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TELEKOM MALAYSIA BERHAD23rd CLSA INVESTORS’ FORUM
HONG KONG 22-23 SEPTEMBER 2016
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TM Today
Latest Updates
About TM
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ANALOG ERA
DIGITAL TECHNOLOGY
FULL-IP TRANSFORMATION
at the leading edge of telecommunications in Malaysia
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TM TODAY*…
MALAYSIA’S CONVERGENCE CHAMPION
No.1 Broadband provider in Malaysia
2.37mn broadband customers
RM5.9bn revenue as at 1H16, with 5.1% growth
More than 2.22mn HSBB fiber ports
27,800 strong Warga TM
413% Total Shareholder Return since demerger
• As at 30 June 2016• TSR as at 15 September 2016
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Latest Updates
TM 30th AGM 30 April 2015
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Our Vision
Our Brand Values
Refocused PIP3.0
Our Guiding Values & Principles
Realigning our strategy: A refreshed Vision Statement aligned
toward Delivering Convergence and Life/Business
Made Easier
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Realigning our strategy: Going Digital for Life/Business Made
Easier
7 Guiding Principles and 4 Key Programmes to create value
through digitalization
(i) Customer Experience(ii) Process Optimisation(iii)Analytics
and Omni-Channel(iv)New adjacent/digital opportunities
Wave 1: Customer Journey
Improvement 7
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HSBB Phase 2 (HSBB2) and Sub-Urban Broadband (SUBB): Expansion
of high speed broadband coverage
HSBB2• Target: 390,000 ports by end-2017 • Close to 200,000
ports covering 85
exchange areas delivered to date
• Target: 420,000 ports by end-2019• Close to 148,000 ports
covering 103
exchange areas delivered to date
SUBB
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Areas are indicative and not to scale
KUALA TERENGGANU
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KANGAR
ALOR STAR
IPOH
SHAH ALAM
MELAKA
KUANTAN
KUALA LUMPUR
Klang
Valley
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©KOTA KINABALU
KUCHING
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Less populated areas
Zone 2 – SUBB
Zone 1 – HSBB & HSBB2
LEGEND
High economic impact areas
Urban/Semi-urban and rural
Industrial parks/FTZs
SEREMBAN
JOHOR BAHRU
Northern
Corridor
Economic
Region
Iskandar
Malaysia
Zone 3
Zone 3
Zone 3 – USP
HSBB and SUBB deployment areas
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KOTA BHARU
PENANG
State capitals/major towns©
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• webe’s network made commercially available from 30th June 2016
and officially launched on 16th August 2016
• LTE network rollout underway focusing on urban centres
• Public availability later this year
• Fully-digital customer journey
• True data liberation: simple, worry-free, family- and
value-oriented webeplan
start here. go anywhere
webe: TM’s Mobility Centre of Excellence
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Refreshed UniFi Packages with unmatched value
• All price are exclusive of GST• Only applicable through
selected channels• *Limited time offer
RM299*/month
Speed: 100 MbpsQuota: unlimited 24 months contract
FREEVoice Plan
Free 600 Minutes Voice
Calls
HyppTV
Everywhere on 2
devices
Installation &
Activation500MB/day
for TM WiFi
Cordless
Phone
HyppTV
Set-Top-Box (STB)Wireless Modem
COMPLIMENTARY
12 months access 3 months access
ADD-ONS Security & Surveillances Home Gadget Protection
Voice IDD Parental Control
ADVANCE PLAN™ ADVANCE PLAN™
RM229/month Speed: 50 MbpsQuota: unlimited 24 months
contract
RM199/month Speed: 30 MbpsQuota: unlimited 24 months
contract
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Deals! Primetime. Anytime. Everytime.
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6 great reasons to switch to HyppTV:
RM60/month RM50/month RM30/month RM40/month RM30/month
• All price are exclusive of GST
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TM 31st AGM, 28 April 2016
• The Year of Convergence – entry into mobility space•
Aggressive rollout of major projects: HSBB2, SUBB• Focus on new
platforms for growth• Operationally: focus on innovation,
productivity enhancement,
digitalization.
2016 Outlook and Business Priorities
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Revenue Growth 3-3.5% 3.5-4%
3-5%
72 72
1 Using TRI*M index measuring end to end customer experience at
all touch points. TRI*M (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.”
*Note: Headline KPI are for TM Group excluding Webe
Headline KPI
2016
Revenue Growth
EBIT Growth
Customer Satisfaction Measure1
3-3.5%
Maintain as per 2015 RM level
2018
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Capital StructureCredit Rating
Total Return To Shareholders
• Authorised Capital: RM3,528,003,015.00• Issued and Paid-up
Capital: RM2,630,554,376.00• Date of Incorporation: 12 October
1984• Date of Listing: 7 November 1990
72.38%FBMKLCI1
413.19%TM1
22.49%AXIATA2
78.75%MAXIS3
236.79%DIGI1
• A3Moody’s
• A-S&P
• AAARAM
Source: Bloomberg1 For the period 22 April 2008 – 15 September
20162 For the period 25 April 2008 – 15 September 20163 For the
period 18 November 2009 – 15 September 2016 • As at 15 September
2016
• EPF: Employees Provident Fund Board• Amanah Raya Berhad – for
Skim Amanah Saham Bumiputra• KWAP: Kumpulan Wang Persaraan
About TM..
15
24%
14%
5%14%
14%
29%
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212322
140
341462
231 195 168
412 371
2 Q 1 5 1 Q 1 6 2 Q 1 6 1 H 1 5 1 H 1 6
Reported PATAMI
Normalised PATAMI
2,841 2,855 3,045
5,615 5,901
2 Q 1 5 1 Q 1 6 2 Q 1 6 1 H 1 5 1 H 1 6
Revenue
+7.2%
-8.0% (Normalised -13.7%)
RM mn
+6.7%
+0.4% (Normalised -15.7%)
Key 1H 2016 Highlights
Revenue
Normalised EBIT
PATAMI
Note : Unless stated otherwise all figures shall be inclusive of
Webe16
-34.2% (Normalised -27.5%)
-56.7% (Normalised -17.5%)
+5.1%
+2.2% (Normalised +4.4%)
306 280 281
549 561
305 312 263
551 575
2 Q 1 5 1 Q 1 6 2 Q 1 6 1 H 1 5 1 H 1 6
Reported EBIT
Normalised EBIT
RM mn
RM mn
+35.5% (Normalised -10.0%)
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878 849 823
1,732 1,672
2Q15 1Q16 2Q16 1H15 1H16
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Group Total Revenue by Product
Voice
Internet
Note : Unless stated otherwise all figures shall be inclusive of
Webe*Total revenue is after inter-co elimination.
RM mn
RM mn
Data
Others*
*Others comprise other telco and non-telco services (i.e
ICT-BPO, MMU tuition fees, customer projects)
RM mn
RM mn
Voice28%
Internet30%
Data23%
Others*18%
1H16
Voice31%
Internet30%
Data22%
Others*17%
1H15
-6.3%
-3.2%
-3.5%
613 636 715
1,240 1,351
2Q15 1Q16 2Q16 1H15 1H16
+8.9%+16.6%
+12.3%
831 894 905
1,661 1,799
2Q15 1Q16 2Q16 1H15 1H16
+8.3%+8.9%
+1.2%
519 476
603
982 1,079
2Q15 1Q16 2Q16 1H15 1H16
+10.0%+16.3%
+26.8%
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129 129 134
246 262
2Q15 1Q16 2Q16 1H15 1H16
1,069 1,038 1,146
2,096 2,184
2Q15 1Q16 2Q16 1H15 1H16
1,233 1,260 1,272
2,470 2,532
2Q15 1Q16 2Q16 1H15 1H16
Group Total Revenue by Customer Clusters
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+3.2% +2.5%
Mass Market Managed Accounts
+7.2% +4.2%
Note: Unless stated otherwise all figures shall be inclusive of
Webe
RM mn RM mn
+20.2%
Global & Wholesale
+14.8%
Others*
*Others include revenue from Property Development, TM R&D,
TMIM, UTSB, MKL & Webe
+3.9% +6.5%
Mass Market
43%
Managed Accounts
37%
Global & Wholesale
16%
Others*4%
1H16
Mass Market
44%Managed Accounts
37%
Global & Wholesale
14%
Others*4%
1H15
410 429 493
803 922
2Q15 1Q16 2Q16 1H15 1H16
+1.0% +10.4%
+14.9% +3.9%
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1,506 1,501 1,501 1,487 1,465
782 793 839 877 900
2Q15 3Q15 4Q15 1Q16 2Q16
Streamyx UniFi
+3.4%
190
+0.1%
86
Cu
sto
me
rs (
In t
ho
usa
nd
)A
RP
U (
RM
)
UniFi ARPU (Blended) Streamyx Net ARPU
UniFi continues to drive growth, with over 900,000 customers
Total broadband customers at 2.37mn
Unifi ARPU at RM194 and Streamyx ARPU stable at RM89
87
192
89
190
2,288 2,294 2,340 2,364
89
192
Higher take up on new plans drive stronger UniFi ARPU.
2,365
89
194
19
Physical Highlights
Broadband
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RM5,058.2
Total Cost / Revenue ( %)
1 Revenue = Operating Revenue + Other Operating Income
Note: The classification of cost is as per financial
reporting
(Please refer to Appendix for breakdown)
Note : Unless stated otherwise all figures shall be inclusive of
Webe
Cost % of Revenue1
RM2,458.5 RM2,599.7
RM mn
Group Capital Expenditure
1H 2016: CAPEX & OPEX
90.3% 90.9% 90.6%90.3%
RM4,887.4
159 137196
29659
363
382
422
100
120
108
220
1Q16 2Q16 1H15 1H16
Core Network Access Support System
Capex / Revenue ( %)
15.9%12.2%
20.4%11.1%
22.2% 21.9% 21.6% 22.0%
18.8% 19.3% 17.8% 19.1%
21.4% 20.4% 22.2% 20.9%
11.7% 11.7% 11.0% 11.7%
5.9% 6.2% 6.8% 6.0%
6.0% 6.7% 5.9% 6.4%
3.3% 4.1% 3.1% 3.7%1.0% 0.6% 1.9% 0.8%
1Q16 2Q16 1H15 1H16
Bad debt
Marketing Expenses
Supplies & materials
Maintenance
Other operating cost
Manpower
Direct cost
Dep & Amortisation
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21
Group Cash Flow
RM mn 1H16 1H15
Cash & cash equivalent at start 3,510.8 2,975.0
Cashflows from operating activities 933.8 833.4
Cashflows used-in investing activities (1,558.6) (1,016.8)
Capex 619.7 685.7
Cashflows from financing activities (281.7) 56.3
Effect of exchange rate changes (0.3) 0.1
Cash & cash equivalent at end 2,604.0 2,848.0
Free cash-flow (EBITDA – Capex) 1,257.2 1,091.3
Note : Unless stated otherwise all figures shall be inclusive of
Webe
Stable Cashflows with Debt Headroom
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Group Balance Sheet
Note : Unless stated otherwise all figures shall be inclusive of
Webe
RM millionAs at
30 June 2016As at
31 Dec 2015
Shareholders’ Funds 7,694.1 7,780.6
Non-Controlling Interests 237.4 258.1
Deferred & Long Term Liabilities 10,753.2 10,551.8
Long Term Borrowings 7,266.2 7,175.4
Deferred Tax 1,486.9 1,367.6
Deferred Income 1,707.4 1,661.7
Derivative financial instruments 274.5 321.9
Trade and other payables 18.2 25.2
18,648.7 18,590.5
Current Assets 6,459.2 7,297.5
Trade Receivables 2,398.4 2,353.1
Other Receivables 635.4 594.0
Cash & Bank Balances 2,604.6 3,511.6
Others 820.8 838.8
Current Liabilities 4,726.7 5,822.6
Trade and Other Payables 3,286.8 4,367.0
Short Term Borrowings 430.2 408.3
Others 1,009.7 1,047.3
Net Current Assets/(Liabilities) 1,732.5 1,474.9
Property Plant & Equipment 15,019.6 15,186.9
Other Non-Current Assets 1,932.6 1,928.7
18,648.7 18,590.5
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Appendix
23
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10,629
11,235
11,722
FY2013 FY2014 FY2015
Revenue
Revenue EBIT
EBITDA PATAMI
RM mn RM mn
RM mn RM mn
+5.7% +4.3%-5.7% (Normalised +2.0%) -2.9% (Normalised
-10.6%)
+2.9% (Normalised +5.9%) +1.6% (Normalised -1.3%) -17.8%
(Normalised -9.4%) -15.8% (Normalised -4.9%)
Note: Unless stated otherwise, all figures shall be inclusive of
Webe
*Excluding webe: Reported EBIT: RM1.53bn (+13.7%)Norm. EBIT:
RM1.52bn (+6.2%)*Excluding webe:
RM11.52bn (+3.0%)
Group Results: 3-Year Performance
24
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FY2013 FY2014 FY2015
*”Others” comprise other telco and non-telco services i.e
ICT-BPO, MMU tuition fees, customer projects, Yellow Pages
Note: Unless stated otherwise, all figures shall be inclusive of
Webe
30%
23%
29%
19%34%
24%
25%
17%31%
27%
23%
19%
+3.7% +2.5%+11.9% -4.1% +1.1%
+0.6%+18.8%
RM mn RM mn RM mn RM mn
Internet Others*VoiceData
+12.4%
Change in revenue mix: non-voice revenue now 70%
InternetVoice
DataOthers
3-Year Performance: Revenue by Product
25
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Capex & Opex: 3-Year Performance
Total Capex
2,506
Capex / Revenue (%)
*Include Application, Support System & Others (building,
land improvement, moveable plants, application & other
assets)
Cost % of Revenue1
10,588.2
89.4%
RM mn
Total Cost / Revenue ( %)
1 Revenue = Operating Revenue + Other Operating Income
Note: The classification of cost is as per financial
reporting
21.4%
RM mn
9,378.3
87.2%
10,095.1
88.6%
1,863
17.5%
1,836
16.3%
3-Year Performance: Capex & Opex
26
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41%59%
FY2013
1,580 1,502 1,501
635 729839
FY2013 FY2014 FY2015
Streamyx UniFi
In thousand+0.7%
2,3402,215 2,231
+4.9%
Broadband More customers upgrading to high speed packages
Evolving UniFi customer mix: more on 10Mbps or higher
12%
88%
FY2013
Below 4Mbps4Mbps and above
Below 10Mbps10Mbps and above
3-Year Performance: Physical Highlights
27
40%
60%
1H 2016
32%
68%
1H 2016
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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
Reiteration of Dividend Policy
28
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150.9124.2
110.5
89.389.9 90.0
89.9
6.5
5.6
4.03.6
4.7
3.3 3.2
Shareholder Returns (2009-2015)
Dividend Payout Policy of RM700mn or up to 90.0% of Normalised
PATAMI whichever is higher
RM mn
Payout Ratio3
(%)
Net Dividend Yield2
(%)
1 2015 1st Interim Dividend of 9.3 sen per share and 2nd Interim
Dividend of 12.1 sen per share2 Net Dividend Yield based on closing
share price at year end3 Excludes Capital
Distributions/Repayment
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TM Group Debt Profile
TM Group Debt Maturity Profile as at 30 June 2016
RM mn
Note: Sakura-JPY Loan: 0.91375% TMISIS Coupon: 4.87% GTC Loan:
5.60%;
Sakura-USD Loan: 3mthL+0.91% ; MTN 001 Coupon: 4.30%; GTC Loan:
5.30%
MTN 2 Coupon: 4.50%; MTN 4 & MTN 6 Coupon: 4.20%
MTN 8 Coupon: 4.0%; MTN 14 Coupon: 3.95%; MTN 006 Coupon:
4.23%
MTN 17 Coupon: 3.95%; MTN 18 Coupon: 3.93%, Finance Lease
Coupon: 6.23%
MTN 002 Coupon: 4.82%; MTN 003 Coupon 4.738%; MTN 004 & MTN
005 Coupon: 4.55%
Yankee Bond USD: 7.875%; MTN 007 4.88% Tulip USD Sukuk: 3.7%;
GTC Loan: 5.38%
CIDA Loan : 0.00% Fibrecomm Loan RC015 Coupon 3.6%; Deutsche
Loan:2.95%
Webe – RC and Loans Finance Lease Coupon:6.00%; GTC: RC 5.30%,
BO 5.15% & Loans
1 2 3
5
6
5
8
9 10
12
JPY denominatedRM denominatedUSD denominatedCDN denominated
1
2 4 76
98
11
10
12
13
7
3
4
14
14
16
30
15
13
11
18 17
18
17
15
16
Key Financial Ratios
30 Jun 16 31 Dec 15
Return on Invested Capital1 6.09% 6.69%
Return on Equity2 9.57% 11.66%
Return on Assets1 4.81% 5.90%
Current Ratio3 1.37 1.25
WACC 6.83% 7.36%
30 Jun 16 31 Dec 15
Gross Debt to EBITDA 1.92 1.90
Net Debt/EBITDA 1.11 1.02
Gross Debt/Equity 0.94 0.97
Net Debt/Equity 0.61 0.52
Net Assets/Share (sen) 204.7 207.0
1 Based on Normalised EBIT2 Based on Normalised PATAMI
Note : Unless stated otherwise all figures shall be inclusive of
Webe
Fixed93%
Floating7%
Fixed vs Floating
MYR86%
USD14%
Others0%
Currency Mix
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webe mobile plan RM 199/mo
• RM 60 rebate for existing TM/P1 customers = RM 139/mo
• RM 60 rebate for webe-certified devices = RM 79/mo
Additional lines• RM 10 rebate for 2nd family member = RM
69/mo
• RM 20 rebate for 3rd family member = RM 59/mo
• RM 30 rebate for 4th & 5th family member and subsequent
lines = RM 49/mo
webe plan
31
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THANK YOUInvestor Relations
Level 11 (South Wing), Menara TMJalan Pantai Baharu50672 Kuala
Lumpur
MalaysiaTel: (603) 2240 4848/ 7366 / 7388
[email protected]
