KUALA LUMPUR: Telekom Malaysia Bhd
(TM) may have encountered a bump in its bid to be part of Digital Nasional Bhd (DNB), a special-purpose vehicle for building the country’s first 5G network. However, it is still hopeful of being part of the second 5G network having submitted its interest recently.
“We have submitted our participation in the Applicant Information Package (AIP). The process is now being conducted by the Malaysian Communications and Multimedia Commission (MCMC),” group chief executive officer Amar Huzaimi Md Deris told reporters after a press briefing to announce its first-half results (1H24) ended June 30, 2024 yesterday.
The government has recently directed the MCMC to initiate the process of selecting mobile network operators (MNOs) to develop the country’s second 5G network.
The MCMC had been directed to issue the AIP on July 1 for eligible MNOs to submit their bids to participate in the development of the second 5G network, according to Communications Minister Fahmi Fadzil.
On when the results of the tender for the second 5G network will be known, Amar said: “I have no idea but we are waiting because this is under the purview of the MCMC.
“So far, there is no indication of the outcome yet.”
On Aug 23, TM said an agreement to buy a stake in DNB was terminated, after its request for additional time to seek shareholders’ approval was rejected.
The company asked DNB for an extension in July, which was not approved, and an appeal later was also denied.
Despite the termination, Amar said TM was unperturbed as it continued to support the 5G ecosystem in Malaysia and provide high quality converged digital offerings across various segments of its customers.
“As far as our 5G is concerned, as we have announced, we are still providing 5G services, it’s just that we are not part of the shareholder agreement.
“We are instrumental in wanting to develop the 5G ecosystem for Malaysia. So, even though our appeal and our request has not been approved by DNB, we still are keen to play a major role in terms of developing a 5G ecosystem.
“There are many ways, many roles and ways that we can do that. For example, we are the largest fibre operator in Malaysia.
“So I’m sure there will be a key role for us to support the 5G ecosystem, whether being the first network or also the second network,” Amar explained.
Analysts are generally positive on TM despite the termination.
CGS International Research believes that TM, as the owner of the widest fibre optic network in Malaysia, would be the provider of backhaul capacity for the 5G networks, thus benefiting from the overall growth in 5G data usage in the country.
The research house said TM will still have access to the 5G networks as an access seeker, allowing it to provide 5G services to its enterprise customer base.
Meanwhile, TM posted a lower net profit of RM396.42mil in the second quarter ended June 30, 2024 (2Q24) from RM568.74mil a year ago primarily caused by the one-time recognition of tax losses in the previous year.
Revenue also fell marginally by 1.7% to RM2.91bil in 2Q24 from RM2.96bil a year earlier, mainly due to lower revenue from voice services.
However, Internet and data services revenue continued to show steady growth.
Correspondingly, operating profit before other gains and finance cost declined by 2.7% to RM612.7mil from RM630mil.
TM also declared an interim dividend of 12.5 sen per share, amounting to RM479.7mil, for the half-year ended June 30, 2024 (1H24), an increase from the 9.5 sen per share interim dividend declared in the previous year.
Regarding revenue by customer segments, it said Unifi maintained a steady growth of broadband subscribers in 2Q24 compared to the same quarter last year.
However, a decrease in voice and mobile device revenue resulted in a drop in operating revenue, decreasing by 1.6% to RM1.39bil down from RM1.41bil a year ago.
TM One recorded operating revenue of RM740.6mil in the current quarter, up 4.9%, from RM706.2mil a year ago, due to the one-off revenue recognition related to a recent arbitration settlement.
Due to lower international voice service revenue, its TM Global’s operating revenue declined by 8.6% to RM751.5mil in 2Q24 from RM822.5mil a year earlier.
On prospects, it said TM proactively adapts its business strategy to identify new growth areas for the future while strengthening its core business.
TM has entered into a partnership with Nxera, Singtel’s data centre arm, to build an advanced artificial intelligence-ready data centre in Johor.
This demonstrated the commitment to delivering top-quality data centre solutions, supported by new submarine cables and the expansion of existing data centres, reinforcing TM’s position as the preferred digital hub for the Asean region.
“TM continues to support the 5G ecosystem in Malaysia and provide high-quality converged digital offerings across various segments of our customers.
“We remain confident in achieving our goal of becoming a digital powerhouse by 2030 and maintaining a positive outlook for the year, aligned with our 2024 issued market guidance,” Amar said.
For 1H 2024, TM recorded a lower net profit of RM821.23mil from RM898.83mil a year earlier while revenue stood at RM5.74bil.
The group recorded a 14.5% growth in earnings before interest and tax, reaching RM1.26bil compared to RM1.1bil in the same period last year.
This was driven by continued focus on enhancing operational efficiency and effective cost management, while profit after taxation and minority interests decreased by 8.6% to RM821.2mil a year ago due to a one-off tax credit in 2023.
Amar said it plans to ramp up this investment towards the end of the year, focusing on enhancing its network infrastructure both nationwide and regionally.
This includes the development of new submarine cable systems and the expansion of data centres.
He said the company was committed to a total capital expenditure (capex) of 14% to 18% of its total revenue. In 1H 2024, its capex amounted to RM460mil, representing 8% of total revenue.
