This article first appeared in The Edge Financial Daily on July 4, 2018

KUALA LUMPUR: Telekom Malaysia Bhd (TM) may be ending its financial year 2018 (FY18) with the first slowdown in annual revenue growth since 2009, as the management slashes its key performance indicators (KPIs) amid a challenging environment.

In a statement yesterday, the group projected a decline of 1% to flat revenue growth for FY18, while it set earnings before interest and taxes (Ebit) growth at about RM1 billion, which would be its lowest in eight years. The original KPI for FY18 revenue growth was 3.5% to 4%, while Ebit growth was expected to match the FY17 level of about RM1.1 billion. TM also revised downwards its customer satisfaction measure to 72 from 74.

The telecommunication services provider plans to cut capital expenditure to between 20% and 22% of revenue compared with the high 20% it had targeted earlier this year. “We are currently facing numerous challenges to the business — intensifying competition, increasing business and operating costs, cautious enterprise spending as well as increasing regulatory pressures,” TM acting chief executive officer Datuk Bazlan Ozman told reporters at a briefing yesterday.

TM executive vice president of Unifi Imri Mokhtar said the group would strive to preserve margins and protect shareholders’ interests via cost-cutting. “We will strike a balance between [offering] affordable products and margins,” Imri said.

As such, TM would reprioritise its network spending and the “sweating” of its existing assets, including 1.4 million of its ports nationwide currently underutilised. The group is also considering seeking access to existing networks and increasing productivity of its workforce as well as insourcing certain processes, Bazlan added.

Concerns about TM’s profitability were raised after new Communication and Multimedia Minister Gobind Singh Deo said broadband users should expect prices to fall 25% by year end, following the implementation of the Mandatory Standard on Access Pricing by the Malaysian Communications and Multimedia Commission.

While TM said the government has not given any official directive to reduce broadband prices, it expects to be able to lower prices beyond the stated 25%. “We can do more than that. What’s important is we keep customers,” Bazlan said. TM also said it would be implementing its performance improvement programme 2018, focusing on uplifting revenue, sustaining profitability, improving cash flow and increasing productivity.

The group unveiled new broadband plans yesterday, including an affordable entry-level Unifi package of 30Mbps for under RM100, targeting the bottom 40% (B40) segment, and Unifi “turbo” plans offering more than double the current broadband speed for the middle 40% (M40) segment. TM will also offer a special package upgrade for pre-Unifi customers using the Streamyx service, and relaunch an unlimited Unifi mobile postpaid plan. It said registration for pre-booking of the plans starts on July 15 this year, with more details to be revealed before the launch.