3Q 2013 RESULTS
ANALYST BRIEFING
28 November 2013
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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
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Disclaimer
Performance Overview
Financial review
Operating highlights
Concluding remarks
3
• Operating revenue growth +9.9% -0.1%* +6.5%
• Normalised EBIT growth +50.6% +6.3% +22.3%
• Reported PBT growth +11.1% +9.5% +1.8%
• Normalised PATAMI growth +32.4% +10.6% +22.6%
Overall positive results
Key Operating Indicators
Key Highlights
Financial Performance
4
• Internet revenue growth +14.1% +7.5% +12.7%
• Data revenue growth +17.0% +4.8% +17.2%
• UniFi customer growth +42.2% +5.2%
• Overall broadband customer growth
+7.7% +1.4%
3Q13 vs
3Q12
3Q13 vs
2Q13
*2Q2013 included disposal of land (RM50.9mn)
YTD Sept 2013 vs
YTD Sept 2012
Performance Overview Financial review Operating highlights
Concluding remarks
5
RMmn
Reported
3Q13 2Q13 % Change
QoQ 3Q12
% Change YoY
YTD13 YTD12 % Change YTD13 vs
YTD12
Revenue 2,610.5 2,613.8 -0.1 2,375.4 +9.9 7,648.9 7,184.2 +6.5
Other Operating Income
32.5 22.5 +44.4 20.5 +58.5 85.7 91.2 -6.0
EBITDA 906.3 860.6 +5.3 751.5 +20.6 2,573.6 2,331.5 +10.4
Depn & Amort. 541.4 530.8 +2.0 529.9 +2.2 1,580.9 1,538.4 +2.8
EBIT 364.9 329.8 +10.6 221.6 +64.7 992.7 793.1 +25.2
Net Finance Cost* 59.5 56.4 +5.5 48.7 +22.2 165.5 137.2 +20.6
FX (Gain) / Loss 43.8 34.1 -28.4 (64.8) >-100.0 96.5 (68.0) >-100.0
Profit Before Tax (PBT) 264.9 241.9 +9.5 238.5 +11.1 736.3 723.4 +1.8
PATAMI 240.9 213.9 +12.6 301.4 -20.1 668.0 900.5 -25.8
Normalised PATAMI 270.3 244.5 +10.6 204.1 +32.4 748.8 610.6 +22.6
Note: For Normalised EBIT and Normalised PATAMI refer Slides 7 and 8 •Excludes FX (Gain )/Loss
Group Results YTD Sept 2013 & 3Q2013
6
Healthy growth of operating profit due to higher operating revenue
Normalised EBIT
In RM mn 3Q13 2Q13 3Q12 YTD13 YTD12
Reported EBIT 364.9 329.8 221.6 992.7 793.1
Non Operational
Loss on Sale of Assets 0.2 0.2 - 0.5 0.4
FX (Gain)/Loss on International trade settlement (15.1) (0.7) 10.8 (13.8) 7.5
Normalised EBIT 350.0 329.3 232.4 979.4 801.0
Normalised EBIT Margin 13.2% 12.5% 9.7% 12.7% 11.0%
Reported EBIT Margin 13.8% 12.5% 9.2% 12.8% 10.9%
EBIT is calculated as Total Revenue (Operating Revenue + Oth. Operating Income) less Total Cost EBIT Margin is calculated as percentage of EBIT against Total Revenue Normalised EBIT Margin is calculated as percentage of Normalised EBIT against Normalised Total Revenue (Operating Revenue + Oth. Operating Income – Loss on Sale of Assets)
7
Normalised EBIT higher by 22.3% vs. YTD Sept 2012
Normalised PATAMI
In RM mn 3Q13 2Q13 3Q12 YTD13 YTD12
Reported PATAMI 240.9 213.9 301.4 668.0 900.5
Non Operational
Loss on Sale of Assets 0.2 0.2 - 0.5 0.4
FX (Gain)/Loss on International trade settlement (15.1) (0.7) 10.8 (13.8) 7.5
Other (Gain)/Losses* 0.5 (3.0) (0.8) (2.4) 0.2
Unrealised FX (Gain)/Loss on Long Term loans
43.8 34.1 (64.8) 96.5 (68.0)
Tax Incentives - - (42.5) - (230.0)
Normalised PATAMI** 270.3 244.5 204.1 748.8 610.6
8
*Comprise of fair value (FV) changes of FVTPL (FV through P&L) investment gain/loss on disposal for AFS (available for sale) investments. **Current year tax incentives: YTD Sept 13: RM162.8mil (HSBB), YTD Sept 12: RM128.4mil [RM47.1mil (last mile), RM81.3mil (HSBB)], 3Q13: RM55.6mil (HSBB), 3Q12: RM40.7mil [RM7.2mil (last mile), RM33.5mil (HSBB)]
Normalised PATAMI 22.6% higher vs. YTD Sept 2012
21.1 20.4
17.6 17.2
19.5 21.3
11.3 11.1
8.2 6.6
6.2 6.2
4.3 3.5
0.9 0.8
YTD 12 YTD 13
Bad Debt
Marketing Expenses
Supplies & material
Maintenance Cost
Other operating cost
Manpower cost
Direct cost
Dep & Amortisation
Revenue = Operating Revenue + Other Operating Income
Cost % of Revenue1
Note: The classification of cost is as per financial reporting
(Please refer to Appendix for quarterly details & breakdown)
Cost/revenue ratio continues to improve
1
RM mn RM mn
Total Cost / Revenue ( %)
RM6,482.3
89.1%
RM6,741.9
87.2%
% of Revenue
YTD Sept 2013 vs. YTD Sept 2012
•Higher Manpower cost due to higher salaries and staff benefits (new Collective Agreement) •Lower Marketing cost due to lower A&P activities •Lower Maintenance cost due to lower customer projects
9
709 523
466
383
244
202
0
200
400
600
800
1000
1200
1400
1600
YTD12 YTD13
Access Core Network Support System*
187 170
114 70
106
116
0
70
140
210
280
350
420
YTD12 YTD13 Access Core Network Support System*
522 353
352
313
138
86
0
200
400
600
800
1000
1200
YTD12 YTD13
Access Core Network Support System*
Improved capex/revenue ratio Group Capital Expenditure
** Gross capex to be shared with Government equally up to RM4.8bn (fully paid as at July 2012) Note: Government coinvestment treated as deferred income, to be amortised progressively to match against the depreciation of assets
*Include Application, Support System & Others (building, land improvement, moveable plants, application & other assets)
HSBB Capex**
Note : BAU – Business As Usual
RM mn
1,419
1,012
19.8
BAU Capex
407
5.7
Capex / Revenue ( %)
752
356
4.7
1,108
14.5
9.8 14.1
Total Capex
10
30 Sept 13 31 Dec 12 30 Sept 13 31 Dec 12Return on Invested Capital 7.21% 6.67% Gross Debt to EBITDA 2.20 2.10
Return on Equity 14.62% 12.31% Net Debt/EBITDA 1.19 0.87
Return on Assets 5.91% 5.17% Gross Debt/ Equity 1.18 1.04
Current Ratio 0.93 1.03 Net Debt/ Equity 0.71 0.49
WACC 6.10% 6.10% Net Assets/Share (sen) 188.9 192.7
30 Sept 13
Group Cash Flow & Key Financial Ratios
31 Dec 12
RM mn YTD Sept 13 YTD Sept 12
Cash & cash equivalent at start 3,738.3 4,212.6
Cashflows from operating activities 1,034.7 1,335.1
Cashflows used-in investing activities (1,464.5) (1,415.9)
Capex* 1,108.0 1,277.0
Cashflows used-in financing activities (128.7) (1,418.6)
Effect of exchange rate changes (2.1) 1.4
Cash & cash equivalent at end 3,177.7 2,714.6
Free cash-flow (EBITDA – Capex) 1,465.6 1,054.5
31 Dec 12 30 Sept 13
11
*net of HSBB grant received from government (YTD Sept 2012 – RM142.0mn, YTD Sept 2013 - nil)
Cash balance at RM3.18bn, ROIC continues to improve
3
3 Includes reclassification of long term debt due within the next 12 months to current liabilities (RM3.5bn)
Based on Normalised EBIT Based on Normalised PATAMI
1
1
2
2 1
Performance Overview
Financial review
Operating highlights
Concluding remarks
12
326 433 398
1,081 1,150
3Q12 2Q13 3Q13 YTD12 YTD13
543 606 635 1,558 1,826
3Q12 2Q13 3Q13 YTD12 YTD13
601 638 686 1,746
1,967
3Q12 2Q13 3Q13 YTD12 YTD13
905 936 892 2,799 2,706
3Q12 2Q13 3Q13 YTD12 YTD13
Voice 39%
Data 22%
Internet 24%
Others 15%
Voice 35%
Data 24%
Internet 26%
Others 15%
Group Total Revenue by Product
Data
RM mn
RM mn RM mn
Voice*
Others**
Internet* YTD13
YTD12
RM mn RM mn
RM mn
RM7,649mn
RM7,184mn
* 2Q13: Reclassification between Voice and Internet of RM30mn **Others comprise other telco and non-telco services (i.e ICT-BPO, MMU tuition fees, customer projects)
-1.4%
-4.7%
Sustained Internet and Data growth
-3.3% +14.1%
+7.5%
+12.7%
+17.0%
+4.8%
+17.2% +22.1%
-8.1%
+6.4%
13
Retail 75%
Global & Wholesale
17%
Others 8%
Retail 75%
Global & Wholesale
16%
Others 9%
1,788 1,957 1,947 5,419
5,757
3Q12 2Q13 3Q13 YTD12 YTD13
201 244 222
572 664
3Q12 2Q13 3Q13 YTD12 YTD13
386 412 442
1,193 1,228
3Q12 2Q13 3Q13 YTD12 YTD13
Global & Wholesale
Group Total Revenue by Line of Business
YTD13 YTD12 RM7,649mn RM7,184mn
* Others comprise revenue from VADS (reclassified from retail), Property Development, TM R&D, TMIM, UTSB and MKL
Retail
RM mn RM mn RM mn
Others*
Retail (C+S+E+G): 75% Retail (C+S+E+G): 75%
+8.9%
-0.5%
Positive growth across all segments vs. YTD Sept 2012
+6.2% +14.5%
+7.3%
+2.9% +10.4%
-9.0%
+16.1%
14
2,524 2,468 2,429 2,390 2,364 2,337 2,317
1,526 1,509 1,497 1,486 1,474 1,463 1,453
316 384 427 483 532 577 607
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13
Fixed Line Residential Fixed Line Business UniFi
1,356 1,330 1,309 1,296 1,292 1,291 1,290
302 297 292 287 285 285 287
316 384 427 483 532 577 607
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13
Streamyx Residential Streamyx Business UniFi
269 325 359 406 448 484 509 46
58 68
77 84
93 98
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13
UniFi Residential UniFi Business
Net adds (in thousand)
In thousand
In thousand
+7.7%
+1.4%
Physical Highlights
Broadband Customer Growth
Fixed Line Customer Growth
+43
4,370
2,109 1,974
4,366
+0.6%
+0.0%
+5.2%
Net adds (in thousand)
+42.2%
532
316
UniFi
+37
2,011
+49
+68
384
4,361
2,028
427
+43
+17
4,353
Improved broadband ARPU; Healthy takeup in broadband – 42% Unifi takeup rate
2,066
+38 +56
483
4,359
15
*Call Usage Only ** Streamyx Net ARPU *** Blended ARPU
ARPU (RM) 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13
Fixed Line (DEL)* 34 35 34 32 31 32 31
Streamyx Broadband** 79 79 80 81 80 82 83
UniFi*** 181 178 181 181 178 180 183
ARPU
577
+45 +44
2,153
4,377
In thousand
+30
607 2,184
+31
4,377
Performance Overview
Financial review
Operating highlights
Concluding remarks
16
Key Takeaways
Financial Performance
• TM Group operating revenue up by 6.5% vs. YTD
Sept 2012
• Normalised EBIT growth 22.3% to RM979.4mn
• Normalised PATAMI grew by 22.6% to RM748.8mn
• Total Capex / Revenue ratio improved to 14.5%
• Cost /Revenue ratio improved to 87.2%
Broadband Champion
• Unifi remains strong: 607,000 customers as at 3Q2013,
more than 620,000 at present
• Good takeup of high speed broadband in non-Unifi
areas (Streamyx 4 & 8 Mbps); increased by 12.5% QoQ
• Healthy HyppTV content takeup, stronger offering
with new channels offered in 3Q2013
17
Appendices
Normalised EBITDA
In RM mn 3Q13 2Q13 3Q12 YTD13 YTD12
Reported EBITDA 906.3 860.6 751.5 2,573.6 2,331.5
Non Operational
Loss on Sale of Assets 0.2 0.2 - 0.5 0.4
FX (Gain)/Loss on International trade settlement (15.1) (0.7) 10.8 (13.8) 7.5
Normalised EBITDA 891.4 860.1 762.3 2,560.3 2,339.4
Normalised EBITDA Margin 33.7% 32.6% 31.8% 33.1% 32.2%
Reported EBITDA Margin 34.3% 32.6% 31.4% 33.3% 32.0%
EBITDA is calculated as Total Revenue (Operating Revenue + Oth. Operating Income) less Operating Cost (Exc. Depreciation, Amortisation & Impairment). EBITDA Margin is calculated as percentage of EBITDA against Total Revenue Normalised EBITDA Margin is calculated as percentage of Normalised EBITDA against Normalised Total Revenue (Operating Revenue + Oth. Operating Income – Loss on Sale of Assets)
Normalised EBITDA higher by 9.4% vs. YTD2012
19
3Q13 2Q13 3Q12 YTD13 YTD12
Comments (YTD2013 vs. YTD2012)
Operating Revenue (RM mil) 2,610.5 2,613.8 2,375.4 7,648.9 7,184.2 -
Other Operating Income (RM mil)
32.5 22.5 20.5 85.7 91.2 -
Direct Costs % 18.4 15.9 17.8 17.2 17.6 Higher absolute cost due to higher leased charges and content cost but lower as percentage of revenue RM mil. 485.5 417.9 425.3 1,333.4 1,282.3
Manpower % 20.3 21.2 19.7 21.3 19.5 Higher salaries due to RTP, and staff benefits RM mil. 536.7 558.1 470.8 1,646.0 1,419.8
Supplies & Materials % 6.3 6.7 7.2 6.2 6.2 Higher absolute cost due to higher materials cost for ICT projects, equipment, cable cost RM mil. 167.5 176.7 171.9 480.9 448.7
Bad & Doubtful Debts % 0.8 0.4 0.1 0.8 0.9 -
RM mil. 21.6 9.7 2.9 62.7 67.6
Marketing Expenses % 3.2 3.9 4.6 3.5 4.3 Lower A&P and dealers’ commission
RM mil. 84.4 103.0 109.5 268.4 310.0
Maintenance Cost % 6.5 7.2 7.4 6.6 8.2 Lower maintenance due to lower customer projects, ie at TM Govt RM mil. 172.6 189.0 176.2 508.7 593.6
Other Operating Costs % 10.2 12.2 12.0 11.1 11.3 Higher absolute cost due to higher international services at ITNT and cost of disposal of Ijok land but lower as percentage of revenue
RM mil. 268.4 321.3 287.8 860.9 821.9
Depreciation & Amortisation % 20.5 20.1 22.1 20.4 21.1 Higher absolute cost due to higher asset base but lower as percentage of revenue RM mil. 541.4 530.8 529.9 1,580.9 1,538.4
Total (RM mil) 2,278.1 2,306.5 2,174.3 6,741.9 6,482.3 -
Total (%) 86.2 87.5 90.8 87.2 89.1 -
Cost % of Revenue
20
6,894.8
165.2
8,513.7
5,130.2
1,202.6
2,129.4
51.5
15,573.7
6,808.8
1,740.9
466.1
3,738.7
863.1
6,622.2
3,545.5
2,010.2
1,066.5
186.6
14,637.6
749.5
15,573.7
As at 31 Dec 2012
6,758.8
151.8
7,661.9
4,400.5
1,191.6
2,029.7
40.1
14,572.5
6,965.2
2,357.0
512.0
3,178.1
918.1
7,458.9
2,611.5
3,574.0
1,273.4
(493.7)
14,246.1
820.1
14,572.5
Shareholders’ Funds
Non-Controlling Interests
Deferred & Long Term Liabilities
Long Term Borrowings
Deferred Tax
Deferred Income
Derivative financial liabilities
Current Assets
Trade Receivables
Other Receivables
Cash & Bank Balances
Others
Current Liabilities
Trade and Other Payables
Short Term Borrowings
Others
Net Current (Liabilities)/Assets*
Property Plant & Equipment
Other Non-Current Assets
RM Million As at 30 Sept 2013
Group Balance Sheet
21
*Due to reclassification of long term debt due within the next 12 months to current liability (RM1.5bn)
745 774 730 2,273 2,231
339 388 385
964 1,156 599 636 684
1,734 1,963
120 167 156
479 435
3Q12 2Q13 3Q13 YTD12 YTD13
Others
Internet
Data
Voice
RETAIL
RM mn -0.5%
+8.9%
1,947 1,957 1,788
Revenue by Product
5,757 5,419
+6.2%
22
162 163 164 537 481
252 266 307
737 820 20 32
28
69 79
3Q12 2Q13 3Q13 YTD12 YTD13
Others
Data
Voice
Others : Include internet
Note: Total revenue is after inter-co elimination. Revenue by product is before inter-co elimination
Revenue by Product
386 412 442
1,193 1,228
RM mn +7.3%
+14.5% +2.9%
GLOBAL & WHOLESALE
THANK YOU Any queries please email to : [email protected]
•Investor Relations • Level 11 (South Wing) •Menara TM •JlnPantaiBharu •50672 Kuala Lumpur, Malaysia • Tel (603) 2240 4848/ 7366 / 7388