TM posts solid Q1 2021 performance, transformation doing well

• Group revenue increased by 9.9% to US$678mil; increase in all of TM’s business lines
• Saw 11.9% YoY growth in fixed broadband customers to 2.44 million

TELEKOM Malaysia (TM) Berhad posted a strong start to the first quarter ending March 2021 with group revenue recording an increase by 9.9% to US$678.9 million (RM2.81 billion) compared to US$618.5 million (RM2.56 billion) in the same quarter last year.

[RM1 = US$0.241]

The quarter saw an increase in revenue across all of the group’s business lines, which are Unifi, TM One and TM Wholesale, the company said in a statement.

“We began the year with a positive momentum and a strong start to our ‘New TM’ 2021-2023 Transformation Programme.’ We are pleased to report a solid year-on-year performance despite these unprecedented times,” said Imri Mokhtar, managing director and group chief executive officer of TM (pic).

According to TM, ongoing cost improvement initiatives continued to show results with total operating cost ratios (percentage cost to revenue) having improved from 88.1% last year to 79.7%. This supported revenue growth whilst optimising cost efficiency across direct costs, manpower, other operating costs and depreciation and amortisation.

Group earnings before interest and taxes (EBIT) for Q1 2021 rose by 80.8% y-o-y from RM326.1 million in 1Q2020 to RM589.7 million, on the back of higher revenue and better operating costs efficiency.

This, subsequently led to a strong 113.4% y-o-y growth in group reported profit after tax and non-controlling interests (Patami) from RM152.5 million last year to RM325.5 million.

In the quarter, TM nvested 8.8% of revenue in capex amounting to RM247.0 million in its efforts to to modernise its network and technology platforms towards delivering current and future solutions for customers.

Of the amount invested, 69% was for network access including Jendela (fibre broadband expansion), 12% for core network, and the balance 19% for support systems.

The telco expects to meet the 2021 market guidance announced in February with revenue growth to be flat or single digit growth, EBIT to be more than RM1.6 billion and capital expenditure (capex) guidance to be between 14% and 18% of revenue.

A new transformation

The group claimed that its New TM Transformation Programme – which is anchored on over 40 value programmes focused on customer experience, revenue, cost efficiency and a future proof organisation – has seen a strong start with quarterly growth across all lines of business and improved operations.

Its fixed broadband service, Unifi, maintains its strong momentum and convergence leadership with 11.9% y-o-y growth in customers to 2.44 million, with the highest ever quarterly fixed broadband customers’ net additions of 110k, driven by growth of Unifi customer base, TM said.

This growth was also supported by the higher number of ports deployed and wider fibre network rollout under the Jendela programme. TM surpassed its first quarter targets achieving 141% of its commitment.

TM is also expanding the pool of network contractors to increase the capacity of its fibre expansion programme in the coming quarters. it said.

Beyond that, the company said Unifi also focused on continuously improving customer experience and accelerated its Streamyx migration programme in the first quarter.

Additionally, it continued the promotion of their mesh Wi-Fi products to new and existing customers, and its IT systems are also undergoing enhancements to provide better customer experience and cost optimisation by simplyaing and consolidating its platforms, it added.

Meanwhile, Unifi rolled out a new order management system that reduces order processing time by more than 60%, to improve customer experience across its sales touchpoints, TM claimed.

Imri said TM’s role is to accelerate Malaysia’s digital efforts through connectivity, digital infrastructure and the workforce.

“As an essential enabler, we are ready to play a leading role in the execution of both, the Jendela implementation plan and the realisation of the Malaysia Digital Economy Blueprint (MyDIGITAL), which leverages on our comprehensive connectivity, digital infrastructure and innovative solutions,” he said.

“With this encouraging set of overall results, we are on track to meet our 2021 market guidance and look forward to delivering greater customer experience and shareholder value with our New TM Transformation Programme,” he said.