TM revises KPIs, reduces capex in face of headwinds

KUALA LUMPUR: Telekom Malaysia Bhd (TM), which Tuesday announced a 40% cheaper fixed broadband plan for the B40 segment, has revised its headline key performance indicators (KPIs) for the year amid persistent headwinds.
Acting group CEO Datuk Bazlan Osman (pix) announced that revenue is expected to remain flat or shrink by 1% this year, compared with the 3.5-4% growth guided earlier, while capital expenditure (capex) has been reduced to 20-22% of revenue from the high 20s% guided earlier. Earnings before interest and tax has been maintained at RM1 billion.
The revision of capex will entail reprioritising its network spending and sweating of existing assets, while expanding its coverage efficiently.
Customer satisfaction measure has been reduced to 72 from 74 previously which, Bazlan noted, is still higher than the global average of 68 last year.
"We are currently facing numerous challenges to the business, namely, intensifying competition; increasing business and operating costs; cautious enterprise spending as well as increasing regulatory pressures," he told reporters at a briefing Tuesday.
In announcing its revised KPIs for the year, TM also announced new broadband plans to deliver on the national broadband aspiration, including a new entry level unifi package at 30Mbps for the B40 segment which will cost less than RM100 a month, more than 40% lower than the existing 30Mbps package. Registration for prebooking starts on July 15.
For the M40 and T20 segments, unifi "turbo" plans offering more than double the current broadband speed will be launched. TM will gradually upgrade the speed for all its existing unifi customers at more than double the speed at no extra cost starting Aug 15 while new customers on existing unifi plans before Dec 31 will be upgraded in 2019.
There will also be a special package upgrade for pre-unifi (Streamyx) customers in unifi areas. For those not in unifi areas, TM will continue investing in its network to provide at least the entry level unifi package. More details will be announced next week.
Bazlan said the group has embarked on the fourth wave of its Performance Improvement Programme to address the challenges, including sustaining profitability and potential broadband price revision.
The programme, which stretches from 2018 till 2020, comprises four pillars – revenue uplift, sustained profitability, improved cash flow and increased productivity.
Bazlan said TM will increase the productivity of its 28,000 employees via in-sourcing instead of engaging third parties while headcount has been reduced via natural attrition and retirement, as well as reprioritising or redistribution of work.
TM is also looking to sweat its assets, for example, using excess broadband ports to bring in new customers without having to expand the coverage or increasing the number of ports. It has 1.4 million unifi ports available nationwide.
"In areas where other network service providers or network facility providers have the network, we don't have to build, we can be the access seeker," Bazlan said, adding that it will also review contracts with suppliers and business partners to reduce cost, and pass on the cost savings to customers.
Group CFO Nor Fadhilah Mohd Ali said a portion of its capex is to support customer projects, which will also be reviewed but gave an assurance that the reduced capex will not compromise investment for growth.
She said TM will continue to assess its capital requirements and balance factors such as market conditions with capex and debt requirements.