KUALA LUMPUR (Aug 25): Telekom Malaysia Bhd (TM) is hinting at a likelihood of better-than-expected earnings performance against its initial guidance of a low- to mid-single-digit growth in revenue.

“We do expect the growth momentum to continue in the second half in terms of revenue and profit. We will be continuously reinvesting in regard to capex (capital expenditure),” TM managing director and group chief executive officer Imri Mokhtar told reporters at the group’s quarterly briefing on Thursday (Aug 25).

“In the market guidance, as we all know, we expect low- to mid-single-digit growth when it comes to revenue and EBIT (earnings before interest and tax) of more than RM1.8 billion in 2022. We are confident of delivering that, and if there is any market re-guidance, let’s wait for the [briefing for the] third quarter [ending Sept 30, 2022] (3QFY22).

“Looking at the momentum, if it is necessary, we will be providing new market guidance — not now, but later,” Imri commented.

TM announced a 7.3% growth in revenue to RM5.98 billion and a 29% increase in EBIT to RM1.26 billion for the first half ended June 30, 2022.

The telecommunications company (telco) achieved its highest quarterly net profit in 10 years, declaring a dividend of nine sen. Quarterly net profit grew 73% to RM378.06 million for 2QFY22, from RM218.59 million a year ago, as revenue from all lines of services came in higher, more than offset the impact of Cukai Makmur (the one-off prosperity tax), larger foreign exchange loss on borrowings and high tax.

Apart from continuous growth in broadband subscription, thanks to the roll-out of fibre networks to more premises, Imri said TM’s data centre services are in high demand as well, without sharing details such as the utilisation rate of the centres.

According to Imri, TM is in final negotiations with Digital Nasional Bhd (DNB) regarding the commercial arrangement for the access agreement between both parties for the purchase of 5G capacity.

In regard to the Aug 31 deadline for telcos to buy a stake in DNB, Imri said that as of now, there are no changes to the timeline yet.

“We are working towards that deadline. As of now, that is the deadline that we are all working towards. I think if there is any shift from that, it is not for us as a telco [to decide],” he said.

“We have written in and registered our interest with DNB to be a shareholder, and of course that is an ongoing process. We will be finalising the necessary agreements very soon — by the end of the month,” he added, but did not reveal any budgeted amount for such investment.

To recap, the government has agreed to let go of a 70% stake in DNB for local telcos to acquire, while the Ministry of Finance will retain the remaining 30% shareholding by injecting RM500 million into the 5G network special purpose vehicle.

Apart from being a shareholder, Imri said TM’s participation as a fibre leasing partner of DNB in the 5G roll-out is also “progressing well”.

“We are the preferred partner of DNB in the network roll-out, where TM is providing fibre leasing services to DNB to roll out 5G towers. That is progressing well, and it is picking up. We do expect the roll-out of fibre for 5G towers to ramp up in the second half of this year,” he said.