24 Aug 2022
TM delivers double digit revenue, EBIT and PATAMI growth in Q2; on track to achieve its 2022 market guidance
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.”
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Innovating Malaysia's healthcare through 5G and digital solutions
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Shazurawati Abd Karim, Executive Vice President of TM One explained the significance of 5G to Malaysian healthcare, stating that: “5G will positively impact the Internet of Medical Things (IoMT), and enable life-saving medical innovations that reflect the needs of a post pandemic society. This includes remote medical learning and remote patient monitoring, among others. Together with our partners, which includes global technology companies as well as leading local companies, we are primed and ready to help Malaysia’s private hospitals co-create solutions that will save lives and bring value to their stakeholders.” “Aside from real-time speed and breakthrough connectivity, today’s digital healthcare ecosystems depend on robust and secure infrastructure essentials. Collecting and sharing of digital patient records and hospital data requires world-class data security to mitigate cyber threats and to comply with stringent regulatory requirements. TM One’s services can be integrated with private 5G networks and offers enhanced data protection and encryption to safeguard both patients and hospitals. This will encourage patients towards adopting digital healthcare services, potentially enabling them to seek treatment earlier and save lives,” she said. Amongst the technologies demonstrated was VRAR (virtual reality/augmented reality) using a Microsoft HoloLens device, which utilises mixed-reality experiences with 3D data processing, analytics, visualisation, and simulation applications. This technology aims to humanise the diagnosis and treatment identification process and will improve the productivity of healthcare personnel by accelerating their time-to-diagnosis, surgical accuracy and reduce time-to-care which will result in improving overall patient experience. TM One also showcased a virtual medical consultation solution powered by REMEDi, a digital healthcare technology developer. Through high-speed, low-latency 5G, the solution will provide enhanced video images and sound quality for safer diagnosis of patients and effective troubleshooting. In addition, this solution can be conveniently deployed anywhere, matching the current shift towards online examinations and telemedicine. Speaking about the event, Datuk Dr Kuljit Singh, President of APHM said, “The 5G in Healthcare Symposium was a great platform for our partners, TM One and Siemens Healthineers to demonstrate the future of Malaysia’s private healthcare, providing a guide on how to transform hospitals by leveraging 5G. This sharing was truly valuable to the symposium participants.” “Having these esteemed digital leaders provided a clearer idea to the industry of how they can transform their institutions. We are both excited by the potential offered by 5G technology and confident of the expert support offered by our partners as the industry continues its digital transformation journey in delivering superior healthcare service to our patients,” he enthused. Rod Frazer, Managing Director of Siemens Healthineers in Malaysia commented, "The opportunity to aggregate healthcare data and leverage this to support the day-to-day decisions of patients and clinicians is the game changer in healthcare delivery and cost effectiveness. To shape this future, it is vital not only to work on ideas that will change the way we think about the healthcare sector in the long term but also to identify current developments such as 5G connectivity, which has the potential to transform the market. Siemens Healthineers is excited to collaborate on this initiative with APHM and TM One to facilitate such discussions in the country.” TM One’s suite of robust and secured digital infrastructure solutions enable organisations to harness the power of AI and IR 4.0 to take their transformation forward. TM’s recent partnership with Digital Nasional Berhad (DNB) to provide extensive fibre coverage for DNB’s 5G network emphasises its commitment to provide 5G infrastructure to support the digital aspiration of all Malaysians, including the digitalisation the nation’s private healthcare industry to support the vitality and wellbeing of the rakyat. For more details about TM One Healthcare solutions, visit www.tmone.com.my/industry/healthcare/
TM and PDRM join forces to ensure a pleasant Raya celebration for all
Op Selamat 13/2018 campaign for the upcoming festive season launched to promote community safety and security Telekom Malaysia Berhad (TM) continues to collaborate with Polis DiRaja Malaysia (PDRM) for community safety and security in conjunction with the upcoming Hari Raya Aidilfitri celebration with the launch of the annual safety campaign “Op Selamat 13/2018” today. This campaign, which marks the 21st consecutive years of collaboration between both parties, aimed at increasing public awareness on road safety and home security this Raya celebration season. The campaign was launched by Tan Sri Dato’ Sri Mohamad Fuzi Harun, the Inspector General of Police. Also present was Tan Sri Dato’ Seri Sulaiman Mahbob, Chairman, TM as well as Datuk Bazlan Osman, Acting Group Chief Executive Officer, TM and other police officers of various ranks. At the event, Tan Sri Mohamad Fuzi flagged off the ‘Traffic Monitoring Team’ and a convoy of motorcyclists and cars to symbolically emphasise the campaign’s message. Speaking at the launching ceremony, Tan Sri Dato’ Seri Sulaiman said, “As a responsible corporate citizen, TM is committed to playing its role in supporting the Government’s efforts towards the nation’s well-being and once again, we continue our long standing collaboration with PDRM for Op Selamat 13/2018 safety campaign this year. The safety of road users and their homes are the utmost important thing during this festive holiday season. This is why we would like to remind all members of the public to adopt proper and courteous driving etiquette as well as be alert of any break-in attempts in your neighbouring community.” “This year also marks the 21st consecutive year of our involvement in this campaign, reflecting our unwavering support towards the Government’s initiatives to reduce the road mishaps rate and to improve home safety during festive season,” he adds. Op Selamat 13/2018 continues to bring safety messages from the previous years’ campaigns where the focus encompasses the safety of Malaysian homes while the residents are away for the festive holiday. This 13th edition of the campaign - aptly themed “Rumah Selamat & Selamat Sampai ke Destinasi” will be running for two (2) weeks beginning from 8 June until 22 June 2018. For this year’s campaign, TM is contributing various necessities for 16 operation centres, for the convenience of the police officers on-duty along the roads identified as accident-prone areas. TM is also contributing car and motorcycle stickers as well as safety booklets which will be distributed to help aide public knowledge on road safety. In fulfilling its unique role towards protecting the national interest with regards to communication infrastructure, TM also works closely with PDRM on preventive measures and initiatives towards curbing cable theft incidents, as it involves public safety particularly when it causes difficulty for local communities to communicate and seek assistance in case of emergencies.
TM announces another steady full year performance (FY2021) with EBIT up 6.6% at RM1.71 billion; revenue up 6.4% at RM11.53 billion; declares 6 sen per share dividend
As a result of jump in revenue and continuous cost optimisation initiatives, Earnings Before Interest and Tax (EBIT) increased 6.6% to RM1.71 billion from RM1.60 billion in 2020 despite one-off provisions, impairments and accelerated depreciation Telekom Malaysia Berhad (TM or the Group) delivered yet another healthy set of financial results for the Full Year 2021 ended 31 December 2021 as compared to the same period last year (YoY), despite protracted impact from the ongoing pandemic on the economic and business front. Fueled by strong growth in unifi revenue and fixed broadband subscribers, as well as sharp growth in the TM Wholesale business which registered increasing data demands from hyperscalers, and international and domestic service providers, TM recorded a 6.4% rise in revenue to clock in at RM11.53 billion from RM10.84 billion in 2020. This marked revenue improvement as well as the Group’s continuous cost optimisation initiatives led to the increase in Earnings Before Interest and Tax (EBIT), up 6.6% YoY to RM1.71 billion, from RM1.60 billion last year. Profit After Tax and Non-Controlling Interests (PATAMI) at RM895.2 million dipped 11.9% contributed by higher taxation including provision for Cukai Makmur, lesser interest income and forex losses, as well as impairment of TM’s mobile assets as the Group prepares itself for 5G. Based on its steady financial position and strong Free Cash Flow generation, the Board of Directors proposed the final interim dividend at 6 sen per share, resulting in a total dividend of 13 sen per share for 2021, in line with the Group’s growth investment strategy. CAPEX for the year was reported at RM1.70 billion, or 14.7% of revenue, reflecting TM’s commitment to reinvest in business expansion, new growth areas and provide great experience and services for its growing base of customers. Free Cash Flow at RM2.19 billion rose 9.5% from RM2.00 billion, ensuring steady growth ahead of a demanding future. unifi: Record-breaking revenue, total subscribers It was a landmark year for unifi, contributing to the Group’s strong performance. Overall unifi revenue grew by 10.3% driven by increased fixed broadband subscribers, with 2.78 million cumulative registered subscribers - the highest number of unifi and fixed broadband customers registered, as well as highest number of ports installed. In addition to unifi’s drive to reduce broadband downtime to the absolute minimum for its customers, the business introduced five #unificares initiatives to refine its end-to-end customer experience, with the highlight being unifi’s 24-hour service restoration guarantee, the first of its kind in the Malaysian telecommunications industry. In its effort to support SME recovery and growth, unifi has offered more than 377,000 local SMEs special packages with complete digital ecosystem to help them to grow their business and stay competitive. unifi will continue to maintain its leadership in convergence of broadband, content, mobile and solutions for both home and SMEs customers. With online connectivity playing a central role to enable Digital Malaysia, unifi bridges the connectivity gap by serving customers with innovative and high-quality products and services. TM Wholesale (TMW): Realising 5G and Malaysia’s digital hub aspiration TM continues to drive wholesale business for both domestic and international segments via TM Wholesale (TMW). With a strong performance last year, TMW’s posted revenue grew by 14.7% due to solid partnership expansion with domestic and international customers. Domestically, as the preferred fibre service provider, TMW will continue to pursue 4G and 5G fibre infrastructure deployment as well as promoting collaboration with domestic service providers, in line with the Government’s JENDELA initiative. The 5G fibre leasing services (worth RM2 billion over 10 years) for Digital Nasional Berhad (DNB)’s 5G infrastructure needs, is a testament of TM’s commitment to infrastructure sharing in enabling excellent wireless solutions and services. TMW also recorded the highest active ports subscription for wholesale High-Speed Broadband (HSBB) access with more than 550,000 cumulative ports for Malaysian fibre broadband providers. On the international front, TMW continues with its aspiration to become a digital hub for the ASEAN region through strategic collaborations with hyperscalers and global service providers. The year saw a solid achievement with 190 new deals from hyperscalers and global service providers for various wholesale International Data offerings. This translated into the highest annual revenue contribution from major hyperscalers worldwide, a milestone year in building a regional hub position for Malaysia. TM ONE: Custom solutions and digital adoption amid a challenging landscape TM ONE is expected to remain competitive amidst the challenging economic and business environment. This is driven by its strong value proposition of offering the end-to-end managed services and digital solutions, backed by robust digital connectivity and infrastructure. As the only home-based Cloud Service Provider (CSP) with data sovereignty assurance, TM ONE will continue enhancing its Cloud service as a complete digital solution by embedding analytics, smart services/IoT and cybersecurity to cater for the key industry verticals. Enterprises and public sector services are on an accelerated path to digitally transform, leveraging on cloud architecture and smart services as a foundational pillar to unlock innovation opportunities, stay resilient and maintain a competitive edge, all in line with Malaysia’s MyDIGITAL aspirations. In becoming a trusted cloud partner, TM ONE focused its efforts in boosting proficiencies and competencies of its solution consultants, technology experts as well as international certifications. It has attained four (4) International Standard certifications (ISO/IEC) for Cloud α (pronounced as Cloud alpha) on Information Security Management System (ISMS), Personal Data Protection Act (PDPA), Business Continuity Management System (BCMS) and Cloud Specific Controls. Commentary and Outlook from Imri Mokhtar, TM Group Chief Executive Officer “As the enabler of Digital Malaysia, TM remains steadfast in its efforts to realise the national digital aspirations. We are committed to support the Government’s efforts to re-build the economy post-pandemic. For 2021, TM has shown positive results, driven by the New TM Transformation Programme which has delivered overall growth in TM’s revenue and EBIT. Cost rationalisation has also significantly improved the Group’s profitability. As TM enters its second year of transformation in 2022, we are activating more programmes to ensure we quickly move forward as a growth company, and keep pace with our trajectory. TM’s revenue growth is expected to remain intact, in line with the Group's market guidance, which is between low to middle single digit growth, while EBIT is projected to be more than RM1.80 billion, driven by TM’s three Lines of Business: unifi, TM ONE and TM Wholesale. We expect to invest between 14% to 18% of our revenue this year on Capex, reflecting our continued commitment to reinvesting into growth areas, capability, and capacity building, as well as enhanced customer experience. In promoting sustainability, TM aligns its ESG (Environmental, Social, Governance) vision and commitments to national and global aspirations. For Environmental, TM is committed to achieve carbon emission reduction by 30% in 2024, 45% by 2030 and Net-Zero emission by 2050. On Social, TM is set to enable MyDIGITAL Blueprint 2025 targets by ensuring at least 70% of premises have access to high-speed Internet. Under Governance, TM works hand-in-hand with the Malaysian Anti-Corruption Commission (MACC) to continue upholding our zero-tolerance to any form of corruption and maintaining the highest standards of corporate governance. This year, we will continue to power a digital nation, by delivering great Customer Experience, Solutions and Connectivity Excellence. This is made possible with unwavering support from its core execution engine; the employees or "Warga TM" who are fully dedicated and committed to enabling a Digital Malaysia, bridging the digital divide and in step, reducing the income divide.” In its pursuit to strengthen its core connectivity and invest more in digital, TM is future-proofing the organisation with future-ready skills and digital workforce, as part of its aspiration in becoming a human-centred technology company.” Guidance for 2022 is summarised below: Revenue Growth Low to middle single digit growth Low to middle single digit growth EBIT More than RM 1.8 billion CAPEX / Revenue Between 14% - 18%
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