TM sees 8% revenue growth, expects a ‘game-changing’ year

• Internet services key driver, registering RM1.45bil revenue
• LTE future driver with P1 acquisition catalyst for urban service

IF you needed proof that life, both at work and play, was becoming more digital, then Telekom Malaysia Bhd’s (TM) financial results for the first half of 2014 (1H2014) provides further evidence of this trend.
 
TM’s group revenue grew 8% in the year to date (YTD) to RM5.44 billion (US$1.73 billion) from RM5.04 billion (US$1.60 billion) recorded in the corresponding period last year. Growth was mainly driven by positive Internet, multimedia, and other telco services.
 
In the first half of 2014, Internet services registered revenue of RM1.45 billion, a growth of 13.3% from RM1.28 billion recorded in 1H2013.
 
This was in line with its growing broadband customer base of 2.251 million customers, a 4.6% increase YoY (year-on-year) from 2.153 million in 1H2013.
 
[RM1 = US$0.32]
 
UniFi was a key driver, with the high-speed broadband (HSBB) service now available via 1.54 million ports providing coverage to 2.56 million premises through 105 exchanges, the company said at an Aug 27 media briefing in Kuala Lumpur to announce its results.
 
With more than 685,000 UniFi customers, translating to a 44% take-up rate, high-speed broadband in non-UniFi areas is also growing strongly, especially on its Streamyx 8Mpbs service. As at 1H2014, 45% or more than one million of total broadband customers were subscribing to 4Mbps and higher packages.
 
Data revenue (leased lines, for example) increased by 5% to RM1.25 billion from RM1.19 billion, driven by customer projects and higher subscription by customers, TM said.
 
READ ALSO: Axiata CEO optimistic despite mobile competition from TM
 
Re-emphasising a point made earlier this year, that 2014 is a ‘game-changing year’ for TM, group chief executive officer Zamzamzairani Mohd Isa (pic) declared that the company will continue to actively address the rising demand for an enhanced Internet experience and deliver a digital lifestyle to all Malaysians.
 
“We acknowledge that there are many challenges but there is also much excitement, and we are well positioned to take advantage of the many opportunities to deliver shareholder value for the longer term,” he said, outlining various initiatives TM has launched, including a nascent home shopping channel two months ago.
 
The expectations are that the various activities will deliver higher revenues and profits to the group.
 
The group reported operating profit rose 4.4% YTD to RM655.7 million in 1H2014, attributable to higher revenue and other operating income. Correspondingly, profit before tax also increased 24.9% YTD to RM589 million in 1H2014 from RM471.4 million in 1H2013 due to the higher revenue growth.
 
Reported group profit or Profit After Tax And Minority Interest (PATAMI) was marginally lower against last year at RM424.7 million due to the absence of HSBB tax incentives in 2014.
 
Commenting on the financial performance, Zamzamzairani said, “The continued growth affirms the progress of our current and past marketing, operational, and financial initiatives in the key areas we identified.”
 
While six years back, it was high-speed broadband that was the new revenue stream TM bet on, it is clear that offering connectivity on-the-go and not just at home will be a key service, as illustrated by its LTE-based TMgo service launched earlier this month and which TM expects to take nationwide by next year.
 
While the monthly growth of UniFi subscribers has slowed, the launch of that service has been hailed as a success and proven to be a key revenue driver for TM over the last few years, offsetting declining voice revenue which now stands at 32% of overall revenue and expected to drop over the next few years.
 
What is certain is that TM will not just be settling for serving underserved customers with LTE. Urban areas will be served too, with Zamzamzairani saying the catalyst was the pending acquisition of a 57% stake in Packet One Networks Sdn Bhd (P1).
 
And with the changing manner with which customers consume content today, he said managing this change was going to be one of TM’s biggest challenges.
 
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TM 2014 first quarter revenue up 8.1% to RM2.62bil
 
 
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