TM to boost earnings with technology mix

KUALA LUMPUR: Telekom Malaysia Bhd (TM), which recorded RM929.75mil in net profit for the financial year ended Dec 31, 2017, is pushing for higher broadband adoption nationwide with its various technology mix to boost earnings.

It has over 1.8 million ready ports (last-mile access points) in major cities and towns for high-speed broadband (HSBB) that can be used to serve over two million customers. By July this year, it will launch a “magic box” to reach out to a wider population to offer its triple play proposition of Internet-voice-entertainment.

It will ride on its existing networks – HSBB, streamyx, mobile and even copper – and cater to the different market segments, including young parents, students and youths, thereby addressing affordability and behavioural demands in its quest to wire up the nation.

Are all these moves to prepare against a new entrant, Broadnet Networks Sdn Bhd that also wants to wire up the nation?

“It is a more aggressive approach, and we have 1.8 million surplus ports. These are yet to be fully used, and each port can serve up to several households, so we want to reach out to more users.

“We also want to migrate as many streamyx users to unifi,” said TM group CEO Datuk Seri Shazalli Ramly after announcing the company’s results here yesterday.

TM recently rebranded unifi and has 2.3 million broadband and unifi users.

Asked if Broadnet had courted TM for any collaboration, he said: “We have not been approached. We are also not worried about competition as we have built a network that serves the nation. Don’t look at our weaknesses, see our strengths and what we have built.”

TM’s net profit rose 19.8% in 2017 led by higher usage of the Internet and multimedia services and boosted by foreign-exchange gains compared to the RM776mil reported in the same period in 2016.

Revenue for the year was up marginally to RM12.08bil from RM12.06bil in 2016, while profit before tax was at RM1.04bil. It registered a 5.6% dip in its earnings before interest, tax, depreciation and amortisation (Ebitda) at RM3.5bil versus RM3.7bil in 2016 due to rising cost. Ebitda margins stood at 30%.

In comparison, mobile companies’ Ebitda in the country is closer to 50%.

Shazalli said TM was “sweating our assets” and “with convergence, we expect affordability factors and cost to be better.”

“We are hoping for a higher Ebitda (this year),” he said.

For the fourth quarter of 2017, TM reported a net profit of RM277mil on the back of RM3.19bil in revenue. TM has declared a dividend of 12.10 sen, payable in April.

For 2018, he expected a “sustainable performance with revenue growth of 3.5% to 4%” based on its key headline performance, and to maintain its 2017 Ebita.

Capital expenditure for 2018 will be similar to the RM2.75bil in 2017.