The drop in earnings was mainly due to higher tax expenses incurred in the quarter under review, says CEO 

by ASILA JALIL / Pic by TMR FILE PIX

TELEKOM Malaysia Bhd’s (TM) net profit plunged 69.2% year-on-year (YoY) in its fourth quarter ended Dec 31, 2021 (4Q21) to RM79.94 million due to lower foreign exchange (forex) translation gains on borrowings which dropped by RM37.9 million, RM12.6 million lower interest income and the application of the 33% Cukai Makmur tax rate on the group’s deferred tax liabilities. 

The telco posted lower operating profits before finance costs of RM294.8 million, down 28.4% YoY. 

Operating cost included RM122 million impairment of the its mobile assets, the accelerated depreciation the group commenced in the quarter, as well as provisions recognised for restoration of services and network affected by floods at the end of 2021. 

Revenue for the quarter increased 5.1% YoY to RM3.15 billion compared to RM3 billion in 4Q20 supported by strong increase in revenue from Internet and data. 

Revenue from unifi rose 12.1% to RM1.36 billion in 4Q21 from RM1.21 billion in 4Q20 driven by an increase in fixed broadband, voice and mobile services. 

Fixed broadband subscriber base saw continued increase at 19.5% to 2.7 million subscribers by the end of 4Q21 from 2.3 million in 4Q20. 

TM Wholesale revenue for the quarter rose 14.7% to RM788.1 million mainly contributed by high revenue from data and other services. 

For the financial year 2021 (FY21), the group’s revenue came in lower at RM895.21 million, down by 11.9% YoY. 

TM group CEO Imri Mokhtar said the drop in earnings was mainly due to higher tax expenses incurred in the quarter under review. 

“This includes the provisions we made for Prosperity Tax on top of lower interest income and forex losses from the borrowings and impairments that we did for our mobile assets. 

“Looking at the fundamental business opportunity, we have seen improvement in the group’s revenue and operating profit,” he said in the virtual press conference on Friday. 

Revenue for FY21 was 6.4% higher at RM11.53 billion due to revenue increase from all lines of products apart from non-telecommunication services. 

Internet recorded a 7.1% increase on the back of a 19.1% growth in fixed broadband customer base. 

The group’s operational efficiency improved YoY as the increase in operating costs was lower than the increase in revenue despite recognition of impairment loss and accelerated depreciation on mobile assets. 

This resulted in 5.2% higher operating profit before finance cost, at RM1.69 billion compared to RM1.61 billion in 2020. 

Imri said the group is expected to register low to mid-single-digit growth in 2022 revenue, while earnings before interests and taxes are projected to be more than RM1.8 billion. 

The group is also planning to invest between 14% and 18% of its revenue on capital expenditure (capex). 

“The capex will primarily be for connectivity and mobile. Since the 5G model is a single wholesale network, that would not be in our capex. Any capex on mobile will be on 4G. 

“Significant part of the capex will be on connectivity and we will make investment on capacity, as well as to the increasing usage of connectivity” he said. 

The group declared a dividend of 13 sen per share which will be paid on March 31.