Healthy revenue growth of 2.1% to RM6.5 billion on back of continued growth momentum in Data, Internet and other telecommunications services
 Normalised EBITDA margin at 32.9%, in line with full-year target of 33%
Broadband customers increased 14.2% to 1.6 million, maintaining leadership position
Successful roll-out of UniFi to 26 exchanges with more than 29,000 closed orders

Telekom Malaysia Berhad (TM), Malaysia’s leading next generation communications provider and broadband champion, today reported its financial results for the 9 months period ended 30 September 2010, with a Group Profit After Tax And Minority Interests (PATAMI) growth of 70.4% to RM805.8 million as compared to RM472.8 million last year. This was achieved on the back of higher operating revenue, gain on disposal of investments as well as higher unrealised exchange gain on translation of foreign currency borrowings. 

TM also recorded healthy revenue growth of 2.1% to RM6.5 billion as compared to RM6.3 billion for the corresponding period last year, from a continued growth momentum in data and internet as well as higher contribution from other telecommunication services. Non-voice revenue continues to surpass voice, contributing 55.0% to the Group’s revenue up from 51.5% a year ago. 

Maintaining its broadband leadership position, TM broadband customers increased 14.2% to 1.6 million. UniFi has also been successfully rolled-out to 26 exchanges with more than 29,000 closed orders as at 15 November 2010, just 8 months after its launch. This was achieved as a result of product portfolio optimisation and an improved go-to-market strategy. 

Normalised Earnings Before Tax, Interest and Depreciation (EBITDA) margin stood at 32.9% in line with 2010 Group target of 33.0% as a result of increasing revenue and controlled spending. Operating profit before finance cost of RM867.4 million was higher by 8.2% as compared to RM801.8 million recorded in the preceding year corresponding period largely attributed to higher operating revenue and gain on disposal of investments, notably Measat.  

TM also generated a strong free cash flow of RM1.2 billion from continuous capital expenditure (capex) management, resulting in a healthy balance sheet. Business as Usual (BAU) capex reduced by 27.6% YoY to RM580.9 million (9.0% of revenue versus 14.1% revenue in 2009) whilst High Speed Broadband (HSBB) capex of RM856.5 million is in-line with the current plan (versus RM793 million in YTD 2009). 

Commenting on the financial results, Dato’ Sri Zamzamzairani Mohd Isa, Group Chief Executive Officer, TM said, “We are encouraged by the steady progress made in all aspects of performance and operations in these challenging times. This is a milestone year for TM, in which we launched UniFi and are all systems go to deliver this quality and much in demand service; whilst maintaining our overall service portfolio and financial discipline. We are also pleased to report that we are very much on track with HSBB. Let me also take this opportunity to congratulate our government and our Ministry on the nation achieving 53% of household broadband penetration ahead of the 50% target set for the year. This bodes well for both TM and the industry in our quest for further broadband adoption and usage.” 

“In line with our KPI guidance and our promise to deliver on customer experience, we have taken greater efforts to improve quality by committing to spend at least 5% of our revenue for this year on customer service. As of 30 September 2010, we have spent RM259.1 million representing about 4.0% of our YTD 2010 revenue. We expect to continue our quality improvement program aggressively. In fact, our customer satisfaction index, (TRI*M - Measuring, Managing, Monitoring) has improved by 6% for 1H10 as compared to 2H09 and the TRI*M index for Streamyx services has also improved by 4.8% YoY as compared to September 2009.”   

“Going forward, we remain steadfast in TM’s transformation journey – driven by the four thrusts of our Performance Improvement Program (PIP) 2.0 of customer centricity and quality improvements, operational excellence and capital productivity, a one company mindset with execution orientation, and leadership through commercial excellence”, he concluded.  

Total Revenue by Products: 

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

Comparison: Quarter-on-Quarter (Q3 2010 vs Q3 2009 Results)  

For the current quarter under review, the Group revenue increased by 4.5% to RM2.2 billion as compared to RM2.1 billion in the third quarter 2009, mainly attributed to higher revenue from data and other telecommunications related services, which mitigated the impact of lower revenue from voice and non-telecommunications services. Data revenue increased by 24.6% in the third quarter to RM440.9 million compared to RM353.9 million in the same quarter 2009 arising from demand for higher bandwidth services.

Internet and multimedia registered higher revenue by 1.4% to RM411.1 million in the current quarter arising from increased in broadband customers to 1.6 million in the current quarter from 1.4 million in the corresponding quarter 2009.  

Profit before finance cost of RM396.5 million increased by 86.8% compared to RM212.3 million recorded in the same quarter last year primarily due to higher operating revenue and higher gain on disposal of investments; whilst PATAMI increased by 144.8% to RM438.5 million as compared to RM179.1 million in the corresponding quarter in 2009 on the back of higher profit before finance costs and unrealised gain on translation of foreign currency borrowings.   

Comparison: Quarter-on-Quarter (Q3 2010 vs Q2 2010 Results)  

For the current quarter under review, Group revenue for 3Q 2010 improved 2.0% to RM2.2 billion, as compared to RM2.15 billion recorded in 2Q 2010, mainly attributed to strong growth from non-voice segment, particularly Data and other telecommunications services. EBITDA increased by 10.7% to RM759.5 million on the back of higher revenue and other income. Normalised EBITDA for the 3Q 2010 of 33.2% is 7.9% higher than 2Q 2010. Group PATAMI for 3Q 2010 increased by 252.5% to RM438.5 million as compared to RM124.4 million in the preceding quarter from higher revenue, gain on disposal of investment and unrealised foreign exchange gain. On a normalised basis, the 3Q 2010 PATAMI is 22.5% higher than 2Q 2010 as a consequence of higher EBITDA. The strong take up in Streamyx continued in the 3Q 2010 with 55,000 net additions, maintaining the same level with 2Q 2010 of 56,000 net additions. 

Prospects for the Current Financial Year  

The broadband market is set to grow further as the country moves rapidly towards internet based activities and transactions. Public and private sectors have helped set the pace to further drive internet and broadband adoption via the availability of more online based transactions. This encouraging development together with government’s continuous efforts through the National Broadband Initiative has narrowed the digital divide between the rural and urban population. Broadband service is now gradually being seen as a necessity for average Malaysian and this was evident through strong take-up rate of TM’s broadband services recorded over the previous quarters.  

As of 15 November 2010, the total number of UniFi subscribers has exceeded 21,000, whilst premises passed exceeded the 700,000 level. UniFi coverage has also been expanded to cover a total of 26 exchange areas with 7 of those exchange areas located in industrial zones in Johor, Penang, Kedah and Selangor. By year end 2010, TM is expected to meet the target total of 48 exchange areas being served by UniFi with 750,000 premises passed. TM is targeting to achieve 1.3 million premises passed by end 2012.