1h 2011 results analyst briefing - tm · 2q11 vs 1q11 5 operating revenue increased by 4% qoq and...
TRANSCRIPT
1H 2011 RESULTS
ANALYST BRIEFING
24 August 2011
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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 TM.
Disclaimer
Performance Overview
Financial review
Operating highlights
Concluding remarks
3
Key Highlights 1H 2011
4
Unifi takeup continued to exceed expectations – 12% takeup
Normalised EBITDA margin improved by 0.9pp to 33.7%
Revenue up by 2.5% to RM4,381.8mn compared to 1H2010 propelled by continued growth in Internet and Data
Normalised PATAMI up by 29.4% to RM257.5mn
Key Operating Indicators
Key Highlights 2Q 2011
Financial Performance
Improved QoQ and YoY performance
2Q11 vs1Q11
5
Operating revenue increased by 4% QoQ and 3.8% YoY to RM2,233.6mn in 2Q11 from higher contribution from data and internet & multimedia
EBITDA for 2Q11 up 2.2% QoQ and 8.8% YoY to RM746.9mn, Normalised EBITDA up 5.3% QoQ and 10.4% YoY to RM768.0mn
Reported PATAMI up 2.3% YoY to RM127.2mn, Normalised PATAMI up 10.5% QoQ and 20.8% YoY to RM135.2mn
Streamyx customers continued to grow by 11.7% YoY
Unifi takeup increased from 63,541 to 109,019 customers on the back of 904,000 premises passed
2Q11 vs2Q10
Note: changes are on Normalised basis
0.3
2.7
7.0
24.7%
10.9%
1.11.21.4
Cash Balance (RM bn) 2.1 3.5 3.5
2008
Capital Expenditure, excluding HSBB(RM bn)
Our capital management approach is guided by two major principles :
Striving to optimize capital productivity and ROIC
Creating shareholder value with strong commitment to dividend policy
1 TRS: Source Bloomberg2 After capital distribution and final dividend3 Normalised EBIT / Total Revenue
16.7 14.1
2009 2010
12.8
Focus on Shareholder Value CreationGrowing enterprise value through improving return on capital
1Total Return to Shareholder (TRS)
7.7% 42.9% 24.0%
EBIT Margin 10.8%10.9% 10.6%3
Capex / Revenue ratio( %)
6
2
1H11
Performance Overview
Financial review
Operating highlights
Concluding remarks
7
Note: EBITDA Margin is calculated as percentage of EBITDA against Revenue + Other Operating Income* Excludes FX (Gain )/Loss
RMmn
ReportedComments
(1H11 vs 1H10)
2Q11 1Q11% Change
QoQ2Q10
% Change YoY
1H11 1H10% Change1H11 vs
1H10
Revenue 2,233.6 2,148.2 +4.0 2,150.9 +3.8 4,381.8 4,275.8 +2.5Continued higher data and internet revenue
Other Operating Income
34.8 21.3 +63.4 29.6 +17.6 56.1 60.5 -7.3Lower due lower gain on sale of assets and sale of scrap
EBITDA 746.9 730.9 +2.2 686.2 +8.8 1,477.8 1,406.2 +5.1Higher YoY due to higher revenue and lower operating cost.
EBITDA margin 32.9% 33.7% -0.8pp 31.5% +1.4pp 33.3% 32.4% +0.9pp-
Normalised EBITDA 768.0 729.0 +5.3 695.5 +10.4 1,497.0 1,421.6 +5.3 -
Normalised EBITDA Margin
33.9% 33.6% +0.3pp 31.9% +2.0pp 33.7% 32.8% +0.9pp -
Depn & Amort. 511.4 500.0 +2.3 477.5 +7.1 1,011.4 934.3 +8.3Higher due to higher asset base and new asset additions
Net Finance Cost* 41.0 42.7 -4.0 63.6 -35.5 83.7 135.9 -38.4Higher interest income and lower interest expense
FX (Gain) / Loss (11.1) (38.4) -71.1 (23.0) -51.7 (49.5) (180.5) -72.6
RM continued to strengthen vs. USD by 6.7% [USD1:RM3.24 at June 2010; USD 1: RM3.02 at June 2011]
Profit Before Tax 207.1 227.3 -8.9 166.9 +24.1 434.4 519.5 -16.4
PATAMI 127.2 163.3 -22.1 124.4 +2.3 290.5 367.3 -20.9 Lower due to lower FX gain
Normalised PATAMI 135.2 122.3 +10.5 111.9 +20.8 257.5 199.0 +29.4 -
Group Results 1H11
8
In RM mn 2Q10 1Q11 2Q11 1H10 1H11
Reported EBITDA 686.2 730.9 746.9 1,406.2 1,477.8
Non Operational
ESOS (Income) / Cost - net 0.3 - - 12.1 -
FX (Gain)/Loss on International trade settlement
7.9 (2.3) 20.7 2.2 18.4
(Gain)/Loss on sale of staff housing loans 1.1 0.4 0.4 1.1 0.8
Normalised EBITDA 695.5 729.0 768.0 1,421.6 1,497.0
Normalised EBITDA Margin 31.9% 33.6% 33.9% 32.8% 33.7%
Reported EBITDA Margin 31.5% 33.7% 32.9% 32.4% 33.3%
Normalised EBITDA
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
9
Better due to higher operating revenue
In RM mn 2Q10 1Q11 2Q11 1H10 1H11
Reported PATAMI 124.4 163.3 127.2 367.3 290.5
Non Operational
ESOS (Income) / Cost - net 0.3 - - 12.1 -
FX (Gain)/Loss on International trade settlement
7.9 (2.3) 20.7 2.2 18.4
(Gain)/Loss on sale of staff housing loans 1.1 0.4 0.4 1.1 0.8
Other (Gain)/Loss – net* 1.2 (0.7) (2.0) (3.2) (2.7)
Unrealised FX (Gain)/Loss on Long Term loans (23.0) (38.4) (11.1) (180.5) (49.5)
Normalised PATAMI 111.9 122.3 135.2 199.0 257.5
Normalised PATAMI
* Comprise fair value (FV) changes of FVTPL (FV through P&L) investment and gain/loss on disposal for AFS (available for sale) investments. 4Q10 included gain on disposal of AXIATA shares.
10
21.5 22.8
21.6 18.6
18.1 20.4
11.9 11.5
5.7 5.4
5.1 6.04.4 3.80.7 1.0
1H10 1H11
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)
Improvement in Cost/revenue ratios will continue to be emphasized
1
11
RM mnRM mn
Total Cost / Revenue ( %)
RM3,864.4
89.1%
RM3,971.5
89.5%
1H2011 vs. 1H2010
• Higher Depreciation & Amortisationmainly due to higher asset base andnew asset additions
• Lower Direct Cost mainly due tolower interconnect andinternational outpayment
• Higher Manpower cost mainly dueto higher staff benefits
• Lower marketing expenses mainlydue to lower A&P
• Lower Other Operating Cost mainlydue to lower professional charges &fees, rental and internationalservices
348395
230
274
226 80
0
100
200
300
400
500
600
700
800
900
1H10 1H11
Access Core Network Support System*
182246
146
176
14020
0
50
100
150
200
250
300
350
400
450
500
1H10 1H11
Access Core Network Support System*
166 149
84 98
86 60
0
50
100
150
200
250
300
350
400
1H10 1H11Access Core Network Support System*
Group Capital Expenditure
** Gross capex to be shared with Government equally1H2010 capex has been restated to include IPTV
Note: Government grant 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)
Capex spend in line with plan
12
Total Capex
HSBB Capex**
Note : BAU – Business As Usual
RM mn
804
468
18.8
BAU Capex
336
7.9
Capex / Revenue ( %)
442
307
7.0
749
17.1
30 June 11 31 Dec 10 30 June 11 31 Dec 10Return on Invested Capital 6.04% 6.03% Gross Debt to EBITDA 1.92 2.09
Return on Equity 7.16% 7.67% Gross Debt/ Equity 0.87 0.72
Return on Assets 4.78% 4.73% Net Debt/ Equity 0.47 0.27
Current Ratio 1.67 1.62 Net Assets/Share (sen) 186.5 216.1
WACC 6.58% 6.58%
2
30 June 11
2 Based on Normalised PATAMI, comparative for Dec’10 is amended to be consistent with current year computation
30 June 11
Group Cash Flow & Key Financial Ratios
31 Dec 10
RM mn 1H10 1H11
Cash & cash equivalent at start 3,490.2 3,488.0
Cashflows from operating activities 954.0 936.7
Cashflows from / (used-in) investing activities (485.7) (683.9)
Capex* 492.9 338.7
Cashflows from financing activities (357.5) (1,077.5)
Effect of exchange rate changes 0.7 1.8
Cash & cash equivalent at end 3,601.7 2,656.9
Free cash-flow (EBITDA – Capex) 913.3 1,139.1
•net of HSBB grant received from Government (1H11 – 410.3mn, 1H10 - RM311.1mn)
Strong Cash Balance to support futurebusiness requirements
1
Based on Normalised EBIT1
1
13
31 Dec 10
Performance Overview
Financial review
Operating highlights
Concluding remarks
14
Voice45%
Data19%
Internet20%
Others16%
Voice43%
Data20%
Internet21%
Others16%
341 346 345
698 691
2Q10 1Q11 2Q11 1H10 1H11
402 453 488 805 941
2Q10 1Q11 2Q11 1H10 1H11
425 425 455823 880
2Q10 1Q11 2Q11 1H10 1H11
982 924 9461,950 1,870
2Q10 1Q11 2Q11 1H10 1H11
Group Total Revenue by Product
15
Data
RM mn
RM mn RM mn
Voice
Others
Internet1H11
1H10
RM mnRM mn
RM mn
RM4.382mn
RM4,276mn
Note: 2Q2010 revenue reclassified from internet to voice
+2.4%
-3.7% -4.1%
+7.7%
+21.4% +16.9%
+7.1%
+7.1% +6.9%
-0.3%
+1.2% -1.0%
Retail78%
Global10%
Wholesale9%
Others3%
83 79 73152 152
2Q10 1Q11 2Q11 1H10 1H11
215182 192
417 374
2Q10 1Q11 2Q11 1H10 1H11
Retail79%
Global9%
Wholesale9%
Others3%
187 190 188377 378
2Q10 1Q11 2Q11 1H10 1H11
557 592 599 1,118 1,191
439 440 467 876 907372 337 387
718 724297 328 327617
655
2Q10 1Q11 2Q11 1H10 1H11
Consumer SME Enterprise Government
Group Total Revenue by Line of Business
16
1H11
1H10
RM4,382mn
RM4,276mn
* Others comprise of revenue from Property Development, TM R&D, TMIM, UTSB and MKL
Retail Wholesale
RM mn
RM mnRM mn
RM mn
1,7811,6971,664
Note: Due to lower IRU sales and reduced traffic minutes
Global Others*
+5.5%
-10.7% -10.3%
3,3293,478
-7.6%
-12.0% +0.0%
+4.9%
+7.0% +4.5%
-1.1%
+0.5% +0.3%
1,499 1,761 1,4926,608 7,894 9,149
746772 940
4,3745,357
6,962
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11Other States Klang Valley
2,763 2,775 2,794 2,799 2,710 2,692
1,553 1,558 1,533 1,535 1,607 1,596
0
1,000
2,000
3,000
4,000
5,000
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
Residential Business
1,212 1,261 1,311 1,393 1,417 1,425
273 280 285 287 291 296
0
500
1,000
1,500
2,000
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
Residential Business
In thousand
In thousand
-1.0%
+11.7%
-0.7%
1,485
+0.8%
4,316
Physical Highlights
Streamyx Customer Growth
Fixed Line Customer Growth
WiFi Hotspot Zones
2,245
+536.0%
+21.6%
*Call Usage Only ** Streamyx Gross ARPU only ^ Streamyx Net ARPU
Net adds (in thousand)
1,541
+56
2,533
4,333
2,432
4,327
+55
1,596
10,982
+84
1,680
4,334
Note: inclusive of NBI initiative
17
Broadband champion - with continued growth in all segments
+28
1,708
4,317
13,251
ARPU (RM) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
Fixed Line* 35 35 35 34 33 34
Streamyx Broadband** 82 81 77 78 77^ 77^
1,721
+13
4,288
16,111
3,60312,456
28,771 55,15693,107
448
1,445
4,1258,385
15,912
2Q10 3Q10 4Q10 1Q11 2Q11
Residential Business
UniFi – leading & shaping the future
18
1
UniFi update as at 18 August 2011
2
4
Delivered 973,000 premises passed covering 76 exchanges, launched Unifi in Melaka
Signed HSBB Services Agreement with 2nd
access-seeker on 3 June 2011 for HSBB(Access) services
HSBB ARPU as at 30 June 2011 is RM186
Unifi takeup going strong
3
Activated more than 142,000 customers 4,051
13,901
32,89663,541
+71.6%
+10
Net adds (in thousand)
109,019
+19 +31 +45
+2591.2%
Performance Overview
Financial review
Operating highlights
Concluding remarks
19
Key Takeaways
Financial Performance
• TM Group revenue up by 2.5% compared to 1H2010 drivenby internet and data
• Normalised EBITDA margin improved by 0.9pp to 33.7%• Normalised PATAMI up 29.4%
Broadband Champion
• Streamyx customer base continues to grow
• HSBB at present:
• Strong Unifi takeup: more than 142,000 customers andgrowing
• 973,000 premises passed
Capital Management
• Capex/Revenue ratio improved from 18.8% to 17.1%• Cost management remains our focus
Shareholder Return
• Single-tier interim dividend of 9.8sen per share orapproximately RM350.6mn to be paid to shareholders in linewith our full year dividend commitment.
Appendices
2Q10 1Q11 2Q11 1H10 1H11 1H11 vs 1H10
Operating Revenue (RM mil) 2,150.9 2,148.2 2,233.6 4,275.8 4,381.8 -
Other Operating Income(RM mil)
29.6 21.3 34.8 60.5 56.1 -
Direct Costs % 21.9 18.6 18.6 21.6 18.6 Lower interconnect and internationaloutpaymentRM mil. 477.1 403.1 422.0 935.8 825.1
Manpower % 17.3 20.8 19.9 18.1 20.4Higher staff benefits
RM mil. 376.2 452.2 452.4 786.8 904.6
Supplies & Materials % 5.0 5.0 6.9 5.1 6.0 Higher customer acquisition cost, cable costRM mil. 109.8 108.5 156.1 221.0 264.7
Bad & Doubtful Debts % - 1.7 0.5 0.7 1.0 Higher trade bad debts from consumer & SMERM mil. -2.6 35.9 10.3 31.0 46.2
Marketing Expenses % 4.8 4.3 3.3 4.4 3.8Lower A&P
RM mil. 104.9 93.9 74.4 192.6 168.3
Maintenance Cost % 6.3 4.7 6.0 5.7 5.4 Reversal of over provision for 2010 and February 2011 (RM1.4m)RM mil. 136.9 102.9 136.9 247.4 239.8
Other Operating Costs % 13.4 11.2 11.9 11.9 11.5 Lower professional charges & fees, rental and international services RM mil. 292.0 242.1 269.4 515.5 511.4
Depreciation & Amortisation % 21.9 23.0 22.5 21.5 22.8 Higher asset base and new assetadditions RM mil. 477.5 500.0 511.4 934.3 1,011.4
Total (RM mil) 1,971.8 1,938.6 2,032.9 3,864.4 3,971.5 -
Total (%) 90.4 89.4 89.6 89.1 89.5 -
Cost % of Revenue
22
6,673.6
142.3
9,269.2
5,754.5
1,699.4
1,783.3
32.0
16,085.1
6,258.7
1,816.4
526.2
2,657.3
1,258.8
3,744.9
3,063.7
36.2
645.0
2,513.8
12,906.9
664.4
16,085.1
7,709.4
150.8
8,630.3
5,506.0
1,664.2
1,432.1
28.0
16,490.5
6,938.5
1,801.5
527.8
3,488.5
1,120.7
4,289.5
3,639.2
26.0
624.3
2,649.0
13,112.1
729.4
16,490.5
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 Assets
Property Plant & Equipment
Other Non-current Assets
RM MillionAs at 30 June 2011 As at 31 Dec 2010
Group Balance Sheet
23
* Included disposal group held for sale (Telekom Smart School)
1,594 1,554
428 486
799 933
672695
0
1,000
2,000
3,000
4,000
1H10 1H11
Others
Internet
Data
Voice
Consumer34%
SME26%
Enterprise22%
Government18%
806 769 785
220 229 257
400 448 485
339 343352
0
500
1000
1500
2000
2Q10 1Q11 2Q11
Others
Internet
Data
Voice
Consumer34%
SME26%
Enterprise21%
Government19%
Total Revenue By Products
RM mn +4.9%
1,664
1H11
+7.0%
RETAIL
Revenue by ProductRevenue by Business Unit
1H10
Note: Total revenue is after inter-co elimination. Revenue of product is before inter-co elimination
RM mn
RM mn
RM3,478mn
RM3,329mn
24
RM mn +4.5%
3,3293,478
1,6971,781
71 55 61
133 149 142
12 21 19
0
50
100
150
200
250
2Q10 1Q11 2Q11
Others
Data
Voice
140 116
267 291
28 40
0
100
200
300
400
500
1H10 1H11
Others
Data
Voice
ASP17%
MC83%
ASP17%
MC83%
MC : Malaysian CarrierASP : Application Service Provider
Others : Include internet
WHOLESALE
1H11
1H10
Note: Total revenue is after inter-co elimination. Revenue of product is before inter-co elimination 25
RM mn +0.3%
377 378
Revenue by ProductRevenue by Customer Segment
RM mn -1.1%
187
+0.5%
190 188
Africa & Middle East
9%
America8%
Europe9%
South Asia41%
North Asia13%
Oceania6%
Others14%
Africa & Middle East
8%America
7%
Europe11%
South Asia38%
North Asia17%
Oceania9%
Others12%
1H11
1H10
Others : Include internet
GLOBAL
Note: Total revenue is after inter-co elimination. Revenue of product is before inter-co elimination26
Revenue by RegionRevenue by Product
222 209
213178
14
4
0
100
200
300
400
500
1H10 1H11
Others
Data
Voice
RM mn -10.3%
417
374
109 102 107
11287 91
9
22
0
50
100
150
200
250
2Q10 1Q11 2Q11
Others
Data
Voice
RM mn +5.5%
215
-10.7%
182192
THANK YOUAny 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