TM to focus on private sector, mass market

A key challenge for the group is reduced spending in the govt sector

By NG MIN SHEN / Pic By AFIF ABD HALIM

Telekom Malaysia Bhd (TM) will be focusing its efforts on products for the private sector and the mass market in the second-half of 2017 (2H17) as public sector spending, which constitutes a large portion of its revenue, has lessened in recent months.

TM MD and group CEO Datuk Seri Mohammed Shazalli Ramly said a key challenge for the telecommunications provider in 1H17 was reduced spending in the government sector.

“Public sector spending constitutes a sizeable portion of our business. So when there’s a cut in spending there, that obviously has an impact on our business which forces us to go out and strengthen our other areas of business, mainly the private sector and mass market,” Mohammed Shazalli told a media briefing on the company’s financial results in Kuala Lumpur yesterday.

“For 2H17, we expect government spending to stabilise. If the elections are held next year, then there is likely to be more public sector spending, especially for infrastructure,” he added.

TM group CFO Nor Fadhilah Mohd Ali said government sector spending accounted for some 22% of the group’s total revenue.

Mohammed Shazalli said in the future, the company’s mass market segment services — including UniFi, webe and HyppTV — are expected to cover the gaps left by cautious government spending by outperforming their respective targets.

To that end, the group plans to roll out a stream of new services and product launches beginning mid-September this year, while looking to its high-speed broadband service UniFi to continue to drive group
earnings.

“Most of the initiatives in the works are positively identified as gap reduction. At least for this year, they will cover the needs for 2017. Once we hit the masses we want, it will be good momentum to drive us further into 2018 and 2019,” Mohammed Shazalli said.

He added that the group is also working on initiatives for the small and medium enterprise (SME) sector.

TM recorded a net profit of RM210.48 million for the second-quarter ended June 30, 2017 (2Q17), a 50.9% jump from RM139.45 million posted a year earlier, attributed to foreign-
exchange (forex) gains on group borrowings in the current quarter compared to forex losses in the previous corresponding period.

Its 2Q17 revenue fell 2.1% to RM2.98 billion compared to RM3.05 billion registered the year before. The company said in its exchange filing yesterday the drop was due to a decrease in revenue from data, voice, other telecommunication and non-telecommunication-related services.

For 1H17, the group’s earnings slid 4.5% to RM440.92 million versus RM461.89 million a year ago, while 1H revenue was largely flat at RM5.94 billion against RM5.9 billion registered last year on the
back of higher revenue from Internet, multimedia and other telecommunication-related services.

To date, TM has 2.36 million broadband customers, of which over one million are UniFi users.

As at end-June 2017, its wireless mobile service offering webe had a 5.6% penetration rate of households subscribing to TM services versus 4.2% a year ago.

The company spent RM899 million in capital expenditure (capex) for 1H17, which was 51% of group revenue.

Nor Fadhilah also said for the rest of the year, it has allocated a revenue percentage of between the “high 20s and early 30s” in capex, some of which will go towards completing the rollout of its fourth-generation long-term evolution or 4G LTE deployment.

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