CEO: At the moment, we are in good shape for spectrum
RM700m tender for mobile network contract to be announced soon
THERE is a huge billboard that stretches across all six lanes of a portion of the Federal Highway that connects the cities of Kuala Lumpur and Petaling Jaya. It belongs to dominant fixed line player Telekom Malaysia Bhd (TM) and speaks of the company’s future intentions.
The billboard, measuring over 200ft across and 40ft wide, just says, “Your Convergence Champion.”
Ever since TM bought a 57% stake in struggling fixed-wireless broadband player Packet One Networks (Malaysia) Sdn Bhd or P1 for RM350 million (US$98 million) in March 2014, the market has been expecting TM to launch its wireless service to complete its quad play ambitions.
It currently offers a triple play with its UniFi high speed broadband service, with voice, video and IPTV (Internet Protocol Television).
On Feb 27, at a press conference in Kuala Lumpur following the announcement of its 2014 financial results, TM group chief executive officer Zamzamzairani Mohd Isa indicated that this quad play ambition would become a reality “towards the end of the year.”
Underpinning that eventual service could well be a key ingredient that has been key to the success of its current broadband offerings, the fibre-based UniFi and the copper-based Streamyx services: Unlimited data.
When asked if TM was going to make this part of its mobile offering, Zamzamzairani only smiled, as did his chief financial officer Bazlan Osman.
“I would love to answer that question, but it is best to wait till we come up with the packages for our new products and services ... I wouldn't want to give a head-start to the others,” said Zamzamzairani.
Just the thought of this would give nightmares to the existing mobile players, whose margins and profits are increasingly dependent on their data offerings.
But TM first has to complete the migration of its nationwide CDMA (Code Division Multiple Access) network to LTE (Long-Term Evolution or Fourth Generation) and ensure this 850MHz service synchs with P1’s 2.6GHz LTE spectrum and 2.3GHz WiMAX spectrum.
And to do this, it needs to decide on the tender it called for last year to pick the vendor or vendors to manage this complex network harmonisation job. The announcement was supposed to be made in November 2014 but has been delayed.
Zamzamzairani told Digital News Asia (DNA) that it will be made in a few months’ time. “We are more eager to get this going than anyone, but it has to be done correctly,” he said.
While he declined to reveal the amount, the tender is believed to be in the RM700 million (US$196 million) range.
Once this contract is awarded and TM eventually launches its mobility-led quad play in the market, that will mark the beginning of its aspirations to “providing full converged services and a completely seamless experience to our customers using multiple devices and in various environments, be it their homes, in their cars, in a café, over fixed broadband, Wifi or over a mobile network,” he said.
As to the question of spectrum, “at this moment in time we are in good shape for spectrum,” said Zamzamzairani.
“In the future, of course, once we move into mobility, we will be interested in any spectrum that will be made available,” he added.
TM currently has two 5Mz bands in the 850MHz band, its CDMA network that is undergoing a technology refresh, and spectrum from P1 in the 2.3GHz and 2.6Ghz band.
With the spectrum refarming exercise by industry regulator the Malaysian Communications and Multimedia Commission expected to happen at the end of this year, the jostling for spectrum will be even more intense with TM keen for more.
For its financial year ended Dec 31 2014, revenue grew 5.7% to RM11.24 billion from the RM10.63 billion recorded in 2013, boosted by the increase in revenue for internet, data and other services, which now collectively represent 69% of group revenue, TM said in a statement.
Group operating profit (Earnings Before Interest and Tax or EBIT) for 2014 was RM1.29 billion, 5.7% lower than the RM1.37 billion in 2013.
Excluding one-off items such as the optional early retirement plan (Skim Mesra), normalised EBIT registered a 2% growth to RM1.39 billion from RM1.36 billion in 2013, TM said.
Profit Before Tax (PBT) was higher by 5.7% year on year (YoY) to RM1.11 billion, against RM1.05 billion in the corresponding period last year, on the back of higher operating revenue.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for 2014 was 2.9% higher than 2013, at RM3.64 billion.
Net profit or Profit After Tax And Minority Interest (PATAMI) stood at RM831.8 million due to the absence of high speed broadband (HSBB) tax incentives in 2014. Normalised PATAMI stood at RM941.2 million.
[RM1 = US$0.28]
TM also improved its capex/ revenue ratio to 16.3% versus 17.5% in 2013. Total capex (capital expenditure) spend for 2014 was RM1.84 billion.
It achieved a TRI*M index score of more than 72 -- higher than the global telco average score of 68.
With this set of results, excluding the impact of Packet One, TM Group has achieved all its three headline Key Performance Indicator (KPI) target of a revenue growth of 5% to 5.5%, EBIT growth of 5%, and customer satisfaction measure based on the TRI*M index of 72, the company said.
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