• TM’s ESG approach is based on the group’s sustainability vision of ‘Making Life Easier, for a Sustainable Tomorrow’.

• TM has given a serious consideration on ESG initiativesin 2018 where the group introduced its sustainability framework, which covered five strategic pillars of growth.

• 2021 has been a significant year in TM’s sustainability journey.

• On that score, TM has implemented ESG initiatives with holistic approach, including reducing emissions, providing financial aid for education, optimizing resources, and meeting high regulatory standards.

• No disclosure however on the group’s annual ESG expenditure

• We have assigned TM an overall ESG rating of 4.00 of 5 which falls in the rating band of “Best”.

• TM is a BUY with unchanged TP of RM7.58, based on based on DCFderived (WACC:7.4%, g:1%)

Summary

Our local telco players are increasingly directing their attention towards ESG strategies, utilizing ESG measures and reporting as a mean of attracting investors, customers, and employees. Currently, telco players are primarily concentrating on environmental issues, such as GHG emissions and waste management. Social aspects of ESG, such as responsible supply chains, customer satisfaction, data privacy, employee diversity, and labor standards are also significant areas of focus among the players. In addition, governance issues, such as board diversity, bribery, data breaches, tax strategy, whistleblower schemes, and executive pay, are relevant across multiple sectors, including the telco industry.

TM’s ESG Evolution Journey

TM’s ESG approach is based on the group’s sustainability vision of ‘Making Life Easier, for a Sustainable Tomorrow’. TM has given serious considerations on ESG in 2018 where the group introduced its sustainability framework, which encompassed five strategic pillars of growth, including: Better Future, Economic Value, Green Citizenship, Society Equity, and Good Principles. In 2020, TM introduced 4 sustainable pillar (i) Building a Digital Malaysia, (ii) Protecting the Planet, (iii) Putting People First and (iv) Strengthening Our Integrity. The group also listed as one of only 75 Bursa companies qualified for the FTSE4Good Bursa Malaysia Index, with a full rating of 4/4 and received an MSCI ESG Rating of AA out of AAA in the same year. Fast forward, 2021 has been a significant year in TM’s sustainability journey. Several significant milestones were accomplished in 2021:

i) The launching of TM’s ESG Roadmap & Commitments

ii) The introduction of sustainability-related KPIs and meeting agendas for TM’s leadership team

iii) The strengthening of TM’s climate related risk management

iv) The integration of sustainability into TM’s business strategy

Source: BIMB Securities Research - 5 May 2023