KUALA LUMPUR: Telekom Malaysia Bhd (TM) yesterday announced its Broadband Improvement Plan for 2017, which sees the telecommunications company’s home customers in the high speed broadband (HSBB) and sub-urban broadband (SUBB) project areas benefiting from an upgrade in their broadband speed next year.
Under the initiative, the average broadband speeds for residential UniFi customers will be doubled, but for the same price.
TM group chief executive officer Tan Sri Zamzamzairani Mohd Isa said the improvement plan is in line with last Friday’s budget announcement which stated that fixed line broadband service providers will offer services at a higher speed for the same price effective January 2017.
“Eligible customers nationwide will begin enjoying the upgrades in stages, starting from January 2017 onwards. In addition, TM will also be introducing a new greater value broadband package offering for non-UniFi customers next year,” he told a news conference yesterday.
TM chief financial officer Datuk Bazlan Osman said he doesn’t see any impact on the group’s capital expenditure due to additional costs incurred from the upgrades as the infrastructure in TM is well supported by HSSB 2 and SUBB projects.
Bazlan also doesn’t expect the average revenue per user to decline despite the free upgrades in speed as TM expects the overall user experience and added services will be the game changer going forward.
To date, TM has more than 2.37 million broadband customers, of which over 900,000 are UniFi customers. More than 60% of TM’s broadband customers are now on packages of 4Mbps and above, while approximately 68% of UniFi customers are on packages of 10Mbps and above, reflecting the current consumption and behaviour patterns of TM’s customers today.
Kenanga Research analyst Cheow Ming Liang sees the impact on TM’s costs from the upgrade in broadband speed for existing home customers next year will be minimal.
“There will probably be a slight impact from these upgrade plans as a more advanced equipment will be required such as a new router that could cater for higher speed. However, if you look at it, existing UniFi’s customers do not have quota on their current subscription. A higher speed could probably see a slight increase in costs for TM, but the impact would be minimal,” Cheow told The Edge Financial Daily yesterday.
He added that the current take-up rate for the HSSB is only at about 43.3% as of the first half of 2016, indicating that these upgrades will not have a severe impact on TM.
“However, for the financial year ending Dec 31, 2019, there are some uncertainties since the prime minister announced in Budget 2017 that within the next two years, the speed will be doubled and prices will be reduced by half,” Cheow added.
TM shares slipped 1.94% or 13 sen to close at RM6.58 yesterday, with a market capitalisation of RM24.8 billion. Year to date, the stock has fallen by 2.95%.