TM’s net profit halves in 1Q20, to leverage new avenues

The telco will continue its unifi promotional packages, as well as the IaaS and SaaS solutions for enterprise and public sector customers to facilitate cloud adoption


TELEKOM Malaysia Bhd (TM) will be leveraging “new avenues” and core products as it remains committed to maintaining profitability amid the Covid-19 pandemic, after its earnings halved in the first quarter ended March 31, 2020 (1Q20).

Its group CEO Datuk Noor Kamarul Anuar Nuruddin said the telecommunications company (telco) will continue its unifi promotional packages, as well as the infrastructure-as-a-service (IaaS) and software-as-a-service (SaaS) solutions for enterprise and public sector customers to facilitate cloud adoption.

“We are faced with new challenges with the global outbreak of Covid-19. These are truly unprecedented times that are affecting everyone globally — members of the public, businesses, corporate, and TM is also not spared,” he said in a statement yesterday.

“As we look to mitigate the impact of Covid-19 on our business, we will continue to monitor the situation closely, actively evaluating various ways to optimise costs and capital expenditure (capex) across our operations. We will continue to focus on optimising our balance sheet structure in the coming quarters.”

The telco’s net profit slumped 50.5% to RM152.52 million in 1Q20 from RM308.28 million a year ago, while revenue fell 8% to RM2.56 billion from RM2.78 billion previously in line with declines in revenue for all products.

Unifi revenue slid 8.4% to RM1.12 billion from RM1.23 billion last year as voice services reduced due to a smaller cumulative customer base, while Internet and multimedia services revenue fell as prices were lowered for Streamyx customers starting September 2019.

TM said the convergence penetration for its unifi household base stood at 55% in 1Q20, with 2.18 million broadband customers.

TM ONE revenue decreased 4.6% to RM960 million from RM1.01 billion previously, mainly due to a smaller customer base.

TM wholesale revenue declined 11.9% to RM509.3 million from RM578.1 million last year, mainly dragged by lower voice services revenue due to lower international traffic exchange.

Total capex in the 1Q stood at RM262.3 million or 10.2% of group revenue, of which 19% was allocated for core network, 68% for access and the remaining 13% for support system.

Given the uncertainty surrounding the scope, duration and economic impact of Covid-19, the extent to which it will continue to impact TM‘s financial results this year remains uncertain, the telco said.

“Due to this, the company cannot estimate the full financial impact with reasonable accuracy at this time and believes to be prudent to revisit its 2020 guidance when there is better clarity.”

Shares of TM closed 3% or 13 sen higher at RM4.49 yesterday, bringing its market capitalisation to RM16.91 billion.