- Launched our Performance Improvement Programme 2018 to overcome headwinds
- Revised capex guidance for the full year to 19% – 20% of revenue
TELEKOM Malaysia Bhd (TM) on Aug 29 announced its financial results for the first half of the year ended June 30, 2018 (1H18).
The group posted revenue of RM5.78 billion year-to-date, 2.7% lower from RM5.94 billion in the corresponding period last year.
This was primarily due to a decline in voice, data and other telecommunication related services as well as provisions recognised against wholesale revenue impacted by regulatory mandated access pricing.
Earnings Before Interest, Tax, Depreciation and Amortisation (Ebitda) for 1H18 was RM1.61 billion as compared to RM1.8 billion in 1H17 mainly due to the lower revenue. Stripping off non-operational items, such as unrealised forex loss on trade settlement, Group Normalised Ebitda was 13.9% lower, at RM1.6 billion.
Reported Earnings Before Interest and Tax (Ebit) for 1H18 was RM444.5 million as compared to RM560.9 million in 1H17. Stripping off some non-operational items, in particular unrealised foreign exchange loss on international trade settlement, normalised Ebit stood at RM433 million.
Reported Profit After Tax and Non-controlling Interests (Patami) was at RM259.1 million, whilst Group Normalised Patami was RM261.1 million, after setting aside non-operational items such as unrealised forex impact on borrowings and international trade settlements.
TM acting group chief executive officer Bazlan Osman, said: “The first six months of 2018 has been very challenging for us, from rapid developments in the market to increasing regulatory pressures.
“Given the current landscape, these events further add challenges to our financial performance. Being cognisant of the potential impact to TM, we had revised our 2018 Headline KPIs as well as capex guidance in early July 2018.
“Alongside this revision, we also launched our Performance Improvement Programme (PIP 2018) as a broad initiative to overcome the headwinds. The PIP 2018 is guided by four main pillars - Revenue Uplift, Sustained Profitability, Improved Cash Flow and Increased Productivity. We expect the regulatory and sector challenges to persist in the near-to-midterm and undertaking these PIP 2018 initiatives are necessary measures to ensure the sustainability of our business for the long term.”
The total capital expenditure (capex) for 1H18 amounted to RM710 million or equivalent to 12.3% of revenue. Of the total capex investment, 18% was allocated for core network, 59% was for access, and the balance 23% for support systems.
“Delivering convergence and going digital remains our priority. We will continue to focus on growth, yet be more prudent in our spending and sweat our existing assets. As such, we are also revising our capex guidance for the full year to 19% – 20% of revenue.”
“We currently have 2.3 million broadband customers and in terms of convergence, we saw more customers moving up the value chain with having triple-play services and above, evidenced by our convergence penetration now at 47% compared to just 37% in 2Q17,” he added.
At the media briefing, TM also announced that its unifi Basic plan, which is a 60GB broadband-only unifi plan will now be extended to everyone beginning September 2018 (no longer exclusive for households with income of less than RM4,500 per month).
“Affordability and accessibility of quality highspeed broadband services is important to TM, and we are committed to lead the charge to unlock the potential of a digitally-savvy Malaysia. As such, we are happy to announce that we are extending the unifi basic plan to all,” he concluded.
For the current quarter under review, group revenue stood at RM2.94 billion, higher by 3.1% q-o-q mainly attributed to an increase in data, internet and other telecommunication related services.
Group Ebitda rose 10.3% q-o-q to RM845.9 million from RM766.7 million the previous quarter. Stripping off non-operational items, such as unrealised forex loss on trade settlement, group normalised Ebitda was 5.9% higher, at RM823.4 million.
Group Ebit grew by 27.2% q-o-q to RM248.9 million from RM195.6 million in 1Q18. On a normalised basis, Ebit improved by 9.6% q-o-q to RM226.4 million from RM206.6 million in 1Q18.
Group Patami was at RM102 million, lower by 35.1% q-o-q from RM157.1 million in the preceding quarter, whilst Group Normalised Patami was RM155.8 million q-o-q, higher by 48% q-o-q, after setting aside non-operational items such as unrealised foreign exchange impact on borrowings and international trade settlements.
For the current quarter under review, group revenue stood at RM2.94 billion, lower by 1.5% y-o-y mainly due to voice and data services.
Group Ebit stood at RM248.9 million, lower by 3.2% y-o-y from RM257.1 million in 2Q17. On a normalised basis, Ebit was lower by 25.6% y-o-y to RM226.4 million from RM304.5 million in 2Q17.
Group Patami stood at RM102 million, less 51.5% as compared to 2Q17; whilst Normalised Patami also decreased 25.1% y-o-y to RM155.8 million from RM208 million in 2Q17.
Prospects for the financial year ending Dec 31, 2018
The recent regulatory challenges and market environment have had major impact to the overall revenue estimates and earnings of TM Group in the current quarter.
TM anticipates that the challenging environment will persist for both of its retail and wholesale segments. In the midst of these challenges, TM will continue to focus on strengthening performance of its core business and operations.
TM to fully implement paperless billing starting Sept 10
TM faces ‘mammoth task’ of upgrading broadband speed; offers RM79 unifi package
TM revises 2018 KPIs, introduces new broadband plans