CEO Morning Brief

Acceleration in IT Assets Impairment Pulls Down TM’s 1Q Net Profit

Publish date: Fri, 26 May 2023, 08:41 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (May 25): Telekom Malaysia Bhd (TM) reported a 2.9% decline in net profit to RM330.1 million for the first quarter ended March 31, 2023 (1QFY2023), compared with RM339.85 million in the same quarter a year ago, due to the group’s decision to accelerate depreciation and impairment of information technology (IT) assets, in view of changes in market conditions.

As a result, its reported earnings before interest and tax (Ebit) were 15.5% lower at RM473.3 million, from RM560.4 million.

Quarterly revenue grew 2% to RM2.95 billion from RM2.89 billion previously, driven by continuous growth across Unifi and TM Global.

During the quarter under review, the group’s capital expenditure stood at RM413.1 million, or 14% of overall revenue, with a significant portion of this investment dedicated to fortifying its fibre infrastructure, delivering new customer acquisition, international subsea cables investment and 5G fibre network deployment, to meet the government’s target of 80% coverage by year end.

Unifi’s revenue for 1QFY2023 expanded 4.3% to RM1.44 billion from RM1.38 billion, contributed by growth in the number of subscribers and average revenue per customer. Unifi fixed broadband subscription increased 8.1% to 3.08 million, propelled by aggressive sales and promotions.

However, TM One saw a 6.7% drop in revenue to RM721.9 million from RM773.7 million, largely due to the impact of price reduction and lower revenue from one-off customer projects.

TM group chief executive officer Datuk Imri Mokhtar expects 2023 to be a challenging year, with changes in the regulatory landscape, heightened competition and other market structure changes.

“As the national connectivity and digital infrastructure provider, TM will continue to execute the fiberisation plan to support the government’s National Digital Network (Jendela) programmes, as well as the 5G rollout nationwide. TM looks forward to continuing playing an active role in the 5G implementation, leveraging its nationwide fibre infrastructure, extensive digital platforms (data centres, edge nodes) and rollout experience,” he said in a statement on Thursday (May 25).

At market close on Thursday, shares of TM were down nine sen or 1.8% to RM5, translating into a market capitalisation of RM19.11 billion.

Source: TheEdge - 26 May 2023

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