Global Insight Perspective | |
Significance | TM’s mobile revenues grew by 39.6% year-on-year (y/y) and contributed 50.2% of the group's total revenues in the quarter ending March. |
Implications | The group's strong mobile growth is strengthened by its international operations, particularly Indonesia's PT Excelcomindo (Excelcom). |
Outlook | Having increased its market presence in the region, TM will need to enhance the strengths of each unit to achieve its goal of extracting more of its revenues and earnings from outside its home market. |
TM Group (formerly known as Telekom Malaysia) yesterday posted revenues of 3.788 billion ringgit for the quarter ending March 2006, up 10.9% from the same period in 2005. EBITDA (earnings before interest, tax, depreciation and amortisation) rose by 3.7% y/y to 1.706 billion ringgit, with the EBITDA margin at 45%. Net profit amounted to 518.9 million ringgit, up 38.6% y/y.
Outlook and Implications
Rising Broadband Business: Revenues from fixed businesses (including fixed-line, narrowband and broadband) for the quarter grew by 13.4% y/y to 1.517 billion ringgit, representing 40.1% of the company's total revenues. As the decline in the growth of the fixed-line voice business continues, the broadband business has seen continued growth, with net additions of 260,000 subscribers during the year ending March.
End-March 2005 (mil.) | End-March 2006 (mil.) | % Growth Y/Y | |
Fixed-Line Subscribers | 4.35 | 4.35 | 0 |
- Business | 1.43 | 1.47 | 2.8 |
- Residential | 2.92 | 2.88 | -1.4 |
Narrowband Subscribers | 1.96 | 2.12 | 8.2 |
Broadband Subscribers | 0.3 | 0.56 | 86.7 |
Source: TM | |||
Strong Mobile Growth: Revenues from the mobile business rose by 39.6% y/y to 1.9 billion ringgit, equating to 50.2% of the total revenues. The group's mobile revenues have exceeded fixed revenues since the last quarter of 2005, as a result of strong mobile customer growth strengthened by the group's overseas operations. TM had a total of 22.25 million mobile customers at the end of March, up 82.6% y/y.
Mobile Subscribers | End-March 2005 ('000) | End-March 2006 ('000) | % Growth Y/Y |
Celcom | 5,787 | 7,218 | 24.7 |
Excelcomindo | 3,266 | 8,221 | 151.7 |
Dialog | 1,539 | 2,301 | 49.5 |
Aktel | 1,474 | 3,059 | 107.5 |
MobileOne | - | 1,275 | - |
Casacom | 118 | 177 | 50.0 |
Total | 12,184 | 22,251 | 82.6 |
Source: TM | |||
Expanding International Operations: After much time spent investing in Africa, TM has shifted its focus to Asia in recent years as it searches for promising growth markets and earnings contributions to its financials (see Asia Regional: 5 May 2005: Telekom Malaysia Looks to Asia for Growth). International operations contributed 24.3% of the group's total revenues in the quarter ending March, compared with 9.9% in the same period of 2005. Net profit from international operations accounted for 26.8% of net profit in the same quarter, up from 15.2% a year earlier. The group expects to generate a third of its 2006 net profit from overseas assets. Indonesia and India are set to be the strongest earnings engines of the future, since both present immense opportunities for growth in the mobile segment. Having increased its presence in the region, TM will have to harness the strengths of each unit through efforts such as initial public offerings (IPOs) in order to achieve its goal of extracting more revenues and earnings away from its home market. Following the public debuts of Dialog in Sri Lanka and Excelcom in Indonesia, the group recently said that it was exploring a possible listing of its 49%-owned Indian subsidiary, Spice, which it acquired in March this year.