TM 2Q REVENUE UP 5.1% TO RM2.11 BILLION

Broadband customers increased 37.1% to 1.46 million from 1.07 last year
Collection to improve going forward
Interim gross dividend of 12 sen in September

Telekom Malaysia Berhad (TM), posted a revenue of RM2,109.2 million for the second quarter ended 30 June 2008, up 5.1% from RM2,005.9 million recorded in the preceding quarter. Broadband continued to be the key revenue driver for the “new” TM posting a strong growth of 7.8%. TM added 108k broadband customers in 2Q 2008 bringing its total broadband customers to 1.46 million from 1.07 million, a year-on-year growth of 37.1%.

Dato’ Zamzamzairani Mohd Isa, Group Chief Executive Officer, TM, enthused, “We are excited by the robust growth of the broadband business. This augurs well for the “new” TM as we continue our transformation from fixed-line business to become Malaysia’s leading next generation communications provider and at the same time build on our existing position as Malaysia’s broadband champion. We believe the broadband business will continue its growth trend as the population is maturing and see the need to have such a service. This is reflected in the increased uptake of the service at the average of 30,000 per month. Our focus is to win more customers through the delivery of enhanced offerings and innovative solutions.”

Apart from growing data, broadband and other services, TM continued to mitigate the decline in voice revenue.

TM also posted an improved Earnings Before Tax, Interest and Depreciation (EBITDA) of RM787.0 million from RM759.7 million recorded in 2Q last year. While Profit After Tax and Minority Interest (PATAMI) for 2Q 2008 rose 1.8% to RM114.7 million from RM112.7 million posted in the corresponding period last year.

TM declared an interim gross dividend of 12 sen per share (less tax at 26%) which is expected to be distributed to shareholders in September 2008.

For the first half of 2008, TM recorded a revenue of RM4,115.1 million, 1.3% increase from RM4,062.5 million achieved in the same period last year. EBITDA for the half year was lower at RM1,398.5 million, 18.1% down from RM1,708.3 million over the same period a year ago after taking in one-off charges such as specific allowance for doubtful debts and revenue adjustment of RM112.9 million for certain foreign VoIP debtors, Employee Share Option Scheme (ESOS) cost of RM93.6 million and diminution in value of investment of RM58.0 million. Excluding the non-recurring charges, the normalised EBITDA for 1H 2008 was RM1,602.1 million with margin of 37.8%.

As a result of the decline in EBITDA, correspondingly, PATAMI for 1H 2008 decreased to RM229.1 million as compared to RM358.8 million in 1H 2007. Excluding the non-recurring charges, normalised PATAMI for 1H 2008 was RM398.5 million.

FOUR MAIN PILLARS OF PRIORITIES MOVING FORWARD

Dato’ Zamzamzairani added, “Over the last 3 months, we have successfully identified challenges that we need to pay attention to; there is no real surprise - these are improving our operational efficiency and customer service. We need to do a lot better in our execution and operations. This is all about simplifying the way we work so that the customer can benefit from that experience. Moving forward, our business strategy will focus on four main areas:
• Customer centricity and quality improvements – focus on quality of customer experience and create continuous improvement mechanisms
• Growth through innovation and commercial excellence – optimizing product portfolio, channel and sales force improvement
• Operational excellence and capital productivity – structural cost optimization and process improvements, and increase working capital efficiency in particular credit management and direct costs. We aim to improve the collection performance by end of 2008. We have taken a number of actions varying from encouraging our customers to use auto-debit facility to shortening the time to bill, reviewing current payment terms, and improving our weekly focus on collections performance, with targets and heavier weightage on collection deliverables for each individual responsible for collections
• One company mindset with execution orientation – improve talent management and execution capacity, mindset change. One company mindset means that everybody at TM will move together as a team with one target in mind, that is, customer satisfaction.

We are placing improved processes and make it easier for our people to do their job. Already, TM has won Computimes Customer Care award in June and two Corporate Responsibility (CR) awards in recognition for the policies and best practices that have been put in place to make TM a conducive place to work i.e. Malaysian Business CSR awards and CIMA-Malaysian Business Enterprise Governance award. We need now to work real hard to improve our human interaction and engage more to give a pleasant experience to the customers. With HSBB, we will be embarking onto a new era of high bandwidth, new technology and most importantly, the abundance of choices of service to TM customers.”

PROSPECT FOR CURRENT FINANCIAL YEAR

With the changing lifestyle and strong demand for broadband internet services, TM expects to continue enjoying a significant revenue contribution from this segment as well as a steady increase in data services contribution to help cushion the declining trend of voice services.

With the Performance Improvement Programmes in place, TM expects to improve its position in terms of operational efficiency and customers’ satisfaction.

The planning for the High Speed Broadband (HSBB) rollout is now complete and TM is awaiting Government’s decision on the next step in the process. TM will continue to engage the Government on the HSBB project as it believes it has submitted comprehensive and detailed proposal and is confident to deliver high quality HSBB services to the business and consumers. HSBB will be an important engine for national growth where both consumers as well as industries are set to benefit from.

Barring any unforeseen circumstances, the Board of Directors expects TM’s performance for the financial year ending 31 December 2008 to remain profitable.

About TM

Telekom Malaysia Berhad (TM), Malaysia’s leading integrated information and communications group, offers a comprehensive range of communication services and solutions in broadband, data and fixed-line. As a market leader in the broadband and fixed-line businesses, 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.

With its extensive global connectivity, TM is poised to position Malaysia as a regional Internet hub and digital gateway for South-East Asia. In line with this, TM is evolving into a Next Generation Network service provider enabling the Group to enhance its efficiency and productivity while providing enriched products and services.

On the Corporate Social Responsibility (CSR) front, the Group has always been a major corporate contributor towards responsible activities in the belief that these practices are a fundamental tenet of good corporate governance. The Group promotes 3 major platforms i.e. education, sports development and community/nation-building. Under education, TM has spent some RM800 million to develop Multimedia University into one of the top universities in Malaysia with more than 20,000 students. TM has also provided scholarships to over 10,000 graduates pursuing academic programmes locally and overseas. On the sports front, TM is actively contributing towards the upliftment of football at all levels while under the community/nation-building platform, the Group contributes towards causes that bring value to the community and nation at large.

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

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