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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


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SLIDE 1

1H 2013 RESULTS ANALYST BRIEFING

29 August 2013

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SLIDE 2

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,

  • pinions and conclusions contained in this presentation. None of the Company and its affiliates and related bodies corporate, and their

respective officers, directors, employees and agents disclaim any liability (including, without limitation, any liability arising from fault or negligence) for any loss arising from any use of this presentation or its contents or otherwise arising in connection with it. This presentation contains projections and “forward-looking statements” relating to the Company’s business and the sectors in which the Company operates. These forward-looking statements include statements relating to the Company’s performance. These statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. It is important to note that actual results could differ materially from those anticipated in these forward looking statements. The Company does not undertake to inform you of any matters or information which may come to light or be brought to the Company’s attention after the date hereof. The forecasts and other forward-looking statements set out in this presentation are based on a number of estimates and assumptions that are subject to business, economic and competitive uncertainties and contingencies, with respect to future business decisions, which are subject to change and in many cases outside the control of the Company. The directors and officers of the Company believe that they have prepared the forecasts with due care and attention and consider all best estimates and assumptions when taken as a whole to be reasonable at the time of 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

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SLIDE 3

Performance Overview Financial review Operating highlights  Concluding remarks

3

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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

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SLIDE 5

Key Operating Indicators Key Highlights 2Q2013 Financial Performance

  • Operating revenue increased by 7.8% YoY and QoQ, to RM2.6bn
  • Normalised EBIT increased by 11.9% YoY and 9.7% QoQ, to RM329.3mn;

Reported EBIT increased by 10.1% YoY and 10.7% QoQ, to RM329.8mn

  • Normalised PATAMI grew by 9.6% YoY and 4.5% QoQ, to RM244.5mn;

Reported PATAMI lower by 38.6% YoY but higher by 0.3% QoQ, to RM213.9mn

  • Internet revenue up by 9.6% YoY to RM638mn driven by UniFi growth and

HyppTV content; Data revenue up by 20.7% YoY to RM606mn

  • UniFi customer base up 50.3% YoY to 577,000 customers;

Overall broadband customer base grew by 7.1% YoY to 2.15mn 5

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SLIDE 6

Performance Overview Financial review Operating highlights  Concluding remarks

6

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SLIDE 7

Note: For Normalised EBIT and Normalised PATAMI refer Slides 8 and 9

  • Excludes FX (Gain )/Loss

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

  • 26.7

44.1

  • 49.0

53.2 70.7

  • 24.8

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

  • 83.3

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

  • 2.8

PATAMI 213.9 213.2 +0.3 348.5

  • 38.6

427.1 599.1

  • 28.7

Normalised PATAMI 244.5 234.0 +4.5 223.0 +9.6 478.5 406.5 +17.7

Group Results 1H2013

7

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SLIDE 8

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

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SLIDE 9

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

  • (187.5)
  • (187.5)

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

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SLIDE 10

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 Manpower cost due to

higher salaries and staff benefits (new Collective Agreement)

  • Lower Direct cost due to lower

international & interconnect

  • utpayment
  • Lower D&A due to lower

provision for write-off

  • Lower Maintenance cost due

to lower customer projects

10

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SLIDE 11

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

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SLIDE 12

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

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SLIDE 13

Performance Overview Financial review Operating highlights  Concluding remarks

13

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SLIDE 14

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)

  • 1.1%

+6.6%

Sustained Internet and Data growth

  • 4.2%

+9.6%

  • 0.9%

+12.0% +20.7% +3.6% +17.2% +9.6% +36.2%

  • 0.4%

14

395 318 433 754 751 2Q12 1Q13 2Q13 1H12 1H13

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SLIDE 15

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%

  • 2.5%

+25.1% +23.9% +18.5%

15

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SLIDE 16

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

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SLIDE 17

17

Attractive Product Offerings Continuous enhancement of product offerings across segments

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SLIDE 18

Performance Overview Financial review Operating highlights  Concluding remarks

18

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SLIDE 19

Key Takeaways Financial Performance

  • TM Group operating revenue up by 4.8% vs. 1H2012
  • Normalised EBIT growth 10.7% to RM629.4mn
  • Normalised PATAMI grew by 17.7% to RM478.5mn

Broadband Champion

  • Total broadband customer base 2.15mn
  • Unifi remains strong: 577,000 customers as at 1H2013,

more than 590,000 at present

  • Good takeup of high speed broadband (Streamyx 4 &

8 Mbps) in non-Unifi areas

  • Total Capex / Revenue ratio improved to 12.5%
  • Cost /Revenue ratio improved to 87.7%

19

Shareholder Return

  • Interim dividend of 9.8 sen per share or

approximately RM350.6mn to be paid to shareholders

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SLIDE 20

Appendices

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SLIDE 21

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

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SLIDE 22

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

  • Other Operating Income

(RM mil) 22.5 30.7 44.1 53.2 70.7

  • Direct Costs %

15.9 17.5 16.9 16.7 17.6

Lower international and interconnect

  • utpayment

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

  • RM mil.

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

  • Total (%)

87.5 87.9 87.9 87.7 88.3

  • Cost % of Revenue

22

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SLIDE 23

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

23

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SLIDE 24

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%

  • 2.5%

GLOBAL & WHOLESALE

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SLIDE 25

THANK YOU

Any queries please email to : investor@tm.com.my

  • Investor Relations
  • Level 11 (South Wing)
  • Menara TM •JlnPantaiBharu •50672 Kuala Lumpur, Malaysia • Tel (603) 2240 4848/ 7366 / 7388