TM cuts revenue and capex forecasts

  • Telcos
  • Wednesday, 04 Jul 2018

Service for the people: Bazlan (right) and Unifi executive vice-president Imri Mokhtar at the press conference.

KUALA LUMPUR: Telekom Malaysia Bhd (TM) has revised downwards its revenue growth and capital expenditure (capex) for the year, citing increasing regulatory pressures, intensifying competition and the potential revision in broadband prices.

The group revised its key performance indicator for revenue growth to -1% to flat growth, from a targeted 3.5% to 4% growth previously, and its earnings before interest and tax to about RM1bil.

Acting group CEO Datuk Bazlan Osman told a press conference that the group’s capex would be between 20% and 22% of revenue from the earlier allocation of between 25% and 30%.

He said this would entail reprioritising the group’s network spending and sweating its existing assets.

“We anticipate headwinds to persist this year and the landscape to change quite rapidly.

“We see the challenges broadly covering expectations to offer affordable broadband in line with national aspirations, intensifying competition affecting fixed and mobile broadband growth, increasing regulatory pressures which may impact our financial performance, and increasing business and operating costs, coupled with cautious enterprise spending,” he said.

On how the group can sweat its assets, Bazlan said the group had 1.4 million unutilised unifi ports nationwide, giving it the potential to increase its customers without having the additional cost of having to expand coverage or increase the number of ports.

“To further optimise our costs, in areas where other network service providers already have ports, we don’t have to build our own. With the reduction in the access pricing, it is competitive for us to be the access seeker as well,” he said.

He added that the group was also reviewing contracts with suppliers and business partners to reduce cost.

During the briefing, the group also announced a new affordable entry-level 30Mbps broadband plan priced at below RM100, targeted at the lower-income or B40 segment, which comprises households earning an average income of below RM3,900.

It said the new affordable package was priced 40% lower than its existing 30Mbps package at RM179.

As for its existing unifi customers, TM is launching the unifi “turbo” plans, which will offer more than double the current broadband speed.

The group said it would gradually upgrade the broadband speed for all its existing customers while maintaining the same price from Aug 15, 2018, while new customers will get the upgrade in 2019.

Unifi executive vice-president Imri Mokhtar said the launch of the new plans would allow TM to provide Malaysians from all walks of life with affordable, high-value and high-speed Internet.

“The entry level will address the lower-income group which needs to be connected, while unifi turbo equips our customers within the T20 and M40 groups with the lifestyle which demands seamless high-speed internet connectivity at home and on the go,” he said.

He said the new turbo plans would push Malaysia ahead of its regional peers, apart from Singapore, in terms of pricing and speed.

While the group has not received any formal directive from the government to slash broadband prices, Bazlan said TM has been gradually lowering prices over the past years, and would continue to do so.

Last month, Communications and Multimedia Minister Gobind Singh Deo had said that broadband prices should fall by at least 25% with the implementation of the mandatory standard on access pricing on June 8.

The minister had said that TM and access seekers such as Maxis Bhd, Celcom Axiata Bhd and others were currently in commercial discussions to finalise the wholesale price for the high-speed broadband, which is scheduled to be completed by August.

“We have already been reducing our prices. In 2010, 10Mbps was RM199, now it is RM129.

“Now, we even have 30Mbps high-speed Internet for the B40 group at below RM100.

“I believe we are actually going beyond the 25% with our prices... we believe we can do more than that,” Bazlan said.

TM’s share price closed 20 sen higher at RM3.31.

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