TELEKOM MALAYSIA BERHAD CONNECT COMMUNICATE COLLABORATE
INVEST MALAYSIA 2014
London 1-2 September 2014
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securities and neither this presentation nor anything contained in it shall form the basis of, or be relied on in connection with any contract
or commitment or investment decision.
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the Company or its respective affiliates until the public disclosure of the information contained herein; and (b) you agree to maintain
absolute confidentiality regarding the information disclosed in this presentation until the public disclosure of such information, or unless
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respective officers, directors, employees and agents disclaim any liability (including, without limitation, any liability arising from fault or
negligence) for any loss arising from any use of this presentation or its contents or otherwise arising in connection with it.
This presentation contains projections and “forward-looking statements” relating to the Company’s business and the sectors in which the
Company operates. These forward-looking statements include statements relating to the Company’s performance. These statements
reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. It
is important to note that actual results could differ materially from those anticipated in these forward looking statements. The Company
does not undertake to inform you of any matters or information which may come to light or be brought to the Company’s attention after
the date hereof.
The forecasts and other forward-looking statements set out in this presentation are based on a number of estimates and assumptions
that are subject to business, economic and competitive uncertainties and contingencies, with respect to future business decisions, which
are subject to change and in many cases outside the control of the Company. The directors and officers of the Company believe that
they have prepared the forecasts with due care and attention and consider all best estimates and assumptions when taken as a whole to
be reasonable at the time of preparing the presentation. However, the Company’s forecasts presented in this presentation may vary from
actual financial results, and these variations may be material and, accordingly, neither the Company nor its directors or officers can give
any assurance that the forecast performance in the forecasts or any forward-looking statement contained in this presentation will be
achieved. Details of the forecasts and the assumptions on which they are based are set out in the presentation.
This presentation may not be copied or otherwise reproduced without the written consent of the Company.
Disclaimer
2
3
2
3
•About TM
4
•TM 1H2014 Results Performance
1 •Country & Industry Overview
5
•High Speed Broadband Update
•Business Priorities 2014
6 •Key Updates
Country & Industry Overview as at 1Q2014
* As at 2H2013
4
Total Households in Malaysia =
6.96mn
Cellular penetration rate in Malaysia =
143.7%
Broadband penetration rate in Malaysia =
67.3%
Voice Revenue
22% market share
Fixed Broadband
92% physical market share
Fixed Line
98% physical market share
Data Revenue*
71% market share
Broadband Revenue
29% market share
TM’s Market Share as at 2Q2014
Source: MCMC, Company Financial Results; Group Regulatory & BMI Team Analysis
Market size: RM4.15bn Market size: RM2.53bn Market size: RM1.06bn
Market size: 3.7mn Market size: 2.4mn
Note: Industry figures are forecasted due to unavailability of Q2 2014 MCMC statistics at the point of calculation.
* as at 31 July 2014 •Note : EPF : Employees Provident Fund
Source: Bloomberg ^ For the period 22 April 2008 – 28 August 2014 * For the period 25 April 2008 – 28 August 2014 ** For the period 18 November 2009 – 28 August 2014
YTD Growth
TM Share price: +13.5%
FBMKLCI: +0.5%
Moody’s A3
S&P A-
Fitch A-
RAM AAA
CREDIT RATING
FBMKLCI^ 83.77%
TM^ 340.81%
AXIATA* 49.53%
MAXIS** 80.12%
DIGI^ 258.34%
TM Share Price
28 Aug 2014 : RM6.30
22 April 2008: RM3.05
TOTAL RETURN TO SHAREHOLDERS
SHARE PRICE PERFORMANCE
Authorised Capital :
RM3,528,003,015.00
Issued and Paid-up Capital:
RM2,567,023,489.80
Date of Incorporation:
12 October 1984
Date of Listing:
7 November 1990
Snapshot of TM
Capital Structure
TM Shareholders*
Source : TM Website (www.tm.com.my)
5
Khazanah 28.9%
EPF 14.3% Amanah
Raya 12.1%
Foreign 17.4%
Free Float 27.3%
Malaysia’s leading ISP with >2.2 million broadband
customers
About TM
6
Malaysia’s broadband champion and leading integrated information
and communication company with over 60 years of experience
Malaysia’s premier BPO provider
Malaysia’s largest fixed data provider with
>50% market share
Enhanced global capacity
245 185 214
479 399
2Q13 1Q14 2Q14 1H13 1H14
329 294 345
629 639
2Q13 1Q14 2Q14 1H13 1H14
2,614 2,620 2,822
5,038 5,442
2Q13 1Q14 2Q14 1H13 1H14
RM mn
RM mn
Normalised EBIT
Normalised PATAMI RM mn
Reported PATAMI
Revenue
7
Key 1H2014 Highlights
214
+8.0%
+7.7%
+1.5%
+17.3%
-12.4%
+15.5%
211 214
+8.0%
+4.7%
-16.5%
427 425
RM mn
Data
RM mn
RM mn RM mn
Voice
Others*
Internet 1H14
1H13
RM mn
RM mn
RM5,442mn
RM5,038mn
*Others comprise other telco and non-telco services (i.e ICT-BPO, MMU tuition fees, customer projects)
Strong growth in Internet and Others revenue
+14.0%
+0.1%
8
-4.5%
+2.2%
-2.5% +13.3%
+6.4%
+6.3% +5.0% +28.1%
+34.5%
+29.1%
1H2014 Highlights: Group Total Revenue by Product
1,957 1,983 2,137 3,811 4,120
2Q13 1Q14 2Q14 1H13 1H14
Revenue growth across all lines of business
9
Global & Wholesale
1H14 1H13 RM5,442mn RM5,038mn
* Others comprise revenue from VADS, Property Development, TM R&D, TMIM, UTSB and MKL
Retail
RM mn RM mn RM mn
Others*
Retail (C+S+E+G): 76% Retail (C+S+E+G): 75%
+9.2%
+7.7%
+9.0%
+15.7%
-3.7%
-5.1%
+8.1% +6.6% +9.5%
Retail 75%
Global & Wholesale
16%
Others 9%
Retail 76%
Global & Wholesale
15%
Others 9%
1H2014 Highlights: Group Total Revenue by Lines of Business
20.4 20.6
16.7 16.4
21.8 22.3
11.6 10.9
6.6 6.9
6.2 6.1
3.6 3.20.8 1.7
1H13 1H14
Bad debt
Marketing expenses
Supplies & material
Maintenance cost
Other operating cost
Manpower cost
Direct cost
Dep & Amortisation
350 268
184
158
97
119
1H13 1H14Access Core Network Support System*
RM mn
1H2014 Highlights: CAPEX & OPEX
Business As Usual (BAU) Capex
12.5 10.0
Note: * gross CAPEX
Cost % of Revenue ¹
1 Revenue = Operating Revenue + Other Operating Income
Note: The classification of cost is as per financial reporting
Capex / Revenue (%)
10
RM mn
Total Cost / Revenue ( %)
% of Revenue
RM4,463.8
87.7%
RM4,866.8
88.1%
HSBB Capex
Total Capex
42%
29%
29%
Access Core Network Support System*
56% 29%
15%
Access Core Network Support System*
631 545
*Due to reclassification of long term debt due within the next 12 months to current liability (RM1.5bn)
7,136.7
162.6
8,076.7
4,865.0
1,151.0
1,999.5
51.4
9.8
15,376.0
5,722.2
1,847.7
440.9
2,514.9
918.7
5,770.5
3,172.8
1,590.2
1,007.5
(48.3)
14,572.0
852.3
15,376.0
11
As at 31 Dec 2013
7,458.0
159.4
8,837.6
5,570.6
1,245.3
1,952.1
49.3
20.3
16,455.0
6,958.2
2,594.6
481.6
3,026.8
855.2
5,366.1
2,694.2
1,563.8
1,108.1
1,592.1
14,002.7
860.2
16,455.0
Shareholders’ Funds
Non-Controlling Interests
Deferred & Long Term Liabilities
Long Term Borrowings
Deferred Tax
Deferred Income
Derivative financial liabilities
Other payables
Current Assets
Trade Receivables
Other Receivables
Cash & Bank Balances
Others
Current Liabilities
Trade and Other Payables
Short Term Borrowings
Others
Net Current Assets/(Liabilities)*
Property Plant & Equipment
Other Non-Current Assets
RM Million As at 30 June 2014
1H2014 Highlights: Group Balance Sheet & Key Financial Ratios
30 June 14 31 Dec 13 30 June 14 31 Dec 13Return on Invested Capital 7.21% 7.68% Gross Debt to EBITDA 1.89 1.92
Return on Equity 11.74% 14.80% Net Debt/EBITDA 1.12 1.04
Return on Assets 6.42% 6.27% Gross Debt/ Equity 0.96 0.90
Current Ratio 1.30 0.99 Net Debt/ Equity 0.55 0.55
WACC 7.03% 6.67% Net Assets/Share (sen) 203.4 199.5
30 June 14 31 Dec 13
1
Based on Normalised PATAMI 2
1
31 Dec 13 30 June 14
2
Based on Normalised EBIT 1
JPY denominated
USD denominated
Net adds (in thousand)
In thousand
In thousand
+4.6%
+1.0%
Broadband Customer Growth
Fixed Line Customer Growth
4,370
2,109
Net adds (in thousand)
532
UniFi
12
*Call Usage Only ** Streamyx Net ARPU *** Blended ARPU
ARPU
577
+45 +44
2,153
4,377
In thousand
+30
607
2,184
+31
4,377
2,215
+31 +28
635
4,373
+16.8%
+3.2%
-1.2%
-0.4%
2,230
+15 +18
653
4,338
Continued growth in broadband customers
+21
2,251
+20
673
4,321
ARPU (RM) 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
Fixed Line (DEL)* 31 32 31 33 30 31
Streamyx Broadband** 80 82 83 85 86 85
UniFi*** 178 180 183 185 188 187
Physical Highlights as at 1H2014
High Speed Broadband Update
116 IPTV Channels Wide range of HyppTV packages for home,
business, hospitality and multi-devices
Delivered >1.54mn premises covering 105 exchanges Activated more than 685,000 customers ~44% takeup Gross capex spent todate: RM7.7bn
13
> 1mn or 45% of customers on high speed broadband (4Mbps and above)
Business Priorities 2014 : Game Changing Year
14
MALAYSIA’S BROADBAND CHAMPION
Enabling a digital lifestyle – Life Made Easier, Business Made Easier Innovative offerings across segments Enhanced customer service Expansion of broadband services in under-served areas
INFORMATION & INNOVATION EXCHANGE
Full suite of converged communications services Integrated ICT player Beyond Connectivity
PERFORMANCE IMPROVEMENT PROGRAM 3.0
Continued growth Fundamental productivity shift Institutional health drivers
• Investment Agreement signed on 27 March 2014
• Partnership and collaboration between TM, Green Packet Berhad (“Green Packet”) and SK Telecom Co., Ltd. (“SK Telecom”) to develop and offer a full-suite of converged communications services using the LTE technology platform
• RM350mn capital injection in Packet One Networks (Malaysia) Sdn Bhd (“P1”) for an estimated 57% stake
• In line with a strategy to deliver high quality and reliable data services and expand
wireless broadband capabilities
• Completion expected before end of 3Q2014
Partnership To Develop Malaysia’s Next-Generation Converged Communications Services
15
Key Updates: Malaysia’s Next-Generation Converged Communications Services
… and Accelerate Our Vision to Become Malaysia’s Information & Innovation Exchange
Develop converged services capabilities
Strengthen core fixed business
Leverage on market opportunities
Enhance value of assets
Realise significant synergies
Establish avenues for future growth
Combined base:
~2,000 sites
Valuable spectrum assets
Extensive Fibre network
Extensive customer base
#1 Fixed Line
WiFi # 1 Fixed Broadband
Mobile Data IPTV
16
17
Wireless service via 4G OTT Application
Attractive IPTV Channels and Packages
New Products and Services
Key Updates: Towards Information and Innovation Exchange
THANK YOU
Appendix
19
20
Headline KPI
2014 2016
Revenue Growth
EBIT Growth
Customer Satisfaction Measure
5.0-5.5% 6%
5% 8%
72 72
1 Using TRiM index measuring end to end customer experience at all touch points. TRiM (Measuring, Managing and Monitoring) is a standardized indicator system. It analyzes, measures and portrays stakeholder relationships on the basis of standardized indicators. The TRI*M Index is an indicator of the status quo of a particular relationship. The index is made up of four points of view on the stakeholder relationship, e.g. for customer loyalty: overall rating, recommendation, repeat purchasing of product/services, and a company's competitive advantage. The information is based on surveys/interviews on a sample customer base.”
Telekom Malaysia Berhad ("the Company" or "TM") issues a statement to reiterate its stand on the Company's dividend policy. The
Company’s dividend policy as announced at the time of the demerger between TM and TM International Berhad (TMI) remains
valid. The policy states as follows:
“In determining the dividend payout ratio in respect of any financial year after the Proposed Demerger, our Company intends to
adopt a progressive dividend policy which enables us to provide stable and sustainable dividends to our shareholders while
maintaining an efficient capital structure and ensuring sufficiency of funding for future growth.
Upon completion of the Proposed Demerger, our Company intends to distribute yearly dividends of RM700 million or up to 90% of
our normalised PATAMI, whichever is higher.
Dividends will be paid only if approved by our Board out of funds available for such distribution. The actual amount and timing of
dividend payments will depend upon our level of cash and retained earnings, results of operations, business prospects,
monetization of non-core assets, projected levels of capital expenditure and other investment plans, current and expected
obligations and such other matters as our Board may deem relevant.”
This policy remains unchanged for 2009 and beyond. The Company is currently able to meet this dividend policy, because:
• The Company has sufficient consolidated cash and bank balances of RM1.144 billion as at 30 September 2008, and it is
confident that TMI is able to meet its obligation due to TM of RM4.025 billion by April 2009.
• In the event of a downturn in performance due to unforeseen circumstances, the Company wishes to state that its recurring cash
generation ability is sufficient to meet its current dividend policy.
• TM’s retained earnings is also sufficient to support this current dividend policy in the event of unforeseen shortfalls in normalised
PATAMI.
Given the unprecedented volatility in global markets, the Company will continue to examine the likely impact on its business,
cashflow generation, capital structure and methods in which excess cash beyond the dividend policy and prudent level of cash
required for operations, can be efficiently distributed to our shareholders.
Moving forward, TM is focused on building a strong foundation for its future growth and operational excellence.
TELEKOM MALAYSIA BERHAD (Bursa Malaysia Announcement Reference No TM-081113-37325)
Date Announced :13/11/2008
21
Reiteration of Dividend Policy
22
Return to Shareholders
1,191 1,264
1,012
635
881
1,039
2011 2012 2013PATAMI Normalised PATAMI
3,084
3,233
3,532
3,106 3,196
3,519
2011 2012 2013EBITDA Normalised EBITDA
9,151 9,994
10,629
2011 2012 2013
Group Results 3-Year Performance
PATAMI EBITDA
Revenue
RM mn
RM mn RM mn
33.3%
31.8%
EBITDA Margin
Normalised EBITDA Margin
33.5%
31.6%
32.9%
32.7%
23
EBIT
958
1,187
1,372
980 1,150
1,359
2011 2012 2013EBIT Normalised EBIT
RM mn
2,001 2,372
2,676
2011 2012 2013
2,013 2,205 2,512
2011 2012 2013
3,734 3,706 3,618
2011 2012 2013
Voice Data Internet RM mn RM mn RM mn
2012 2011
Total Revenue by Product
+12.8%
Non-voice Revenue now >65% of Group Revenue
Voice 41%
Data 22%
Internet 22%
Others* 15%
Voice 37%
Data 22%
Internet 24%
Others* 17%
+18.5% +13.9% +9.5% -2.4% -0.7%
24 *”Others” comprise other telco and non-telco services i.e ICT-BPO, MMU tuition fees, customer projects, Yellow Pages
2013
659 781 479
633 645
516
132 228
171
2011 2012 2013Access Core Network Support System*
401 338 269
343 278
129
395
276
299
2011 2012 2013Access Core Network Support System*
23.0 20.1 20.1
16.6 17.0 17.2
20.2 19.9 21.0
11.7 11.6 10.9
6.5 8.5 7.1
6.5 6.3 6.4
4.5 4.2 3.7
0.8 0.6 0.8
2011 2012 2013
Bad Debt
Marketing Expenses
Supplies & Material
Maintenance Cost
Other Operating Cost
Manpower Cost
Direct Cost
Dep & Amortisation
RM mn
Business As Usual (BAU) Capex
HSBB Capex**
12.4 8.9
Note: **gross CAPEX
BAU Capex / Revenue
Cost % of Revenue ¹
1 Revenue = Operating Revenue + Other Operating Income
RM mn
Note: The classification of cost is as per financial reporting
HSBB Capex / Revenue
25
RM mn
Total Cost / Revenue ( %)
RM8,313.2
89.7%
RM8,972.0
88.3%
% of Revenue
CAPEX & OPEX
1,139
892
697
6.6
1,424 1,654
1,166
15.6 16.6 11.0
RM9,378.3
87.2%
*Include Application, Support System & Others (building, land improvement, moveable plants, application & other assets)
4,112 3,876 3,738
237 483 635
2011 2012 2013
DEL UniFi
202
406 530
35
77
105
2011 2012 2013
UniFi Residential UniFi Business
1,686 1,583 1,580
237 483 635
2011 2012 2013
Streamyx UniFi
Broadband and Fixed Line customers
Total Broadband Customers
In thousand
In thousand
1,923
4,349 4,359 4,373
+7.2%
2,066 2,215
Strong broadband growth led by Unifi
Fixed Line Customers
UniFi Customers
In thousand
237
483
635
+7.4%
+0.3% +0.2%
+31.6% +103.8%
26
Any queries please email to : Rohaila Mohamed Basir
Investor Relations Telekom Malaysia Berhad
•Investor Relations • Level 11 (South Wing) • Menara TM •Jln Pantai Baharu •50672 Kuala Lumpur, Malaysia • Tel (603) 2240 4848/ 7366 / 7388