launching its mobile service in two weeks although Zamzamzairani remains tight-lipped about it.

“We are on-track to launch our mobility service in 2016,” he said.

The wireless game is not new to TM.

In 2008, TM’s mobile business was spun off to Axiata Group Bhd, formerly known as TM International.

Following the demerger, TM became a fixed-line player but it made no secret of its interest in mobile telecoms.

However, detractors reckon that it will not be easy for TM to play catch up with the big four established mobile operators.

In fact, P1 has been a drag on TM’s earnings and some analysts are expecting more losses to come from this division.

To this, Zamzamzairani explained that P1 was a new investment and it required some time to turn profitable.

“The drag (on earnings) is expected and we have a solid core business to absorb the drag.

“These are investments that we make now, but can only reap in three to five years. Hopefully, earlier than that. P1 business has stabilised,” he added.

He said investment in P1 was “still within expectation” and not something extraordinary.

TM has allocated 25% to 30% of its revenue for the financial year ending Dec 31, 2016 (FY16) to capital expenditure (capex).

P1’s WiMax currently has about 170,000 subscribers. TM’s 4G wireless broadband offering, TMgo currently has some 60,000 subscribers.

Despite being a newcomer, Zamzamzairani is confident of its chances of success.

“We will stay the course and avoid senseless competition.

“Senseless competition is not good for anyone,” he said.

Nonetheless, he believes competition is good as it keeps TM on its toes.

Meanwhile, TM is also aggressive rolling out High-Speed Broadband Phase 2 (HSBB2) including the Sabah and Sarawak extension as well as the Sub-Urban Broadband (SUBB) project.

Together with premises passed under HSBB2, TM has a wider HSBB footprint of 1.89 million ports, with an overall take-up rate of 44%.

Zamzamzairani noted that 56% of the company’s broadband customers were now on packages of 4Mbps and above and some 46% of UniFi customers were now on packages of 10Mbps and above.

TM is also embarking on a digitalisation programme, which will involve transforming its processes as well as customer-facing activities into a more digital-based experience.

“We are now on our next transformation trajectory, evolving from the nation’s broadband champion to become Malaysia’s convergence champion,” Zamzamzairani said.

When asked if TM was looking to divest its Internet-protocol television unit, HyppTV, Zamzamzairani answered with a strong “no”. He said the group had been strengthening its content offerings.

Going forward, Zamzamzairani said the market would continue to be challenging and would not be affected much by foreign-exchange (forex) issues.

“We will not be affected much as our businesses are mostly in ringgit apart from our global business. Our US dollar long-term loan is only maturing in 2025 and it is just about 10% of our total debt.

“We have done some hedging. Like everyone, we are exposed to the fluctuation of forex but it is not much,” he said.

For the financial year ended Dec 31, 2015 (FY15), TM reported a net profit of RM700.28mil, about 15% lower than the RM831.81mil recorded a year ago.

The company said this was primarily due to forex losses from borrowings due to the weaker ringgit.

However, revenue for the year was 4.3% higher at RM11.722bil against RM11.235bil in 2014, on the back of higher contribution from all services.

Earnings before interest, tax, depreciation and amortisation was 1.6% higher year-on-year in 2015 at RM3.69bil.

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