TM sets RM3.4b capital expenditure

Wednesday May 11, 2011


RM2b provisioned for HSBB service expansion

KUALA LUMPUR: Telekom Malaysia Bhd (TM) has earmarked a total of RM3.4bil for its capital expenditure (capex) this year. Of that amount, RM2bil will be used by the national telecommunications provider for the expansion of its high-speed broadband (HSBB) services in the country, while the remainder will be used for its business as usual capex.

“We are on track to meeting our HSBB project target of 1.1 million premises passed covering 78 exchange areas by year-end,” TM chairman Datuk Dr Halim Shafie told the press after the company's AGM.

Halim said the company was targeting to achieve 1.3 million premises passed and 95 exchange areas by the end of next year.

Launched in March 2010, TM's HSBB service, brand named UniFi, is currently available at 66 exchange areas with more than 800,000 premises passed. The total number of UniFi customers nationwide at present stands at 80,000, an increase from 33,000 at the end of 2010.


Datuk Seri Zamzamzairani Mohd Isa (left), Datuk Dr Halim Shafie and group CFO Datuk Bazlan Osman (right) at the press conference.

“We are confident that our UniFi service will continue to see sustainable and impressive growth because there is genuine demand for the HSBB service,” said TM group managing director/CEO Datuk Seri Zamzamzairani Mohd Isa.

He explained that the rapid growth of UniFi hinged not only on the company's aggressive promotional campaigns for the HSBB service, but the word-of-mouth by existing subscribers was also fuelling the growth of the service.

ECM Libra, in its recent note, conceded that TM would likely see more material contribution from its UniFi service next year. The local research house had projected an increase of 35% in the company's earnings per share (EPS) for the financial year (FY) ending Dec 31, 2013, premised on improvement in margins and higher revenue growth driven by the maturity of its HSBB network.

TM posted an impressive performance in FY10, when its net profit rose 85% year-on-year (y-o-y) to RM1.25bil, on revenue of RM8.79bil, which represented an increase of around 2% y-o-y. ECM Libra said data revenue would continue to drive TM's earnings, which was expected to grow at low double-digits this year. It believed the company's EBITDA (earnings before interest, taxes, depreciation and amortisation) margins would be lower this year compared with the preceding year due to the costs of maintaining its two separate networks, while capex would likely peak this year.

Meanwhile, TM also said yesterday it had obtained shareholders' approvals for its proposed final gross dividend of 13.1 sen less tax at 25%, amounting to RM351.5mil, and proposed capital distribution of RM1.04bil cash, or 29 sen per share, for the financial year (FY) ended Dec 31, 2010. The payment was expected to be done by next month.

Last September, TM distributed an interim dividend of 13 sen less tax 25% that amounted to RM348.8mil. Together with the just-approved final dividend and capital distribution, TM's total payout to shareholders for FY10 stood at RM1.74bil.

Analysts commended TM's consistent ability to fulfil its dividend obligation, adding that the company's strong presence in both the retail and wholesale broadband markets, had made the counter even more attractive to investors. TM yesterday gained 10 sen to close at RM4.12, marking a year-to-date gain of 17%.

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