TM subscribers seen upgrading broadband packages – CEO

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KUALA LUMPUR (Apr 30): Telekom Malaysia Bhd (TM) expects its existing high-speed Internet or broadband subscribers to upgrade their packages to capitalise on the company's cheaper offerings.

TM (fundamental: 1; valuation: 1.1) group chief executive officer Tan Sri Zamzamzairani Mohd Isa said customers might be tempted to upgrade their broadband packages as they become more affordable.

Hence, the government's effort to keep broadband access affordable will not have a "very significant" impact on the company's earnings, Zamzamzairani told reporters after TM's annual general meeting here today.

"When we reduce prices of broadband, people tend to think of the downside of the decision but not the upside.

"Lower prices for basic packages would not compress the company's margins. We still expect our earnings before interest and tax and our revenue to grow between 4% and 4.5% this year in line with our headline KPI," he said.

TM will launch two cheaper broadband packages to help the government boost Internet take-up.

The first is a RM38/month 1Mbps package with data usage of up to 1GB. The scheme, which will be available from this June 16, is cheaper than the current RM88/month 1Mbps offering.

The second is the UniFi 10Mbps package at RM179/month, which will be available from this July 15.

The package comes with unlimited broadband access, free fixed telephone calls nationwide and 22 basic HyppTV channels.

The new price compares with the existing UniFi 10Mbps package at RM199/month.

At 2.33pm, TM shares fell eight sen or 1% to RM7.39 for a market capitalisation of RM27.49 billion.

The stock had gained 7% this year, versus the KLCI's 4% rise.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)