This article first appeared in The Edge Financial Daily on May 23, 2018

KUALA LUMPUR: Telekom Malaysia Bhd’s (TM) first quarter net profit fell 32% year-on-year (y-o-y) to RM157.16 million from RM230.43 million, as a decline in voice, data and other telecommunication-related services led to a drop in group revenue.

Following the release of its quarterly results, the group’s share price fell 50 sen or nearly 11% to RM4.20 yesterday, after 11.78 million shares were done. At the current price, TM has a market capitalisation of RM17.32 billion. The stock is down 33% y-o-y.

In a statement to Bursa Malaysia, TM said its revenue for the three months ended March 31, 2018 (1QFY18) dropped to RM2.85 billion, from RM2.96 billion.

“Group revenue decreased 3.9% (or RM116.6 million) to RM2.848 billion, from RM2.965 billion in the same quarter last year, due to a decline in voice, data and other telecommunication-related services. This led to a 35.2% (RM105.2 million) decrease in operating profit before finance cost, from RM299.1 million in the first quarter of 2017 to RM193.9 million.

“Group profit after tax and non-controlling interests decreased 31.8% (RM73.3 million), from RM230.4 million to RM157.1 million, despite a higher foreign exchange gain on the group’s borrowings in the current quarter, compared with that in the corresponding quarter of 2017,” TM said.

TM group chief executive officer Datuk Seri Mohammed Shazalli Ramly said the group saw challenges across its customer clusters in 1QFY18, affecting its performance.

“For the rest of this year, we remain guided by our two key strategic thrusts — to accelerate convergence and empower digital via our PERFEXE 10 approach. This will enable us to further accelerate broadband connectivity, convergence and the digital economy. We will continue with our investments for long-term growth, in line with our expansion plans but will also ensure that we fully sweat our existing assets,” he said.