TM: Speed upgrade won't hurt bottom line

KUALA LUMPUR: Telekom Malaysia Bhd (TM), which was quick to announce its Broadband Improvement Plan following Budget 2017, said the speed upgrade for its broadband packages won’t weigh on its bottom line in the short term.
However, when asked about the price reduction by 50% by 2019, TM CEO Tan Sri Zamzamzairani Mohd Isa said the group is in talks with the government on the matter.
“We’re still discussing with the government and MCMC (Malaysian Communications and Multimedia Commission) on how we will implement it. We still have two years to look at it,” he told a press conference here yesterday.
Under the Broadband Improvement Plan, Zamzamzairani said, the average broadband speeds for residential UniFi customers will be doubled without any change in pricing.
“For example, 5Mbps will be doubled to 10Mbps, and 10Mbps to 20 Mbps,” he explained, noting that the upgrade will start in stages from January 2017.
TM will introduce a greater value broadband package offering for non-UniFi customers in 2017.
As part of the High Speed Broadband and Suburban Broadband projects, Zamzamzairani said, the speed enhancement initiatives are not expected to add to the group’s cost structure for its telecommunication infrastructure.
“It will not materially change the rollout plan to determined populated areas. It’s part of our capex (capital expenditure) plan for the next three years. Of course, there will be a cost incremental if there is a need for modems to offer better speed, but we expect, with better customer experience, the churn rate to improve, and it will mitigate the rise in cost,” he noted.
Churn rate refers to the number of subscription cancellations.
TM expects to spend 30% to 35% of its revenue as capex for 2016.
Zamzamzairani declined to comment on the RM1 billion fund allocated to MCMC by the government, which some quarters claim that will then given to TM as a subsidy. The fund will be used to ensure the coverage and quality of broadband nationawide to reach up to 20Mbps.
To date, TM has more than 2.37 million broadband customers, of which over 900,000 are UniFi customers. Worth noting is that more than 60% of TM’s broadband customers are now on packages of 4Mbps and above, while 68% of UniFi customers are on packages of 10Mbps and above.
Meanwhile, Zamzamzairani is of the view that the industry will move from fixed consumption to usage-based, which could see the set of quota limit.
“Today there are no changes, but this is the overall picture that I’m giving over the long run. If you want to empower customers, then customers will have a choice of what they want to use that connectivity for. On the flip side, for customer who don’t use that much, if you fix the price, then they have to pay that amount even if they don’t use it.”