FRESH from posting a stellar quarter that led to a major spike in its share price, a bigger story is unravelling at TELEKOM MALAYSIA BHD (TM).
A big difference in opinion on how the telecom giant should be managed has erupted between its chairman and some members of its senior management.
This has led to reports that chairman Rosli Man has refused to appoint acting chief executive officer Imri Mokhtar as CEO.
Sources say that since Rosli was appointed chairman last December, he has pushed for various audit initiatives to look at past dealings at the group.
This move does not have the full support of the board, sources add, which explains a possible standoff between the new chairman and some members of the board and senior management.
Rosli was appointed chairman after Tan Sri Dr Sulaiman Mahbob resigned on Nov 30. Sources say Sulaiman was asked to leave early as he had a few months left in his tenure, although this could not be verified at the time of writing.
The change in TM‘s chairmanship was part of significant leadership changes that swept across numerous government-linked companies after the Pakatan Harapan government came into power last May.
Sources say part of the audits called for are related to the question of whether TM had overpaid for any deals it went into in the past.
“As soon as Rosli took over as chairman, he asked for various forensic audits. This obviously did not go down well with some executives within TM,” says one source.
Another source reckons that there could be former top executives of TM backing the current senior management team to seek a change in the chairman’s position of TM.
Four names have been bandied around as potential candidates. They are Tan Sri Rafidah Aziz, Tan Sri Zamzamzairani Isa (former group CEO of TM), Datuk Zalekha Hassan (currently an independent director of TM) and Datuk Ibrahim Marsidi (a former board member of TM).
Interestingly, during TM’s AGM on Wednesday, audit committee chairman Gee Siew Yoong was not reappointed. In a Bursa Malaysia filing on Wednesday, 69-year-old Gee was said to have retired from the board.
Some sources, though, reckon that Gee’s departure is linked to the audit that is still underway, with her exit jeopardising the completion of the audit.
Who is going to be CEO?
Meanwhile, the issue of who is going to be the permanent CEO of TM remains unsolved.
Over the past one year, TM has had three CEOs, with two of them being in an “acting” capacity.
Soon after the 14th general election (GE14) results last May, which brought in a new government, the-then TM CEO Datuk Seri Shazalli Ramly quit.
In his place, Datuk Bazlan Osman was appointed as acting group CEO.
In November, Bazlan also decided to throw in the towel. Six months ago, TM‘s board – led by Sulaiman – decided that Imri, a homegrown talent, would take over as acting CEO.
Since then, Imri has been waiting to be appointed as the permanent CEO but that has not happened yet.
At this week’s AGM, the matter of Imri’s appointment was raised by a shareholder.
That then opened up the saga as media reports speculated about the rift among TM‘s top brass.
Late Friday, TM issued a statement to clarify the situation. It said that last November, TM‘s board had recommended the appointment of Imri as managing director (MD) and group CEO to TM‘s special shareholder, namely, the Finance Ministry (MoF). The MoF had subsequently via a letter dated Feb 28, 2019 addressed to Imri and copied to the chairman agreed to appoint Imri as MD and group CEO of TM, subject to proper execution of documents and the approval of the terms and conditions.
“(TM‘s) chairman informed the board in early March that he had received a request from the Prime Minister’s Office to defer the appointment. We believe that it is good corporate governance to engage key stakeholders, including the Prime Minister’s Office,’’ the statement says.
It adds that any formal announcement relating to the appointment of the group CEO will be made in due course.
But sources say at the same time, possible candidates for the CEO position are being considered by Rosli. Two of the three candidates are said to have been interviewed by TM’s nomination and remuneration committee.
Two of them are believed to be Burhanuddin Yusof (formerly from Celcom Axiata Bhd) and Noor Kamarul Anuar Nuruddin (formerly Celcom’s CTO).
Even the name of Dr Farid Mohamad Sani, TM ‘s current director representing Khazanah Nasional Bhd’s 26% interest in TM, has been bandied around as a potential candidate for the CEO’s post.
“There is some serious level of ‘power play’ and lobbying going on. It is anyone’s guess if Imri would get the CEO’s job and whether Rosli would stay on,” says a source.
Both Rosli and Imri did not reply to queries from StarBizWeek.
Rosli is not new to the telecoms industry, having worked in TM and Celcom Axiata Bhd.
Sources say that after being appointed chairman, Rosli has been trying to get actively involved by looking to address issues facing TM. He has also expressed his own ideas as to what is the best direction forward for TM in view of 5G, its fibre network expansion and the need for wireless connectivity.
Imri is a long-time TM professional, having honed his telco skills while with the group. He has made some inroads into cost reductions, pushed for the sale of non-core assets and the expansion of TM ‘s fiber network.
Despite all the power play going on, the fortunes of TM are changing for the better. Its share price has done well after it announced a sterling set of financial results for the first quarter ended March 31, 2019 on Thursday.
The better results were due to lower operational costs and MFRS 16 adoption.
Since the results announcement, several analysts have upgraded their calls on TM. Of the 28 stockbroking houses tracking the stock, according to Bloomberg data, 14 have a “buy” call, 10 “hold” and four “sell”. The 12-month target price is RM3.75.
MIDF Research says it commends the group’s cost-rationalisation programme, which has significantly improved the group’s profit margin and profitability.
On dividends, the research house says despite the expectancy of higher earnings growth, dividend payout is limited to a maximum of 60% of the group’s profit after tax and minority interest, based on the revised dividend policy. “Coupled with the commitment to its capex requirement, we view dividend yields to range around 4%,’’ it adds.
Public Investment Bank Bhd expects Tenaga Nasional Bhd (TNB) to pose new competition in the home fibre broadband segment in the medium term.
TNB is ready to commercially venture into the connectivity business after the successful pilot project in Jasin.
BIMB Securities Research says it believes the cost improvements are structural and further incremental gains could be seen in the coming quarters under the performance improvement programme.
It also expects TM’s convergence strategy to continue to grow, driven by expanding Unifi mobile networks and a flexible capex rollout.
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