TM 1Q19 net profit soars to US$73.38mil on lower operating costs

• unifi revenue fell by 9.3% to US$292.89 million from US$321.46 million
• Earnings per share were 8.2 sen compared with 4.18 sen

TELEKOM Malaysia Bhd's (TM) net profit almost doubled in the first quarter ended March 31, 2019 (1Q19) to US$73.38 million (RM308.28 million) from US$37.42 million (RM157.15 million) a year ago due mainly to a reduction in operating costs.

In a filing to Bursa Malaysia on May 30, TM said its revenue slipped by 2.4% to US$661.97 million (RM2.78 billion) from US$678.64 million (RM2.85 billion) a year ago. Its earnings per share were 8.2 sen compared with 4.18 sen.

[US$1 = RM4.195]

Lower group revenue was due to a decline in voice, Internet and multimedia services and non-telecommunication related services revenue.

A reduction in operating costs saw earnings before interest and tax (Ebit) doubling to  RM504.8 million from RM195.6 million a year ago.

On the performance of unifi, TM said revenue fell by 9.3% to US$292.89 million (RM1.23 billion) from US$321.46 million (RM1.35) billion on lower revenue from voice services due to lower usage, which was in line with a decreased customer base.

TM said that the lower cumulative customer base for Streamyx also contributed to the decrease in revenue from Internet and multimedia services.

“Despite the decrease in revenue, Ebit increased from a RM17 million loss in the corresponding quarter last year to RM194.4 million in the current year quarter mainly due to lower operating costs,” it said.

TM One's revenue fell by 1.3% to RM1 billion from RM1.016 billion mainly due to voice and data services. Despite the lower revenue, Ebit rose by 5.1% to RM263.4 million from RM250.6 million a year ago contributed by lower operating cost. 

TM Global's revenue for the current quarter increased by 11.5% to RM578.1 million from RM518.4 million a year ago mainly on voice and data services.

Ebit jumped by 167.4% to RM116.3 million from RM43.5 million mainly due to lower network costs in the current quarter.

TM said total capital expenditure (capex) for 1Q19 was in line with guidance at RM151 million or 5.4% of revenue. By asset type, access comprised 67% of total spending, followed by core network at 18% and 15% for support systems.

Commenting on the results, TM acting group chief executive officer and chief operating office Imri Mokhtar (pic) said revenue challenges continued to persist into the first quarter of the year, with intensifying competition and price erosion.

“However, I’m pleased to report that our Performance Improvement Programme 2019-2021 (PIP2019-2021) is yielding results. We recorded improved operational efficiency and increased profitability.

“Our operating expenditure (Opex)/Revenue also improved by 11.4 percentage points, whilst profit for the quarter also doubled mainly from the cost optimisation efforts undertaken to counter revenue decline.

“Our capex spending was lower compared to 1Q18 and within our guidance, as we continued to sweat our assets and optimise our network.

“We expect the industry and competitive landscape to continuously evolve. We remain focused on delivering our strategies of accelerating convergence and empowering digital to enable a Digital Malaysia,” he said.