KUALA LUMPUR (Nov 25): Telekom Malaysia Bhd's net profit for the third financial quarter ended Sept 30, 2016 (3QFY16) fell 4.2% year-on-year to RM159.84 million or 4.25 sen per share from RM166.87 million or 4.44 sen per share, weighed by higher operating costs and foreign exchange losses. 

In a filing with Bursa Malaysia today, the country's largest telecommunication services provider said the higher operating costs arose from accelerated depreciation of WiMAX assets and write-off of dismantled sites.

"There were also minimal foreign exchange losses on international settlement in the current quarter compared to a significant net gain in corresponding quarter last year," it explained. 

Revenue for the quarter was flat at RM2.92 billion as reduction in voice and data services partially offset higher revenue from internet and multimedia, other telecommunication related services and non-telecommunication related services. 

It did not declare any dividend for the quarter.

Net profit for the nine-month period ended Sept 30, 2016 (9MFY16) gained 22.4% to RM621.73 million or 16.54 sen per share from RM507.85 million or 13.6 sen per share mainly due to foreign exchange gains from the group's borrowings arising from the strengthening ringgit against U.S. dollar over the current period.

Cumulative revenue was up 3.3% at RM8.82 billion from RM8.54 billion due to higher revenue from internet and multimedia, non-telecommunications related services, other telecommunication related services and data. 

In a separate statement filed on Bursa Malaysia, TM said total capital expenditure (capex) up to Sept 30, 2016 was RM1.65 billion or 18.7% of revenue, with spending during 3QFY16 at RM715 million. 

"The higher capex is in line with the expansion of major projects, whilst higher year-to-date cost as a percentage of revenue is in line with higher revenue and launch of new products and services," it explained. 

Commenting on TM's financial performance, its group chief executive officer Tan Sri Zamzamzairani Mohd Isa said the group remained resilient over the first nine months of the year despite an overall challenging environment.

"Our LTE (long term evolution) service, Webe, is now officially operational and still has an impact on our financial performance on account of the costs associated with the LTE rollout and Webe’s initial operations," he added. 

Operationally, he shared that TM recorded a 3.3% increase in total broadband customers year to date, from 2.29 million to 2.37 million, with UniFi continuing to drive growth with over 921,000 customers in total.

"I’m also pleased to note that to date more than 62% of our broadband customers are currently subscribing to packages of 4Mbps and above," he said, adding 75% of UniFi customers are now on packages 10Mbps and above.

"Strong traction from upselling activities as well as higher purchase of premium IPTV content have also driven stronger broadband average revenue per user (ARPU)," he added. 

Moving forward, TM said it will introduce a new greater value broadband package offering for non-UniFi customers in 2017 on top of its broadband improvement plan initiative which will be implemented next year.

"This is testament to our commitment to drive broadband reach and adoption nationwide, providing unlimited experiences, unmatched choices and unbeatable value for everyone," said Zamzamzairani

He also shared that the group has inked several agreements with property developers to strengthen the existing telecommunication and information communication and technology (ICT) infrastructure for their developmental projects.

"The company will continue to boost its efforts to offer relevant fixed and mobile connectivity services, ICT and smart services solutions," he added. 

Shares in TM were not traded today. It last closed at RM6.29, for a market value of RM23.64 billion.