TM records higher 1Q profit of RM339.84m despite Cukai Makmur, thanks to lower finance cost

KUALA LUMPUR (May 25): Telekom Malaysia Bhd’s (TM) net profit rose 4.42% to RM339.84 million for the first quarter ended March 31, 2022 (1QFY22) from RM325.46 million in the same quarter last year — despite having to apply the Prosperity Tax or Cukai Makmur — thanks to lower finance costs subsequent to the group's early redemption of its RM2 billion sukuk in March 2021.

The group also recorded lower foreign exchange translation losses on borrowings, while revenue for the quarter grew 2.95% to RM2.89 billion from RM2.81 billion, driven primarily by increased demand for voice, Internet and multimedia, its bourse filing showed.

Earnings per share for 1QFY22 improved to 9.01 sen, up from 8.62 sen for 1QFY21.

"Entering into the 2nd year of the Group’s 3-Year Transformation Programme, the group continues with its manpower optimisation initiatives to enable early realisation of expected benefits to the group. Expenses from the programme together with lower foreign exchange translation gains on settlement and placements in the current quarter contributed to the net increase in operating costs between the two comparatives quarters. This led to a 5.1% (RM29.8 million) decrease in operating profits before finance cost, which was RM553.5 million for the first quarter of 2022, compared with RM583.3 million in the same quarter last year," TM said.

TM said it has applied the 33% Cukai Makmur statutory tax rate accordingly for the quarter under review.

Compared with the immediate preceding quarter of 4QFY21, TM's net profit soared 325% from RM79.94 million, though revenue declined 8.27% from RM3.15 billion, on lower revenue from voice, data and other telecommunication services, though Internet continued to record quarter-on-quarter increase.

The improved q-o-q earnings was due to corresponding lower operating costs in the current quarter, which led to an 87.8% (RM258.7 million) increase in operating profit before finance costs to RM553.5 million from RM294.8 million previously.

TM's group chief executive officer Imri Mokhtar said the group is powering Malaysia’s journey on its road towards recovery, by ensuring the vision of an inclusive and extensive Digital Malaysia becomes a reality.

“Into the second year of our Transformation, we are focused on strengthening our core business while investing into new growth areas to meet customers’ demands. In ensuring sustainability in the long run, we continue to grow our profitability to invest and seize opportunities arising from digital acceleration.

“One of these opportunities is in the exciting space of digital solutions and services for enterprises. Building on TM One’s existing capability and relationships with enterprises and the public sector, we will deliver speed and agility through our new digital arm Credence: a corporate start-up led by technology leaders.

“Unifi continues to better its fixed broadband and Fixed-Mobile Convergence value proposition to improve customer experience while expanding our offerings to provide quality entertainment to customers at home or on-the-go,” he said.

The telecommunication service provider also said it has achieved some key milestones in its sustainability efforts.

As an example, it said TM One had successfully secured the Green Electricity Tariff from Tenaga Nasional Bhd for its data centres in Kuala Lumpur, Cyberjaya and Johor Bahru, contributing to a lower carbon footprint as the demand for cloud storage inevitably increases. This is in addition to the existing Green Building Index (GBI) certification earlier obtained for its core data centres.

“TM’s broader ESG [environmental, social and governance] commitment also remains consistent with Malaysia’s initiatives towards achieving net-zero Greenhouse Gas emission for the country by 2050.

“Meanwhile, TM Wholesale continues to establish Malaysia as a regional digital hub via new submarine cables, edge computing, data centres and supporting international connectivity. On the domestic front, TM Wholesale continues performing its role as the enabler for industry broadband, 4G and 5G network via fibre infrastructure that will transform the nation’s connectivity capabilities,” Imri said.

TM shares dropped 11 sen or 2.28% to close at RM4.71 on Wednesday, giving the telecommunications company a market value of RM17.77 billion. The stock has fallen 14.67% year to date from RM5.52.