TM confident it can deliver stronger FY19 earnings

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KUALA LUMPUR (Aug 28): Telekom Malaysia Bhd is confident it can deliver stronger earnings for the financial year ending Dec 31, 2019 (FY19) after posting a 12% year-on-year (y-o-y) increase in profit in the second quarter of FY19 (2QFY19).

At a press conference to announce its results for the fist half of FY19 (1HFY19), TM CEO Datuk Noor Kamarul Anuar Nuruddin said he was bullish about the long term. "For the short term, our earnings will be within guidance, for the [long-term] future I am bullish. It is possible for us as we improve our mobile offerings, and once we do that there is a high possibility that our earnings can grow further."

He said the bulk of revenue comes from its fixed line services and that TM would be bolstering its mobile connectivity.

In 1HFY19, the telco spent RM450 million or the equivalent of 8% of its revenue on capital expenditure (capex), with 19% on core network, 54% on access and 27% on support systems.

Chief financial officer (CFO) Nor Fadilah Mohd Ali said the group expects to spend 18% of its FY19 revenue as capex this year as its investments would include improving access, and customer experience, as well as providing smart solutions.

Noor Kamarul said the sale of its Annexe 1 and Annexe 2 buildings was still a work in progress.

He also said TM welcomes competition from Tenaga Nasional Bhd (TNB) in setting up its own fibre network, and that it would discuss the possibility of collaborating.

The group said the year-to-date (YTD) convergence penetration of TM households increased by 56%, with broadband customers numbering more that 2.16 million subscribers. The group defines convergence penetration as a household using at least three or more of its products.

For 2QFY19, net profit rose 12% y-o-y to RM114.18 million, from RM101.93 million before — translating into higher earnings per share of 3.04 sen versus 2.71 sen previously.

Revenue declined 6% to RM2.77 billion against RM2.94 billion last year on account of a decline in voice, Internet and multimedia services, other telecommunication related as well as non-telecommunication related services.

"We continued to face challenges in 1HFY19. However, our cost optimisation efforts continue to show results and we will keep the momentum on profitability going. We shall navigate the challenges on revenue through a stronger focus on customers. We will also continue to serve as a strategic partner of the National Fiberisation Connectivity Plan (NFCP) backed by our solid network infrastructure," said Noor Kamarul.

See also: TM's 2Q net profit improves 12% on lower operating costs