TM’S TRANSFORMATION ON TRACK

Telekom Malaysia Berhad (TM ) is moving on to the next level of its transformation on a raised platform. Initiatives undertaken in the past one year have put TM on an improved competitive position and paved the way for the Company to raise its profile towards becoming a leading regional operator.

After SingTel, TM is the second largest telco in South East Asia with investments in 8 countries namely Sri Lanka, Bangladesh, Indonesia, Thailand, Cambodia, Pakistan, Malawi and Guinea, and a subscriber base of some 13.5 million across Asia. The Company’s cellular investment in Sri Lanka, Dialog Telekom is the number one mobile operator with a subscriber base of 1.7 million and a market share of 56% as at 31 May 2005. While its cellular company in Bangladesh, TM International (Bangladesh) Limited is the number two mobile operator with a customer base of 1.7 million as at 31 May 2005.

Speaking at the media briefing in conjunction with his 1 year in office, Dato’ Abdul Wahid Omar, Group Chief Executive Officer, TM, said, “The past year has been a year of important achievements and significant progress. We managed to push the initiatives as planned under our 5-pronged strategies. We even scored a number of ‘firsts’ in the last 12 months demonstrating to the market that TM is a forerunner, not just a follower in the telecommunications industry as previously perceived. Now as we move on to the next level, we need to ensure that what have been achieved so far is sustainable and work harder to improve ourselves. I believe that we can steadily build on the momentum of the past year and be on track towards becoming a leading regional player.”

Moving forward, the Company is putting in place plans to prepare itself for greater challenges from both domestic and international fronts. One of key growth areas that has been identified is broadband. In supporting Malaysia to achieve the target set in the National Broadband Plan (NBP), TM will expedite the roll-out of broadband using both fixed and wireless access to reach more than 500,000 customers by the end of 2005.

On its cellular business, TM via its cellular arm, Celcom (M) Berhad (Celcom), will continue to provide innovative products and services at competitive prices. Emphasis will be on data services through Celcom 3G and Celcom Integrated Business Solutions for business customers. Celcom was the first operator in Malaysia to launch 3G services commercially.

On the international front, TM will continue with its strategy to look at investment opportunities in emerging markets closer to home that have high growth potential. In view of a regional focus closer to home, TM’s African investments will continue to be rationalized and at the moment TM is studying several exit options. TM is also looking forward to the listing of Dialog Telekom on the Colombo Stock Exchange and realizing value from Excelcomindo in Indonesia. Despite the lapsing of the agreement to acquire Idea Cellular, TM still views India as an attractive market given its huge population of 1.2 billion and low penetration rate of 4.5 per cent.

Another interesting development on the international front is TM’s membership in the Asia Mobility Initiative (AMI), a regional mobile operator alliance, via TM International and Celcom. TM’s membership into AMI will give the Group’s cellular business access to AMI’s customer base of some 37 million through its members in Telstra (Australia), MobileOne (Singapore), DTAC (Thailand), Smart (Philippines) and CTM (Macau). The alliance also works together on various business initiatives, among others procurement of common items, content sharing and technology know-how consultation.

At the same time, TM will strive to maximize its traditional revenues by further promoting its own VoIP services 'i-Talk' and focus on providing high quality voice and value added services for its fixed line business.

Customer service improvements will continue to be a priority. To this end, a number of initiatives are in the pipeline; among others include upgrading TMpoint and implementing Customers Relationship Management programme. Rationalization of contact centers and consolidation of customer service access numbers from 11 to only 3 are also expected in the third quarter of 2005.

Internally, the Company expects its staff to further embrace the new work culture that comes with all the changes that have been put in place. The re-branding exercise in particular, did not only signal change to the external public, but more importantly, it has given a breath of fresh air to the staff at TM thus motivating them to actively participate in the new environment which promotes performance based culture, competitiveness and efficiency.

Cost management will also be one of key improvement areas. This includes reviewing various parts of the Company’s operation to drive out inefficient processes and excessive costs. Some of the immediate areas are procurement improvements, bill printing and desktop management.

PROGRESS AND ACHIEVEMENTS

The Company’s progress and achievements for the past one year were a reflection of the initiatives that have been implemented based on the 5-pronged strategies announced last October.

Revisiting the 5-pronged strategies, Dato’ Abdul Wahid explained, “Each initiative is not a quick-fix solution. In fact, it has been executed to meet specific strategic goals that are crucial to the long-term growth and survival of the Company. In this context, initiatives undertaken in the past one year have paved the way for TM to move on to the next level of its transformation with a strengthened competitive advantage.”

To Grow Cash Flow and Increase Asset Utilization of Fixed Line Operations
Some of the initiatives implemented include packaging value-added services into fixed line telephony, providing quality and reliable network to other licensed operators, and meeting the demand of the green field areas.

To Capitalize on the Continued Growth of the Cellular Segment
Spearheaded by Celcom, The Group’s cellular arm, some of the initiatives implemented include completion of the massive TM Cellular-Celcom network integration, launch of Celcom’s Integrated Business Solutions, Launch of Celcom WiFi – a partnership with TM Net Sdn Bhd (TM Net), the first Minutes Plan for Malaysian post-paid customers and launch of Celcom 3G, the first 3G services in the country.

To Focus on Data, Broadband and Value-added Services
Spearheaded by TM Net, some of the initiatives implemented include increasing the number of ports to 747,396 as at end of May 2005 from 383,168 last May, increasing hotspot locations to 680, upgraded internet connection speed of a basic package from 384 kbps to 512 kbps, and from 512 kbps to 1.0 Mbps, and continued effort to develop content and application.

To Develop a Customer and Service Oriented Culture Within the Group
Put in place systems and infrastructure to improve and enhance customer service – customer friendly and conducive environment at TM contact points e.g. TMpoint, clickers, shorter waiting and processing time for customers, internet access facilities, customer experience training programme, remodeling and refurbishments of Kedai Telekom into TMpoint.

To Develop Prudent International Expansion Programme
Divestment of Telkom South Africa, resolution of Ghana arbitration process / dispute, acquisition of Excelcomindo in Indonesia and Idea Cellular in India (the latter did not go through due to regulatory issues), broadband and fibre optic in Pakistan.

Internally, the Group has also embarked on a series of programme to increase its efficiency and productivity. This includes new working hours, culture change initiatives, manpower rationalization, re-organization of its corporate center, centralized procurement, shared service organization (SSO) for human resource, finance, IT and procurement functions and new appointment of several key positions.

The initiatives undertaken in total have delivered;

Concluding the media briefing, Dato’ Abdul Wahid said, “Transforming TM is a continuous journey. For this phase, we have laid out a clear direction and put in place the necessary ground work. We are on the right track. Our progress in the past year has given us the foundation to achieve better performance. Now, what we need to do is work hard and ensure that we deliver the results.”

About TM
Telekom Malaysia Berhad (TM), a leading regional information and communications group, offers a comprehensive range of communication services and solutions in fixed-line, mobile, data and broadband. As one of the largest listed companies on Bursa Malaysia with an operating revenue of more than RM13 billion. TM is driven to deliver value to its stakeholders in a highly competitive environment.

The Group places emphasis on continuing customer service quality enhancements and innovations. Currently, with investments and operations in 12 countries around Asia and globally, TM is focused on sustainable growth in both the local and international markets.

For further information on TM, visit www.tm.com.my.

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