TM's 2016 revenue tops RM12b, eyes 3.5-4.0% growth this year

KUALA LUMPUR: Telekom Malaysia Bhd (TM), whose revenue exceeded RM12 billion for the first time last year, is targeting 3.5-4% revenue growth this year, said its group CEO Tan Sri Zamzamzairani Mohd Isa.

For the financial year ending Dec 31, 2017 (FY17), the group aims to maintain its earnings before interest and tax (EBIT) at FY16 level and customer satisfaction measure of 73.

For FY19 it is targeting 3.5-4% growth in revenue and EBIT, and customer satisfaction measure of 73. TM’s customer satisfaction is measured using the TR*M index, which measures end-to-end customer experience at all touch points.

All the headline key performance indicators (KPIs) except customer satisfaction measure include webe. FY17 will be webe’s first full-year performance following its launch in September 2016.

In FY16, TM’s revenue rose 2.9% to RM12.06 billion from RM11.72 billion a year ago, driven by non-voice services which represent 72% of group revenue. EBIT fell 8.2% to RM1.15 billion from RM1.25 billion a year ago due to higher operating costs and impact of accelerated depreciation of WiMAX assets.

Excluding one-off items like unrealised foreign exchange gain on international trade settlement and the group’s early retirement scheme, its normalised EBIT stood at RM1.19 billion, 4.4% lower than a year ago.

“For FY16, WiMAX assets that we had accelerated the depreciation together with write-off impairment in total is RM195 million compared with only RM74.7 million in FY15. There will be some residual in the next two years, depends on how fast we rollout our LTE service and migrate WiMAX customers into LTE service,” group CFO Datuk Bazlan Osman told reporters at a briefing yesterday.

Net profit for FY16 rose 10.8% to RM776 million from RM700.3 million a year ago due to other gains, lower foreign exchange losses on group borrowings and tax incentives recognised in FY16. Excluding non-operational items, the normalised net profit was 6.3% lower at RM847.9 million.

Zamzamzairani said TM achieved all its FY16 headline KPIs (excluding webe) namely 3-3.5% revenue growth, maintain EBIT at FY15 level and customer satisfaction measure at 72. Its actual results excluding webe were 4.1% revenue growth, 22.9% EBIT growth and customer satisfaction measure of more than 72.

“EBIT growth was from RM1.5 billion in FY15 to RM1.8 billion in FY16 so it is higher. That is without webe. Now (for FY17), even with webe, we expect EBIT to be at the same level,” he said.

Total capital expenditure for FY16 was 27.5% of revenue, amounting to RM3.3 billion. For FY17, TM expects capex to be in the “low 30%” range with the continuation of the High Speed Broadband (HSBB), HSBB2, Sub-Urban Broadband and subsea cable projects.

“We believe our internal cash flow is able to support that but we will look at the market, whether funding is required. If we can obtain cheaper funding then we will go on that route. It could be a mix,” said Bazlan.

TM declared a second interim single-tier cash dividend of 12.2 sen per share or RM458.5 million for FY16, to be paid on March 24, 2017. Together with the first interim dividend of 9.3 sen per share paid in October 2016, the total dividend payout is 21.5 sen per share or RM808 million.

On webe’s performance, Zamzamzairani said it managed to achieve its internal targets for webe within four months instead of nine months despite the delayed launch.

He said webe, which is on track with its three- to-five year turnaround plan and breakeven target by 2018, is part of its convergence plan and is offered to existing TM customers or TM-based households.