TM reports resilient FY2020 performance, ready to play vital role in supporting MyDigital, 5G rollout  

  • TM Group revenue recorded at US$2.68bil, 5.2% lower than 2019 due to pandemic
  • 2021 market guidance: revenue growth at flat or single digit, cost optimisation focus

TM reports resilient FY2020 performance, ready to play vital role in supporting MyDigital, 5G rollout  

2020 was, without a doubt, a tough year. For Telekom Malaysia Bhd (TM), it was a year with its own challenges, though the national telecommunications company came out resilient.

The company on 24 February 2021 reported its financial results for the full year ended 31 Dec 2020 with lower revenue by 5.2% at US$2.68 billion (RM10.84 billion) as compared to US$2.82 billion (RM11.43 billion) in FY2019. It cited market and pandemic challenges for the lower revenue, announced during a virtual a press briefing.

[RM1 = US$0.247]

TM reports resilient FY2020 performance, ready to play vital role in supporting MyDigital, 5G rollout  Imri Mokhtar (pic, right), managing director & group chief executive officer for TM, however, said that its performance improvement programs continued to bear fruit, with EBIT and PATAMI growth recorded from the previous year.

Group EBIT for FY2020 rose by 2.3% year-on-year (YoY) to RM1.60 billion, from RM1.57 billion in FY2019, on the back of lower operating cost and ongoing momentum of its cost optimisation and productivity programmes.

This subsequently led to a strong 60.6% YoY growth in group PATAMI to RM1.02 billion from RM632.7 million last year.

“We saw a contraction with regards to our revenue in 2020, and that is expected in some ways from the market guidance that we have provided. But from the continuous cost optimisation and productivity program, we have managed to deliver a stronger profitability result,” Imri said.

In 2020, the company invested 13.7% of revenue in capex amounting to RM1.49 billion as it continued to optimise and modernise its network as well as sweating its assets.

Of the amount spent, 53% was for network access, 22% for core network, and the balance 25% for support systems. This, the company said, has ensured that TM’s network was able to effectively manage network traffic that has surged over the period of the movement control order (MCO).

 

Building on momentum

For shareholders, TM committed to continually increase shareholder value and declared a Final Interim Dividend of 7.5 sen per share with a total payout amounting to RM283.0 million for the financial year of 2020.

Imri noted that they are also committed to sustainable growth, with increased emphasis on ESG, building on the company’s track record as one of the 75 Bursa companies on the FTSE4Good Bursa Malaysia Index, with the full rating of 4/4.

2020 also recorded growth for TM’s broadband service unifi – fixed broadband customers grew by 6.8% to 2.33 million. 2020 also marked the highest convergence take-up of TM households, at 60%. Last year, TM launched their ‘unifi Your World’ campaign, which provided a total convergence offering combining fixed broadband plans with mobile packages, TV content and lifestyle devices. 

Imri noted that the 2.33 million customers are purely on fixed broadband, so we don’t know the exact uptake on unifi’s wireless broadband plans (called unif Air). The majority of these customers are on unifi broadband.

With TM currently investing in fiberising areas and migrating customers who are still on the non-fibre Streamyx broadband service, we will be seeing less Streamyx customers in the future.

Imri noted that 2020 was also the year TM have seen the rebase of their Streamyx revenue – in 2019, they revised their Streamyx pricing, with the impact on the revenue being adjusted for 2020. Going forward, Imri said they are committed to deliver “the best end-to-end experience for our broadband customers”, from the moment they look for a broadband plan to the payment process.

As for TM One, their business unit that serves enterprise and public sectors, 2020 saw some “significant customer wins” for the unit in key verticals, specifically education, public sector, BFSI (banking, financial services and insurance) and oil & gas.

TM One is also appointed as the sole home-based Cloud Service provider (CSP) under the MyDigital initiative; last year, they also launched TM ONE Cloud α, an end-to-end Cloud AI Infrastructure Service Provider which serves as an aggregator of multi-cloud platform.

 

The next phase

TM will now be embarking on the next phase of their journey, marked as the ‘New TM’ Transformation Programme (2021 – 2023). This phase, Imri said, is guided by the ‘New TM’ Compass of Purpose, Customers, Performance and People.

With this, TM will inculcate a “new performance culture that is focused on outcome and impact”. Over the next 12 months, the company looks to improve EBIT growth through three areas of excellence: in connectivity, solutions and customer experience; with stronger revenue from their business units, better cost management and productivity from operations optimisation, and improved customer experience.

The ‘New TM’ transformation is said to be anchored on 40+ Value Programs, driven by a dedicated Transformation Office; with a new cadence towards a higher execution tempo, which Imri said is already showing early traction.

TM is also reshaping its workforce into a stronger execution engine, embracing a more agile work culture with future-ready skills.

For 2021, TM is sharing the following market guidance: Revenue growth to be flat or single digit growth, EBIT to be more than RM1.6 billion and CAPEX guidance to be between 14% and 18% of revenue.

These, the company said, will set TM on a sustainable growth trajectory, to create shareholder value and continuously enable a more Digital Malaysia.

The company reiterates its support for MyDigital – Malaysia Digital Economy blueprint and other Government’s digital and stimulus plans. “How TM sees it, we will be well positioned to support this game-changing blueprint for the industry. In our minds, it really covers the three areas of digital connectivity, digital infrastructure, and digital skillsets and talents,” Imri said.

As for digital connectivity, TM said it is already playing a leading role in support of JENDELA for the expansion of fibre connectivity nationwide. Imri stressed that TM is also ready to support the 5G special purpose vehicle (SPV).

“As the country moves towards 5G, the mobile sites needs a fibre backhaul in particular. And with the 570,000km of fibre networks nationwide and beyond, we do believe TM would be ready to support fast and cost-effective rollout of the 5G infrastructure in the country,” Imri said.

 

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