Profit after tax and minority interest (PATAMI) up 25.1% to RM367.3 million for 1HFY10
Broadband customers increased 12.5% to 1.541 million from 1.370 million a year ago
Interim gross dividend of 13 sen per share less 25% tax

TM posted a revenue of RM4,275.8 million for the first half-year ended 30 June 2010, up 1.0% as compared to RM4,234.4 million recorded in the corresponding period last year. The growth was led by increasing demand in Internet and data services.  

TM’s market position remains strong despite the challenging economic environment and intense competition. Performance for the half year was boosted by growth in data revenue by 11.5% to RM822.6 million compared with RM738.0 million in the same period last year arising from demand for higher bandwidth services. Leveraging on the strong brand presence and wide distribution network, Internet revenue for the half year increased by 8.6% from RM786.7 million recorded in 1H 2009 to RM854.2 million. This is mainly a result of a year-on-year growth of 12.5% in broadband customers to 1.541 million in the current first half-year from 1.370 million in the corresponding period last year. Total net additions in 1H10 were 110,000 as compared to 90,000 in 1H09. 

In line with its continued focus on shareholder returns and capital management, TM is pleased to announce that its Board of Directors has approved an interim gross dividend payout of 13 sen per share less 25% tax or approximately RM348.8 million to be paid to shareholders by end of September 2010. With the interim dividend, TM is on track to meet its full year dividend commitment. 

Speaking at the press conference after announcing the Company’s 2010 first half-year financial results, Dato’ Sri Zamzamzairani Mohd Isa, Group Chief Executive Officer, TM said, “The commendable half-year results demonstrate TM’s ability to leverage on inherent strengths and scale opportunities present in this competitive environment. Non-voice services continued to be the revenue driver for TM. While we are seeing intense competition by the mobile and Wimax players in the market, TM continued to record positive growth in its broadband subscribers. Broadband customer base grew by 12.5%  primarily due to optimized product portfolio and improved go-to-market strategy. As at end of June 2010, our customer base stood at 1.541 million customers. So far, the take up rate of our high speed broadband (HSBB) service, UniFi, has been very encouraging with more than 4,800 customers onboard as at 30 June 2010 and the total orders have exceeded 12,000 as of last week. We almost doubled the number of our Streamyx Zone locations from 1,303 in 1H 2009 to 2,533 as at end of June 2010. I’m also pleased to share that we continue to see an increase in our total fixed-line customer base to 4.33 million compared to 4.32 million a year ago.” 

“Ensuring customers get a good quality of service is very important to us in ensuring that these customers stay with us. Towards this end, TM is committed to spend at least 5.0% of revenue this year on customers’ quality improvement initiatives. Our customer satisfaction index recorded an improvement of 6.0% for overall TM brand as compared to 2H 2009.” 

“While we compete to offer the best value to our customers, we continue to be prudent in our spending by maintaining tight focus on cost management and capital discipline. In line with our Performance Improvement Programme (PIP) 2.0, our cost management efforts were focused on process improvements and cost optimisation while capital efficiency improvement efforts were directed towards reducing accounts receivable days and optimising capital expenditure (capex). This strong focus on cost optimisation and capex efficiency is reflected in the lower Business as Usual (BAU) capex in 1H 2010. TM spent RM336 million during this period, 35.4% lower as compared to RM520 million in the same period last year. This was the result of tighter procurement approach and requirement scrutiny. HSBB capex has increased to RM437 million from RM428 million last year due to the rapid expansion of HSBB coverage areas. The Company expects to spend about RM2 billion in capex for the full year of 2010.” 

Reported EBITDA in 1H 2010 was slightly lower than last year. The decline was primarily due to one-time gain on disposal of Axiata rights reported in 1H 2009. The higher network maintenance and the planned spending in A&P and other UniFi related costs in 1H 2010 also contributed to the lower EBITDA. The normalised EBITDA margin, excluding all non-recurring items, was 32.7%, in line with TM’s 2010 target of 33.0%. 

Total Revenue by Products: 

 *Others include other telecommunication related services and non-telecommunication related services

Comparison: Quarter-on-Quarter (Q2 2010 vs Q2 2009 Results) 

For the current quarter under review, TM posted positive revenue growth of 1.0% year-on-year to RM2,150.9 million from RM2,129.0 million mainly attributed to higher revenue from data and Internet services, which offset the impact of declining voice revenue.  

Increasing demand in higher bandwidth services have contributed to improved data revenue by 14.5% in 2Q 2010 to RM424.9 million compared to RM371.0 million in the same quarter 2009. Meanwhile, Internet revenue registered 7.5% growth from RM401.6 million recorded in 2Q 2009 to RM431.6 million in the current quarter arising from the encouraging growth in broadband customers. 

EBITDA for 2Q 2010 was lower at RM689.9 million, 16.3% down from RM824.1 million recorded in the same quarter last year primarily due to  the one-time gains and higher operating costs as explained earlier.  

PATAMI for 2Q 2010 decreased by 53.2% to RM124.4 million as compared to RM266.0 million in the corresponding quarter in 2009. This was largely attributed to the one-time gain as explained above and lower unrealised foreign exchange gain on translation of foreign currency borrowings of RM18.1 million as compared to RM123.2 million in the same quarter in 2009.  

Prospects for the Current Financial Year  

TM will continue to face keen competition amid industry liberalisation, regulatory changes and the backdrop of increasing competition. TM will seek to increase market share in selected business segments to grow revenue while maintaining margins. In addition, the Group’s prudent cost management and capital discipline will continue to focus on process improvement, cost optimisation and capital efficiency in line with the PIP 2.0 initiatives outlined. 

The current penetration rate in the broadband market stands at 38.4% (source: MCMC –  21 July 2010 report) gives TM the opportunity to further enhance its leading role in the industry.  

On UniFi service rollout, in July, TM expanded the coverage to 18 more areas including 5 areas outside the Klang Valley, located in the industrial zones in Kedah, Penang and Johor as planned. TM is on track to increase its UniFi service coverage to a total of 48 exchange areas by end of the year. As of last week, the service rollout has reached over 500,000 premises passed nationwide. In phase 1 of the HSBB project, UniFi is being progressively rolled out to reach 750,000 premises passed by the end of 2010, and 1.3 million premises passed by the end of 2012. 

Due to the intensely competitive telecommunication landscape and the lead time necessary to build the HSBB related businesses, the Board of Directors expects TM’s business environment for the financial year ending 31 December 2010 to remain challenging.

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