TM’s internet business gives strong showing: Page 2 of 2

Goals for this year

This year, TM hopes to grow its revenue by 3.5%-4%, while it expects its earnings before interest and tax (Ebit) to maintain at 2016 levels.

It also hopes to maintain the score of 73 points in terms of its TRI*M index score. The TRI*M index is an indicator of a company's customer satisfaction level. Global telco average is at 68 points.

To a question on what will be the driving factors for revenue growth this year, Zamzamzairani told reporters that the company is looking at improving its business today, as well as investing in the future.

“In terms of the business today, you can see the improvement in Unifi upgrades, the ARPU has increased, more content being bought by our customers. So we expect that to continue, going forward.

“But on top of that we’ve also invested in webe, we started two years ago and that will continue. Last year was an aggressive rollout and we expect to get returns from these investments. So the improvement of the business today and the investments we’re making in the future, that’s where revenue growth is going to come from and in terms of products and services we still expect that (revenue growth) to come from data, Internet and multimedia.”

Analysts that Digital News Asia spoke to expressed concern about TM’s ability to make webe profitable because of the huge investments involved. Zamzamzairani shared that to date, TM had invested up to RM500 million in capital expenditure (capex) on its LTE rollout. The company has allocated RM1.65 billion funding for webe over five years.

However, he appeared undaunted. “We have a three- to five-year plan to turn it around and are on track; that still stands. As at end 2016, TM has more than 2,100 LTE ready sites nationwide with 61% population coverage,” he said of the LTE rollout.  [Paragraph edited for accuracy based on TM's feedback.]

He added that the company had met its internal targets within four months of the rollout, despite having a delayed launch of the LTE service (it was originally to launch in March 2016, but launched in September 2016).

He declined to share webe subscriber numbers, saying that the company was not ready to share numbers for now. However, he did say that the LTE service has now covered some 2% of households using TM services and that the target is to achieve 8% to 10% of coverage of TM households by the end of this year.

Commenting on the capex for 2016, TM group chief financial officer Bazlan Osman noted that the company had spent 27.5% of revenue or RM3.3 billion and for this year, the capex would be increased to the low 30% to be spent on the HSBB, Suburban Broadband Project, subsea cables and the LTE rollout.

“We believe our internal cash flow is able to support this, but we will look at the market and if we can obtain cheaper funding, we will go that route. It could be a mix, we will look into it when the time comes,” he said when asked how the capex would be funded.

Meanwhile, to a question on Budget 2017 promising double the broadband speeds for half the price and what TM’s role in it is, Zamzamzairani shared that TM is still seeking clarification on the matter. “Suffice to say we’re in discussions with the government,” he said.
 
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