Broadband powers TM’s growth

• Internet revenue for 2012 stood at RM2.372 billion, 18.5% growth over 2011
• Streamyx still going strong, TM upgrading copper network to serve customers where feasible

TELEKOM Malaysia Bhd (TM) executives were a happy bunch earlier this week as the company announced a record 9% rise in group revenue to RM9.99 billion last year, versus the RM9.15 billion in 2011.
 
What was significant to them, as pointed out by group chief executive officer Datuk Sri Zamzamzairani Mohd Isa (pic), was that “this is the first time ever that our growth has outstripped the telco industry.”
 
It was also its highest revenue since the de-merger with Celcom in 2008. Growth in 2009 was flattish, 2% in 2010 and 4% in 2011, noted Zam, as the TM chief is known.
 
Improved performance was mainly driven by healthy growth across all its key products – Internet and multimedia, particularly UniFi; data and other services.
 
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) for FY2012 stood at RM3.23 billion, which is 4.7% higher compared with FY2011, on the back of higher operating revenue.
 
[RM1 = US$0.32]
 
Much of TM’s growth rode on the continued strong take-up of UniFi, its high- speed broadband service which it launched in March, 2010. In fact, TM saw Internet revenue powered by UniFi and HyppTV (its Internet Protocol TV service) hitting RM2.372 billion for the financial year 2012, an 18.5% growth over 2011 (click chart on right to enlarge).
 
Zam said that HyppTV had “grown tremendously,” recording a revenue increase of RM80 million over 2011 revenue. The UniFi customer base also more than doubled in 2012 with a 104% growth in subscribers to 482, 513.
 
Its overall broadband growth, which includes its Streamyx, hit 2.07 million customers, a 7.4% growth over 2011. Streamyx will continue to play an important role in TM’s broadband rollout, with Zam sharing that it is continually upgrading its copper infrastructure too (click chart below to enlarge).
 
In fact, TM recently also introduced an 8MB Streamyx service that augments its 2MB and 4MB offerings.
 
The reason for the copper focus is simple -- cost. With a government subsidy to ensure the HSBB rollout was supply-driven, and now coming to an end, TM will revert to being demand-driven for its subsequent fiber rollout. However, in many cases, it is cheaper to upgrade copper lines than to dig in new fiber to customer premises.
 
TM received an HSBB subsidy of RM754.5 million from the Malaysian Government in 2011, and RM142 million in 2012. The rest of the total RM2.4 billion in subsidies was given out prior to 2011.
 
One positive development for TM, noted Zam, was that many developers were now talking to it to have fiber as part of their developments from the get- go.
 
It is cheaper and easier to get a neighborhood fiber ready from the beginning than it is when everything is already built up. Fiber is now considered a utility, ranking in importance with the traditional water and power.
 
Claiming that over 90% of its UniFi base was on the 5MB line and that “many customers” are happy with the service level, Zam said that this presents a tough challenge for TM to upsell its customers. “It is going to be very tough when you already have a good experience on the 5MB line.”
 
But TM is working on some packages to encourage its large 5MB customer base to migrate to a 10MB line and Zam hopes that some of the applications consumers use will drive them to purchase a higher speed connection.
 
Meanwhile, Zam said out that TM is well on its way towards becoming an ‘Information Exchange.’ “As new markets grow and are created, such as the Internet of Everything, it's increasingly clear that the Information Exchange is at the center of that future.”
 
TM won’t have it all its way, though in positioning to be this Information Exchange, the hub through which data flows for all kind of connected devices.
 
Mobile player Maxis Bhd is also making a strong play in this space. Maxis has already launched solutions for the logistics and transportation and the retail sectors with more verticals planned.
 
 
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