TM sees more collaborations in delivering Jendela


TELEKOM Malaysia Bhd (TM) is expecting to have more collaborations with other service providers in delivering the government’s digital infrastructure plan called Jendela.

TM group CEO Imri Mokhtar (picture) said the group continues to collaborate with industry players in Malaysia and globally on the wholesale front.

“At TM ONE, we further cemented our leadership position as the digital enabler for enterprise and public sector customers with enterprise-grade connectivity and end-to-end cloud offerings.

“We look forward to more collaborations with strategic partners and customers towards establishing a solid foundation for a more Digital Malaysia,” he said in a statement yesterday.

For the third quarter ended Sept 30, 2020 (3Q20), the telcommunication company’s (telco) earnings increased 26% year-on-year (YoY) to RM329.4 million or 8.74 sen per share from RM261.31 million a year ago, attributed to lower direct costs and higher other operating and investment income.

TM’s quarterly revenue, however, fell 5.6% YoY to RM2.69 billion from RM2.85 billion in 3Q19 due to revenue decline for all lines of products except for data services reflective of impact from the Streamyx price adjustments effective from September of the previous financial year, as well as impact from lower volume and restricted economic activities during the Movement Control Order.

Revenue for unifi declined 2.4% from RM1.18 billion to RM1.15 billion in the current quarter due to reduction in voice services from lower usage and decrease in cumulative customer base, while Internet and multimedia revenue services declined following the Streamyx price adjustment provided to customers.

TM ONE recorded a 10.3% decrease in revenue from RM1.07 billion to RM962.1 million in 3Q20 mainly due to lower revenue from voice, data and other telecommunication-related services from lower usage volume and deferment of customer project activities.

Revenue for TM wholesale in July to September 2020 was up 11% from RM539.7 million in 3Q19 to RM599.2 million contributed by both its data and voice services.

For the cumulative nine-month period (9M20), TM’s net profit climbed 10.66% YoY to RM756.67 million, while revenue dropped 6.67% to RM7.84 billion.

“We are seeing unifi gaining momentum, posting a 6.3% growth to 1.65 million subscribers, with our total broadband customer base now at 2.26 million,” Imri said.

“We achieved the highest convergence penetration (of three services or more) in TM households since 2018 of 58%, as more Malaysians embrace digital living-working in this new norm,” he added.

AmInvestment Bank Bhd analyst Alex Goh maintained a ‘Buy’ call on TM in a report yesterday with a higher discounted cashflow based fair value of RM6.10 per share from RM5.05 per share on a lowered weighted average cost of capital of 6.7% from 7.4% following a one-percentage-point cut in the group’s cost of debt to 4.5%.

“Our forecasts have been finetuned to adjust for the reduction in our financial year 2020 capital expenditure and revenue assumption to 15% from 20%, in line with management’s 12%-15% guidance.

“Nevertheless, TM’s 9M20 normalised net profit of RM508 million came within our expectations,” Goh said.

The counter closed at 24 sen, or 5.22%, higher to RM4.84 yesterday — the highest since May 2018 — giving it an RM18.26 billion market capitalisation.

TM has gained RM3.75 billion market capitalisation this year, recovering from the hit by Pakatan Harapan’s government calls for telcos to double the speed of fixed-broadband services, while cutting prices by half in 2018.

The counter saw its share prices plunge by 47% from RM5 on May 11, 2018, to RM2.65 on Dec 28, 2018, and losing about RM8.86 billion market capitalisation within the period, as investors worried that the largest broadband operator will continue to see its earnings squeezed.


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