This article first appeared in The Edge Financial Daily on August 30, 2017

KUALA LUMPUR: Telekom Malaysia Bhd (TM) is stepping up efforts to generate more sales in the mass market segment in order to fill the gap caused by the decline in revenue from the public sector.

To cultivate earnings growth, TM will consolidate its businesses into three core units.

“The public sector accounts for about 22% of our total revenue and we have seen contraction in government spending, which shows cautious spending on the government’s side.

“We are trying to close that gap left by the decline in government spending, which has forced us to go out and strengthen our other areas, particularly for the private-sector services and mass market,” said TM group chief executive officer Datuk Seri Mohammed Shazalli Ramly, who took over the helm in May.

He revealed yesterday that the telco will roll out the new Perfexe 10 initiative that entails consolidation of its brand portfolio.

“Whatever we are doing in the second half of this year will consolidate our operations on the front line, which will enable three things to happen. Firstly, we will be able to attract more high-quality customers, which will, secondly, allow us to monetise them.

“Once we have that in place, we will run some loyalty programmes to keep them with us. This will set the base for our momentum into 2018,” he said.

Mohammed Shazalli was speaking at yesterday’s media briefing on the group’s financial results for the second quarter ended June 30, 2017 (2QFY17).

TM will be consolidating its mobile, Wi-Fi and fixed line segment under the UniFi brand, under its new Perfexe 10 initiative, which aims to accelerate convergence and digitisation, according to him.

“In essence, the consolidation under UniFi allows a complete convergence of mobile, nomadic and fixed services. At this point, our mobile penetration stands at 5.6% of our household penetration.

“Once this consolidation is done, we expect to grow the penetration rate to more than double of today’s figure,” said Mohammed Shazalli, adding that UniFi will be a highly visible brand in Malaysia in the second half of 2017.

Under the Perfexe 10 initiative, the group will also consolidate its enterprise operations — which include its ICT and data services unit VADS Bhd — to be rebranded as TM One, while its global wholesale operations will be rebranded as TM Global.

He added that the group will be coming up with a host of new products and services within the next month or so to address the goals outlined under the new initiative.

This includes its strategy to expedite its fibre roll-out and expand its reach in its existing investments, which include expanding its network into high-rise developments.

“High-rise developments are not one of our strong fortes. The high-rise market covers two categories of new customers — the house owners and the renters.

“Home renting in [the] Klang Valley is huge, but the ability to get Internet services while renting is limited especially as users do not have a fixed domain. One of the items we will be focusing on when we announce the new products is specifically focused on renters, especially those aged between 25 and 30 years old,” he said.

Besides that, TM is also looking to expand its 4G LTE coverage, which Mohammed Shazalli said will be focused on specific areas, as more than 80% of the major cities in Malaysia are already covered.

The group is also looking to be more aggressive in liberating its 11,000 Wi-Fi access points dotted around the country.

TM reported a 51% year-on-year (y-o-y) growth in net profit to RM210.48 million for 2QFY17, helped by foreign exchange gain on its borrowings, while revenue fell 2% to RM2.98 billion amid a decline in contribution from data, voice and other telecommunication and non-telecommunication related services.

For the first half of the financial year, net profit slid 5% y-o-y to RM440.92 million, while revenue was almost flat at RM5.94 billion compared with RM5.9 billion a year earlier.

The telco’s share price fell three sen to RM6.42 yesterday, with a market capitalisation of RM24.13 billion.