TM’s 2Q earnings rise on lower operating costs

TM had a challenging 1H19, but cost optimisation efforts and momentum on profitability will continue, says group CEO

by DASHVEENJIT KAUR/ pic by RAZAK GHAZALI

TELEKOM Malaysia Bhd (TM) stated lower operating costs enabled it to post higher earnings for the second quarter (2Q), despite troubling signs of weaker demand for its broadband and voice services.

TM saw a 12% year-on-year (YoY) rise in net profit to RM114.18 million for the 2Q ended June 30, 2019, despite a decline in revenue and impairment losses.

The telecommunications company reported a 6% YoY drop in revenue for the quarter to RM2.77 billion mainly due to a decline in voice, Internet and multimedia services, other telecommunication-related services, as well as non-telecommunication-related services.

Group CEO Datuk Noor Kamarul Anuar Nuruddin (picture) said TM had a challenging first half of 2019 (1H19), but noted that the cost optimisation efforts and momentum on profitability will be continued.

Earnings per share for the quarter amounted to 3.04 sen.

Revenue for its Unifi broadband service fell 10.7% YoY in the period due to lower revenue from Internet and multimedia services as an impact from the lower cumulative customer base for Streamyx and Unifi broadband services.

TM One’s revenue fell 8.4% due to a decline in voice and other telecommunication-related services.

Revenue for TM Global rose 18.2%, mainly contributed by data services.

“Operating profit before finance cost increased 6.8% due to a reduction in operating costs from the continuing impact of the group’s various cost initiatives, notwithstanding the revenue reduction and impairment loss on network assets recognised during the current quarter,” Noor Kamarul told reporters at the group’s 1H19 media briefing in Kuala Lumpur yesterday.

For the first six months, TM’s net profit soared by 63% YoY to RM422.46 million, while revenue fell 4% YoY to RM5.55 billion.

Despite the decrease in revenue and impairment loss on network assets recognised, its operating profit before finance cost increased by 74.2% YoY to RM771.1 million — mainly due to lower operating costs resulting from the group’s various cost initiatives.

Noor Kamarul said the group’s total capital expenditure (capex) is in line with guidance at RM450 million (or 8.2% of revenue).

“We shall navigate the challenges on revenue through a stronger focus on customers. We will continue to serve as a strategic partner of the National Fiberisation Connectivity Plan backed by our network infrastructure.

“Our capex is well within guidance as we optimise investment for growth and quality improvement to better serve our customers,” he added.

Noor Kamarul said the group is looking forward to more collaborations with strategic partners for TM One.

TM’s shares rose 13 sen or 3.3% to RM4.08, valuing the company at about RM15.2 billion.

Its shares have advanced 12% in the past 52 weeks.

Analysts’ consensus one-year price target for the company is set at RM3.83. Moreover, analysts have raised the target by 26% in the past three months.