TM’s fixed line grows again

Click here to download TM's 2nd Quarter 2007 Financial Results

KUALA LUMPUR: Telekom Malaysia Bhd (TM), whose net profit rose 54.6% to RM701 million in the second quarter ended June 30, 2007 from RM453.5 million a year earlier, has made a strong recovery in the fixed-line business.

Among other improvements, the company saw a 3% growth in fixed-line revenue against a 9% decline a year earlier. TM declared a gross interim dividend of 26 sen per share, totalling RM651.3 million, and representing a payout ratio of 50%.

“The performance improvement programme (PIP) has seen encouraging results in mitigating the decline in our fixed-line business where we’ve seen revenue improve by about 3% in 1H 2007 compared to a decline of 9% in 1H 2006.

“This has been made possible through key efforts in the aggressive push for broadband where our customers have surpassed the one million mark while our Let’s Talk packages aimed at stimulating the fixed-line usage and meeting the needs of our customers have started to show promising results in reducing churn from fixed line,” said TM group chief executive officer Datuk Abdul Wahid Omar.

He said over 300,000 customers had signed up for the Let’s Talk packages. Wahid said TM would continue to introduce new packages to increase the fixed-line business’ contribution.

“We are delighted that Celcom (Malaysia) Bhd has come out stronger and Malaysia Business is gaining momentum in revitalising the fixed services,” he said. Its fixed-line customers remain stable at 4.4 million, an improvement of 2.3% versus 4.3 million a year earlier.

TM attributed the rise in the 2QFY07 net profit to higher operating revenue and other operating income, which comprises mainly the gain on placement of a 3.8% stake in its Sri Lanka subsidiary Dialog Telekom Ltd of RM194 million.

The group’s revenue rose 8.6% to RM4.32 billion from RM3.98 billion in 2Q 2006, mainly due to higher revenue from cellular, data, Internet and multimedia segments. The increase in mobile revenue was mainly contributed by Celcom and PT Excelcomindo Pratama Tbk (XL) arising from more customers and usage.

The Internet and multimedia revenue rose 22.9% to RM269.4 million in 2QFY07 from RM219.2 million in 2QFY06, consistent with the plan to revitalise fixed-line business due to continued growth of broadband customers to 1.07 million.

For the first half, TM’s net profit rose 29.8% to RM1.3 billion from RM999.1 million a year earlier, while revenue rose 9.5% to RM8.5 billion from RM7.76 billion.

Its Malaysia Business revenue, which is made up of fixed line, data and Internet and multimedia, registered a revenue of RM3.8 billion for 1H 2007.

Wahid said mobile revenue now formed a key component of the group’s operations with increased contribution to group revenue at 54.3% in 1H 2007 compared to 51.3% in 1H 2006.

He said Celcom continued to register consistent improvements with a growth of 15.7% in revenue, an increase to RM2.5 billion from RM2.2 billion recorded in 1H 2006.

Wahid added that the turnaround of Celcom was within expectations. He said Celcom did not expect further erosion in postpaid customers as reflected in the net increase of 4,000 customers in June.

Celcom’s pre-paid average revenue per user (ARPU) stabilised at RM53 in 2QFY07, while its post-paid ARPU rose 3.5% to RM117.

Celcom’s EBITDA margin improved to 44.2% for 1H 2007 from 44% in 1H 2006, while net profit rose to RM489 million from RM398 million. With a net addition of 163,000 customers in 2QFY07, it had 6.4 million customers as at end-June.

“Our regional mobile customers also registered a robust growth of 33.1% to 31.8 million against 23.9 million in 1H 2006,” Wahid said.

Earnings before interest, tax, depreciation and amortisation (EBITDA) margin for the group was higher by 0.7 percentage points to 47.3% in 1H 2007 compared to 46.6% in the 1H 2006.

On the international front, Wahid said the group’s performance would continue to be affected by intense competition, difficult macroeconomics and also political issues in some countries.

TM said it was on track to achieve the main headline key performance indicators (KPIs) of EBITDA margin and return on equity.

“However, the revenue KPI will remain challenged due to the continued increase in competition, unstable political and regulatory environment and foreign currency translation losses from the stronger ringgit in the overseas market,” it said.