23 Nov 2023
TM Delivers Strong Performance Amidst Challenging Market Conditions in 3Q 2023
3Q 2023 Key Highlights (vs 3Q 2022)
· Operating Revenue declined 2.6% to RM3.08 billion, due to market challenges
· PATAMI grew 102.9% from RM265.2 million to RM538.2 million
· CAPEX investment stood at 15.1% of revenue or RM1.38 billion, mainly for network infrastructure expansion
KUALA LUMPUR, 23 November 2023 – Telekom Malaysia Berhad (“TM” or “the Group”) demonstrates resilience in the face of challenging market dynamics, delivering stronger financial performance in the third quarter ended 30 September 2023 (3Q 2023), compared to the corresponding period last year. This steadfast momentum solidifies TM’s position in the local and global telecommunications landscape.
The Group’s Profit After Tax and Non-Controlling Interest (PATAMI) experienced a surge of 102.9% from RM265.2 million to RM538.2 million, against a revenue of RM3.08 billion primarily attributed to a lower tax impact and reduced net finance costs.
The strong performance of two of TM’s lines of business, Unifi and TM Global played a pivotal role in this growth. Unifi’s fixed broadband subscription increased 4.6% reaching 3.12 million, while TM Global’s revenue increased due to heightened demand for both domestic and international data services.
The Group’s year-to-date (YTD) Capital Expenditure (CAPEX) investment stood at RM1.38 billion or 15.1% of the overall revenue. This strategic allocation of resources is directed towards the nationwide network infrastructure expansion and enhancement of its regional submarine cable system.
Reflecting on the 3Q 2023 performance, Amar Huzaimi Md Deris, TM’s Group Chief Executive Officer said, “I am pleased to announce the significant strides we have made amidst intensified competition. Our commitment to advancing quad-play convergence services, coupled with the introduction of attractive and competitive packages, enabled us to retain and expand our customer base, solidifying our portfolio as the true convergence champion.
“Our relentless pursuit of improving mobile coverage nationwide aligns with our dedication to inclusivity, bridging the digital divide, and fostering widespread digital adoption. By ensuring our services are accessible to all, we contribute to creating a more connected and inclusive society.
“Simultaneously, our aggressive expansion of data and network infrastructure is strategically positioned to meet the growing demands of our domestic market and attract more international players. This is a crucial step towards positioning Malaysia as a digital hub for the region, contributing significantly to the creation of a globally connected digital economy.
“TM supports the recently launched New Industrial Master Plan (NIMP) 2030 and we are well positioned to unlock technological opportunities whilst driving innovation for the nation and key economic sectors. As we continue our journey towards humanising technologies, our commitment extends beyond services to the development and refinement of smart innovative solutions. It is not just about technological advancement and improving business outcomes but also about enhancing lives, bringing positive impact to the environment and society.
“In summary, these initiatives underscore our goals to foster digitalisation and emerging technologies. Our comprehensive approach reflects TM’s position as a trailblazer in the ever-evolving landscape, with a clear focus on driving positive change and shaping the future of digital connectivity”, added Amar.
LINES OF BUSINESS PERFORMANCE
Unifi Drives Innovation and Maintains Growth Trajectory
Unifi recorded 0.7% revenue growth reaching RM1.41 billion, propelled by effective convergence campaigns and robust customer retention activities.
As leader of converged offerings, Unifi continues to elevate connectivity at home and on-the-go through the country’s best fibre network, superior 4G coverage and an expanding 5G nationwide footprint. Driven by vibrant content offerings, improved mobile coverage and competitive new packages, Unifi caters to diverse consumer lifestyles and digital experiences for Malaysians. Unifi received the Open Signal 5G Global Awards 2023, recognising it as one of the fastest 5G telcos in the world.
Unifi Business serves close to 400,000 MSMEs nationwide and further strengthened its position as a preferred digital partner. Its diverse digital solutions help MSMEs build stronger brand presence and online visibility, enhanced by ultra-speed broadband internet and 5G mobile to empower their business.
Looking ahead, Unifi is solidifying its true convergence leadership and powering the MSME digital ecosystem, driving continuous innovation for the nation’s connectivity needs.
TM One Navigates Challenges, Continues to Drive Smart Innovation
Despite intense competition, TM One remains a resilient and trusted partner for enterprises and the public sector. Recently, TM One forged a successful collaboration with the Selangor government to launch the Selangor Government Data Exchange (SelGDX) portal, positioning Selangor as the first state in Malaysia to develop a data-sharing platform across its 48 agencies and departments. The portal facilitates secure, fast, and accurate data sharing and processing with enhanced efficiency while fostering transparency and good governance.
In August, CyberSecurity Malaysia recognised TM One for its role in safeguarding the Critical National Information Infrastructure through its Security Operations Centre and Network Operations Centre. The award reinforces TM One's commitment to protecting data and devices across all network environments, contributing significantly to national security and opens the door to new cybersecurity solution opportunities.
Moving forward, TM One maintains its focus on managed converged next-gen connectivity, smart services, cloud and cybersecurity while remaining steadfast in providing fit-for-purpose solutions to enable industry digital transformation and economic growth. TM One is well positioned to support the recently launched NIMP 2030, dedicated to enabling innovative solutions for the nation and key sectors, spurring new opportunities and driving continuous innovation.
TM Global Strengthens Malaysia position as the Preferred Digital Hub for ASEAN
TM Global reported a 5.0% revenue increase to RM808.6 million from RM769.9 million, driven by encouraging demand for both domestic and international data services.
TM Global actively contributed to Malaysia’s digital transformation through continuous deployment of 5G infrastructure, HSBB access and edge facilities nationwide. These facilities set the foundation for industry players to offer new innovative 5G solutions and industry specific use cases. Despite market challenges, TM Global mitigated the risk through strong collaborations with industry players in promoting wholesale broadband solutions to drive internet inclusivity for the nation.
TM Global signed a Memorandum of Understanding with SK Telecom for the joint development of Multi-Access Edge Computing and participated in the Asia Link Cable System to enhance submarine cable capacity from Malaysia to Asia, amplifying inbound traffic, laying a solid foundation for the future of Malaysia's digital landscape.
Looking ahead, TM Global remains focused on advancing 5G and broadband infrastructure, whilst expanding its submarine cable system and building regional scale in Content Delivery Network. It will further expand its edge and data centre capabilities, positioning Malaysia as the preferred digital hub for ASEAN.
2023 Market Guidance
| Revenue Growth | Flat |
| EBIT | RM1.8bil - RM2.0bil |
| CAPEX/Revenue | 18% - 20% |
The Group is on track to achieve its 2023 market guidance, reinforcing its commitment to powering a digital future.
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2Q2022 Key Highlights (vs 2Q2021) Increased demand for Internet and Data translated to an 11.8% growth in Operating Revenue, at RM3.09 billion compared to RM2.76 billion Manpower and other OPEX cost optimisation contributed 81.3% EBIT growth, recorded at RM702.7 million PATAMI up 73.0% at RM378.0 million from RM218.5 million, as a result of higher operating profit and lower net finance cost Invested 15.7% of revenue in CAPEX or RM484.5 million in fibre expansion, network upgrades and support systems Free Cash Flow increased 36.4% at RM730.5 million, mainly attributed to increase in revenue and cost optimisation initiatives Interim Dividend of 9.0 sen per share declared with Dividend Reinvestment Scheme applicable (DRS) On track to achieve its 2022 market guidance, TM continues to strengthen core businesses while investing in new growth areas Telekom Malaysia Berhad (TM) has sustained its growth trajectory, delivering an excellent set of financial results across all key metrics for the second quarter ended 30 June 2022, offering converged services and solutions and demonstrating its resilience against increasing competition from other telco and technology players. The Group’s operating revenue grew by 11.8% to RM3.09 billion, compared to RM2.76 billion in the same quarter last year (YoY), on a foundation of strong performance across every customer segment and a sharp increase in revenue from all lines of service, particularly Internet and Data. Optimisation efforts enabled TM to record lower manpower and other OPEX costs, which led to higher Earnings Before Interest and Taxation (EBIT), up 81.3% at RM702.7 million compared to RM387.6 million YoY. Profit After Tax and Non-controlling Interest (PATAMI) was up 73.0% at RM378.0 million from RM218.5 million YoY, on the back of accelerated demand for connectivity, services and digital solutions. The Group applied the 33% Cukai Makmur statutory tax rate accordingly for the current quarter. In addition to Group-wide cost optimisation initiatives, the revenue jump helped drive an increase of Free Cash Flow by 36.4% to RM730.5 million YoY, putting TM in a solid position to make future investments and further reduce debt. TM also declared an Interim Dividend of 9.0 sen per share in line with its policy to distribute yearly dividends of 40% - 60% from its PATAMI. The DRS is applicable for this dividend tranche to provide flexibility to shareholders, enabling participation into the Group’s continuous growth momentum. unifi: Maintaining growth momentum As the leading convergence provider in Malaysia, unifi recorded a 10.3% revenue increase from RM1,272.0 million to RM1,402.6 million in the current quarter, driven primarily by continuous growth of fixed broadband subscribers, which recorded a 14.1% increase from the same quarter last year. unifi continues to innovate the home entertainment landscape, rapidly adapting to consumer consumption patterns through more attractive content that can be viewed both at home via high-speed broadband as well as on mobile devices via the playTV@unifi app. Its growing content ranges from Hollywood to Hallyu, offering variety for everyone. unifi's focus also extended to local SME businesses with the month-long #BelanjaDiSME campaign, as well as the SME Digitalisation Grant (SDG), which provides entrepreneurs with up to 50% savings for internet subscriptions and digital solutions. TM Wholesale (TMW): Leading the charge in positioning Malaysia as a digital hub TMW continues its march to be the nation’s preferred network infrastructure provider and to position Malaysia as a digital hub. Revenue for the current quarter increased by 26.4% from RM585.3 million YoY to RM739.9 million, contributed mainly by higher revenue from data and voice services. TMW’s compelling performance is underpinned by escalating domestic data demand and new deals secured on the international front. It recorded the highest installation for High-Speed Broadband (HSBB) Access in June 2022, driven by mobile network operators (MNOs) and content service provider under JENDELA. TMW also delivered more than 4,500 cumulative 4G and 5G backhaul sites in supporting the MyDIGITAL blueprint for enhanced digital inclusivity nationwide. On the international front, TMW has secured new deals with a US-based hyperscaler and a North Asian digital provider. Simultaneously, its collaborative agreement with Globe Telecom will enable its customers to enjoy superior gaming experiences, a strategic move to expand its business beyond its telco offerings. TM One: Stronger performance amidst market challenges The Group’s enterprise and public sector arm, TM One, recorded an increase in revenue of 4.1% YoY to RM854.6 million, with growth from recurring business across the enterprise and government sectors. Global supply chain challenges and delays, however, continued to impact its operations and subsequent delivery of several customer projects. As the sole local provider for the Government’s MyGovCloud initiative, TM through TM One, is the only hyperscale cloud provider to offer data residency, data locality and data sovereignty for the Malaysian Government and its citizens. This eliminates potential risks from international regulations, policy interventions, or risk of Malaysian data housed beyond Malaysia’s borders. Credence: Spearheading TM’s growth into the digital tech space Responding to the fast-growing market demand for the digitalisation of enterprises, Credence was recently launched to drive greater levels of digital capabilities and technology skills for the Group’s corporate customers. Established as a start-up, Credence is TM’s new cloud and digital services company, focusing on becoming a trusted technology partner to accelerate the digital transformation of large enterprises and the public sector. Leveraging TM’s existing technology partners and new ventures, Credence will also accelerate the Group’s transformation in the digital tech space. Commentary and Outlook from Imri Mokhtar, TM Group Chief Executive Officer “At the mid-point of 2022, our financial performance and results demonstrate TM’s ability to manage our businesses effectively despite the headwinds arising from a challenging and competitive business environment. These results are also a powerful testament of our transformation journey, and our commitment to deliver a sustainable and inclusive Digital Malaysia. “unifi will continue its trajectory to provide converged solutions to both residential and SME customers. unifi Business, specifically, will double down on its efforts to provide new propositions to engage SME customers including promotional campaigns and financing options. “TM One remains focused in enabling the digital transformation of the enterprise and public sectors. Complemented by its global partner ecosystem, TM One continues to make inroads on bespoke solutions engineered and supported by its in-house ICT capabilities. “TM Wholesale is on course to provide a comprehensive suite of advanced wholesale communication services and solutions for both domestic and global fronts. TMW is poised to position Malaysia as a digital hub for the ASEAN region. “As part of TM’s commitment to empower businesses on their digital transformational journey, the Group will also address the digital and tech skills gap through Credence. This new digital services subsidiary will deliver a differentiated advantage for enterprise digital solutions, providing greater and faster time-to-value with customised options for enterprises. “Looking ahead, 5G will level the playing field and move the industry away from network-based to service-based competition. TM welcomes the Government’s call for the industry to take up equity stakes in DNB. 5G will open up and expand the opportunities and growth areas for all of TM’s business segments – consumers, SMEs, enterprises, wholesale as well as digital services. We look forward to rolling out 5G-enabled products and solutions and unlocking value to meet customers’ demands. “As Malaysia’s convergence champion, we believe 5G will strengthen our convergence proposition, and our customers will be encouraged to transition to 5G in the near term. “Ultimately, TM’s growth and differentiation, whether in 5G, fixed broadband or digitalisation, will hinge on creating and offering exceptional customer experience, as we continue on our evolution towards becoming a human-centred technology company.”
TM One poised to offer comprehensive data centre capacity and data sovereignty for the government’s digital transformation
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TM's decision to exit menara KL concession
Telekom Malaysia Berhad ("TM" or "the Group") wishes to clarify that Menara KL ("MKL" or "Tower") is owned by the Government while the operations and maintenance of the tower is granted under a concession. TM via its wholly owned subsidiary, Menara Kuala Lumpur Sdn. Bhd. (MKLSB) had undertaken the concession since 1996. As part of its business transformation programme, TM is focusing its efforts and resources on strengthening its core business of telecommunications and technology. After due consideration on the change in the business nature of MKL, from telecommunications services to tourism and hospitality, TM has decided in October 2021 not to renew the MKL concession and informed the Government accordingly. Subsequently in 2022, the selection process of the new Concessionaire was then taken up by the Government upon which TM was informed on the appointed company to take over the shares of MKLSB and the MKL concession. MKLSB shall continue to operate the concession and ensure the continuity of MKL operations for the Malaysian public, including international visitors. Employees will remain employed with MKLSB under the new Concessionaire for a minimum period of 3 years. This is to ensure their welfare is protected in this transition. In TM’s 3Q 2022 financial announcement to Bursa Malaysia, a reference was made in the subsequent changes to shareholding in MKLSB. TM practices good governance and transparency in our business undertakings to preserve the interest of our customers and stakeholders. TM will provide our full cooperation and disclosures as required by the authorities. Building on our commitment to enable a Digital Malaysia, TM will continue to deliver the best telco and technology services for the community, businesses, Government and industry.
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