1H 2013 RESULTS ANALYST BRIEFING
29 August 2013
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1H 2013 RESULTS ANALYST BRIEFING 29 August 2013 Disclaimer This presentation is not and does not constitute an offer, invitation, solicitation or recommendation to subscribe for, or purchase, any securities and neither this presentation nor
29 August 2013
This presentation is not and does not constitute an offer, invitation, solicitation or recommendation to subscribe for, or purchase, any 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. This presentation has been prepared solely for use at this presentation. By your continued attendance at this presentation, you are deemed to have agreed and confirmed to Telekom Malaysia Berhad (the “Company”) that: (a) you agree not to trade in any securities of 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 you have been otherwise notified by the Company. Reliance should not be placed on the information or opinions contained in this presentation or on its completeness. This presentation does not take into consideration the investment objectives, financial situation or particular needs of any particular investor. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information,
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Performance Overview Financial review Operating highlights Concluding remarks
3
Key Highlights 1H2013 vs. 1H2012 Continued Capex efficiency: Total capex/revenue ratio: 12.5% vs. 16.3% for 1H2012 Normalised EBIT grew by 10.7% to RM629.4mn Revenue up by 4.8% to RM5bn, driven by Data and Internet & Multimedia growth Normalised PATAMI up by 17.7% to RM478.5mn Strong broadband takeup: UniFi grew by >50% vs. 1H2012 Overall good performance 4
Key Operating Indicators Key Highlights 2Q2013 Financial Performance
Reported EBIT increased by 10.1% YoY and 10.7% QoQ, to RM329.8mn
Reported PATAMI lower by 38.6% YoY but higher by 0.3% QoQ, to RM213.9mn
HyppTV content; Data revenue up by 20.7% YoY to RM606mn
Overall broadband customer base grew by 7.1% YoY to 2.15mn 5
Performance Overview Financial review Operating highlights Concluding remarks
6
Note: For Normalised EBIT and Normalised PATAMI refer Slides 8 and 9
RM mn
Reported 2Q13 1Q13 % Change QoQ 2Q12 % Change YoY 1H13 1H12 % Change 1H13 vs 1H12
Revenue 2,613.8 2,424.6 +7.8 2,425.0 +7.8 5,038.4 4,808.8 +4.8 Other Operating Income 22.5 30.7
44.1
53.2 70.7
EBITDA 860.6 806.7 +6.7 797.4 +7.9 1,667.3 1,580.0 +5.5 Depn & Amort. 530.8 508.7 +4.3 497.9 +6.6 1,039.5 1,008.5 +3.1 EBIT 329.8 298.0 +10.7 299.5 +10.1 627.8 571.5 +9.9 Other Gains / (Loss) 3.0 (0.1) >+100.0 (2.4) >+100.0 2.9 (1.0) >+100.0 Net Finance Cost* 56.4 49.6 +13.7 46.9 +20.3 106.0 88.5 +19.8 FX (Gain) / Loss 34.1 18.6
64.7 +47.3 52.7 (3.2) >-100.0 Profit Before Tax (PBT) 241.9 229.5 +5.4 185.6 +30.3 471.4 484.9
PATAMI 213.9 213.2 +0.3 348.5
427.1 599.1
Normalised PATAMI 244.5 234.0 +4.5 223.0 +9.6 478.5 406.5 +17.7
Group Results 1H2013
7
Normalised EBIT
In RM mn 2Q13 1Q13 2Q12 1H13 1H12 Reported EBIT 329.8 298.0 299.5 627.8 571.5 Non Operational Loss on Sale of Assets 0.2 0.1 0.2 0.3 0.4 FX (Gain)/Loss on International trade settlement (0.7) 2.0 (5.3) 1.3 (3.3) Normalised EBIT 329.3 300.1 294.4 629.4 568.6 Normalised EBIT Margin 12.5% 12.2% 11.9% 12.4% 11.7% Reported EBIT Margin 12.5% 12.1% 12.1% 12.3% 11.7% 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)
8
Normalised EBIT higher by 10.7% vs. 1H2012
Normalised PATAMI
In RM mn 2Q13 1Q13 2Q12 1H13 1H12 Reported PATAMI 213.9 213.2 348.5 427.1 599.1 Non Operational Loss on Sale of Assets 0.2 0.1 0.2 0.3 0.4 FX (Gain)/Loss on International trade settlement (0.7) 2.0 (5.3) 1.3 (3.3) Other (Gain)/Losses* (3.0) 0.1 2.4 (2.9) 1.0 Unrealised FX (Gain)/Loss on Long Term loans 34.1 18.6 64.7 52.7 (3.2) Tax Incentives
Normalised PATAMI** 244.5 234.0 223.0 478.5 406.5
9
* 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: 1H13: RM108.0mil (HSBB), 1H12: RM40.0mil (last mile), RM47.8mil (HSBB)
Normalised PATAMI 17.7% higher vs. 1H2012
20.7 20.4 17.6 16.7 19.4 21.8 10.9 11.6 8.6 6.6 5.7 6.2 4.1 3.6 1.3 0.8 1H12 1H13
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 ( %)
RM4,308.0 88.3% RM4,463.8 87.7%
% of Revenue
1H 2013 vs. 1H 2012
higher salaries and staff benefits (new Collective Agreement)
international & interconnect
provision for write-off
to lower customer projects
10
444 350 207 184 134 97 100 200 300 400 500 600 700 800 1H12 1H13
Access Core Network Support System*
326 247 127 149 59 50 90 180 270 360 450 540 1H12 1H13
Access Core Network Support System*
118 103 80 35 75 47 70 140 210 280 1H12 1H13
Access Core Network Support System*
Improved capex/revenue ratio Group Capital Expenditure
** Gross capex to be shared with Government equally up to RM4.8bn 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
785 512
16.3
BAU Capex 273
5.7
Capex / Revenue ( %)
446 185
3.7
631
12.5 8.9 10.6
Total Capex
11
RM mn RM mn
30 June 13 31 Dec 12 30 June 13 31 Dec 12
Return on Invested Capital 6.98% 6.67% Gross Debt to EBITDA 2.25 2.10 Return on Equity 13.93% 12.31% Net Debt/EBITDA 1.17 0.87 Return on Assets 5.66% 5.17% Gross Debt/ Equity 1.14 1.04 Current Ratio 1.18 1.03 Net Debt/ Equity 0.64 0.49 WACC 6.03% 6.10% Net Assets/Share (sen) 191.4 192.7 30 June 13
Group Cash Flow & Key Financial Ratios
31 Dec 12
RM mn
1H13 1H12 Cash & cash equivalent at start 3,738.3 4,212.6 Cashflows from operating activities 500.6 703.3 Cashflows used-in investing activities (978.6) (1,077.3)
Capex
631.0 785.0 Cashflows from financing activities 187.6 (132.2) Effect of exchange rate changes (2.0) (1.7) Cash & cash equivalent at end 3,445.9 3,704.7 Free cash-flow (EBITDA – Capex) 1,036.3 795.0
1 Based on Normalised PATAMI 2 1
31 Dec 12 30 June 13
2 Based on Normalised EBIT 1
12
Performance Overview Financial review Operating highlights Concluding remarks
13
502 585 606 1,016 1,191 2Q12 1Q13 2Q13 1H12 1H13 582 644 638 1,145 1,282 2Q12 1Q13 2Q13 1H12 1H13 946 878 936 1,894 1,814 2Q12 1Q13 2Q13 1H12 1H13 Voice 36% Data 24% Internet 25% Others 15% Voice 39% Data 21% Internet 24% Others 16%
Group Total Revenue by Product
Data
RM mn RM mn RM mn
Voice* Others** Internet*
1H13 1H12
RM mn
RM mn RM mn RM5,038mn RM4,809mn
*2Q13 : Reclassified between voice and internet of RM30mn **Others comprise other telco and non-telco services (i.e ICT-BPO, MMU tuition fees, customer projects)
+6.6%
Sustained Internet and Data growth
+9.6%
+12.0% +20.7% +3.6% +17.2% +9.6% +36.2%
14
395 318 433 754 751 2Q12 1Q13 2Q13 1H12 1H13
Retail 75% Global & Wholesale 16% Others 9% Retail 75% Global & Wholesale 17% Others 8% 1,831 1,854 1,957 3,631 3,811 2Q12 1Q13 2Q13 1H12 1H13 195 197 244 372 441 2Q12 1Q13 2Q13 1H12 1H13 399 374 412 806 786 2Q12 1Q13 2Q13 1H12 1H13
Global & Wholesale
Group Total Revenue by Line of Business
1H13 1H12
RM5,038mn RM4,809mn
* 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%
+6.9% +5.6%
Positive growth across Mass Market and Managed Accounts segment
+5.0% +3.3% +10.2%
+25.1% +23.9% +18.5%
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2,524 2,468 2,429 2,390 2,364 2,337 1,526 1,509 1,497 1,486 1,474 1,463 316 384 427 483 532 577 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Fixed Line Residential Fixed Line Business UniFi 1,356 1,330 1,309 1,296 1,292 1,291 302 297 292 287 285 285 316 384 427 483 532 577 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Streamyx Residential Streamyx Business UniFi 269 325 359 406 448 484 46 58 68 77 84 93 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 UniFi Residential UniFi Business
Net adds (in thousand)
In thousand In thousand +7.1% +2.1%
Physical Highlights
Broadband Customer Growth Fixed Line Customer Growth
+43 4,370 2,109 1,974 4,366 +0.4% +0.2% +8.5%
Net adds (in thousand)
+50.3% 532 316
UniFi
+37 2,011
+49 +68
384 4,361 2,028 427
+43
+17 4,353
Continued overall Broadband growth; Healthy takeup of Streamyx 8Mbps
2,066 +38
+56
483 4,359
16
*Call Usage Only ** Streamyx Net ARPU *** Blended ARPU
ARPU (RM) 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Fixed Line (DEL)* 34 35 34 32 31 32 Streamyx Broadband** 79 79 80 81 80 82 UniFi*** 181 178 181 181 178 180 ARPU
577
+45
+44 2,153 4,377 In thousand
17
Attractive Product Offerings Continuous enhancement of product offerings across segments
Performance Overview Financial review Operating highlights Concluding remarks
18
Key Takeaways Financial Performance
Broadband Champion
more than 590,000 at present
8 Mbps) in non-Unifi areas
19
Shareholder Return
approximately RM350.6mn to be paid to shareholders
Normalised EBITDA
In RM mn 2Q13 1Q13 2Q12 1H13 1H12 Reported EBITDA 860.6 806.7 797.4 1,667.3 1,580.0 Non Operational Loss on Sale of Assets 0.2 0.1 0.2 0.3 0.4 FX (Gain)/Loss on International trade settlement (0.7) 2.0 (5.3) 1.3 (3.3) Normalised EBITDA 860.1 808.8 792.3 1,668.9 1,577.1 Normalised EBITDA Margin 32.6% 32.9% 32.1% 32.8% 32.3% Reported EBITDA Margin 32.6% 32.9% 32.3% 32.7% 32.4% 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 5.8% vs. 1H2012
21
2Q13 1Q13 2Q12 1H13 1H12 Comments (1H2013 vs. 1H2012)
Operating Revenue (RM mil) 2,613.8 2,424.6 2,425.0 5,038.4 4,808.8
(RM mil) 22.5 30.7 44.1 53.2 70.7
15.9 17.5 16.9 16.7 17.6
Lower international and interconnect
RM mil. 417.9 430.0 418.1 847.9 857.0 Manpower % 21.2 22.5 19.6 21.8 19.4
Higher salaries and staff benefits
RM mil. 558.1 551.3 483.4 1,109.3 949.0 Supplies & Materials % 6.7 5.6 5.2 6.2 5.7
Higher materials cost for ICT projects, equipment, cable cost
RM mil. 176.7 136.7 129.1 313.4 276.8 Bad & Doubtful Debts % 0.4 1.3 0.5 0.8 1.3
9.7 31.4 11.6 41.1 64.7 Marketing Expenses % 3.9 3.3 4.3 3.6 4.1
Lower A&P and dealers’ commission
RM mil. 103.0 80.9 106.1 183.9 200.5 Maintenance Cost % 7.2 6.0 9.6 6.6 8.6
Lower maintenance due to lower customer projects, ie at TM Govt
RM mil. 189.0 147.1 236.5 336.1 417.5 Other Operating Costs % 12.2 11.0 11.6 11.6 10.9
Higher due to cost of disposal of Ijok land and international services at ITNT.
RM mil. 321.3 271.2 286.9 592.6 534.0 Depreciation & Amortisation % 20.1 20.7 20.2 20.4 20.7
Higher absolute cost due to higher asset base but lower as percentage of revenue
RM mil. 530.8 508.7 497.9 1,039.5 1,008.5 Total (RM mil) 2,306.5 2,157.3 2,169.6 4,463.8 4,308.0
87.5 87.9 87.9 87.7 88.3
22
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
6,848.7 152.4 9,188.2 5,830.0 1,195.5 2,087.5 75.2 16,189.3 7,188.0 2,377.8 461.9 3,446.3 902.0 6,079.5 2,782.2 2,008.9 1,288.4 1,108.5 14,286.1 794.7 16,189.3 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 Million
As at 30 June 2013
Group Balance Sheet
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770 727 774 1,528 1,501 307 383 388 625 771 577 643 636 1,135 1,279 188 112 167 359 279 2Q12 1Q13 2Q13 1H12 1H13 Others Internet Data Voice
RETAIL
Note: Total revenue is after inter-co elimination. Revenue of product is before inter-co elimination
RM mn +5.6% +6.9% 1,957 1,854 1,831
Revenue by Product
3,811 3,631 +5.0%
24
181 154 163 375 317 249 247 266 485 513 28 19 32 49 51 2Q12 1Q13 2Q13 1H12 1H13 Others Data Voice
Others : Includes internet
Revenue by Product
399 374 412 806 786 RM mn +10.2% +3.3%
GLOBAL & WHOLESALE
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